  
  
WT/DS435/AB/R  
WT/DS441/AB/R  
 
9 June 2020  
(20-4018) Page: 1/232 
  Original: English  
 
  
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, 
GEOGRAPHICAL INDICAT IONS AND OTHER PLAIN  PACKAGING 
REQUIREMENTS APPLICA BLE TO TOBACCO PRODU CTS AND PACKAGING  
AB-2018-4 
AB-2018-6 
Report s of the Appellate  Body 
Note:  
 
The Appellate  Body is issuing these Reports in the form of a single document constituting 
two separate Appellate  Body Reports: WT/DS435/AB/R ; and WT/DS441/AB/R . The cover page, 
preliminary pages, sections 1 through 7, and the annexe s are common to both Reports. The page 
header throughout the document bears the two document symbols WT/DS435/AB/R  and 
WT/DS441/AB/R . 
 WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Table of Contents  
 
1  INTRODUCTION  ................................ ................................ ................................ .........  17 
2  ARGUMENTS OF THE PA RTICIPANTS  ................................ ................................ .........  24 
3  ARGUMENTS OF THE TH IRD PARTICIPANTS  ................................ ...............................  24 
4  ISSUES RAISED IN TH ESE APPEALS  ................................ ................................ ...........  24 
5  RELEVANT BACKGROUND  INFORMATION  ................................ ................................ ... 25 
5.1  The products at issue  ................................ ................................ ................................ . 25 
5.2  The measures at issue  ................................ ................................ ...............................  26 
5.2.1  Overview  ................................ ................................ ................................ ...............  26 
5.2.2  Requirements for the retail packaging of tobacco products  ................................ ............  28 
5.2.3  Requirements for the appearance of tobacco products  ................................ ..................  29 
6  ANALYSIS OF THE APP ELLATE  BODY  ................................ ................................ ..........  30 
6.1  Article  2.2 of the TBT  Agreement  ................................ ................................ .................  30 
6.1.1  Overview  ................................ ................................ ................................ ...............  30 
6.1.2  The contribution of the TPP  measures to Australia's objective  ................................ ........  33 
6.1.2.1   Background to the Panel's analysis and findings on the contribution  
of the TPP  measures to Australia's objective  ................................ ................................ ........  34 
6.1.2.2   Claim that the Panel erred in its application of Article  2.2 of the TBT  Agreement  ............  36 
6.1.2.3   Claims under Article  11 of the DSU  ................................ ................................ .........  38 
6.1.2.3.1   Introduction  ................................ ................................ ................................ ..... 38 
6.1.2.3.1.1   Burden of proof  ................................ ................................ ..............................  39 
6.1.2.3.1.2   The nature of the Panel's overall conclusion and the scope of the  
appellants' appeals ................................ ................................ ................................ ...........  40 
6.1.2.3.1.3   Cross -cutting themes underpinning the appellants' claims under Article  11 .............  42 
6.1.2.3.1.4   Approach to addressing the appellants' claims under Article  11 of the DSU  
and order of analysis  ................................ ................................ ................................ ........  45 
6.1.2.3.2   The Panel's assessment of the pre -implementation evidence pertaining  
to the design, structure, and intended operation of the TPP  measures  ................................ ..... 46 
6.1.2.3.2.1   Overview  ................................ ................................ ................................ ....... 46 
6.1.2.3.2.2   Summary of the Panel's findings  ................................ ................................ ....... 47 
6.1.2.3.2.3   Whether the Panel acted inconsistently with Article  11 of the DSU by  
inappropriate ly attaching probative value to the TPP  literature  ................................ ................  49 
6.1.2.3.2.4   Whether the Panel acted inconsistently with Article  11 of the DSU by  
disregarding the Dominican  Republic's evidence  ................................ ................................ ... 53 
6.1.2.3.2.5   Conclusion  ................................ ................................ ................................ ..... 58 
6.1.2.3.3   The Panel's assessment of the post -implementation evidence pertaining to the 
application of the TPP  measure s ................................ ................................ .........................  58 
6.1.2.3.3.1   Discrete claims regarding the Panel's analysis of the actual effects of the 
TPP measures  ................................ ................................ ................................ .................  60 
6.1.2.3.3.2   Groups of claims based on cross -cutting themes  ................................ ...............  106 
6.1.2.3.3.3   Claims concerning the Panel's statements on the future impact  
of the TPP  measures  ................................ ................................ ................................ ....... 123 
6.1.2.3.3.4   Claims that we need not address for purposes of resolving these disputes  .............  125 WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.1.2.3.4   Whether the Panel erred in its overall conclusion on the contribution of the 
TPP measures to Australia's objective  ................................ ................................ ...............  127 
6.1.3  The trade restrictiveness of the TPP  measures  ................................ ..........................  136 
6.1.3.1   Whether the Panel erred in its interp retation of Article  2.2 of the TBT  Agreement  ........  136 
6.1.3.2   Whether the Panel erred in its application of Article  2.2 ................................ ...........  143 
6.1.3.2.1   Overview  ................................ ................................ ................................ ....... 143 
6.1.3.2.2   The reduced opportunity for products to differentiate on the basis of brands  ............  146 
6.1.3.2.3   The effect of the TPP  measures on the value of imported tobacco products  ..............  149 
6.1.3.2.3.1   The causation standard applied by the Panel  ................................ .....................  153 
6.1.3.2.3.2   The Panel's reasoning in paragraph  7.1221 of the Panel  Report  ...........................  156 
6.1.3.2.3.3   The reaction of private actors to the TPP  measures  ................................ ............  158 
6.1.3.2.4   Conclusion on the Panel's application of Article  2.2 ................................ ...............  160 
6.1.3.3   Claims under Article  11 of the DSU  ................................ ................................ ....... 160 
6.1.3.4   Conclusion  ................................ ................................ ................................ ........  162 
6.1.4  Alternative measures  ................................ ................................ ............................  163 
6.1.4.1   Overview  ................................ ................................ ................................ ..........  163 
6.1.4.2   Whether the Panel erred under Article  2.2 in its assessment of the relative trade 
restrictiveness of the alternative measures  ................................ ................................ ........  164 
6.1.4.3   Whether the Panel erred under Article  2.2 in its assessment of the relative  
contribution of the alternative measures  ................................ ................................ ...........  167 
6.1.4.4   Claims under Article  11 of the DSU  ................................ ................................ ....... 176 
6.1.4.5   Conclusion regarding the Panel's assessment of the alternative measures  ..................  177 
6.1.5  Overall conclusion under Article  2.2 of the TBT  Agreement  ................................ ..........  178 
6.2  Separate opinion of one Division Member regarding Article  2.2 of the TBT  Agreement  ....... 179 
6.2.1  Introduction  ................................ ................................ ................................ .........  179 
6.2.2  Addressing the appellants' claims regarding the contribution of the TPP  measures  
was not necessary to resolve the dispute  ................................ ................................ ...........  180 
6.2.3  Due process and Article  11 of the DSU  ................................ ................................ ..... 182 
6.3  Claims under the TRIPS  Agreement  ................................ ................................ ............  183 
6.3.1  Article  16.1 of the TRIPS  Agreement  ................................ ................................ ........  183 
6.3.1.1   Summary of the Panel's findings  ................................ ................................ ..........  183 
6.3.1.2   Whether the Panel erred in its interpretation of Article  16.1 ................................ ...... 188 
6.3.2  Article  20 of the TRIPS  Agreement  ................................ ................................ ..........  201 
6.3.2.1   Introduction  ................................ ................................ ................................ ...... 201 
6.3.2.2   Summary of the Panel's findings  ................................ ................................ ..........  202 
6.3.2.3   Whether the Panel erred in its interpretation of the term "unjustifiably"  
in Article  20 of the TRIPS  Agreement  ................................ ................................ ................  205 
6.3.2.4   Whether the Panel erred in its application of Article  20 of the TRIPS  Agreement  ..........  213 
6.3.2.4.1   The Panel's examination of the nature and extent of encumbrances  
resulting from the TPP  measures  ................................ ................................ ......................  214 
6.3.2.4.2   The Panel's assessment of whether the reasons for the special requirements  
provide sufficient support for the resulting encumbrances  ................................ ....................  218 
6.3.2.4.3   The weight attributed by the Panel to the FCTC Guidelines  ................................ .... 224 WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.3.2.5   Whether the Panel acted inconsistently with Articles 7.1 and 11 of the DSU  
in its analysis of the TPP  measures' requirements for individual cigarette sticks  .......................  226 
6.3.2.6   Conclusion  ................................ ................................ ................................ ........  229 
7  FINDINGS AND CONCLU SIONS  ................................ ................................ .................  229  
7.1  Article  2.2 of the TBT  Agreement  ................................ ................................ ...............  229 
7.2  Article  16.1 of the TRIPS  Agreement  ................................ ................................ ..........  230 
7.3  Article  20 of the TRIPS  Agreement  ................................ ................................ .............  231 
7.4  Recommendation  ................................ ................................ ................................ ..... 232 
  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  ABBREVIATIONS USED I N TH ESE REPORT S 
Abbreviation  Description  
ASSAD  Australian Secondary Students Alcohol Smoking and Drug  
CCA Cancer Council Australia  
CCQ Cancer Council Queensland  
CCV Cancer Council Victoria  
CPMA  Consumer Packaging Manufacturers Alliance  
Doha Declaration  Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2 
(14 November  2001)  
DSB Dispute Settlement Body  
DSU  Understanding on the Rules and Procedures Governing the Settlement of 
Disputes  
FCTC Framework Convention on Tobacco Control  
GATT  1994 General Agreement on Tariffs and Trade 1994  
GHW graphic health warnings  
GI geographical indications  
HAC heteroskedasticity - and autocorrelation -consistent  
IMS/EOS  In-Market -Sales/Exchange of Sales  
INTA International Trademark Association  
IPE Institute for Policy Evaluation  
MLPA  minimum legal purchasing age  
NHS National Health Survey  
NPHT  National Preventative Health Taskforce  
NSWPHS  New South Wales Population Health Survey  
NTPPTS  National Tobacco Plain Packaging Tracking Survey  
Paris Convention  Paris Convention for the Protection of Industrial Property  
Paris Convention (1967)  Stockholm Act of the Paris Convention for the Protection of Industrial 
Property of 14  July 1967  
RMSE  root mean squared error  
RMSS  Roy Morgan Single Source  
SCI strictly confidential information  
TBT Agreement  Agreement on Technical Barriers to Trade  
TM Act  Trade Marks Act 1995 (Cth)  
TMA Act  Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth)  
TMA Bill  Trade Marks Amendment (Tobacco Plain Packaging) Bill 2011 (Cth)  
TPA Taxpayers Protection Alliance  
TPP Act  Tobacco Plain Packaging Act 2011 (Cth)  
TPP Bill  Tobacco Plain Packaging Bill 2011 (Cth)  
TPP literature  tobacco plain packaging literature  
TPP measures  Tobacco Plain Packaging Act 2011 (Cth); Tobacco Plain Packaging 
Regulations 2011 (Cth), as amended by the Tobacco Plain Packaging 
Amendment Regulation 2012 (No.  1) (Cth); Trade Marks Amendment 
(Tobacco Plain Packaging) Act 2011 (Cth)  
TPP Regulations  Tobacco Plain Packaging Regulations 2011 (Cth), as amended by the 
Tobacco Plain Packaging Amendment Regulation 2012 (No.  1) (Cth)  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Abbreviation  Description  
TRIPS  Agreement  Agreement on Trade -Related Aspects of Intellectual Property Rights  (as 
amended on 23  January  2017)  
UICC Union for International Cancer Control  
Vienna  Convention  Vienna  Convention on the Law of Treaties, done at Vienna, 23  May 1969, 
UN Treaty Series, Vol. 1155, p.  331 
VIF variance inflation factors  
Working Procedures  Working Procedures for Appellate Review  
WHO World Health Organization  
WIPO  World Intellectual P roperty Organization  
WTO World Trade Organization  
 
 
 
  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  PANEL EXHIBITS CITED  IN TH ESE REPORT S 
Exhibit Number  Short Title  Description  
AUS-1, JE-1 TPP Act  Tobacco Plain Packaging Act 2011  (Cth)  
AUS-2, JE-7 TPP Bill 
Explanatory 
Memorandum  Explanatory Memorandum , Tobacco Plain Packaging Bill 2011 
(Cth) 
AUS-3, JE-2 TPP Regulations  Tobacco Plain Packaging Regulations 2011 (Cth) , as amended  
by the Tobacco Plain Packaging Amendment Regulation 2012 
(No. 1) (Cth)  
AUS-4, JE-3 TMA Act  Trade Marks Amendment (Tobacco Plain Packaging) Act  2011 
(Cth) 
AUS-5, JE-5 TMA Bill 
Explanatory 
Memorandum  Explanatory Memorandum , Trade Marks Amendment 
(Tobacco Plain Packaging) Bill 2011  (Cth) 
AUS-7 Samet Report  Expert Report of J. Samet (5  March  2015)  
AUS-9  
F. Chaloupka, Expert Report on Australia's Plain Packaging 
Legislation (7 March  2015)  
AUS-10 Tavassoli 
Report  N. Tavassoli, Report on the World Trade Organization Dispute 
Settlement Proceedings Concerning Australia's Tobacco Plain 
Packaging Legislation  (10 March 2015)  
AUS-11  
Expert Report of Dr Jean-Pierre Dubé (9  March 2015)  
AUS-12 Slovic Report  Expert Report of Dr Paul Slovic (4  March 2015)  
AUS-14 Fong Report  Expert Report of Dr Geoffrey T . Fong (4  March 2015)  
AUS-18 Katz Report  M. Katz, An Economic Assessment of the Effects of Tobacco 
Plain Packaging  (9 March 2015)  
AUS-19 (SCI)   
HoustonKemp, Competition and Trade for Tobacco Products 
in Australia (9 March 2015)  
AUS-23  British American Tobacco, Packaging Brief (2 January 2001 ), 
Bates Nos. 325211963 -3252121964  
AUS-38  Union for International Cancer Control and Cancer Council 
Australia, Written Submission of Non -Party Amici Curiae  
(11 February 2015)  
AUS-42 (revised )  World Health Organization and the WHO  Framework 
Convention on Tobacco Control Secretariat, Information for 
Submission to the Panel by a Non -Party (16 February 2015 )  
AUS-44, JE-19 FCTC  World Health Organization , Framework Convention on 
Tobacco Control (2003) 
AUS-67, JE -14 NPHT – The 
Roadmap for 
Action  National Preventative Health Taskforce, Australia: The 
Healthiest Country by 2020  – National Preventative Health 
Strategy  – The Roadmap for Action , Australia n Government  
(30 June 2009)  
AUS-76  
US Department of Health and Human Services, Preventing 
Tobacco Use Among Youth and Young Adults: A Report of the 
Surgeon General  (Atlanta , 2012)  
AUS-81, CUB-61 Chantler Report  C. Chantler, Standardised Packaging of Tobacco: A Report of 
the Independent Review Undertaken by Sir Cyril Chantler 
(April 2014)  
AUS-140, HND -130, CUB -59 Stirling Review  C. Moodie, M. Stead, L. Bauld, A. McNeill, K. Angusa, 
K. Hinds, I. Kwan, J. Thomas, G. Hastings , and 
A. O'Mara -Eves, Plain Tobacco Packaging: A Systematic 
Review,  UK Centre for Tobacco Control Studies, University of 
Stirling (2012)  
AUS-186, DOM -235 White et al. 
2015a  V. White , T. Williams, and M.  Wakefield,  "Has the 
Introduction of Plain Packaging with Larger Graphic Health 
Warnings Changed Adolescents' Perceptions of Cigarette 
Packs and Brands?" Tobacco Control , Vol. 24 (2015), ii42 -49 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 8 - 
 
  Exhibit Number  Short Title  Description  
AUS-206, DOM -306 Wakefield et al. 
2015 M. Wakefield, K.  Coomber, M.  Zacher, S.  Durkin, M.  Brennan, 
and M.  Scollo, "Australian Adult Smokers' Responses to Plain 
Packaging with Larger Graphic Health Warnings One Year 
After Implementation: Results from a National 
Cross -Sectional Tracking Survey", Tobacco Control , Vol.24 
(2015), ii17 -ii25 
AUS-207, HND -132, 
DOM-199 Dunlop et al. 
2014 S. Dunlop, T. Dobbins, J. Young, D. Perez, and D. Currow, 
"Impact of Australia's Introduction of Tobacco Plain Packs on 
Adult Smokers' Pack -Related Perceptions and Responses: 
Results from a Continuous Tracking Survey", BMJ Open , 
Vol. 4 (2014), doi:10.1136/bmjopen -2014-005836  
AUS-215 (revised), 
DOM-305 Durkin et al. 
2015 S. Durkin, E. Brennan, M. Coomber, M. Zacher, M. Wakefield, 
and M. Scollo, "Short -Term Changes in Quitting -Related 
Cognitions and Behaviours After the Implementation of Plain 
Packaging with Larger Health Warnings: Findings from a 
National Cohort Study with  Australian Adult Smokers", 
Tobacco Control , Vol. 24 (2015), ii26 -ii32 
AUS-216, CUB -60 Stirling Review 
2013 Update  C. Moodie, K. Angus, M. Stead , and L. Bauld, "Plain Tobacco 
Packaging Research: An Update" , Centre for Tobacco Control 
Research, Institute for Social Marketing, University of Stirling 
(2013)  
AUS-234  Letter dated 6  July 1994 from D. Latham of Lovell, White, 
Durrant to J.  Smithson, Public Affairs Manager, Rothmans 
International Services Limited , attaching letter dated 5  July 
1994 from L. Baeumer, Director, Industrial Property Law 
Department, WIPO , to D. Latham of Lovell, White, Durrant , 
Bates Nos.  502592535 -502592536  
AUS-259  Acts Interpretation Act 1901 (Cth)  
AUS-501  
S. Ulucanl ar, G. Fooks, J. Hatchard, and A. Gilmore, 
"Representation and Misrepresentation of Scientific Evidence 
in Contemporary Tobacco Regulation: A Review of Tobacco 
Industry Submissions to the UK Government Consultation on 
Standardised Packaging" , PLoS Medicine , Vol. 11 (2014) , 
doi:101371/journal.pmed.1001629  
AUS-515  Healthy Caribbean Coalition, Amicus Curiae Brief  (22 April 
2015)  
AUS-531 Fong 
Supplemental 
Report  G. Fong, Supplemental Report in Response to Professor  Ajzen 
(8 September 2015)  
AUS-535 (SCI)  Chipty Rebuttal 
Report  Rebuttal Report of Dr Tasneem Chipty (14  September 2015)  
AUS-555 Hammond 
Review  D. Hammond, Standardized Packaging of Tobacco Products: 
Evidence Review , prepared for the Irish Department of Health 
(March 2014)  
AUS-582  
F. Chaloupka, Rebuttal Report on Selected Issues Raised in 
Ongoing Challenges to Australia's Tobacco Plain Packaging 
Measure (26  October 2015)  
AUS-585 Fong Second 
Supplemental 
Report  G. Fong, Supplementary Report in Response to Professors 
Inman and Kleijnen  (27 October 2015)  
AUS-586  Surrebuttal Report of Dr Tasneem Chipty (26  October 2015)  
AUS-588  N. Tavassoli, Rebuttal to Arguments Raised in Exhibit 
DOM/HND -14 (26  October 2015)  
AUS-590  F. Chaloupka, Report on Selected Issues Raised in Ongoing 
Challenges to Australia's Tobacco Plain Packaging Measure 
(7 December 2015)  
AUS-591 Chipty Second 
Rebuttal Report  Second Rebuttal Report of Dr  Tasneem Chipty (8  December 
2015)  
AUS-605 Chipty Third 
Rebuttal Report  Third Rebuttal Report of Dr Tasneem Chipty (1  February 
2016)  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Exhibit Number  Short Title  Description  
AUS-624 Tobacco Plain 
Packaging PIR  Department of Health, Post -Implementation Review: Tobacco 
Plain Packaging 2016, Australian Government (2016)   
CUB-58  
M. Stead, C. Moodie, K. Angus, L. Bauld, A. McNeill, J. 
Thomas, G. Hastings, K. Hinds, A. O'Mara -Eves, I. Kwan, 
R. Purves, and S. Bryce, "Is Consumer Response to 
Plain/Standardised Tobacco Packaging Consistent with 
Framework Convention on Tobacco Control Guidelines? 
A Systematic Review of Quantitative Studies",  PLoS One , 
Vol. 8 (2013), doi:10.1371/journal.pone.0075919  
DOM-65  WIPO, WIPO Intellectual Property Handbook , 2nd edn 
(Geneva, 2004; reprinted 2008)  
DOM-100 IPE Report  D. Afshartous, M. Hagedorn , A. Kaul, and M.  Wolf, Empirical 
Assessment of Australia's Plain Packaging Regime, Institute 
for Policy Evaluation (7  October 2014)  
DOM-232  R. Bonnie, K.  Stratton, and L.  Kwan (eds.), Public Health 
Implications of Raising the Minimum Age of Legal Access to 
Tobacco Products , US Institute of Medicine (The National 
Academies Press, 2015) (Pre -publication copy: uncorrected 
proofs)  
DOM-303 IPE Updated 
Report  D. Afshartous, M.  Hagedorn, A.  Kaul, and M.  Wolf, Updated 
Empirical Assessment of Australia's Plain Packaging Regime, 
Institute for Policy Evaluation (14 September 2015)  
DOM-361 IPE Second 
Updated Report   D. Afshartous, M.  Hagedorn, A.  Kaul, and M.  Wolf, Updated 
Empirical  Assessment of Australia's  Plain Packaging  Regime, 
Institute for Policy Evaluation (27 October 2015)  
DOM-375 IPE Third 
Updated Report  D. Afshartous, M.  Hagedorn, A.  Kaul, and M.  Wolf, 
Empirical  Assessment of Australia's  Plain Packaging  Regime, 
Institute for Policy Evaluation (8 December 2015)  
DOM-379 IPE Summary 
Report  
 D. Afshartous, M.  Hagedorn, A.  Kaul, and M.  Wolf, Summary 
of Findings: Empirical Assessment of Australia's Plain 
Packaging Regime,  Institute for Po licy Evaluation  (1 February 
2016)  
DOM-382 Yong et al. 
2015 H. Yong, R. Borland, D. Hammond, J. Thrasher, 
K. Cummings, and G. Fong, "Smokers' Reactions to the New 
Larger Health Warning Labels on Plain Cigarette Packs in 
Australia: Findings from the ITC Australia Project", Tobacco 
Control  (19 February 2015), doi:10.1136/tobaccocontrol -
2014-05197  
DOM/HND -3 Inman et al. 
Peer Review 
Report  J. Inman, Plain Packaging Literature Peer Review Project  
(3 October 2014)  
DOM/HND -4 Kleijnen 
Systematic 
Review  J. Kleijnen, A. Bryman, and M. Bosnjak, Quality of the 
Empirical Evidence Testing the Impact of Plain Packaging on 
Tobacco Consumption: A Systematic Review (6 October 
2014)  
DOM/HND -10 Steinberg 
Rebuttal Report  L. Steinberg, Adolescent Decision -Making and the Prevention 
of Underage Smoking: The Role of Plain Packaging: 
A Response to Expert Evidence Submitted on Behalf of 
Australia (3  July 2015)  
DOM/HND -15 Steinberg 
Second 
Rebuttal Report  L. Steinberg, Adolescent Decision -Making and the Prevention 
of Underage Smoking: The Role of Plain Packaging : A Second 
Response to Expert Evidence Submitted on Behalf of Australia  
(23 October 2015)  
DOM/HND/IDN -1  Amicus curiae  submissions from intellectual property and 
business associations supporting the arguments of the 
Dominican  Republic  
DOM/HND/IDN -2  Moldova's third party submission  
DOM/HND/IDN -3 Ajzen Report  I. Ajzen, Examination of Australia's Reliance on Behavioral 
Theories to Support its Tobacco Plain Packaging Legislation" 
(31May 2015)  WT/DS435/AB/R • WT/DS441/AB/R  
 
- 10 - 
 
  Exhibit Number  Short Title  Description  
DOM/HND/IDN -4 Ajzen 
Supplemental 
Report  I. Ajzen, Supplemental Report: Pre -Implementation Empirical 
Testing of Behavioral Theories Relied on by Australia to 
Justify Plain Packaging  (7 July 2015)  
DOM/HND/IDN -5 Ajzen Rebuttal 
Report  I. Ajzen, The Role of Theory and Empirical Evidence in 
Evaluating the Effectiveness of Plain Packaging: Response to 
Australia and its Experts (27 October 2015)  
DOM/HND/IDN -6 Ajzen Response 
to Panel 
question 
Nos. 146, 202, 
and 203  I. Ajzen, Response to Questions 146, 202, and 203 by the 
Panel (8 December 2015)  
DOM/IDN -1 List Report  J. List, A Consideration of the Empirical Evidence on the 
Effects of Australia's Tobacco Plain Packaging Legislation 
(1 June 2015)  
DOM/IDN -2 Ajzen et al. 
Data Report  I. Ajzen, A. Hortaçsu, J. List , and A. Shaikh, Reconsideration 
of Empirical Evidence on the Effectiveness of Australian Plain 
Packaging Legislation: Evidence from the National Plain 
Packaging Tracking Survey (NPPTS) and Other Datasets 
(15 September 2015)  
DOM/IDN -3 List Rebuttal 
Report  J. List, A Further Consideration of the Empirical Evidence on 
the Effects of Australia's Tobacco Plain Packaging Legislation 
(16 September 2015)  
DOM/IDN -5 List Second 
Supplemental 
Report  J. List, A Synthesis of the Evidence on Australia's Plain 
Packaging Policy (28 October 2015)  
DOM/IDN -7 List Third 
Supplemental 
Report  J. List, A Further Synthesis of the Newly -Available Evidence 
on Australia's Plain Packaging Policy (8 December 2015)  
DOM/IDN -9 List Summary 
Report  J. List, Concluding Summary on Australia's Plain Packaging 
Policy (2 February 2016)  
HND-2, DOM -50  Australian Government Preventative Health Taskforce, 
"Terms of Reference", available at 
http://www.preventativehealth.org.au/internet/preventativeh
ealth/publishing.nsf/Content/terms -of-reference -1lp 
(accessed 7 October 2014)  
HND-118  J. Klick, Rebuttal Report – A Reply to Dr  Chipty (8 July 2015)  
HND-122  J. Klick, Supplemental Rebuttal Report – A Review of New 
and Updated Australian Survey and Market Data 
(16 September 2015)  
HND-133, DOM -237, 
DOM-311 Scollo et al. 
2015a  M. Scollo, M.  Zacher, K.  Coomber, M.  Bayly, and 
M. Wakefield, "Changes in Use of Types of Tobacco Products 
by Pack Sizes and Price Segments, Prices Paid and 
Consumption Following the Introduction of Plain Packaging in 
Australia", Tobacco Control , Vol. 24 ( 2015)  
HND-165 Klick Second 
Supplemental 
Rebuttal Report  J. Klick, Second Supplemental Rebuttal Report – A Review of 
Australian Survey Data From New South Wales (28 October 
2015)  
HND-166 Klick Third 
Supplemental 
Rebuttal Report  J. Klick, Third Supplemental Rebuttal Report – A Reply to 
Dr Chipty and Professor Chaloupka (8 December 2015)  
HND-169 Klick Fourth 
Supplemental 
Rebuttal Report  J. Klick, Fourth Supplemental Rebuttal Report – Comments 
on Additional Arguments Raised by Dr Chipty  (3 February 
2016)  
JE-6 TM Act  Trade Marks Act 1995  (Cth) 
JE-20  Guidelines for Implementation of Article  11 (Packaging and 
Labelling of Tobacco Products), Document FCTC/COP3(10), 
excerpted from Conference of the Parties to the WHO FCTC, 
"Decisions", Third Session, held in Durban, South Africa, 
17 to 22 November 2008, Document FCTC/COP/3/DIV/3 
(16 February 2009)  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Exhibit Number  Short Title  Description  
JE-22 TPPA Regulation 
Explanatory 
Statement  Explanatory Statement , Tobacco Plain Packaging Amendment 
Regulation 2012 (No.  1) (Cth)  
UKR-5  
J. Klick, The Effect of Australia's Plain Packaging Law on 
Smoking: Evidence from Survey and Market Data (26 July 
2014)  
UKR-6 Klick TPP 
Literature 
Report  Report by J. Klick on Plain Packaging Literature and Research 
Methodology (2 October 2014)  
 
  WT/DS435/AB/R • WT/DS441/AB/R  
 
- 12 - 
 
  CASES CITED IN TH ESE REPORT S 
Short Title  Full Case Title and Citation  
Argentina – Footwear (EC)  Appellate  Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R , adopted 12 January 2000, DSR 2000:I, p. 515 
Australia – Apples  Appellate  Body Report, Australia – Measures Affecting the Importation of 
Apples from New Zealand , WT/DS367/AB/R , adopted 17 December 2010, 
DSR 2010:V, p. 2175 
Australia – Salmon  Appellate  Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R , adopted 6 November 1998, DSR 1998:VIII, p. 3327 
Australia – Salmon  Panel  Report , Australia – Measures Affecting Importation of Salmon , 
WT/DS18/R  and Corr.1, adopted 6 November 1998, as modified by 
Appellate  Body Report WT/DS18/AB/R, DSR 1998:VIII, p. 3407 
Australia – Tobacco Plain 
Packaging (Panel Report)  Panel Report, Australia – Certain Measures concerning Trademarks, 
Geographical Indications and other Plain Packaging Requirements applicable to 
Tobacco Products and Packaging , WT/DS435/R , Add.1 and Suppl.1, circulated 
to WTO Members 28 June 2018 [appealed by Honduras 19 July 2018]  
Panel Report, Australia – Certain Measures concernin g Trademarks, 
Geographical Indications and other Plain Packaging Requirements applicable to 
Tobacco Products and Packaging , WT/DS441/R , Add.1 and Suppl.1, circulated 
to WTO Members 28 June 2018 [appealed by the Dominican Republic 
23 August 2018]   
Panel Report, Australia – Certain Measures concerning Trademarks, 
Geographical Indications and other Plain Packaging Requirements applicable to 
Tobacco Products and Packaging , WT/DS458/R , Add.1 and Suppl.1, adopted 
27 August 2018  
Panel Report, Australia – Certain Measures concerning Trademarks, 
Geographical Indications and other Plain Packaging Requirements applicable to 
Tobacco Products and Packaging , WT/DS467/R , Add.1 and Suppl.1, adopted 
27 August 2018  
Brazil – Retreaded Tyres  Appellate  Body Report, Brazil – Measures Affecting Imports of Retreaded 
Tyres , WT/DS332/AB/R , adopted 17 December 2007, DSR 2007:IV, p.  1527 
Brazil – Retreaded Tyres  Panel  Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/R , adopted 17 December 2007, as modified by Appellate  Body 
Report WT/DS332/AB/R, DSR 2007:V, p.  1649 
Canada – Aircraft  Appellate  Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft , WT/DS70/AB/R , adopted 20 August 1999, DSR 1999:III, p.  1377 
Canada – Continued 
Suspension  Appellate  Body Report, Canada – Continued Suspension of Obligations in the 
EC – Hormones Dispute , WT/DS321/AB/R , adopted 14 November 2008, 
DSR 2008:XIV, p.  5373 
Canada – Continued 
Suspension  Panel  Report, Canada – Continued Suspension of Obligations in the  
EC – Hormones Dispute , WT/DS321/R  and Add.1 to Add.7, adopted 
14 November 2008, as modified by Appellate  Body Report WT/DS321/AB/R, 
DSR 2008:XV, p.  5757 
Canada – Dairy (Article  21.5 
– New Zealand and US II)  Appellate  Body Report, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products – Second Recourse to Article  21.5 of the 
DSU by New Zealand and the United  States , WT/DS103/AB/RW2 , 
WT/DS113/AB/RW2 , adopted 17 January 2003, DSR 2003:I, p.  213 
Canada – Renewable Energy 
/ Canada – Feed-in Tariff 
Program  Appellate  Body Reports, Canada – Certain Measures Affecting the Renewable 
Energy Generation Sector / Canada – Measures Relating to the Feed -in Tariff 
Program , WT/DS412/AB /R / WT/DS426/AB/R , adopted 24 May 2013, 
DSR 2013:I, p.  7 
Chile – Price Band System  Appellate  Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R , adopted 23 October 
2002, DSR 2002:VIII, p.  3045 (Corr.1, DSR 2006:XII, p.  5473)  
Chile – Price Band System 
(Article  21.5 – Argentina)  Appellate  Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Recourse to Article  21.5 of the DSU  
by Argentina , WT/DS207/AB/RW , adopted 22 May 2007, DSR 2007:II, p.  513 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 13 - 
 
  Short Title  Full Case Title and Citation  
China – HP-SSST (Japan) / 
China – HP-SSST (EU)  Appellate  Body Reports, China – Measures Imposing Anti -Dumping Duties on 
High-Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High -Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European  Union , 
WT/DS454/AB/R  and Add.1 / WT/DS460/AB/R  and Add.1, adopted 28 October 
2015, DSR 2015:IX, p.  4573 
China – Intellectual Property 
Rights  Panel  Report, China – Measures Affecting the Protection and Enforcement of 
Intellectual Property Rights , WT/DS362/R , adopted 20 March 2009, 
DSR 2009:V, p.  2097 
China – Rare Earths  Appellate  Body Reports, China – Measures Related to the Exportation of Rare 
Earths, Tungsten, and Molybdenum , WT/DS431/AB/R  / WT/DS432/AB/R  / 
WT/DS433/AB/R , adopted 29 August 2014, DSR 2014:III, p.  805 
Colombia – Textiles  Appellate  Body Report, Colombia – Measures Relating to the Importation of 
Textiles, Apparel and Footwear , WT/DS461/AB/R  and Add.1, adopted 22 June 
2016, DSR 2016:III, p.  1131 
Dominican  Republic – Import 
and Sale of Cigarettes  Appellate  Body Report, Dominican  Republic – Measures  Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R , adopted 19 May 
2005, DSR 2005:XV, p.  7367 
Dominican  Republic – Import 
and Sale of Cigarettes  Panel  Report, Dominican  Republic – Measures Affecting the Importation and 
Internal Sale  of Cigarettes , WT/DS302/R , adopted 19 May 2005, as modified 
by Appellate  Body Report WT/DS302/AB/R, DSR 2005:XV, p.  7425 
EC – Asbestos  Appellate  Body Report, European  Communities – Measures Affecting Asbestos 
and Asbestos -Containing Products , WT/DS135/AB/R , adopted 5 April 2001, 
DSR 2001:VII, p.  3243 
EC – Bananas III  Appellate  Body Report, European  Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R , adopted 25 September 
1997, DSR 1997:II, p.  591 
EC – Bed Linen 
(Article  21.5 – India)  Appellate  Body Report, European  Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India – Recourse to Article  21.5 of the 
DSU by India , WT/DS141/AB/RW , adopted 24 April 2003, DSR 2003:III, 
p. 965 
EC – Fasteners (China)  Appellate  Body Report, European  Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R , 
adopted 28 July 2011, DSR 2011:VII, p.  3995 
EC – Fasteners (China) 
(Article  21.5 – China)  Appellate  Body Report, European  Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China – Recourse to 
Article  21.5 of the DSU by China , WT/DS397/AB/RW  and Add.1 , adopted 
12 February 2016, DSR 2016:I, p.  7 
EC – Hormones  Appellate  Body Report, European  Communities – Measures Concerning Meat 
and Meat Products (Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 
13 February 1998, DSR 1998:I, p.  135 
EC – Poultry  Appellate  Body Report, European  Communities – Measures Affe cting the 
Importation of Certain Poultry Products , WT/DS69/AB/R , adopted 23 July 
1998, DSR 1998:V, p.  2031 
EC – Sardines  Appellate  Body Report, European  Communities – Trade Description of 
Sardines , WT/DS231/AB/R , adopted 23 October 2002, DSR 2002:VIII, p.  3359 
EC – Seal Products  Appellate  Body Reports, European  Communities – Measures Prohibiting the 
Importation and Marketing of Seal Products , WT/DS400/AB/R  / 
WT/DS401/AB/R , adopted 18 June 2014, DSR 2014:I, p.  7 
EC – Selected Customs 
Matters  Appellate  Body Report, European  Communities – Selected Customs Matters , 
WT/DS315/AB/R , adopted 11 December 2006, DSR 2006:IX, p.  3791 
EC – Trademarks and 
Geographical Indications 
(Australia)  Panel  Report,  European  Communities – Protection of Trade marks and 
Geographical Indications for Agricultural Products and Foodstuffs, Complaint by 
Australia , WT/DS290/R , adopted 20 April 2005, DSR 2005:X, p.  4603 
EC – Trademarks and 
Geographical Indications 
(US) Panel  Report,  European  Communities – Protection of Trademarks and 
Geographical Indications for Agricultural Products and Foodstuffs, Complaint by 
the United  States , WT/DS174/R , adopted 20 April 2005, DSR 2005:VIII, 
p. 3499 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 14 - 
 
  Short Title  Full Case Title and Citation  
EC – Tube or Pipe Fittings  Appellate  Body Rep ort, European  Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R , 
adopted 18 August 2003, DSR 2003:VI, p.  2613 
EC and certain member 
States – Large Civil Aircraft  Appellate  Body Report, European  Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p.  7 
EC and certain member 
States – Large Civil Aircraft 
(Article  21.5 – US) Appellate  Body Report, European  Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft  – Recourse to Article  21.5 of 
the DSU by the United  States , WT/DS316/AB/RW  and Add.1, adopted 28 May 
2018 
India – Patents (US)  Appella te Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R , adopted 16 January 1998, 
DSR 1998:I, p.  9 
India – Solar Cells  Panel  Report, India – Certain Measures Relating to Solar Cells and Solar 
Modules , WT/DS456/R  and Add.1, adopted 14 October 2016, as modified by 
Appellate  Body Report WT/DS456/AB/R, DSR 2016:IV, p.  1941 
Indonesia – Import Licensing 
Regimes  Panel  Report, Indonesia – Importation of Horticultural Products, Animals and 
Animal Products , WT/DS477/R , WT/DS478/R , Add.1 and Corr.1, adopted 
22 November 2017, as modified by Appellate  Body Report WT/DS477/AB/R, 
WT/DS478/AB/R, DSR 2017:VII, p.  3131 
Indonesia – Iron or Steel 
Products  Panel  Report, Indonesia – Safeguard on Certain Iron o r Steel Products , 
WT/DS490/R , WT/DS496/R , and Add.1, adopted 27 August 2018, as modified 
by Appellate  Body Report WT/DS490/AB/R, WT/DS496/AB/R  
Japan – Agricultural 
Products  II Appellate  Body Report, Japan – Measures Affecting Agricultural Products , 
WT/DS76/AB/R , adopted 19 March 1999, DSR 1999:I, p.  277 
Japan – Alcoholic  
Beverages II  Appellate  Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R , 
WT/DS10/AB/R , WT/DS11/AB/R , adopted 1 November 1996, DSR 1996:I, 
p. 97 
Japan – Alcoholic  
Beverages II  Panel  Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/R , WT/DS10/R , 
WT/DS11/R , adopted 1 November 1996, as modified by Appellate  Body Report 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR 1996:I, p.  125 
Japan – Apples  Appellate  Body Report, Japan – Measures Affecting the Importation of Apples , 
WT/DS245/AB/R , adopted 10 December 2003, DSR 2003:IX, p.  4391 
Japan – DRAMs (Korea)  Panel  Report, Japan – Countervailing Duties on Dynamic Random Access 
Memories from Korea , WT/D S336/R , adopted 17 December 2007, as modified 
by Appellate  Body Report WT/DS336/AB/R, DSR 2007:VII, p.  2805 
Korea – Alcoholic Beverages  Appellate  Body Report, Korea – Taxes on Alcoholic Beverages , WT/DS75/AB/R , 
WT/DS84/AB/R , adopted 17 February 1999, DSR 1999:I, p.  3 
Korea – Dairy  Appellate  Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R , adopted 12 January 2000, 
DSR 2000:I, p.  3 
Korea – Pneumatic Valves 
(Japan)  Appellate  Body Report, Korea – Anti-Dumping Duties on Pneumatic Valves 
from Japan , WT/DS504/AB/R  and Add.1, adopted 30 September 2019  
Korea  – Various Measures on 
Beef Appellate  Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen B eef, WT/DS161/AB/R , WT/DS169/AB/R , adopted 10 January 
2001, DSR 2001:I, p.  5 
Mexico – Anti-Dumping 
Measures on Rice   Appellate  Body Report, Mexico – Definitive Anti -Dumping Measures on Beef 
and Rice, Complaint with Respect to Rice , WT/DS295/AB/R , adopted 
20 December 2005, DSR 2005:XXII, p.  10853  
Mexico – Corn Syrup 
(Article  21.5 – US) Appellate  Body Report, Mexico – Anti-Dumping Investigation of High Fructose 
Corn Syrup (HFCS) from the United  States – Recourse to Article  21.5 of the  
DSU by the United  States , WT/DS132/AB/RW , adopted 21 November 2001, 
DSR 2001:XIII, p.  6675 
Peru – Agricultural Products  Appellate  Body Report, Peru – Additional Duty on Imports of Certain 
Agricultural Products , WT/DS457/AB/R  and Add.1, adopted 31 July 2015, 
DSR 2015:VI, p.  3403 
Philippines – Distilled Spirits  Appellate  Body Reports, Philippines – Taxes on Distilled Spirits , 
WT/DS396/AB/R  / WT/DS403/AB/R , adopted 20 January 2012, 
DSR 2012:VIII, p.  4163 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 15 - 
 
  Short Title  Full Case Title and Citation  
Russia – Commercial 
Vehicles  Appellate  Body Report,  Russia – Anti-Dumping Duties on Light Commercial 
Vehicles from Germany  and Italy , WT/DS479/AB/R  and Add.1, adopted 9 April 
2018 
Thailand – Cigarettes 
(Philippines)  Appellate  Body Report, Thailand – Customs and Fiscal Measures on Cigarettes 
from the Philippines , WT/DS371/AB/R , adopted 15 July 2011 , DSR 2011:IV, 
p. 2203 
Thailand – H-Beams  Appellate  Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and 
Sections of Iron or Non -Alloy Steel and H -Beams from Poland , 
WT/DS122/AB/R , adopted 5 April 2001, DSR 2001:VII, p.  2701 
US – Anti-Dumping and 
Countervailing Duties (China)  
 Appellate  Body Report, United  States – Definitive Anti -Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R , 
adopted 25 March 2011, DSR 2011:V, p.  2869 
US – Carbon Steel  Appellate  Body Report, United  States – Countervailing Duties on Certain 
Corrosion -Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R  and Corr.1, adopted 19 December 2002, DSR 2002:IX, 
p. 3779 
US – Carbon Steel (India)  Appellate  Body Report, United  States – Countervailing Measures on Certain 
Hot-Rolled Carbon Steel Flat Products from India , WT/DS436/AB/R , adopted 
19 December 2014, DSR 2014:V, p.  1727 
US – Clove Cigarettes  Appellate  Body Report, United  States – Measures Affecting the Production and 
Sale of Clove Cigarettes , WT/DS406/AB/R , adopted 24 April 2012, DSR 
2012:XI, p.  5751 
US – Clove Cigarettes  Panel  Report, United  States – Measures Affecting the Production and Sale of 
Clove Cigarettes , WT/DS406/R , adopted 24 April 2012, as modified by 
Appellate  Body Report WT/DS406/AB/R, DSR 2012:XI, p.  5865 
US – Continued Suspension  Appellate  Body Report, United  States – Continued Suspension of Obligations in 
the EC – Hormones Dispute , WT/DS320/AB/R , adopted 14 November 2008, 
DSR 2008:X, p.  3507 
US – Continued Suspension  Panel  Report, United  States – Continued Suspension of Obligations in the  
EC – Hormones Dispute , WT/DS320/R  and Add.1 to Add.7, adopted 
14 November 2008, as modified by Appellate  Body Report WT/DS320/AB/R, 
DSR 2008:XI, p.  3891 
US – Continued Zeroing  
 Appellate  Body Report, United  States – Continued Existence and Application of 
Zeroing Methodology , WT/DS350/AB/R , adopted 19 February 2009, 
DSR2009:III, p.  1291 
US – Continued Zeroing  
 Panel  Report, United  States – Continued Existence and Application of Zeroing 
Methodology , WT/DS350/R , adopted 19 February 2009, as modified as 
Appellate  Body Report WT/DS350/AB/R, DSR 2009:III, p.  1481 
US – COOL  Appellate  Body Reports, United  States – Certain Country of Origin Labelling 
(COOL) Requirements , WT/DS384/AB/R  / WT/DS386/AB/R , adopted 23 July 
2012, DSR 2012:V, p.  2449 
US – COOL  Panel  Reports, United  States – Certain Country of Origin Labelling (COOL) 
Requirements , WT/DS384/R  / WT/DS386/R , adopted 23 July 2012, as 
modified by Appellate  Body Reports WT/DS384/AB/R / WT/DS386/AB/R, 
DSR 2012:VI, p.  2745 
US – COOL 
(Article  21.5 – Canada and 
Mexico)  Appellate  Body Reports, United  States – Certain Country of O rigin Labelling 
(COOL) Requirements – Recourse to Article  21.5 of the DSU by Canada and 
Mexico , WT/DS384/AB/RW  / WT/DS386/AB/RW , adopted 29 May 2015, 
DSR 2015:IV, p.  1725 
US – COOL (Article  21.5 – 
Canada and Mexico)  Panel  Reports, United  States – Certain Country of Origin Labelling (COOL) 
Requirements – Recourse to Article  21.5 of the DSU by Canada and Mexico , 
WT/DS384/RW  and Add.1 / WT/DS386/RW  and Add.1, adopted 29 May 2015, 
as modified by Appellate  Body Reports WT/DS384/AB/RW / 
WT/DS386/AB/RW, DSR 2015:IV, p.2019  
US – FSC (Article  21.5 – EC) Appellate  Body Report, United  States – Tax Treatment for "Foreign Sales 
Corporations" , WT/DS108/AB/R , adopted 20 March 2000, DSR 2000:III, 
p. 1619 
US – FSC (Article  21.5 – EC) Panel  Report, United  States – Tax Treatment for "Foreign Sales 
Corporations"  – Recourse to Article  21.5 of the DSU by the 
European  Communities , WT/DS108/RW , adopted 29 January 2002, as 
modified by Appellate  Body Report WT/DS108/AB/RW, DSR 2002:I, p.  119 WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Short Title  Full Case Title and Citation  
US – Gambling  Appellate  Body Report, United  States – Measures Affecting the Cross -Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R , adopted 20 April 
2005, DSR 2005:XII, p.  5663 (and Corr.1, DSR 2006:XII, p.  5475)  
US – Gasoline  Appellate  Body Report, United  States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R , adopted 20 May 1996, DSR 1996:I, p.  3 
US – Hot-Rolled Steel  Appellate  Body Report, United  States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R , adopted 23 August 
2001, DSR 2001:X, p.  4697 
US – Large Civil Aircraft (2nd 
complaint)  Appellate  Body Report, United  States – Measures Affecting Trade in Large Civil 
Aircraft (Second Complaint) , WT/DS353/AB/R , adopted 23  March 2012, 
DSR 2012:I, p.  7 
US – Offset Act (Byrd 
Amendment)  Appellate  Body Report, United  States – Continued Dumping and Subsidy Offset 
Act of 2000 , WT/DS217/AB/R , WT/DS234/AB/R , adopted 27 January 2003, 
DSR 2003:I, p.  375 
US – Oil Country Tubular 
Goods Sunset Reviews  Appellate  Body Report, United  States – Sunset Reviews of Anti -Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R , 
adopted 17 December 2004, DSR 2004:VII, p.  3257 
US – Poultry (China)  Panel  Report, United  States – Certain Measures Affecting Imports of Poultry 
from China , WT/DS392/R , adopted 25 October 2010, DSR 2010:V, p.  1909 
US – Section 211 
Appropriations Act  Appellate  Body Report, United  States – Section 211 Omnibus Appropriations 
Act of 1998 , WT/DS176/AB/R , adopted 1 February 2002, DSR 2002:II, p.  589 
US – Shrimp  Appellate  Body Report, United  States – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R , adopted 6 November 1998, 
DSR 1998:VII, p.  2755 
US ‒ Softwood Lumber VI 
(Article  21.5 – Canada)  Appellate  Body Report, United  States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada – 
Recourse by Canada to Article  21.5 of the DSU , WT/DS257/AB/RW , adopted 
20 Decemb er 2005, DSR 2005:XXIII, p.  11357  
US – Steel Safeguards  Appellate  Body Report, United  States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R , WT/DS249/AB/R , 
WT/DS251/AB/R , WT/DS252/AB/R , WT/DS253/AB/R , WT/DS254/AB/R , 
WT/DS258/AB/R , WT/DS259/AB/R , adopted 10 December 2003, DSR 
2003:VII, p.  3117 
US – Tuna II (Mexico)  Appellate  Body Report, United  States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products , WT/DS381/AB/R , adopted 
13 June 2012, DSR 2012:IV, p.  1837 
US – Tuna II (Mexico) 
(Article  21.5 – Mexico)  Appellate  Body Report, United  States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products – Recourse to Article  21.5 of 
the DSU by Mexico , WT/DS381/AB/RW  and Add.1, adopted 3 December 2015, 
DSR 2015:X, p.  5133 
US – Tuna II (Mexico) 
(Article  21.5 – US) /  
US – Tuna II (Mexico) 
(Article  21.5 – Mexico II)  Appellate  Body Report, United  States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products – Recourse to Article  21.5 of 
the DSU by the United  States , WT/DS381/AB/RW/USA  and Add.1 / 
United  States – Measures Concerning the Importation, Marketing and Sale of 
Tuna and Tuna Products – Second Recourse to Article  21.5 of  the DSU by 
Mexico , WT/DS381/AB/RW2  and Add.1, adopted 11 January 2019  
US – Upland Cotton  Appellate  Body Report, United  States – Subsidies on Upland Cotton , 
WT/DS267/AB/R , adopted 21 March 2005, DSR 2005:I, p.  3 
US – Upland Cotton 
(Article  21.5 – Brazil)  Appellate  Body Report, United  States – Subsidies on Upland Cotton – Recourse 
to Article  21.5 of the DSU by Brazil , WT/DS267/AB/RW , adopted 20 June 
2008, DSR 2008:III, p.  809 
US – Washing Machines  Appellate  Body Report,  United  States – Anti-Dumping and Countervailing 
Measures on Large Residential Washers from Korea , WT/DS464/AB/R  and 
Add.1, adopted 26 September 2016, DSR 2016:V, p.  2275 
US – Wheat Gluten  Appellate  Body Report, United  States – Definitive Safeguard Measur es on 
Imports of Wheat Gluten from the European  Communities , WT/DS166/AB/R , 
adopted 19 January 2001, DSR 2001:II, p.  717 
US – Wool Shirts and 
Blouses  Appellate  Body Report, United  States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R , adopted 23 May 1997, 
and Corr.1, DSR 1997:I, p.  323 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 17 - 
 
  WORLD TRADE ORGANIZATION  
APPELLATE  BODY 
 
Australia – Certain Measures Concerning 
Trademarks, Geographical Indications and 
Other Plain Packaging Requirements 
Applicable to Tobac co Products and 
Packaging   
 
Honduras , Appellant1 
Dominican  Republic , Appellant2 
Australia , Appellee  
 
Argentina , Third Participant  
Brazil , Third Participant  
Canada , Third Participant  
Chile, Third Participant  
China , Third Participant  
Dominican  Republic, Third Participant3 
Ecuador , Third Participant  
European  Union , Third Participant  
Guatemala , Third Participant  
India, Third Participant  
Indonesia , Third Participant  
Japan , Third Participant  
Korea , Third Participant  
Malawi , Third Participant  
Malaysia , Third Participant  
Mexico , Third Participant  
New Zealand , Third Participant  
Nicaragua , Third Participant  
Nigeria , Third Participant  
Norway , Third Participant  
Oman , Third Participant  
Panama , Third Participant  
Peru, Third Participant  
Philippines , Third Participant  
Russia n Federation , Third Participant  
Singapore , Third Participant  
South Africa , Third Participant  
Chinese Taipei , Third Participant  
Thailand , Third Participant  
Turkey, Third Participant  
Ukraine, Third Participant  
United  States, Third Participant  
Uruguay, Third Participant  
Zambia, Third Participant  
Zimbabwe, Third Participant  
 AB-2018-4 
AB-2018-6 
 
Appellate  Body Division : 
 
Servansing , Presiding Member  
Bhatia , Member  
Graham , Member  
 
 
1  INTRODUCTION  
1.1.  Honduras and the Dominican  Republic each  appeal certain issues of law and legal 
interpretations developed in the Panel  Report , Australia – Certain Measures Concerning Trademarks, 
Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products  
 
1 In DS435 only.  
2 In DS441 only.  
3 In DS435.  
 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 18 - 
 
  and Packaging4 (Panel  Report5). The Panel was established to consider complaint s by Honduras6, 
the Dominican  Republic7, Cuba8, Indonesia9, and Ukraine10 with respect to certain restrictions, 
imposed by Australia, on trademarks, geographical indications (GIs), and other plain packaging 
requirements, applicable to all tobacco products sold, offered for sale, or otherwise supplied in 
Australia. The measures at issue in these  disputes  (the TPP  measures) are "one of the means by 
which the Australia[n] Government will give effect to Australia's obligations under the [World Health 
Organization Framework Convention on Tobacco Control (2003) (FCTC)]" and, in particular 
Articles  5, 11, and 13 of the FCTC.11 
1.2.  The factual aspects of these disputes  are set forth in greater detail in section  2 of the 
Panel  Report . The factual aspects pertaining to the products and measures at issue in these disputes 
are also set forth in  sectio n 5 of these  Report s. 
1.3.  The Dispute Settlement Body (DSB) established separate panels to address the matters 
brought by each of the five  complainants.12 On 24  April 2014, Australia sent a communication to the 
Chair of the DSB on behalf of the parties to all f ive disputes.13 This communication concerned certain 
arrangements for the establishment and composition of the panels, and the panels' timetable in 
these disputes. The communication stated , inter alia, that: (i) Australia would request the 
Director -General to compose the panels to address the complaints brought by the 
Dominican  Republic and Cuba14; and (ii)  pursuant to Article  9.3 of the Understanding on the Rules 
and Procedures Governing the Settlement of Disputes ( DSU), the parties had agreed to the  
harmonization of the timetable for the Panel proceedings in all five  disputes.15 On 5 May 2014, the 
Director -General composed five  panels, with the same persons serving as panelists on each of the 
separate panels.16 
1.4.  On 7 May 2014, Australia submitted  reques ts to the Panel for preliminary rulings with respect 
to the consistency , with Article  6.2 of the DSU , of the Dominican  Republic's, Cuba's, and Indonesia's 
 
4 WT/DS435/R, WT/DS441/R, WT/DS458/R,  WT/DS467/R, 28  June 2018.  
5 The Panels that addressed the complaints by Honduras (DS435), the Dominican  Republic (DS441), 
Cuba (DS458), and Indonesia (DS467) issued their Reports in the form  of a single document constituting 
four separate Panel  Reports. For ease of reference, the Panels and Panel  Reports are herein collectively 
referred to as the Panel and the Panel  Report, respectively. The Panel  Report has a separate "Conclusions and 
Recomm endations" section (section  8) with respect to each complaint. Thus, where these Appellate  Body 
Reports make a reference to section  8 of the Panel  Report, the Appellate  Body Reports will specify which 
Panel  Report is being referred to.  
6 Request for the Es tablishment of a Panel by Honduras, WT/DS435/16 (Honduras' panel request).  
7 Request for the Establishment of a Panel by Dominican  Republic, WT/DS441/15 (Dominican  Republic's 
panel request).  
8 Request for the Establishment of a Panel by Cuba, WT/DS458/14 ( Cuba's panel request).  
9 Request for the Establishment of a Panel by Indonesia, WT/DS467/15 (Indonesia's panel request).  
10 Request for the Establishment of a Panel by Ukraine, WT/DS434/11 (Ukraine's panel request).  
11 Panel  Report, para.  2.16 (quoting Expla natory Memorandum, Tobacco Plain Packaging Bill 2011 (Cth) 
(TPP Bill Explanatory Memorandum) (Panel Exhibits  AUS-2, JE-7), p.  2 (emphasis omitted)). Article  5 of the 
FCTC requires each FCTC Party to develop, implement, periodically update and review compre hensive 
multisectoral national tobacco control strategies, plans and programmes in accordance with this Convention 
and the Protocols to which it is a party. (Panel  Report, para.  2.101) Part  III of the FCTC, which includes 
Articles  11 and 13, addresses meas ures relating to the reduction of demand for tobacco. Article  11 concerns 
packaging and labelling of tobacco products, while Article  13 concerns tobacco advertising, promotion and 
sponsorship. (Panel  Report, paras.  2.103 -2.105 (quoting World Health Organiz ation, Framework Convention on 
Tobacco Control (2003) ( FCTC) (Panel Exhibits  AUS-44, JE -19), Articles  11 and  13)) 
12 Panel  Report, paras.  1.10, 1.14, 1.18, and 1.22; WT/DSB/M/322.  
13 Australia's communication to the DSB was sent before the establishment of t he panels in the disputes 
brought by the Dominican  Republic and Cuba The DSB established the panels to address the complaints by the 
Dominican  Republic and Cuba on 25  April 2014. (Panel  Report, paras.  1.13 and 1.17) With respect to Cuba's 
complaint, the DS B established the panel in a meeting at which Cuba's panel request first appeared as an item 
on the DSB agenda. (WT/DSB/M/344)  
14 On 24  March 2014, Ukraine requested the Director -General to determine the composition of the panel 
to hear its dispute (DS434).  On 26  March and 23  April, respectively, Australia requested the Director -General 
to determine the composition of the panel to hear the disputes brought by Honduras (DS435) and Indonesia 
(DS467). On 25  April 2014, Australia requested the Director -General t o determine the composition of the 
panels to hear the disputes brought by the Dominican  Republic (DS441) and Cuba (DS458). (WT/DS434/12, 
WT/DS435/17, WT/DS441/16, WT/DS458/15, WT/DS467/16)  
15 Panel  Report, para.  1.26.  
16 Panel  Report, para.  1.27.  
 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 19 - 
 
  panel requests.17 On 19  August 2014, the Panel issued its preliminary rulings to the parties and the 
third parties, with an indication that these would become an integral part of the Panel  Report , subject 
to any modifications or elaboration of the reasoning, either in a subsequen t ruling or in the 
Panel  Report .18 These preliminary rulings were circulated to the DSB on 27  October 2014.19 
1.5.  The Panel adopted its Working Procedures20 and timetable on 17  June 2014. The Panel's 
Working Procedures were amended on 1  October 2014, to reflect t he Panel's adoption of additional 
procedures for the protection of strictly confidential information (SCI)21. The Panel's Working 
Procedures were further amended on 15  December 2014, to reflect the Panel's decision to grant the 
third parties the following a dditional rights: (i)  access to the parties' rebuttal submissions; and 
(ii) access to the final written versions of the parties' opening and closing statements at the first and 
second substantive meetings.22 
1.6.  On 28  May 2015, the Panel received a request from  Ukraine to suspend the Panel proceedings 
in DS434 pursuant to Article  12.12 of the DSU. In a letter dated 29  May 2015, Australia indicated 
that it "support[ed] the request by Ukraine to suspend proceedings, on the basis that … the 
suspension will be 'with  a view to finding a mutually agreed solution'".23 On 30  May 2015, after 
consulting with the parties in DS435, DS441, DS458, and DS467, the Panel sent a communication 
to the parties informing them that it had accepted Ukraine's request and had suspended the  work in 
DS434. In its communication, the Panel noted that Ukraine remained entitled to participate in the 
Panel proceedings, as a third party, in disputes DS435, DS441, DS458, and DS467. The Panel also 
took note of the shared understanding between Ukraine  and the other parties that Ukraine's 
first written submission in DS434, and related evidence, would remain on the record as validly filed 
third-party submissions in DS435, DS441, DS458, and DS467.24 
1.7.  The Panel in DS434 was not requested to resume its work during the 12  months following 
suspension. Pursuant to Article  12.12 of the DSU, the authority for the establishment of the Panel 
in DS434 lapsed on 30  May 2016.25 
1.8.  Following consultation with the parties, the Panel contacted Ecuador, Egypt, and Moldova . 
These three  WTO Members were third parties in the dispute initiated by Ukraine,  but not in the 
disputes initiated by Honduras, the Dominican  Republic , Cuba, or Indonesia. The Panel informed 
Ecuador, Egypt , and Moldova that they would need to notify their  interest to the DSB pursuant to 
Article  10.2 of the DSU with respect to  DS435, DS441, DS458, and DS467 should they wish to 
participate in the proceedings of one or more of these disputes, including the third -party session of 
the first substantive meeting.  Ecuador notified its third -party interest with respect to  DS435,  DS441, 
 
17 Panel  Report, para.  1.33.  
18 Panel  Report, para.  1.37. As regards the Dominican  Republic's, Cuba's, and Indonesia's 
panel  requests, the Panel found that "the terms 'including', 'complement' and 'add to', as used in [these] panel 
request[s], are not, on their face, i nconsistent with the requirement under Article  6.2 of the DSU to identify the 
specific measures at issue." (Panel  Report, para.  1.38) With respect to Cuba's panel request, the Panel also 
held that the additional claims introduced by Cuba in its panel reque st were closely related to those that 
formed the legal basis of its request for consultations and could reasonably be said to have evolved from the 
legal basis that formed the subject of consultations. Therefore, the Panel considered that Cuba's claims und er 
Article  16.3 of the Agreement on Trade -Related Aspects of Intellectual Property Rights ( TRIPS  Agreement)  and 
Article  6bis of the Paris  Convention (through Article  2.1 of the TRIPS  Agreement) remained "within the bounds 
of the 'measure of flexibility' ac corded to Members in formulating their complaints in their panel request". 
(Panel  Report, para.  1.39 (quoting  Communication from the Panel, dated 27 October 2014, WT/DS458/18, 
para. 3.53))  
19 Panel  Report, para.  1.40 (referring to Communications from the Panel, dated 27 October 2014, 
WT/DS441/19, WT/DS458/18, and WT/DS467/19).  
20 Panel  Report, para.  1.30, and Annex A -1. 
21 Panel  Report, paras.  1.30 and 1.41, and Annex A -2. None of the participan ts in these appellate 
proceedings requested us to adopt additional procedures for the protection of SCI.  
22 Panel  Report, paras.  1.30 and 1.42 -1.43.  
23 Panel  Report, para.  1.51.  
24 Panel  Report, para.  1.52.  
25 Panel  Report, para.  1.54 (referring to Lapse of Authority for the Establishment of the Panel, 30 June 
2016, WT/DS434/17).  
 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 20 - 
 
  DS458, and DS467 to the Chair of the DSB. By contrast, Moldova informed the Panel that it did not 
wish to participate in the se disputes as a third party.26 
1.9.  A number of amici  curiae  submissions were presented to the Panel. On 20  August 2014, the 
Panel received an unsolicited amicus  curiae  submission from a group of US business organizations.27 
On 15  December 2014, the Panel informed the parties and third parties that it "would not be in a  
position to consider unsolicited information submitted to it after 27 April 2015".28 The Panel received 
35 additional unsolicited amici curiae  submissions on or before 27  April 2015 and five  unsolicited 
amici  curiae  submissions after th at date.29 Australia submitted , as exhibits , three  of the  amici curiae  
submissions, provided by the World Health Organization (WHO) and the FCTC Secretariat30; the 
Healthy Caribbean Coalition; and the Union f or International Cancer Contr ol (UICC) and Cancer 
Council Australia  (CCA) .31 The Dominican  Republic , Honduras, and Indonesia submitted, as an 
exhibit, 36  amici  curiae  submissions.32 
 
26 Panel  Report, para.  1.53. The text of Moldova's third -party submission was submitted by Honduras, 
the Dominican  Republic, and Indon esia as an exhibit in the Panel proceedings on 1 June 2015 . (Panel  Report, 
fn 55 to para.  1.53 (referring to Moldova's third -party submission (Panel Exhibit DOM/HND/IDN -2))) 
Additionally, it appears that Egypt did not respond to the Panel's prompting about  Egypt's continued 
participation as a third party.  
27 This submission was made jointly by the following organizations: Emergency Committee for American 
Trade; National Association of Manufacturers of the United  States; National Foreign Trade Council; Paperb oard 
Packaging Council; Printing Industries of America; Independent Packaging Association; United  States Chamber 
of Commerce; and United  States Council for International Business.  
28 Panel  Report, para.  1.48 (quoting letter from the Panel to the parties and  third parties dated 
15 December 2014 concerning, inter alia , amicus curiae  briefs).  
29 Panel  Report, para.  1.49 and fn  47 thereto. The Panel received amici  curiae  submissions dated on or 
before 27  April 2015 from: Emergency Committee for American Trade, Na tional Association of Manufacturers of 
the United  States, National Foreign Trade Council, Paperboard Packaging Council, Printing Industries of 
America, Independent Packaging Association, United  States Chamber of Commerce, and United  States Council 
for Inte rnational Business; Associação Brasileira da Propriedade Intelectual; American Chamber of Commerce 
in the Netherlands; Federation of Philippine Industries; Confederação Nacional da Indústria (Brazil); Federation 
of Attica and Piraeus Industries; Cámara Nac ional de Comercio y Servicios del Uruguay; Federação des 
Industrias do Estado da Bahia; Japan Business Federation; Association of South -East Asian Nations (ASEAN) 
Intellectual Property Association; Institute of Public Affairs; Cámara de Industria de Guatem ala; Trade -related 
IPR Protection Association; Indonesian Chamber of Commerce and Industry; Montenegrin Employers 
Federation; Taxpayers Association of Europe; International Trademark Association; Australian Retailers 
Association; Japan Intellectual Propert y Association; Association of European Businesses in Russia, American 
Chamber of Commerce in Russia, and RusBrand; International Tobacco Growers' Association; Patent and 
Trademark Attorneys Association – Turkey; Aegean Exporters Association; European Assoc iation of Trade Mark 
Owners (MARQUES); United  States Chamber of Commerce; EU -ASEAN Business Council, EU -Malaysia Chamber 
of Commerce and Industry, European Chamber of Commerce in Singapore, European Chamber of Commerce of 
the Philippines, European Chamber of Commerce and Industry in Lao PDR, and European Association of 
Business and Commerce in Thailand; American Chamber of Commerce in Thailand; Romanian Small and 
Medium Retailers Association; Association of Trademarks and Design Rights Practitioners; Canadi an 
Manufacturers and Exporters; Federation of Korean Industries; Polish Chamber of Trade; Union des Fabricants; 
Healthy Caribbean Coalition; Union for International Cancer Control; Cancer Council Australia; and World 
Health Organization and WHO Framework C onvention on Tobacco Control Secretariat. The Panel received 
amici  curiae  submissions dated after 27 April 2015 from: Russian Union of Industrialists and Entrepreneurs; 
Graphic Association Denmark; American Chamber Mexico; Malaysian International Chamber o f Commerce and 
Industry; and Confederation of Danish Industry.  
30 Panel  Report, para.  1.50 and fn  48 thereto. World Health Organization and the WHO  Framework 
Convention on Tobacco Control Secretariat, Information for Submission to the Panel by a Non -Party 
(16 February 2015) (Panel Exhibit AUS -42 (revised)).  
31 Healthy Caribbean Coalition , Amicus Curiae Brief  (22 April 2015)  (Panel Exhibit AUS -515); Union for 
International Cancer Control and Cancer Council Australia, Written Submission of Non -Party Amici  Curia e 
(11 February 2015) (Panel Exhibit AUS -38). 
32 Panel  Report, para.  1.50 and fn  50 thereto. Briefs from the following amicus curiae  were submitted as 
Exhibit DOM/HND/IDN -1: Emergency Committee for American Trade, National Association of Manufacturers of 
the United  States, National Foreign Trade Council, Paperboard Packaging Council, Printing Industries of 
America, Independent Packaging Association, United  States Chamber of Commerce, and United  States Council 
for International Business; Associação Brasileira da Propriedade Intelectual; American Chamber of Commerce 
in the Netherlands; Federation of Philippine Industries;  Confederação Nacional da Indústria (Brazil); Federation 
of Attica and Piraeus Industries; Cámara Nacional de Comercio y Servicios del Uruguay; Federação des 
Industrias do Estado da Bahia; Japan Business Federation; ASEAN Intellectual Property Association; Institute of 
Public Affairs; Cámara de Industria de Guatemala; Trade -related IPR Protection Association; Indonesian 
Chamber of Commerc e and Industry; Montenegrin Employers Federation; Taxpayers Association of Europe; 
 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 21 - 
 
  1.10.  Additionally, the parties requested the Panel to exercise its authority to seek information 
under Article  13 of the DSU on various occasions, regarding information relating to evidence 
submitted by another party. The Panel also exercised its authority under Article  13 to seek 
information from the WHO and the FCTC Secretariats, the International Bureau of the World 
Intellectual Property Organization (WIPO), Cancer Council Queensland (CCQ), and Cancer Council 
Victoria (CCV).33 
1.11.  Honduras requested the Panel to find that Australia's plain packaging trademark restrictions 
in the TPP  measures are inconsistent with Art icle 2.1 of the Agreement on Trade -Related Aspects of 
Intellectual Property Rights ( TRIPS  Agreement ) (incorporating Article  6quinquies  of the Stockholm 
Act of the Paris Convention for the Protection of Industrial Property of 14  July 1967 ) 
(Paris  Convention (1967) ) and Articles  15.4, 16.1, 17, 20, 22.2(b), and 24.3 of the 
TRIPS  Agreement. Honduras also requested the Panel to find that Australia's plain packaging 
measures are inconsistent with Article  2.2 of the Agreement on Technical Barrie rs to Trade 
(TBT Agreement ). Additionally, Honduras requested the Panel to find that Australia had acted 
inconsistently with Article  10bis of the Paris Convention  (1967)  (as incorporated into the 
TRIPS  Agreement through Article  2.1) and Articles  22.2(b) an d 24.3 of the TRIPS  Agreement.34 
1.12.  The Dominican  Republic requested the Panel to find that, by its adoption and imposition of 
the TPP  measures, Australia had acted inconsistently with Article  2.2 of the TBT  Agreement, 
Article  10bis of the Paris Convention  (1967)  (as incorporated into the TRIPS  Agreement through 
Article  2.1), and Articles  15.4, 16.1, 16.3, 20, 22.2(b), and 24.3 of the TRIPS  Agreement.35 
1.13.  Cuba requested the Panel to find that the TPP  measure s are inconsistent with Article  2.2 of 
the TBT  Agreement, Ar ticle 10bis of the Paris  Convention (read with Article  2.1 of the 
TRIPS  Agreement), Articles  15.4, 16.1, 16.3, 20, 22.2(b), and 24.3 of the TRIPS  Agreement, as well 
as Article  IX:4 of the General Agreement on Tariffs and Trade 1994 ( GATT  1994).36 Indonesia 
requested the Panel to find that the TPP  measures, collectively and individually, are inconsistent with 
Article  2.2 of the TBT  Agreement, Article  2.1 of the TRIPS  Agreement (incorporating Article  10bis of 
the Paris  Convention), and Articles  15.4, 16.1, 16. 3, 20, 22.2(b), and 24.3 of the TRIPS  Agreement. 
Indonesia also requested the Panel to find that the TPP  measures, collectively and individually, are 
inconsistent with Article  XXIII:1(a) of the GATT  1994 because they have nullified or impaired 
benefits acc ruing directly or indirectly to Indonesia under the TBT  Agreement.37 
1.14.  The Panel  circulated its Report to Members of the World Trade Organization (WTO) on 28 June 
2018. In its Report , the Panel found that  Honduras, the Dominican  Republic, Cuba, and Indonesia 
(the complainants) had not demonstrated that Australia's measures are inconsistent with Article  2.2 
of the TBT  Agreement, Articles  6quinquies  and 10 bis of the Paris Convention (1967) (read in 
conjunction with Article  2.1 of the TRIPS  Agreement ), Articles  15.4, 16.1, 16.3, 20, 22.2(b), 
and 24.3 of the TRIPS  Agreement, and Article  IX:4 of the  GATT  1994. In light of these findings, the 
Panel declined the complainants' requests that the Panel recommend that Australia bring its 
measures into conformity  with its obligations under the TRIPS  Agreement, the TBT  Agreement, and 
the GATT  1994.38 
 
International Trademark Association; Australian Retailers Association; Japan Intellectual Property Association; 
Association of European Businesses in Russia, American Chambe r of Commerce in Russia, and RusBrand; 
International Tobacco Growers' Association; Patent and Trademark Attorneys Association – Turkey; Aegean 
Exporters Association; European Association of Trade Mark Owners (MARQUES); United  States Chamber of 
Commerce; EU -ASEAN Business Council, EU -Malaysia Chamber of Commerce and Industry, European Chamber 
of Commerce in Singapore, European Chamber of Commerce of the Philippines, European Chamber of 
Commerce and Industry in Lao PDR, and European Association of Business an d Commerce in Thailand; 
American Chamber of Commerce in Thailand; Romanian Small and Medium Retailers Association; Association 
of Trademarks and Design Rights Practitioners; Canadian Manufacturers and Exporters; Federation of Korean 
Industries; Polish Cham ber of Trade; Union des Fabricants; Russian Union of Industrialists and Entrepreneurs; 
American Chamber Mexico; and Malaysian International Chamber of Commerce and Industry.  
33 Panel  Report, paras.  1.56-1.57.  
34 Panel  Report, para.  3.1. 
35 Panel  Report, para.  3.3. 
36 Panel  Report, para.  3.5. 
37 Panel  Report, para.  3.7. 
38 Panel  Report, section  8. 
 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 22 - 
 
  1.15.  On 19  July 2018, Honduras notified the DSB, pursuant to Articles  16.4 and 17 of the DSU, of 
its intention to appeal certain issues of law covered in the Panel  Report in  DS435, and certain legal 
interpretations developed by the Panel, and filed a Notice of Appeal39 and an appellant's submission  
pursuant to Rule  20 and Rule  21, respectively, of the Working Procedures for Appellate Review40 
(Working Procedures).  On 23  August 2018, the Dominican  Republic notified the DSB, pursuant to 
Articles  16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the 
Panel  Report in DS441, and certain legal interpretations developed by the Panel, and filed a Notice 
of Appeal41 and an appellant's submission, pursuant to Rule  20 and Rule 21, respectively, of the 
Working Procedures.42 On 2 October 2018, Australia filed an appellee's submission in response to 
the appeals by Honduras and the Dominican  Republic.43 
1.16.  On 11-12 October  2018, 19  WTO Members  – Argentina, Brazil, Canada, China, 
Dominican  Republic44, European  Union, Indonesia, Japan, Malawi, Mexico, New Zealand, Nigeria, 
Norway, Philippines, Singapore, Thailand, United  States, Zambia, and Zimbabwe45 – each filed a 
third participant's submission.46 On 12 October  2018, 1 0 WTO Members  – Chile, Guatemala, India, 
Korea, Malaysia, Peru, Russia n Federation  (Russia) , South  Africa, Chinese  Taipei, and Uruguay  – 
notified their intention to appear at the oral hearing as third parti cipants.47 Between 15  October 
2018 and 19  November 2019, six WTO Members  – Ecuador, Oman, Nicaragua, Panama, Turkey, and 
Ukraine  – notified their intention to appear at the oral hearing as third participants.48 
1.17.  On 13  July 2018, after Honduras filed its appeal49 but before the Dominican  Republic did50, 
the Appellate  Body received a joint communication from Australia, Honduras, and the 
Dominican  Republic (the participants)  in relation to these appellate  proceedings. This 
communication was also sent to Cuba a nd Indonesia and to all the third parties in the four  disputes 
before the Panel. In their joint communication, the parti cipants  requested that, in the event of 
multiple  appeals, the Appellate  Body allow Australia to file a single Notice of Other Appeal, a single 
other appellant's submission, and a single appellee's submission in relation to all appeals. The 
participants  also requested the Appellate  Body to consider adopting a schedule for the filing of 
appellees ' and third participants' submissions that wou ld give all participants and third  participants 
sufficient time to review and respond to possible appeals from any of the participants.  On 16  July 
2018, the Chair of the Appellate  Body, on behalf of the  Appellate  Body Division that would hear the 
appeals51 (the Division) , invited Cuba, Indonesia, and the third parties in the four  disputes before 
the Panel to comment on the joint request. Brazil, Canada, China, Cuba, Indonesia, Japan, Korea, 
Mexico, New Zealand, and Russia submitted comments. None of them ob jected to the joint proposal 
by the participants . No comments were received from the other third parties.  
1.18.  On 23  July 2018, the Chair of the Appellate  Body issued a Procedural Ruling on behalf of the 
Division. Given the envisaged consolidation of Honduras' appeal with any other appeals that would 
be filed by the other three  complainants, the Division agreed to modify the filing of a Notice of Other 
Appeal, other appellant's submission, appellees ' submissions, and third  participants' submissions in 
 
39 WT/DS435/23.  
40 WT/AB/WP/6 , 16 August 2010.  
41 WT/DS441/23.  
42 Cuba, Indonesia, and Australia did not appeal the Panel  Reports in DS458 and DS467. Nor did 
Australia file  other appeals with respect to the Panel  Reports in DS435 and DS441.  
43 Pursuant  to Rule  22 of the Working Procedures.  
44 In WT/DS435.  
45 Zimbabwe filed its third participant's submission on 11  October 2018.  
46 Pursuant  to Rule  24(1) of the Working Procedures.  
47 Pursuant to Rule 24(2) of the Working Procedures.  
48 Pursuant to Rule 24(4) of the Working Procedures. On 6 and 7  June 2019, respectively, Ukraine and 
Panama submitted their delegation lists for the first oral hearing to the Appellate  Body Secretariat an d the 
participants and third participants in these disputes. On 14 and 19 November  2019, respectively, Panama and 
Oman submitted their delegation lists for the second oral hearing to the Appellate  Body Secretariat and the 
participants and third participant s in these disputes. For purposes of these appellate proceedings, we have 
interpreted Oman's, Panama's, and Ukraine's actions to be notifications expressing their intention to attend the 
oral hearings pursuant to Rule  24(4) of the Working  Procedures.  
49 In WT/DS435/23.  
50 In WT/DS441/23.  
51 At the time of the issuance of this Procedural Ruling, the composition of the Division hearing the 
appeal in DS435 had not yet been announced. The composition of the Division was announced only after the 
Dominican  Repub lic filed its Notice of Appeal in DS441.  
 WT/DS435/AB/R • WT/DS441/AB/R  
 
- 23 - 
 
  order to e nsure fairness and orderly procedure in the conduct of these appeals. Moreover , in order 
to safeguard Australia's due process rights, which would risk being affected if a complaining party 
were to file its Notice of Appeal and appellant's submission after having seen Australia's 
first appellee's submission, the Division authorized Australia to file any Notice of Other Appeal and 
other appellant's submission in a single document no later than by 3  September 2018. In addition, 
the Division set a single deadli ne for appellees ' submissions in these disputes for 2  October 2018. 
With respect to the extension of the deadline for filing third participants' submissions, the Division 
set a single deadline for third participants' submissions in these disputes for 12  October 2018.52 
1.19.  Between 25  July 2018 and 20  May 2019, the Appellate  Body received eight amici  curiae  
submissions in connection with these appellate proceedings. On 25  July 2018, the Appellate  Body 
received an amicus  curiae  submission from the Consumer Choice Center. On 30  July 2018, the 
Appellate  Body received an amicus  curiae  submission from Bienvenido S.  Oplas, Jr., president of 
Minimal Government Thinkers. On 7  August 2018, the Appellate  Body received two  amici  curiae  
submissions: from Sinclair Davidson, professor of institutional economics at the Blockchain 
Innovation Hub in Australia; and from the Consumer Packaging Manufacturers Alliance (CPMA). On 
8 August 2018, the Appellate  Body received a further two  amici curiae submissions: from the 
Australian  Taxpayers' Alliance; and from the Taxpayers Protection Alliance (TPA). On 28  November 
2018, the Appellate  Body received a joint amicus  curiae  submission from the UICC and CCA. Finally, 
on 10  January 2019, the Appellate  Body received an amicus  curiae  submission from the 
International Trademark Association (INTA).53 
1.20.  By letter dated 17  September  2018, the Chair of the Appellate  Body notified the Chair of the 
DSB that the Appellate  Body would not be able to circulate its Report s within the 60 -day period 
pursuant to Article  17.5 of the DSU, or within the 90 -day period pursuant to the same provision, 
due to the exceptional size and complexity of these consolidated proceedings , the backlog of appeals 
pending with the Appellate  Body at present, and the overlap in the composition of all divisions 
resulting in part from the reduced number of Appellate  Body Members .54 On 31 March 2020 , the 
Presiding Member of the Division  notified the Chair of the DSB that the Appellate  Body Report in 
these proceedings would be circulated to WTO  Members by early June 2020. The Presiding Member 
indicated that the Division would communicate the specific date in the weeks preceding such date 
of circulation .55 On 4 June 2020, the Presiding Member of the Divisi on notified the Chair of the DSB 
that the Appellate  Body Report in these proceedings would be circulated to WTO  Members no later 
than 9 June 2020.56 
1.21.  The two hearings in these appellate proceedings were held on  11-14 June 2019 and 
19-22 November 2019 , respectively . At both hearings, t he participants and third participants made 
oral statements and responded to questions posed by the Members of the Division.  At the request 
of Honduras, the Division allowed a member of Honduras' delegation to participate in the reading of 
the closing statements at the second hearing via video conference.  
1.22.  By letter dated 16  August 2019, Australia requested the Division to provide guidance on the 
presence and role of individuals that Australia referred to as "fact experts", at the second hearing of 
these appellate proceedings. Australia request ed that the Division either: (i)  exclude, from the 
second  hearing, individuals who appeared as "fact experts" before the Panel; or (ii)  issue clear 
guidance concerning the role of these  individuals at the second  hearing. On 20  August 2019, the 
Division invited the Dominican  Republic, Honduras , and the third participants to comment on 
Australia's letter by 23  August 2019. The Dominican  Republic, Honduras, Canada, the 
European  Union,  and t he United  States submitted comments on 23  August 2019. China submitted 
its comments on 26  August  2019.  
1.23.  By letter dated 30  August 2019, the Division reiterated the Presiding Member's clarification, 
provided at the first hearing, that each Member has the rig ht to determine who will form part of its 
 
52 Procedural Ruling of 23  July 2018.  
53 Copies of these submissions were not simultaneously provided to the participants and 
third participants in these appellate  proceedings. Therefore, as a matter of courtesy, the Appellate  Body 
forwarded electronic copies of these eight  amici  curiae  submissions to the participants and third  participants. 
However, the Appellate  Body emphasized that this transmission was without prejudice to the legal status or to 
any action the Appe llate Body would take in connection with these submissions.  
54 WT/DS435/24 and WT/DS441/25.  
55 WT/DS435/25 and WT/DS441/26.  
56 WT/DS435/2 6 and WT/DS441/2 7. WT/DS435/AB/R • WT/DS441/AB/R  
 
- 24 - 
 
  delegation and who speaks on its behalf. The Division added that, when responding to questions 
from the Division, every individual member of a delegation responds as an advocate representing 
that participant. Moreo ver, as all individuals included in participants' delegations at the 
second  hearing would be present as representatives of their governments, they would be subject to 
the provisions of the DSU, including the scope of appellate review as delineated by Article  17.6 of 
the DSU. In this regard, the Members of the Division indicated th at they would be proactive in 
disciplining participants' responses to questions and would  intervene whenever they deemed it 
necessary. The Division provided further guidance as to the conduct of the second hearing at the 
start of that hearing.  
1.24.  By letter da ted 28  September 2018, the participants and third participants were informed 
that, in accordance with Rule  15 of the Working Procedures, the Chair of the Appellate  Body had 
notified the Chair of the DSB of the Appellate  Body's decision to authorize Appella te Body Member 
Mr Shree Baboo Chekitan Servansing to complete the disposition of these appeals, to which he had 
been assigned before the expiry of his term of office. On 10  December 2019, the participants and 
third participants were informed that, in accor dance with Rule  15 of the Working Procedures, the 
Chair of the Appellate  Body had informed the Chair of the DSB that Messrs  Thomas R. Graham and 
Ujal Singh Bhatia would complete the disposition of these appeals , to which they had been assigned 
before the expiry of their second terms  of office , and "for which hearings ha[d] been completed" .57 
2  ARGUMENTS OF THE PAR TICIPANTS  
2.1.  The claims and arguments of the participants are reflected in the executive summaries of their 
written submissions provided to the Appella te Body.58 The Notice of Appeal and the executive 
summaries of the participants' claims and arguments are contained in Annexes  A and B of the 
Addendum to these  Report s, WT/DS 435/AB/R/Add.1, WT/DS 441/AB/R/Add.1.  
3  ARGUMENTS OF THE THI RD PARTICIPANTS  
3.1.  The arguments of the third participants that filed a written submission59 are reflected in the 
executive summaries of their written submissions provided to the Appellate  Body60 and are contained 
in Annex  C of the Addendum to these Report s, WT/DS 435/AB/R/Add.1, WT/DS441/AB/R/Add.1.  
4  ISSUES RAISED IN THESE APPEALS  
4.1.  The following issues are raised in th ese appeal s: 
a. whether the Panel erred in finding that  the complainants had not demonstrated that the 
TPP measures are more trade -restrictive than necess ary to fulfil a legitimate objective, 
within the meaning of Article  2.2 of the TBT  Agreement , specifically : 
i. with respect to the contribution of the TPP  measures to Australia's objective , whether 
the Panel erred in finding that the TPP measures, in combination with other 
tobacco -control measures maintained by Australia,  are apt to, and do in fact, 
contribute to Australia's objective of reducing the use of, and exposure to, tobacco 
products. In this regard : 
• whether the Panel erred in its application of Article  2.2; and  
• whether the Panel failed to make an objective assessment of the facts of the case 
as provided for under Article  11 of the DSU, in its assessment of the evidence 
pertaining to the contribution of the TPP  measures to Austr alia's objective;  
 
57 WT/DSB/79.  
58 Pursuant to the Appellate  Body's communication on "Executive Summaries of Written Submissions in 
Appellate Proceedings" and "Guidelines in Respect of Executive  Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11  March 2015).  
59 See par a. 1.16.    above.  
60 Pursuant to the Appellate  Body's communication on "Executive Summaries of Written Submissions in 
Appellate Proceedings" and "Guidelin es in Respect of Executive  Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11  March 2015).  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  ii. with respect to the trade restrictiveness of the TPP  measures , whether the Panel erred 
in finding that: (i)  a reduction in the opportunity to differentiate among tobacco 
products on the basis of brands d id not demonstrate the trade restri ctiveness of the 
TPP measures; and (ii)  the TPP  measures  did not  affect the overall value of imported 
tobacco products . In this regard : 
• whether the Panel erred in its interpretation and application of Article  2.2; and 
• whether the Panel failed to make an ob jective assessment of the facts of the case 
as provided for under Article  11 of the DSU , in finding that  the part of the 
downward substitution that occurred after the implementation of the TPP  measures 
was attributable to the overall reduction in cigarette  consumption caused by the 
TPP measures (Dominican  Republic only) ; 
iii. with respect to the proposed alternative measures , whether the Panel erred in its 
findings concerning two  of these alternatives, namely , an increase in  the minimum 
legal purchasing age (MLPA) and an increase in taxation . In this regard : 
• whether the Panel erred in its interpretation and application of Article  2.2 in finding 
that the complainants had not demonstrated that the two  proposed alternative 
measu res are less trade -restrictive than the TPP  measures;  
• whether the Panel erred in its interpretation and application of Article  2.2 in finding 
that, in the particular context of tobacco control and the regulatory efforts of 
Australia to improve public healt h, none of the alternatives proposed by the 
complainants would contribute to Australia's objective to an equivalent degree as 
would the TPP  measures ; and  
• whether the Panel failed to make an objective assessment of the matter , as 
provided for under Article  11 of the DSU  (Dominican  Republic only) ; 
b. whether the Panel erred in finding that  the complainants had not demonstrated that the 
TPP measures are inconsistent with Article  16.1 of the TRIPS  Agreement , specifically : 
i. whether the Panel erred in its interpreta tion and application of Article  16.1; and  
ii. whether the Panel failed to make an objective assessment of the matter as provided 
for under Article  11 of the DSU; and  
c. whether the Panel erred in finding that  the complainants had not demonstrated that the 
TPP measures are inconsistent with Australia's obligations under Article  20 of the 
TRIPS  Agreement , specifically : 
i. whether the Panel erred in its interpretation of the word "unjustifiably" in Article  20; 
ii. whether the Panel erred in its application of Article  20; and  
iii. whether the Panel acted inconsistently with Articles  7.1 and 11 of the DSU by failing 
to address the Dominican  Republic's claim regarding cigarette sticks  
(Dominican  Republic only) . 
5  RELEVANT BAC KGROUND INFORMATION  
5.1  The products at issue  
5.1.  The products at issue in these disputes are tobacco products. The term "tobacco product" is 
defined in the Tobacco Plain Packaging Act 2011 (TPP  Act) to mean "processed tobacco, or any 
product that contains tobacco " that is "manufactured to be used for smoking, sucking, chewing or 
snuffing" and "not included in the Australian Register of Therapeutic Goods maintained under the WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Therapeutic Goods Act 1989 ".61 This definition encompasses not only cigarettes, but also 
"non-cigarette" products, such as cigars,  little cigars (also known as cigarillos) , and bidis.62 
5.2.  Before the Panel, Australia indicated that the total volumes of cigarette and cigar imports had 
increased steadily following the introduction of tobacco plain pack aging. This increase in imports  of 
tobacco products into Australia was mostly attributable  to domestic producers  moving production 
out of Australia  and shifting production offshore .63 The shifting of production offshore was a response 
to the Australian government 's reduced -fire-risk requirements introduced in 2010 , which negatively 
impacted local manufacturing .64 The Panel observed that  "imports will soon represent the entirety 
of Australia's tobacco product market, with domestic production bei ng phased out ."65 Thus, 
Australia's domestic market for tobacco products "is supplied entirely through imported products".66 
5.2  The measures at issue  
5.2.1   Overview  
5.3.  The legislative process in Australia, which led to the adoption of the measures at issue in these 
disputes, started in 2008 with the establishment of the National Preventative Health Taskforce 
(NPHT). The NPHT was responsible for developing a "National Pre ventive Health Strategy", to 
"provide a blueprint for tackling the burden of chronic disease currently caused by obesity, tobacco, 
and excessive consumption of alcohol".67 In 2009, the NPHT released its final report.68 With respect 
to tobacco control, this r eport identified 11  "key action areas", including: (i)  making tobacco 
products significantly more expensive; (ii)  ending all remaining forms of advertising and promotion 
of tobacco products (which included a specific action to eliminate promotion of tobacc o products 
through design of packaging); and (iii)  eliminating exposure to second -hand smoke in public 
places.69 
 
61 Panel  Report, para.  2.12 (quoting Tobacco Plain Packaging Act 2011  (Cth) ( TPP Act) (Panel Exhibits 
AUS-1, JE-1), Section  4(1)). In footnote  189 thereto, the Panel noted that the definitions stated in 
paragraph  2.12 are also applicable to the TPP Regulations, in addition to its own list of definitions. ( Tobacco 
Plain Packaging Regulations 2011  (Cth), as amended by the Tobacco Plain Packaging Ame ndment Regulation 
2012 (No. 1) (Cth) ( TPP Regulations) (Panel Exhibits AUS -3, JE-2), Note to Regulation  1.1.3; TPP Bill 
Explanatory Memorandum (Panel Exhibits AUS -2, JE-7), p.  9; FCTC (Panel Exhibits  AUS-44, JE -19), 
Article  1(f)).  
62 Panel  Report, para.  2.12 (quoting TPP Bill Explanatory Memorandum (Panel Exhibits  AUS-2, JE-7), 
p. 9). Other covered "non -cigarette" products include roll -your-own (RYO) tobacco, kreteks, and dissolvable 
tobacco products, such as tablets containing tobacco for sucking. (Ibid.) S ome of these types of 
tobacco  products (such as cigarettes, cigars, and bidis), and their specific packaging, are also defined in the 
TPP Act and TPP Regulations. (Panel  Report, fn  190 to para.  2.12 (referring to TPP  Act (Panel Exhibits AUS -1, 
JE-1), Secti on 4(1); TPP  Regulations (Panel Exhibits AUS -3, JE-2), Regulation  1.1.3))  
63 Australia's response to Panel question No.  5, paras.  29-30. 
64 Panel  Report, para.  7.1217 (referring to Dominican  Republic's second written submission to the Panel, 
para. 948; respo nse to Panel question No.  5, paras.  36-39; Australia's response to Panel question No.  117, 
para. 125; HoustonKemp, Competition and Trade for Tobacco Products in Australia (9  March 2015) (Panel 
Exhibit AUS -19 (SCI)), pp.  27 and 50).  
65 Panel  Report paras.  7.420 and 7.1145. See also paras.  7.1203 -7.1204.  
66 Panel  Report, para.  7.1196.  
67 Panel  Report, para.  2.6 (quoting Australian Government Preventative Health Taskforce, "Terms of 
Reference", available at http://www.preventativehealth.org.au/internet/preventativehealth/publishing.nsf/  
Content/terms -of-reference -1lp (accessed 7 October 2014) (Panel Exhibits HND -2, DOM -50)). 
68 Panel  Report, para.  2.7 (referring to National Preventative Health Taskforce, Austr alia: The Healthiest 
Country by 2020  – National Preventative Health Strategy  – The Roadmap for Action , Australian Government  
(30 June 2009) (NPHT  – The Roadmap for Action) (Panel  Exhibits  AUS-67, JE -14)). 
69 Panel  Report, para.  2.7 (referring to NPHT – The Roadmap for Action (Panel  Exhibits  AUS-67, JE -14), 
pp. 174 and 182).  
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  5.4.  In addressing these key action areas, Australia maintains a series of tobacco -control -related 
measures, most of which are not at issue in these disputes.70 The Panel identified the measures at 
issue in these disputes as comprising the following:  
a. the Tobacco Plain Packaging Act 2011 (Cth)71 (TPP Act); 
b. the Tobacco Plain Packaging Regulations 2011 (Cth), as amended by the Tobacco Plain 
Packaging Amendm ent Regulation 2012 (No.  1) (Cth)72 (TPP Regulations)73; and  
c. the Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth)74 (TMA Act).75 
5.5.  The Panel used the term "TPP  measures" to refer to these instruments taken together.76 
Tobacco products manufactured or packaged in Australia for domestic  consumption were required 
to comply with the TPP  measures from 1  October 2012. As of 1  December 2012, all tobacco products 
sold, offered for sale, or otherwise supplied in Australia were required to comply with the 
TPP measures.77 
5.6.  As the Panel noted, t he TPP  Act is, by its own terms, "[a]n Act to discourage the use of tobacco 
products, and for related purposes".78 Pursuant to Section  3 of the TPP Act, this Act regulates the 
 
70 Section  2.2 of the Panel  Report describes certain of Australia's tobacco -related measures that are not 
at issue in these disputes, but that are relevant to an understanding of the regul atory context within which the 
measures at issue operate.  
71 TPP Act (Panel Exhibits AUS -1, JE-1). 
72 TPP Regulations (Panel Exhibits AUS -3, JE-2). The amendment to the TPP Regulations was adopted 
on 8 March 2012. The "purpose of the regulation is to amend t he Principal Regulations to expand their 
application to non -cigarette tobacco products and to prescribe specific requirements for the retail packaging 
and appearance of non -cigarette tobacco products". (Panel  Report, fn  185 to para.  2.9 (quoting Explanator y 
Statement, Tobacco Plain Packaging Amendment Regulation 2012 (No.  1) (Cth) (TPPA Regulation Explanatory 
Statement) (Panel Exhibit JE -22), p.  1)) 
73 Section  109 of the TPP  Act provides that "[t]he Governor -General may make regulations prescribing 
matters: (a) required or permitted by this Act to be prescribed; or (b) necessary or convenient to be prescribed 
for carrying out or giving effect to this Act".  The TPP  Regulations were made pursuant to this provision. 
(Panel  Report, para.  2.14 (quoting TPP  Act (Pa nel Exhibits  AUS-1, JE-1), Section  109(1); referring to TPPA 
Regulation Explanatory Statement (Panel Exhibit JE -22), p.  2)) 
74 The Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth) (TMA Act) (Panel 
Exhibits  AUS-4, JE-3). The TMA Act amends the Trade Marks Act 1995 (Cth) by inserting a new provision, 
Section  231A. According to the TMA Bill Explanatory Memorandum, the amendment was introduced so that, if 
necessary, the Australian government could quickly remedy any unintended interaction between the TPP  Act 
and the Trade Marks Act 1995. The objective of any such exercise of power under the TMA Act would be to 
ensure tha t applicants for trade mark registration and registered owners of trade marks were not 
disadvantaged by the practical operation of the TPP  Act. Regulations made under new Section  231A were not 
intended to have any effect on the operation of the Trade Marks  Act in relation to goods or services not 
governed by the TPP Act. (Panel  Report, paras.  2.45-2.47 (referring to TMA Act (Panel Exhibits AUS -4, JE-3); 
quoting Explanatory Memorandum, Trade Marks Amendment (Tobacco Plain Packaging) Bill 2011 (Cth) (TMA 
Bill Explanatory Memorandum) (Panel Exhibits AUS -5, JE-5), p.  1)) 
75 Panel  Report, paras.  2.1-2.4.  
76 An important aspect of the TPP  measures is that the Explanatory Memoranda accompanied the 
respective Bills of Parliament before they were passed into law. As t he Panel noted, the TPP  Bill and TMA  Bill 
were accompanied by Explanatory Memoranda. (TPP Bill Explanatory Memorandum  (Panel Exhibits AUS -2, 
JE-7); TMA Bill Explanatory Memorandum (Panel Exhibits AUS -5, JE-5)) Such documents assist members of 
Parliament, o fficials, and the public to understand the objectives and detailed operation of the clauses of a Bill. 
In Australia, an Explanatory Memorandum may also serve as "extrinsic material" that can be used as an aid to 
judicial interpretation of Acts. (Panel  Report, para.  2.13 (referring to Acts Interpretation Act 1901 (Cth) (Panel 
Exhibit AUS -259), Section  15AB(2)(e); Australia's first written submission to the Panel, fn  775 to para.  601)) 
The TPP  Regulations were accompanied by a similar document, an Explanatory  Statement, which may also 
serve as an extrinsic aid to judicial interpretation. (Panel  Report, para.  2.13 (referring to TPPA Regulation 
Explanatory Statement (Panel Exhibit JE -22)))  
77 Panel  Report, para.  2.10 (referring to Australia's first written submis sion to the Panel, para.  123; 
TPP Regulations (Panel Exhibits AUS -3, JE-2), Regulation 1.1.2; TPP  Act (Panel Exhibits AUS -1, JE-1), 
Section  9). 
78 Panel  Report, para.  2.11 (quoting TPP  Act (Panel Exhibits AUS -1, JE-1)). 
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  retail packaging and appearance of tobacco products in order to: (i)  improve public health; and 
(ii) give effect to certain obligations in the WHO FCTC.79 
5.2.2   Requirements for the retail packaging of tobacco products  
5.7.  Pursuant to the TPP  measures, all outer and inner surfaces of  certain retail packaging of 
tobacco products80 must have a matt finish .81 The TPP  measures further stipulate that the outer 
surfaces of these packages must be the colour Pantone 448C (drab dark brown), and that the inner 
surfaces of a cigarette pack or ciga rette carton must be white. The inner surface of these packages 
(other than a cigarette pack or cigarette carton) must be either white or the colour of the packaging 
material in its natural state. The lining of a cigarette pack must be silver -coloured foil  with a white 
paper backing.82 However, a s the Panel noted, the colour requirements in the TPP  measures do not 
apply to health warnings ; the text of the brand, business or company name, or variant name ; or the 
text of relevant legislative requirements.83 
5.8.  In addition, the TPP  measures prohibit the appearance of trademarks84 and marks anywhere 
on the retail packaging of tobacco products, with the exception of the brand name, business or 
company name, variant name, the relevant legislative requirements, and other  trademarks and 
marks permitted by the TPP  measures.85 The TPP  measures make provision for the appearance of 
origin marks, calibration marks, a measurement mark and trade description, a barcode, a fire -risk 
statement, a locally made product statement, the n ame and address of the person who packed the 
product or on whose behalf it was packed, and a consumer contact number.86 These markings must 
not obscure any relevant legislative requirement, or constitute or provide access to tobacco 
advertising and promotio n.87 
5.9.  Section  21 of the TPP  Act, operating together with the TPP  Regulations, prescribes the 
requirements for the manner in which the brand, business  or company , or variant names for tobacco 
products may appear on the retail packaging of a tobacco product.88 With respect to cigarette 
packaging, any of these names must be printed in the Lucida Sans typeface in fonts no larger than 
 
79 Panel  Report, paras.  2.11 and 2.15 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1), Section  3). The 
TPP Act identifies certain safety or information standards that prevail to the extent of any inconsistency 
between them and the TPP  Act. The Act also provides that it "does not exclude or limit the operation of a 
relevant tobacco law of a State or Territory that is capable of operating concurrently with this Act". 
(Panel  Report, para.  2.43 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1), Sections  10-11)) 
80 The TPP  measures contain specif ic definitions for certain types of tobacco packaging, such as 
"cigarette pack", "cigarette carton", "cigar tube", and "pouch". A cigarette pack is "any container for retail sale 
in which cigarettes are directly placed". Reference to an outer surface of a cigarette pack (such as its "front 
outer surface") "is a reference to all of that outer surface, including the part of that outer surface that forms 
part of the flip -top lid". Further, the "inside lip" of a cigarette pack "means the part of the outer surfa ces of the 
pack that is obscured when the flip -top lid is closed". A cigarette carton is "any container for retail sale that 
contains smaller containers in which cigarettes are directly placed". Additionally, "[i]f a cigarette carton has 
one or more flaps with surfaces that become visible only when the carton is opened, those surfaces are taken 
to be inner surfaces of the carton". A cigar tube means "a tube for packaging one cigar". A pouch means 
"primary packaging" that "is made from flexible material" and  "takes the form of a rectangular pocket with a 
flap that covers the opening". (Panel  Report, fn  202 to para.  2.17 (quoting TPP  Act (Panel Exhibits AUS -1, 
JE-1), Sections  4(1), 6(1) -(2); TPP  Regulations (Panel Exhibits AUS -3, JE-2), Regulation  1.1.3))  
81 Panel Report, para.  2.23.  
82 Panel  Report, para.  2.23 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1), Section  19; 
TPP Regulations (Panel Exhibits AUS -3, JE-2), Regulation  2.2.1).  
83 Panel  Report, para.  2.23 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1), Section 19(3)).  
84 Section  17 of the Trade Marks Act 1995 (Cth) (TM Act) defines a trademark as "a sign used, or 
intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person 
from goods or services so dea lt with or provided by another person". The TM  Act defines a "sign" as including 
"any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, 
colour, sound or scent", or any combination thereof. (Panel  Report, paras.  2.77-2.78 (quoting TM  Act 
(Panel  Exhibit JE -6), Sections  6 and 17))  
85 Panel  Report, para.  2.24 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1), Section  20). 
86 Panel  Report, para.  2.24 (referring to TPP  Regulations (Panel Exhibits AUS -3, JE-2), 
Regulations  2.3.1(1) -2.3.1(2) and 2.3.8(1)).  
87 Panel  Report, para.  2.24 (referring to TPP Regulations (Panel Exhibits AUS -3, JE-2), 
Regulation  2.3.1(5)).  
88 Panel  Report, para.  2.25 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1)). Section  21(5) of th e 
TPP Act stipulates that Section  21 does not apply to wrappers, which are governed by Section  22. 
(Panel  Report, fn  230 to para.  2.25)  
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  14-point size (for a brand , busines s, or company name) or 10 -point size (for a variant name). 
The font must be normal weighted and in the colour Pantone Cool Gray  2C. In addition, the 
first letter in each word must be capitalised. No other upper case letters may be used.89 With respect 
to re tail packaging other than retail packaging of cigarettes, names must meet the same 
specifications, but can be printed on the packaging or on an adhesive label fixed to the packaging.90 
Such adhesive label must be in the colour Pantone 448C (drab dark brown) , be no larger than 
reasonably necessary to print the permitted names, be fastened firmly to the retail packaging so as 
not to be easily removable, and not obscure any relevant legislative requirement.91 
5.10.  Importantly, the requirements set out in the TPP  Act and the TPP  Regulations operate in 
conjunction with other legislative requirements that are not challenged in these disputes, including 
graphic health warnings (GHWs).92 
5.2.3   Requirements for the appearance of tobacco products  
5.11.  In addition to regulating the appea rance of the retail packaging of tobacco products, the 
TPP measures regulate various elements affecting the appearance of tobacco  products themselves. 
Section  26 of the TPP  Act provides that no trademark or mark may appear anywhere on a tobacco 
product, ot her than as permitted by the TPP  Regulations. Section  27 of the TPP  Act provides that 
the TPP  Regulations may prescribe additional requirements in relation to the appearance of tobacco 
products to further the objects of the TPP  Act.93 
5.12.  Pursuant to the TPP  Regulations, the paper casing and lowered permeability band (if any) of 
cigarettes must be white, or white with an imitation cork tip.94 No trademark may appear anywhere 
on a cigarette. However, a  cigarette may be marked with an alphanumeric code, which may a ppear 
only once on the cigarette. The alphanumeric code must not: (i)  constitute, or provide access to, 
tobacco advertising and promotion; (ii)  be "false, misleading, deceptive or likely to create an 
erroneous impression about the cigarette's characteristi cs, health effects, hazards or emissions"; 
(iii) "directly or indirectly create a false impression that a particular tobacco product is less harmful 
than other tobacco products"; (iv)  "represent, or be linked or related in any way to, the emission 
yields o f the cigarette"; or (v)  "represent, or be related in any way to, the brand or variant name of 
the cigarette".95 
5.13.  With respect to cigars, the TPP  Regulations prescribe that a single band may appear around 
the circumference of a cigar in the colour Pantone 44 8C (drab dark brown). The band may feature 
the brand, business or company name, and variant name of the cigar ; the name of the country in 
which the cigar was made or produced ; and an alphanumeric code. These marks must appear only 
once on the band. The bra nd, business or company name , and variant name must be placed 
horizontally along the length of the band so that they run around the circumference of the cigar. 
Similar restrictions to those applied to the alphanumeric code that appears on a cigarette also apply 
to the alphanumeric code that appears on a cigar. In addition, the band of a cigar may contain a 
covert mark, not visible to the naked eye, that does not provide access to tobacco advertising and 
promotion.96 
 
89 Panel  Report, para.  2.25 and fn  231 thereto (referring to TPP  Regulations (Panel Exhibits AUS -3, 
JE-2), Regulation  2.4.1).  
90 Panel  Report, para.  2.25 (referring to TPP  Regulations (Panel Exhibits AUS -3, JE-2), 
Regulation  2.4.2(2)).  
91 Panel  Report, para.  2.25 (referring to TPP  Regulations (Panel Exhibits AUS -3, JE-2), 
Regulation  2.4.2(3)).  
92 Panel  Report, para.  2.32.  
93 Panel  Report, para.  2.33 (referring to TPP  Act (Panel Exhibits AUS -1, JE-1), Sections  26 
and 27(1)(b)).  
94 TPP Regulations (Panel Exhibits AU S-3, JE-2), Regulation 3.1.1.  
95 Panel  Report, para.  2.34 (quoting TPP Regulations (Panel Exhibits AUS -3, JE-2), Regulation  3.1.2).  
96 Panel  Report, paras.  2.35-2.37 (referring to TPP Regulations (Panel Exhibits AUS -3, JE-2), 
Regulation  3.2.1). A covert mark  is a type of origin mark, similar to the alphanumeric code.  
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  6  ANALYSIS OF THE APPE LLATE  BODY  
6.1.  Honduras ap peals certain aspects of the Panel's findings under Article  2.2 of the 
TBT Agreement and Articles  16.1 and 20 of the TRIPS  Agreement.97 The Dominican  Republic also 
appeals certain aspects of the Panel's findings under Article  2.2 of the TBT  Agreement and Article  20 
of the TRIPS  Agreement.98 We begin by addressing the appellants' claims that the Panel erred in its 
analysis under Article  2.2 of the TBT  Agreement. Next, we discuss the appellants'  claims of error 
relating to the Panel's interpretation and application of Articles  16.1 and 20 of the TRIPS  Agreement.  
6.1  Article  2.2 of the TBT  Agreement  
6.1.1   Overview  
6.2.  Honduras and the Dominican  Republic (th e appellants) request us to reverse the Panel's 
conclusion that the appellants had "not demonstrated that the TPP  measures are inconsistent with 
Australia's obligations under Article  2.2 of the TBT  Agreement".99 Article  2.2 provides that:  
Members shall ensure that technical regulations are not prepared, adopted or applied 
with a view to or with the effect of creating unnecessary obstacles to international trade. 
For this purpose, technical regulations shall not be more trade -restrictive tha n 
necessary to fulfil a legitimate objective, taking account of the risks non -fulfilment would 
create. Such legitimate objectives are, inter alia: national security requirements; the 
prevention of deceptive practices; protection of human health or safety, animal or plant 
life or health, or the environment. In assessing such risks, relevant elements of 
consideration are, inter alia : available scientific and technical information, related 
processing technology or intended end -uses of products.  
6.3.  For purposes of  establishing that a measure is inconsistent with Article  2.2, a complainant100 
must demonstrate that: (i)  the measure at issue constitutes a "technical regulation" within the 
meaning of the TBT  Agreement101; and (ii)  the measure is "more trade -restrictive tha n necessary to 
fulfil a legitimate objective, taking account of the risks non -fulfilment would create". With respect to 
the second element, the Appellate  Body has said that a panel must determine the objective that the 
Member seeks to achieve by means of t he technical regulation at issue and whether that objective 
is "legitimate".102 A panel must also determine whether the technical regulation is "more 
trade-restrictive than necessary" to fulfil the legitimate objective. The Appellate  Body has said that 
the a ssessment of "necessity", in the context of Article  2.2, involves a "relational analysis" of the 
following factors: (i)  the trade  restrictiveness of the technical regulation; (ii)  the degree of 
 
97 Honduras' Notice of Appeal, pp.  1-6. In its Notice of Appeal, the Dominican  Republic states that it 
"incorporates by reference into this appeal the claims on appeal made by Honduras". (Dominica n Republic's 
Notice of Appeal, para.  16) In addition, the "Introduction" section of its appellant's submission, in the context 
of summarizing its claim of error under Article  20 of the TRIPS  Agreement, the Dominican  Republic asserts that 
it "incorporates b y reference into this appeal the claims on appeal, and arguments, made by Honduras." 
(Dominican Republic's appellant's submission, para.  30) Furthermore, in response to questioning at the 
first hearing of these appellate proceedings, the Dominican  Republic  confirmed that it incorporated all of 
Honduras' claims and arguments on appeal. Accordingly, any reference to Honduras' claims and arguments 
throughout these Reports should be understood as also including a reference to the claims and arguments of 
the Dom inican  Republic.  
98 Dominican  Republic's Notice of Appeal, pp.  1-3. 
99 Honduras' Notice of Appeal, p.  6 (referring to Panel  Report (DS435), paras.  7.1724 -7.1732 and 
8.1.a); Dominican  Republic's Notice of Appeal, para.  5 (quoting Panel  Report (DS441), paras.  7.1732 and 
8.1.b.i.).  
100 The burden of proof under Article  2.2 rests on the complainant. (Appellate  Body Report,  
US – Tuna II (Mexico) , para.  323) 
101 Annex  1.1 to the TBT  Agreement defines a "technical regulation" as follows:  
Document which lays down product characteristics or their related processes and production 
methods, including the applicable administrative provisions, with which compliance is ma ndatory. 
It may also include or deal exclusively with terminology, symbols, packaging, marking or 
labelling requirements as they apply to a product, process or production method.  
102 Appellate  Body Report, US – Tuna II (Mexico) , para.  314. The third sentence  of Article  2.2 provides 
an illustrative list of "legitimate objectives", which includes " protection of human health ". 
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  contribution that the technical regulation makes to the achiev ement of a legitimate objective; and 
(iii) the risks non -fulfilment would create.103  
6.4.  The phrase in the second sentence of Article  2.2 that "technical regulations shall not be more 
trade-restrictive than necessary" implies that "some" trade  restrictiveness i s allowed.104 Establishing 
whether a technical regulation is "more trade -restrictive than necessary" may involve a comparison 
between: (i)  the trade restrictiveness and the degree of contribution of the measure at issue to the 
legitimate objective; and (ii)  the trade restrictiveness and the degree of contribution of possible 
alternative measures that are reasonably available to the legitimate objective  – taking account of 
the risks non -fulfilment would create.105 However, there are certain instances when such a  
comparative analysis might not be required, such as, when the measure is not trade -restrictive at 
all, or when a trade -restrictive measure makes no contribution to the achievement of the relevant 
legitimate objective.106 Likewise, a comparative analysis mig ht not be required where it can be 
demonstrated that, by its design, a trade -restrictive measure is incapable of contributing to the 
achievement of the relevant legitimate objective.107 
6.5.  Before the Panel, the complainants claimed that the TPP  measures are inc onsistent with 
Article  2.2 because they are more trade -restrictive than necessary to fulfil a legitimate objective, 
taking account of the risks non -fulfilment would create. The complainants submitted two  sets of 
arguments in support of their claims under Article  2.2. In their main set of arguments, the 
complainants asserted that  the TPP  measures are not apt to contribute , and make no contribution , 
to Australia's objective.108 In their alternative set of arguments, the complainants contended that, 
even if the TPP  measures make some contribution to Australia's objective, the TPP  measures are 
more trade -restrictive than necessary because "certain less trade-restrictive alternative measures 
would be reasonably available to Australia to achieve an equivalent  contribution to its objective, 
taking account of the risks that non -fulfilment of the objective would create."109 Australia responded 
to the complainants' claims by asserting that the TPP  measures fall outside the scope of Article  2.2 
and, to the extent tha t they do fall within the scope of this provision, the complainants failed to 
make a prima  facie case that they are inconsistent with Article  2.2.110 
6.6.  The Panel accepted that the TPP  measures fall within the scope of the TBT  Agreement111 and 
that these measures  constitute a technical regulation within the meaning of that  Agreement.112 The 
Panel also found that Australia had not demonstrated that the TPP  measures are "in accordance with 
relevant international standards" for the purpose of the second  sentence of Art icle 2.5 of the 
 
103 Appellate  Body Reports, US – COOL , para.  374 (referring to Appellate  Body Report, US – Tuna II 
(Mexico) , para.  318).  
104 Appellate  Body R eports, US – COOL , para.  375. 
105 Appellate  Body Reports, US – COOL , para.  376 (referring to Appellate  Body Report, US – Tuna II 
(Mexico) , paras.  320-322). The Appellate  Body has said that the comparison with reasonably available 
alternative measures is mere ly a "conceptual tool" to be used for the purpose of ascertaining whether a 
challenged measure is more trade -restrictive than necessary. (Appellate  Body Reports, US – COOL 
(Article  21.5 – Canada and Mexico) , paras.  5.328, 5.334, and 5.338; US – COOL , fn 749 to para.  376;  
US – Tuna II (Mexico) , para.  320) 
106 Appellate  Body Reports, US – COOL , fn 748 to para.  376 (referring to Appellate  Body Report,  
US – Tuna II (Mexico) , fn 647 to para.  322).  
107 In Colombia – Textiles , when addressing a defence under Article  XX(a) of the GATT  1994, the 
Appellate  Body considered that, "[w]ith respect to the analysis of the 'design' of the measure", an initial 
threshold examination should be conducted "to determine whether there is a relationship between an otherwise 
GATT-inconsistent measure" and the objective it purports to achieve. The Appellate  Body explained that if the 
"threshold examination reveals that the measure is incapable" of contributing to the objective, then further 
examination as to whether this measure i s "necessary" to achieve the stated objective "would not be required". 
(Appellate  Body Report, Colombia – Textiles , para.  5.68) We consider this reasoning to be equally apposite to 
the analysis under Article  2.2 of the TBT  Agreement.  
108 Panel  Report, paras.  7.426, 7.437 -7.438, and 7.485.  
109 Panel  Report, para.  7.1325. (emphasis original) In response to questioning at the second hearing, 
the appellants confirmed that: (i)  their main assertion before the Panel was that the TPP  measures are "more 
trade -restricti ve than necessary" because they do not, and are not apt to, make any contribution to Australia's 
objective while being trade -restrictive; and (ii)  they had argued, in the alternative, that, even if the 
TPP measures were found to make some contribution, the y would still be "more trade -restrictive than 
necessary" in light of the proposed alternative measures.  
110 Panel  Report, paras.  7.16 and 7.48.  
111 Panel  Report, para.  7.106.  
112 Panel  Report, para.  7.182.  
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  TBT Agreement.113 Therefore, the Panel found that the TPP  measures could not be "rebuttably 
presumed not to create an unnecessary obstacle to international trade".114 These Panel findings are 
not challenged on appeal.  
6.7.  Additionally, before the P anel, it was undisputed among the parties that "the objective of the 
TPP measures relates to public health protection and more specifically to the protection of public 
health in relation to the use of tobacco products in Australia."115 However, the parties d iffered in 
their understanding of the particular objective of the TPP  measures.116 Following its evaluation of 
the parties' arguments and the relevant evidence before it, the Panel considered "the objective 
pursued by Australia by means of the TPP  measures t o be to improve public health by reducing the 
use of, and exposure to, tobacco products".117 The Panel's finding regarding Australia's objective is 
not challenged on appeal.  
6.8.  Having identified Australia 's objective, the Panel indicated that it would "conduct a relational 
analysis of different factors, including the degree to which the TPP  measures contribute to this 
objective, the extent to which they are trade -restrictive, and the nature of the risks of non -fulfilment 
of the objective pursued and the gravity of the consequences that would arise from such 
non-fulfilment".118 The Panel considered it appropriate to examine the following factors119: (i) the 
degree of contribution of the TPP  measures to Australia's objective120; (ii) the trade restrictiveness 
of the TPP  measures121; (iii)  the nature and gravity of the "risks of non -fulfilment" within the 
meaning of the second sentence of Article  2.2 of the TBT Agreement122; and (iv)  whether any less 
trade-restrictive alternative measures capable of making an equivalent contri bution are reasonably 
available to Australia.123 
6.9.  The Panel found that:  
a. The complainants had failed to demonstrate that the TPP  measures are not apt to make a 
contribution to Australia's objective of improving public health by reducing the use of, and 
exposure to, tobacco products124; 
b. The evidence before the Panel, taken in its totality, supported the view that the 
TPP measures, in combination with other tobacco -control measures maintained by 
Australia (including the enlarged GHWs introduced simultaneously with TPP), are apt to, 
and do in fact, contribute to Australia's objective of reducing the use of, and exposure to, 
tobacco products125; 
c. The TPP  measures are trade -restrictive, insofar as, by reducing the use of tobacco 
products, they reduce the volume of imported tobacco products on the Australian market, 
and thereby have a "limiting effect" on trade126; 
d. While it is plausible that the TPP  measures may also, over time, affect the overall value  of 
tobacco imports, the evidence before the Panel did not show this to have been the case 
yet. The Panel was also not persuaded that the complainants had demonstrated that the 
TPP measures impose conditions on the sale of tobacco products in Australia or compliance 
costs of such magnitude that they would amount to a limiting effect on trade127; 
 
113 Panel  Report, para.  7.397.  
114 Panel  Report, para.  7.402 . 
115 Panel  Report, para.  7.213.  
116 Panel  Report, para.  7.214.  
117 Panel  Report, para.  7.232. See also ibid., paras.  7.243, 7.246, 7.251, and 7.495.  
118 Panel  Report, para.  7.419.  
119 Panel  Report, paras.  7.420 -7.422.  
120 Panel  Report, section  7.2.5.3.  
121 Panel  Report , section  7.2.5.4.  
122 Panel  Report, section  7.2.5.5.  
123 Panel  Report, section  7.2.5.6.  
124 Panel  Report, para.  7.1025  
125 Panel  Report, paras.  7.1025 and 7.1043.  
126 Panel  Report, paras.  7.1208 and 7.1255.  
127 Panel  Report, para.  7.1255.  
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  e. The risk that non -fulfilment of the objective of the TPP  measures would create is that 
public health would not be improved as  the use of, and exposure to, tobacco products 
would not be reduced. Such public health consequences of not fulfilling this objective are 
particularly grave128; and  
f. The complainants had not demonstrated that any of the four  proposed alternative 
measures is a  less trade -restrictive alternative measure that is reasonably available to 
Australia that would make a contribution to the objective equivalent to that of the 
TPP measures129, nor had Honduras or the Dominican  Republic established that the 
"cumulative" appl ication of these alternatives would constitute a less trade -restrictive 
alternative.130 
6.10.  Based on the foregoing, the Panel arrived at its overall conclusion that the complainants had 
not demonstrated that the TPP  measures are more trade -restrictive than neces sary to fulfil a 
legitimate objective, taking account of the risks non -fulfilment would create, within the meaning of 
Article  2.2.131 
6.11.  On appeal, the appellants claim that the Panel's intermediate and overall conclusions under 
Article  2.2 of the TBT  Agreement  should be reversed, because the Panel erred in its findings with 
respect to: (i)  the contribution by the TPP  measures to Australia's legitimate objective; (ii)  the 
trade-restrictive nature of the TPP  measures; and (iii)  the availability of less trade -restrictive 
alternative measures that provide an equivalent contribution to Australia's legitimate objective. In 
addition, the appellants claim that the Panel failed to make an objective assessment of the matter, 
as required under Article  11 of the DSU, with r espect to all the challenged aspects of its findings 
under Article  2.2 of the TBT  Agreement.132 We address the appellants ' claims of error pertaining to 
each aspect of the Panel's analysis in turn. In doing so, we bear in mind that these aspects of the 
Panel 's analysis relate to distinct but interrelated elements of the single legal standard applicable 
under Article  2.2, described in paragraphs  6.3.  -6.4.   above.  
6.1.2   The contribution of the TPP  measures to Australia's objective  
6.12.  Honduras argues that, while the Panel set out the correct legal standard under Article  2.2 of 
the TBT  Agreement, the Panel "erred in law as it failed to apply this legal standard to the facts of 
the case" in making its findings on the degree of contribution of the TPP  measures to Australia's 
objective.133 However, the majority of the a ppellants' claims of error relating to this aspect of the 
Panel's analysis challenge the Panel's objectivity in its assessment of the facts of the case, with the 
appellants arguing that the Panel failed in its duty under Article  11 of the DSU.134 Australia r equests 
us to reject the claim under Article  2.2 of the TBT  Agreement and the claims under Article  11 of the 
DSU in their entirety.135 
6.13.  In order to situate the appellants' claims in their proper context, we begin by providing a brief 
background to the Panel's  analysis and findings on the degree of contribution of the TPP  measures 
to Australia's objective. Next, we address Honduras' claim that the Panel erred in applying Article  2.2 
of the TBT  Agreement to the facts of this case. Thereafter, we introduce the ap pellants' claims under 
Article  11 of the DSU, setting out the order of analysis of these claims. This is followed by a 
discussion of the claims of error raised by the appellants  under Article  11 of the DSU . 
 
128 Panel  Report, para.  7.1322.  
129 Panel  Report, paras.  7.1471, 7.1545, 7.1624, and 7.1716.  
130 Panel  Report, paras.  7.1717 -7.1723.  
131 Panel  Report, para.  7.1732.  
132 Honduras' Notice of Appeal, pp.  3-6; Dominican  Republic's Notice of Appeal, pp.  1-3. 
133 Honduras' a ppellant's submission, para.  552. 
134 Honduras' appellant's submission, paras.  695-1080 and 1082 -1086; Honduras' appellant's 
submission, paras.  32-1216 and 1224 -1243.  
135 Australia's appellee's submission, paras.  355 and 915.  
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  6.1.2.1   Background to the Panel's analysis and findings o n the contribution of the 
TPP measures to Australia's objective  
6.14.  Before the Panel, Honduras argued that the TPP  measures make no contribution to Australia's 
objective, nor are they apt to do so.136 The Dominican  Republic contended that well -accepted axioms 
of social and medical science confirm that the TPP  measures will not be effective in achieving 
Australia's stated goals.137 The Dominican  Republic also argued that, at this stage, evidence of actual 
operation of the TPP  measures is far more valuable than mere expectations.138 Australia argued that 
the TPP  measures improve public health by impacting the three  mechanisms identified in the 
TPP Act, namely: (i)  reducing the attractiveness of tobacco packaging; (ii)  reducing positive 
perceptions of taste; and (iii)  reducing positive perceptions of smokers.139 Australia argued further 
that, with regard to the nature of the objective of the TPP  measures, their characteristics as revealed 
by their design and structure, and the nature, quantity , and quality of evidence avail able, the Panel 
should determine the measure's degree of contribution in qualitative terms.140  
6.15.  The Panel sought to determine the degree to which the TPP  measures, "as written and applied, 
contribute, if at all, to Australia's legitimate objective of improvi ng public health by reducing the use 
of, and exposure to, tobacco products".141 Although the Panel conducted its analysis in several steps, 
it emphasized that its overall assessment would "be based on the entirety of the relevant evidence, 
taken together".142 The Panel indicated that it would assess the evidence before it on the design, 
structure, and intended operation of the TPP  measures, before addressing the evidence relating to 
their actual application. In carrying out its analysis, the Panel considered th at it had a duty to 
examine all the evidence before it and to "evaluate the relevance and probative force of each piece 
thereof".143 Of particular relevance to how the Panel approached its analysis was 
Australia's  indication that the TPP  measures are intende d to contribute to Australia's objectives in 
the following manner:  
a. Tobacco plain packaging is intended to: (i)  reduce the appeal of tobacco products to 
consumers; (ii)  increase the effectiveness of the health warnings; and (iii)  reduce the 
ability of the p ackaging to mislead consumers about the harmful effects of smoking. 
Australia referred to these processes as the TPP  mechanisms, as did the Panel.144  
b. If the TPP  measures operate as intended upon any one or any combination of the above 
three mechanisms, then  Australian consumers are expected to be discouraged from taking 
up smoking (initiation) or resuming smoking (relapse), and to be encouraged to stop 
smoking (cessation) and reduce exposure to second -hand smoke. The Panel referred to 
initiation, relapse, an d cessation as, more generally, smoking behaviours  relating to the 
use of tobacco products.145 
 
136 Panel  Report, para.  7.426.  
137 Panel Report, para.  7.437.  
138 Panel  Report, para.  7.438. We take note of a tension in the appellants' claims of error on appeal. 
With respect to the Panel's assessment of the contribution of the TPP  measures to Australia's objective, the 
appellants claim that the Panel erred, inter alia, by according too much weight to the evidence of the 
anticipated effects of the TPP  measures, and insufficient weight to the evidence of actual effects of the 
TPP measures. Conversely, with respect to the Panel's assessment of t he trade restrictiveness of the 
TPP measures, the appellants claim that the Panel erred, inter alia, by according too much weight to the 
evidence of the actual effects of the TPP  measures, and insufficient weight to the evidence of the anticipated 
effects of the TPP  measures. (See para.  6.423.   and fn  1223 thereto below.)  
139 Panel  Report, para.  7.451.  
140 Panel  Report, para.  7.455.  
141 Panel  Report, para.  7.424. See also ibid., para.  7.483.  
142 Panel  Report, para.  7.507.  
143 Panel  Report, para.  7.517 (quoting Appellate  Body Report, Korea  – Dairy , para.  137).  
144 Panel  Report, para.  7.490.  
145 The Panel explained that, for the purpose of its Report, "smoking behaviours" are those directly 
related to the use of tobacco products, including, for example, initiation, cessation, relapse, and consumpt ion. 
"Smoking -related behaviours" are those associated with smoking behaviours, such as purchasing tobacco 
products, calling a Quitline, concealing a pack in public, and directing eye movements to GHWs. (Panel  Report, 
fn 1442 to para.  7.490)  
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  c. As a consequence, positive public health outcomes  – specifically reduced use of, and 
exposure to, tobacco products, and an associated reduction in tobacco -related disease and 
deaths  – would arise.146  
6.16.  The Panel began by assessing the anticipated effect of the TPP  measures, based on their 
design, structure , and expected operation.147 Thereafter, the Panel assessed the evidence relating 
to the actual effects of the TPP  measures following their entry into force. Specifically, the Panel 
assessed the impact of the TPP  measures on: (i)  "non-behavioural" or "proximal" outcomes (i.e.  the 
appeal of packaging, the effectiveness of the GHWs, and the ability of packaging to mislead 
consumers)148; (ii) "distal" outcomes (i.e.  intention and behavioural outcomes, such as increased 
intentions to quit and increased quit attempts)149; and (iii)  smoking beh aviour (i.e.  prevalence and 
consumption).150 
6.17.  Throughout its analysis, the Panel emphasized that the operation of the TPP  measures, 
including their contribution to Australia's objective, must be viewed in the broader context of other 
tobacco control measures maintained by Australia. The Panel explained that, while this broader 
context does not remove or reduce the need "to identify the contribution that the challenged 
measures themselves make to Australia's objective", it was a relevant consideration in the Panel's 
assessment, to the extent that "it informs and affects the manner in which the measures are applied 
and operate, as a component of a broader suite of complementary tobacco control measures."151 
6.18.   Following the Panel's examination of : (i) the de sign, structure, and intended operation of the 
TPP measures; (ii)  the actual application of the TPP  measures; and (iii)  the impact of the 
TPP measures on illicit trade, the Panel concluded that:  
7.1025. Overall … the complainants have not demonstrated that  the TPP  measures are 
not apt to make a contribution to Australia's objective of improving public health by 
reducing the use of, and exposure to, tobacco products. Rather, we find that the 
evidence before us, taken in its totality, supports the view that t he TPP  measures, in 
combination with other tobacco -control measures maintained by Australia (including the 
enlarged GHWs introduced simultaneously with TPP), are apt to, and do in fact, 
contribute to Australia's objective of reducing the use of, and exposu re to, tobacco 
products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports 
the view that, as applied in combination with the comprehensive range of other tobacco 
control measures maintained by Australia and not challen ged in these proceedings, 
including a prohibition on the use of other means through which branding could 
otherwise contribute to the appeal of tobacco products and to misleading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, a nd do, make a 
meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products.152 
6.19.  The Panel emphasized that its conclusion was based on the evidence available to the Panel at 
the time of its assessment and was not i ntended to prejudge the future evolution of the contribution 
of the TPP  measures to the reduction of the use of, and exposure to, tobacco products. At the same 
time, the Panel indicated that it was mindful that "the impact of the TPP  measures may evolve ov er 
time."153 In particular, the Panel considered "reasonable Australia's suggestion that the measures 
may be expected to have an impact in particular on future generations of young people whose 
 
146 Panel  Report , para.  7.490.  
147 Panel  Report, section  7.2.5.3.5.  
148 Panel  Report, para.  7.491.  
149 The Panel noted that "distal" outcomes relate more closely to smoking behaviours such as initiation, 
relapse, cessation, and exposure to second -hand smoke. (Panel  Report, para . 7.491)  
150 Panel  Report, section  7.2.5.3.6. The Panel also examined the impact of the TPP  measures on illicit 
trade. (Panel  Report, section  7.2.5.3.7)  
151 Panel  Report, para.  7.506 (referring to Appellate  Body Report, Brazil  – Retreaded Tyres , para.  154).  
152 Panel  Report, paras.  7.1025 and 7.1043.  
153 Panel  Report, para.  7.1044.  
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  exposure to tobacco advertising or promotion in Australia will h ave been generally limited, and that 
impacts on smoking cessation for existing smokers will also take some time to produce their full 
effects".154 
6.1.2.2   Claim that the Panel erred in its application of Article  2.2 of the TBT  Agreement  
6.20.  Honduras acknowledges that th e Panel "set out the correct legal standard"155 of how to assess 
the "degree to which a Member's technical regulation, as adopted, written, and applied, contributes 
to the legitimate objective pursued by that Member".156 However, Honduras claims that the Panel  
erred in law because it failed to apply this legal standard to the facts of the case.157 Honduras argues 
that, "generally", the Panel considered that an examination of the "totality of the evidence" meant 
that it was relieved of its obligation "to conduct a  proper analysis of the probative value of the 
evidence regarding the measures' actual impact on the relevant smoking behaviour".158 In response 
to questioning at the second hearing, Honduras expressed the view that if a panel sets a particular 
"legal standa rd" for how to approach and assess the evidence, then failing to adhere to that approach 
in its examination of the evidence would constitute an incorrect application of the law to the facts 
by the panel.  
6.21.  Australia submits that Honduras' claims relate to th e Panel's appreciation of the evidence and 
arguments and the relative weight that the Panel attributed to specific pieces of evidence, rather 
than the Panel's engagement with issues of law and legal interpretation. In support of its assertion, 
Australia po ints to Honduras' "failure to develop legal arguments in relation to any of its purported 
application claims".159 Accordingly, Australia requests the Appellate  Body to reject Honduras' claim 
that the Panel erred in its application of Article  2.2 of the TBT  Agreement in its assessment of the 
contribution of the TPP  measures to Australia's objective.160  
6.22.  We observe that, in elaborating its claims that the Panel erred under Article  2.2 of the 
TBT Agreement in its analysis of the contribution of the TPP  measures to  Australia's objective, 
Honduras makes arguments that overlap entirely with those made in support of its claims under 
Article  11 of the DSU. Specifically, in support of its claim that the Panel failed to apply the correct 
legal standard under Article  2.2 to the facts of this case, Honduras submits that the Panel:  
a. did not focus on the actual impact "on smoking behaviour" and "on the use of tobacco 
products", but gave equal or more weight to perceptions and intentions not corroborated 
by evidence on actual be haviour;  
b. did not focus on the actual impact of the measures on the use of tobacco products, but 
included "baseless " speculation about an uncertain future impact of the measures over 
time in light of uncorroborated statements about perceptions and intention s; 
c. did not make findings about the contribution of "the challenged [plain packaging 
measures] themselves", but rather about the challenged measures in combination with all 
other tobacco control measures adopted by Australia;  
d. did not examine and consider th e degree of contribution by evaluating "the relevance and 
probative force of each piece thereof"; rather, it simply summari zed the evidence 
presented and noted certain weaknesses without drawing any conclusions from these 
weaknesses in terms of the weight to be attached to this evidence, ultimately giving equal 
weight to all evidence;  
e. did not engage in any serious or objective assessment of the "scientific and methodological 
rigor" of the evidence on the degree of contribution presented "in application of t he 
 
154 Panel  Report, para.  7.1044.  
155 Honduras' appellant's submission, para.  552. 
156 Honduras' appellant's submission, para.  549 (quoting Appellate  Body Reports, US – COOL , 
para. 390).  
157 Honduras' appellant's submission, para.  552. 
158 Honduras' appellant's submission, para.  555. 
159 Australia's appellee's submission, para.  352. 
160 Australia's  appellee's submission, para.  355. 
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  SPS test" it considered to be applicable, but simply included all of the evidence – or at 
least all of the evidence that was submitted by Australia – and effectively gave it all equal 
weight; and  
f. despite its repeated statements about its approach to th e econometric evidence, the Panel 
conducted "its own (flawed) econometric assessment of the evidence" as it developed 
certain calculation and estimation methods that were never discussed with the parties and 
that remain unexplained even in the Panel's own final Report.161 
6.23.  In certain circumstances, some of the issues identified by Honduras' allegations may implicate 
a panel's application of the legal standard under Article  2.2 to the facts of the case.162 Moreover, as 
the Appellate  Body has said in the past, it is sometimes difficult to distinguish clearly between issues 
that are purely legal or purely factual or are mixed issues of law and fact.163 However, in most cases, 
an issue will be  either  one of application of the law to the facts or an issue of the objecti ve 
assessment of facts, but not both.164 
6.24.  In these appellate proceedings, several factors contribute to our view that Honduras' 
challenges to the Panel's analysis relate to the Panel's appreciation of the evidence before it, rather 
than to the Panel's applica tion of the legal standard under Article  2.2 to the facts of this case. We 
highlight Honduras' use of the following terminology in the arguments that it makes in support of its 
claim that the Panel erred in applying the legal standard under Article  2.2 to the facts of this case: 
(i) "the Panel … gave equal or more weight to perceptions and intentions not corroborated by 
evidence on actual behaviour"165; (ii) "[t]he Panel [did not evaluate] 'the relevance and probative 
force of each piece thereof'"166; (iii)  "[the Panel] simply summarised the evidence presented and 
noted certain weaknesses without drawing any conclusions from these weaknesses in terms of the 
weight to be attached to this evidence, ultimately giving equal weight to all evidence"167; (iv) "[t]he 
Panel did not engage in any serious or objective assessment of the 'scientific and methodological 
rigor' of the evidence"168; and (v)  the Panel "conduct[ed] its own (flawed) econometric assessment 
of the evidence".169 Moreover, the arguments raised  by Honduras are accompanied by footnotes 
referencing Honduras' arguments made in support of its claims under Article  11 of the DSU.170 In 
the same vein, Honduras indicates that the "Panel's actions", which are the subject of the claim that 
the Panel erred i n its application of Article  2.2, "also amount to a failure to undertake an objective 
assessment of the matter" under Article  11 of the DSU.171 
6.25.  For these reasons, we consider that Honduras' claims implicate the Panel's appreciation of the 
facts and evidence,  rather than its application of the legal standard under Article  2.2 to the facts of 
this case. Accordingly, we find that Honduras has not substantiated its claim that the Panel erred in 
its application of Article  2.2 to the facts of this case.  
6.26.  Rather, as  mentioned in paragraph  6.24.   above, in elaborating its claims that the Panel erred 
under Article  2.2 of the TBT  Agreement in its analysis of the cont ribution of the TPP  measures to 
Australia's objective, Honduras makes arguments that overlap entirely with those made in support 
 
161 Honduras' appellant's submission, para.  554. 
162 For instance, Honduras highlights that the Panel borrowed a standard that has been applied in cases 
involving the SPS  Agreement, in reasoning that "[t]o the extent that sci entific evidence is relied upon, [the 
Panel's] assessment may include in particular a consideration of whether such evidence … has the 'necessary 
scientific and methodological rigor to be considered reputable science'." (Honduras response to questioning at  
the second hearing; Panel  Report, para.  7.516 (quoting Appellate  Body Report, US – Continued Suspension , 
para. 591)) According to Honduras, the Panel did not apply this test "but simply included all of the evidence – 
or at least all of the evidence that w as submitted by Australia – and effectively gave it all equal weight". 
(Honduras' appellant's submission, para.  554.v)  
163 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  872. 
164 Appellate  Body Report, EC and certain member S tates – Large Civil Aircraft , para.  872. The 
Appellate  Body made similar observations in EC – Seal Products  and China – Rare Earths . See Appellate  Body 
Reports, EC – Seal Products , para.  5.243;  China – Rare Earths , para.  5.180.  
165 Honduras' appellant's submission, para.  554.i.  
166 Honduras' appellant's submission, para.  554.iv.  
167 Honduras' appellant's submission, para.  554.iv.  
168 Honduras' appellant's submission, para.  554.v.  
169 Honduras' appellant's submission, para.  554.vi.  
170 Hondura s' appellant's submission, fns  303-308 to para.  554. 
171 Honduras' appellant's submission, fn  302 to para.  554. 
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  of its claims under Article  11 of the DSU. Given the complete overlap between these two  sets of 
arguments, and the focus of bot h sets of arguments on the Panel's engagement with the facts and 
appreciation of the evidence before it, we address all of Honduras' challenges to the Panel's 
contribution analysis under the rubric of its claims under Article  11 of the DSU.  
6.1.2.3   Claims under Ar ticle 11 of the DSU  
6.1.2.3.1   Introduction  
6.27.  The appellants request us to reverse the Panel's conclusion that "the TPP  measures are apt 
to, and do, make a meaningful contribution to Australia's objective of reducing the use of, and 
exposure to, tobacco products."172 The appellants' request is based, primarily173, on their claims that 
the Panel failed in its duty under Article  11 of the DSU to make an objective assessment of the 
matter before it, with the appellants' focus being on the Panel's assessment of the facts of the  case.  
6.28.  Article  11 of the DSU provides that:  
The function of panels is to assist the DSB in discharging its responsibilities under this 
Understanding and the covered agreements. Accordingly, a panel should make an 
objective assessment of the matter before it, including an objective assessment of the 
facts of the case and the applicability of and conformity with the relevant covered 
agreements, and make such other findings as will assist the DSB in making the 
recommendations or in giving the rulings p rovided for in the covered agreements. 
Panels should consult regularly with the parties to the dispute and give them adequate 
opportunity to develop a mutually satisfactory solution.  
6.29.  Honduras contends that "the Panel fail[ed] to conduct an 'objective exami nation' of the 
evidence on the plain packaging measures' contribution to the objective of reducing the use of 
tobacco products."174 The Dominican  Republic, for its part, appeals the Panel's "overall findings and 
intermediate findings" resulting from its asse ssment of the: (i)  post-implementation evidence "on 
the actual  impact of the TPP  measures on smoking behaviours"175; (ii) pre-implementation evidence 
"on the anticipated  impact of the TPP  measures"176; (iii)  post-implementation evidence "on the 
actual  impact o f the TPP  measures on proximal and distal outcomes"177; and (iv)  "potential future 
impact of the TPP  measures".178 
6.30.  When introducing its claims under Article  11 of the DSU, the Dominican  Republic indicates 
that, "[i]n accordance with the Appellate  Body's guidan ce", the Dominican  Republic has carefully 
considered whether, and in which specific instances, to challenge the lack of objectivity  of the Panel's 
assessment of the matter.179 The Dominican  Republic states that it "challenges solely those errors 
for which th e Panel has 'exceeded the bounds of its discretion, as the trier of facts', and that are 
consequential to the Panel's findings".180 Honduras, for its part, contends that the "failures of the 
 
172 Honduras' appellant's submission, paras.  533, 615, 721, 740, and 766; Dominican  Republic's 
appellant's submission, paras.  32, 587, and 1593 (quo ting Panel  Report, para.  7.1043).  
173 As discussed in section  6.1.2.2   above, Honduras also claims that the Panel erred in its application of 
Article  2.2 of the TBT  Agreement to the facts of the case in its analysis of the contribution of the TPP  measures 
to Australia's objective.  
174 Honduras' Notice of Appeal, p.  5, section  III. 
175 Dominican  Republic's Notice of Appeal, para.  7. (emphasis original; fns  omitted)  
176 Dominican  Republic's Notice of Appeal, para.  8. (emphasis original)  
177 Dominican  Republic's Notice of Appeal, para.  9. (emphasis original)  
178 Dominican  Republic's Notice of Appeal, para.  10. As described in footnote  97 above, in addition to 
these specific claims of error, the Dominican  Republic, in its Notice of Appeal, states that it "incorporates by 
reference into this appeal the claims on ap peal made by Honduras". (Dominican  Republic's Notice of Appeal, 
para. 16) In response to questioning at the first hearing of these appellate proceedings, the 
Dominican  Republic confirmed that it incorporated all of Honduras' claims and arguments on appeal.  
Accordingly, any reference to Honduras' claims and arguments throughout these Reports should be understood 
as also including a reference to the claims and arguments of the Dominican  Republic.  
179 Dominican  Republic's appellant's submission, para.  33 (referr ing to Appellate  Body Reports,  
China – Rare Earths , para.  5.228).  
180 Dominican  Republic's appellant's submission, para.  33 (quoting Appellate  Body Reports,   
EC and certain member States – Large Civil Aircraft (Article  21.5 – US), para.  5.148; US – Wheat Gl uten, 
para. 151).  
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  Panel, taken individually and together", are of such a nature and m agnitude as to cast serious doubt 
on the required "objective assessment" of the Panel in the context of this dispute.181 
6.31.  Australia asks us to reject all of the appellants' claims under Article  11 of the DSU, 
characterizing them as an "unprecedented assault on a panel's performance of its fact -finding 
function".182 In Australia's view, the appellants' assurance that they have followed "the 
Appellate  Body's guidance" and "carefully considered whether, and in which specific instances, to 
challenge the lack of objectivity of the Panel's assessment of the matter" rings hollow given both the 
scale and nature of their claims under Article  11 of the DSU.183 Rather, Australia contends that the 
appellants' claims are an invitation to the Appellate  Body to determine whether the Panel's factual 
findings are correct , rather than whether the Panel was objective  in making its assessment of the 
facts of the case.184 For Australia, the appellants' approach to their claims under Article  11 of the 
DSU undermines  the Appellate  Body's recognition that the "credibility and weight of the evidence is 
within the panel's discretion as the trier of facts".185 In this regard, Australia recalls the 
Appellate  Body's explanation that it would not "interfere lightly" with the p anel's fact -finding 
authority186, and would not "second -guess the [p]anel in appreciating either the evidentiary value 
of … studies or the consequences, if any, of alleged defects in [the evidence]".187 
6.32.  At the outset, we wish to highlight certain preliminary c onsiderations that inform our approach 
to the appellants' claims under Article  11 of the DSU. These considerations pertain to: (i)  the burden 
of proof under Article  2.2 with respect to the assessment of the contribution of the TPP  measures to 
Australia's o bjective; (ii)  the nature of the Panel's overall conclusion, and the scope of the appellants' 
appeals in respect thereof; and (iii)  cross-cutting themes underpinning the appellants' claims under 
Article  11 of the DSU.  
6.1.2.3.1.1   Burden of proof  
6.33.  As noted in paragraph  6.5.   above, before the Panel, the complainants claimed that the 
TPP measures are inconsistent with Article  2.2 because they are more trade -restrictive than 
necessary to fulfil a legitimate objective, taking account of the risks non -fulfilment would create. 
The complainants submitted two  sets of arguments in support of their claims under Article  2.2. In 
their main set of arguments, the complainants assert ed that  the TPP  measures are not apt to 
contribute and make no contribution to Australia's objective.188 In their alternative set of arguments, 
the complainants contended that, even if the TPP  measures make some contribution to Australia's 
objective, the TPP  measures are more trade -restrictive than necessary because "certain less 
trade-restrictive alternative measures would be reasonably available to Australia to achieve an 
equivalent contribution to its objective, taking account of the risks that non -fulfilment of the 
objective would create."189 
 
181 Honduras' appellant's submission, para.  697. 
182 Australia's appellee's submission, para.  424. 
183 Australia's appellee's submission, para.  424. 
184 Australia's appellee's submission, para.  431. See also Canada's third participant's submission, 
para. 52; New  Zealand's third participant's submission, para.  15; United  States' third participant's submission, 
para. 31. 
185 Australia's appellee's submission,  para. 437 (quoting Appellate  Body Reports, US – Upland Cotton 
(Article  21.5 – Brazil) , fn 920 to para.  440; EC – Hormones , para.  132; US – Wheat Gluten , para.  151;  
EC – Sardines , para.  299; US – Carbon Steel , para.  142; Japan – Apples , para. 221).  
186 Australia's appellee's submission, para.  437 (quoting Appellate  Body Report, EC and certain member 
States – Large Civil Aircraft , para.  1317).  
187 Australia's appellee's submission, fn  558 to para.  437 (quoting Appellate  Body Report, 
Korea  – Alcoholic Beverages , para.  161).  
188 Panel  Report, paras.  7.426, 7.437 -7.438, and 7.485.  
189 Panel  Report, para.  7.1325. (emphasis original) In response to questioning at the second hearing, 
the appellants confirmed that: (i)  their main assertion before the Pane l was that the TPP  measures are "more 
trade -restrictive than necessary" because they do not and are not apt to make any contribution to Australia's 
objective while being trade -restrictive; and (ii)  they had argued, in the alternative, that, even if the 
TPP measures were found to make some contribution, they would still be "more trade -restrictive than 
necessary" in light of the proposed alternative measures.  
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  6.34.  It is well settled that "the party who asserts a fact, whether the claimant or the respondent, 
is responsible for providing proof thereof."190 Thus, the burden of proving that the TPP  measures are 
inconsistent with  Article  2.2 of the TBT  Agreement rested on the complainants.191 An implication of 
this allocation of the burden of proof is that, with respect to their main set of arguments, the 
complainants were required to adduce sufficient evidence to persuade the  Panel  that the 
TPP measures are not apt to, and do not, make any contribution to Australia's legitimate objective.192 
6.35.  In their alternative set of arguments, the complainants contended that, even if the 
TPP measures make some contribution to Australia's objective,  the TPP  measures are more 
trade-restrictive than necessary because "certain less trade-restrictive alternative measures would 
be reasonably available to Australia to achieve an equivalent contribution to its objective, taking 
account of the risks that non -fulfilment of the objective would create."193 We recall that the degree 
of contribution is only one factor of a panel's overall weighing and balancing for determining 
"necessity" under Article  2.2, and there is no predetermined threshold of contribution for  purposes 
of demonstrating an inconsistency with Article  2.2.194 A panel's overall weighing and balancing 
exercise need not be quantitative, and is often a qualitative assessment. Indeed, the Appellate  Body 
has said that "[i]n assessing the relevant factors with respect to the technical regulation itself, … 
while a complainant must be held to fulfil its burden to present a prima  facie case that the technical 
regulation is more trade restrictive than necessary under Article  2.2, it will not always be possible 
to quantify a particular factor, or to do so with precision."195 Thus, with respect to the complainants' 
alternative set of arguments, we do not consider that the complainants needed to demonstrate a 
precise quantifiable degree of contribution that the TPP  measures make to Australia's objective, in 
order to meet their burden of demonstrating that the TPP  measures are "more trade -restrictive than 
necessary". Rather, the complainants had to demonstrate that the TPP  measures are more 
trade-restrictive than neces sary because an equivalent degree of contribution could be achieved 
through less trade -restrictive alternative means.  
6.36.  This leads us to our next consideration: the nature of the Panel's overall conclusion, and the 
scope of the appellants' appeals in respect  thereof.  
6.1.2.3.1.2   The nature of the Panel's overall conclusion and the scope of the appellants' 
appeals  
6.37.  We recall that, before the Panel, and in connection with the complainants' main set of 
arguments, Honduras argued that the TPP  measures make no contribution to  Australia's objective, 
nor are they apt to do so.196 The Dominican  Republic contended that well -accepted axioms of social 
and medical science confirm that the TPP  measures will not be effective in achieving Australia's 
stated goals.197 The Panel understood th e parties' arguments as follows:  
In essence, the complainants consider that the TPP  measures cannot contribute to their 
objective through the mechanisms identified in the TPP  Act, and that 
post-implementation evidence shows that smoking prevalence has not in fact been 
reduced as a result of the TPP  measures. Australia in essence responds that, contrary 
to the complainants' assertions, the measures are designed on the basis of a sound 
 
190 Appellate  Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p.  335. See also 
Appellate  Body Reports, US – Carbon Steel (India) , para.  446; US – Gambling , paras.  138-140; US – Carbon 
Steel, para.  157; Canada – Dairy (Article  21.5 – New Zealand and US II) , para.  66; Japan – Apples , para.  159; 
EC – Hormones , para.  98; Japan – Agricultural Produ cts II, para.  129. 
191 Appellate  Body Report, US – Tuna II (Mexico) , para.  323. (fn  omitted) See also Appellate  Body 
Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208.  
192 This is in line with the Appellate  Body's explanation that "under the u sual allocation of the burden of 
proof, a responding Member's measure will be treated as WTO -consistent , until sufficient evidence is presented 
to prove the contrary." (Appellate  Body Report, Canada – Dairy (Article  21.5 – New Zealand and US II) , 
para. 66) (emphasis original))  
193 Panel  Report, para.  7.1325; Honduras' first written submission to the Panel, paras.  853, 859, 
and 911; Dominican  Republic's first written submission to the Panel, paras.  736-737, 980, and 1019 -1021.  
194 Appellate  Body Reports, US – COOL, para.  374; US – COOL (Article  21.5 – Canada and Mexico) , 
para. 5.216.  
195 Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208.  
196 Panel  Report, para.  7.426.  
197 Panel  Report, para.  7.437.  
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  evidence base, and that available post -implementation evidence confirms th at the 
measures are contributing to their objective of reducing smoking.198 
6.38.  The Panel sought to determine the degree to which the TPP  measures, "as written and applied, 
contribute, if at all, to Australia's legitimate objective of improving public health by reducing the use 
of, and exposure to, tobacco products".199 In its overall conclusion, the Panel answered this question 
as follows:  
7.1024. We have considered … the evidence before us in relation to the contribution of 
the TPP  measures to their objective of improving public health by reducing the use of, 
and exposure to, tobacco products. We have considered the relevant evidence relating 
both to the design, structure and intended operation of the TPP  measures, and the 
available evidence relating to their appl ication since their entry into force in December 
2012.  
7.1025. Overall, we find that the complainants have not demonstrated that the 
TPP measures are not apt to make a contribution to Australia's objective of improving 
public health by reducing the use of,  and exposure to, tobacco products. Rather, we 
find that the evidence before us, taken in its totality, supports the view that the 
TPP measures, in combination with other tobacco -control measures maintained by 
Australia (including the enlarged GHWs introdu ced simultaneously with TPP), are apt 
to, and do in fact, contribute to Australia's objective of reducing the use of, and exposure 
to, tobacco products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports 
the view that, as applied in combination with the comprehensive range of other tobacco 
control measures maintained by Australia and not challenged in these proceedings, 
including a prohibition on the use of other means through which branding could 
otherwise contribute to  the appeal of tobacco products and to misleading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, and do, make a 
meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products.200 
6.39.  We observe first that the Panel arrived at its "overall conclusion" following its consideration 
of the relevant evidence before it "relating both to the design, structure and intended operation of 
the TPP  measures, and the available evidence relating to their  application since their entry into force 
in December  2012".201 Second, we note that paragraph  7.1025 contains two  sentences. In the 
first sentence, the Panel concluded that "the complainants have not demonstrated that the 
TPP measures are not apt to make a contribution to Australia's objective of improving public health 
by reducing the use of, and exposure to, tobacco products."202 In the second sentence, the Panel 
continued to state that the evidence before it supported the view that "the TPP  measures, in 
combination with other tobacco -control measures maintained by Australia (including the enlarged 
GHWs introduced simultaneously with TPP), are apt to, and do in fact, contribute to Australia's 
objective of reducing the use of, and exposure to, tobacco products ."203 None of the appellants' 
submissions expressly referred to the first sentence of paragraph  7.1025. However, in response to 
questioning at the second hearing, the appellants , as well as Australia, all shared the view that the 
two sentences of paragraph  7.1025 were not to be read in isolation from each other. Rather, in their 
view, both sentences, read together, reflected the Panel's rejection of the complainants' proposition 
that the TPP  measures are not apt to, nor do they, make a contribution to Austral ia's objective of 
 
198 Panel  Report, para.  7.485. We note that the Panel's characterization of the parties' arguments is not 
challenged on appeal.  
199 Panel  Report, para.  7.424. See also ibid., para.  7.483.  
200 Panel  Report, paras.  7.1024 -7.1025 and 7.1043.  
201 Panel  Report, para.  7.1024.  
202 Panel  Report, para.  7.1025. (emphasis added)  
203 Panel  Report, para.  7.1025.  
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  reducing the use of, and exposure to, tobacco products. Honduras added that paragraph  7.1043 
confirmed the Panel's main finding, as reflected in the second sentence of paragraph  7.1025.  
6.40.  We agree with the participants that both sentences o f paragraph  7.1025, read together, are 
a rejection of the complainants' proposition that the TPP  measures are not apt to, nor do they make 
a contribution to Australia's objective of reducing the use of, and exposure to, tobacco products. 
However, we do not  share Honduras' view that the content of paragraph  7.1043 is the same as that 
of the second sentence of paragraph  7.1025. As we read it, there is an additional nuance to the 
Panel's finding in paragraph  7.1043. Between paragraphs  7.1025 and 7.1043, the Pa nel summarized 
the key points204 that justify its conclusion that "the TPP  measures are apt to, and do, make a 
meaningful  contribution to Australia's objective of reducing the use of, and exposure to, tobacco 
products."205 We do not consider the Panel's additi on of the word "meaningful" to be happenstance. 
While paragraph  7.1025 addressed and rejected the proposition by the complainants that "the 
TPP measures are not apt to  make a contribution to Australia's objective"206, the Panel's conclusion 
in paragraph  7.1043 goes further by speaking to the question of the "degree" of the contribution 
that the TPP  measures, in concert with Australia's other tobacco -control measures, make to 
Australia's objective. In this regard, the Panel's conclusion that "the TPP  measures are apt to, and 
do, make a meaningful  contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products"207 relates to the alternative set of the complainants' arguments. In other words, 
we understand the Panel to have made this  conclusion as a gateway to addressing the complainants' 
alternative proposition that, even if the Panel were to conclude that the TPP  measures make a 
contribution to Australia's objective, the TPP  measures would still be "more trade -restrictive than 
neces sary" because various alternative measures would be available to Australia that are less 
trade-restrictive and could achieve an equivalent degree of contribution  to Australia 's objective.208 
Indeed, the Panel highlighted this conclusion about the measures' " meaningful contribution to 
Australia's objective" in its assessment of the complainants' proposed alternative measures.209 
6.1.2.3.1.3   Cross -cutting themes underpinning the appellants' claims under Article  11 
6.41.  While the appellants have made numerous claims against specif ic statements, analyses, and 
findings of the Panel, they have largely addressed these claims under the rubric of broad 
cross-cutting themes. For instance, when introducing its claims under Article  11 of the DSU, 
Honduras claims that the Panel, in its asses sment of the evidence, "acted in violation of Article  11 
of the DSU" by failing to make an objective assessment of the matter before it, including an objective 
assessment of the evidence presented to it on the degree of actual  contribution of the measures to 
the fulfilment of the legitimate objective of Australia.210 Specifically, Honduras asserts that the Panel 
failed to make an objective assessment of the facts, as required under Article  11 of the DSU because 
the Panel allegedly, inter alia: 
a. failed to provide a reasoned and adequate explanation of how the facts supported the 
determination that the TPP  measures resulted in a reduction in smoking prevalence and 
in consumption of tobacco products;  
b. disregarded, misrepresented, and distorted material pieces of Honduras' evidence;  
c. failed to examine the evidence in an even -handed manner, applying a double standard of 
proof; and  
d. failed to respect the basic principles of due process and procedural fairness in the following 
manner – rather than appointing an expert to assist it in a transparent manner in exercise 
of its powers under Article  13 of the DSU or Article  14.2 of the TBT  Agreement, the Panel 
 
204 We observe that, in these paragraphs, the Panel emphasized the robust nature of the 
pre-implementation evidence before it, while highlighting the limitations of the eviden ce relating to the actual 
impact of the TPP  measures following their entry into force.  
205 Panel  Report, para.  7.1043. (emphasis added)  
206 Panel  Report, para.  7.1025.  
207 Panel  Report, para.  7.1043. (emphasis added)  
208 Honduras' first written submission to the P anel, para.  911; Dominican  Republic's first  written 
submission to the Panel, paras.  1019 and 1021 (referring to para.  736 et seq ., in particular para.  737).  
209 Panel  Report, para.  7.1386.  
210 Honduras' appellant's submission, para.  695. 
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  relied on a "ghost expert" who developed criticisms of the parties' evidence that the parties 
were never given an opportunity to comment on and that are never explained in the 
Panel  Report thus shielding them from proper scrutiny.211 
6.42.  According to Honduras, "[t]hese failures of the Panel, taken individually and together, are of 
such a nature and magnitude as to cast serious doubt on the required 'objective assessment ' of the 
Panel in the context of this dispute that related to a controversi al product and possibly well -intended 
but in any case unlawful, ineffective, and disproportionate measures."212 
6.43.  For its part, the Dominican  Republic asserts that, in assessing the contribution of the 
TPP measures to Australia's objective, the Panel allegedly  committed errors of the following nature:  
a. the Panel failed to respect the requirements of due process, including the requirements to 
provide the parties with a meaningful opportunity to comment and to test evidence with 
the parties, and to seek further in formation if necessary, in order to determine whether 
the evidence satisfies a party's burden of proof;  
b. the Panel made the case for Australia;  
c. the Panel treated competing evidence submitted by the parties inconsistently;  
d. the Panel developed reasoning that is internally incoherent;  
e. the Panel failed to provide "reasoned and adequate explanations" for its findings;  
f. the Panel made findings that lack a basis in the evidence contained on the Panel record; 
and 
g. the Panel failed to engage with evidence from the Domi nican  Republic that was material 
to its case.213 
6.44.  In responding to the appellants' allegations, Australia also clusters its arguments around 
several cross -cutting themes, including: (i)  the allocation of the burden of proof214; (ii) denial of due 
process215; (iii) the Panel's alleged failure to provide "'reasoned and adequate' explanations"216; and 
(iv) the materiality of the appellants' claims under Article  11 of the DSU.217 
6.45.  We recall that, with respect to the Panel's analysis of the contribution of the TPP  measures to 
Australia's objective, the appellants' claims under Article  11 of the DSU concern the Panel's 
assessment of the facts of the case. Article  11 provides that, in carrying out its function to assist the 
DSB in discharging its responsibilities under the DSU , "a panel should make an objective assessment 
of the matter before it, including an objective assessment of the facts of the case."218 In these 
appellate proceedings, the issue that we are required to address is whether the appellants have 
demonstrated that  the Panel, in conducting its analysis leading to its overall conclusion on the 
contribution of the TPP  measures to Australia's objective, made an objective assessment of the facts 
of the case in accordance with Article  11 of the DSU. The appellants' myria d claims and arguments 
pertain to this single issue, but are not in and of themselves, discrete "issues" within the meaning 
of Articles  17.6 and 17.12.219 Accordingly, we need not address, separately, each claim of error 
 
211 Honduras' appellant's submission, para.  696. 
212 Honduras' appellant's submission, para.  697. 
213 Dominican  Republic's appellant's submission, para.  34. 
214 Australia's appellee's submission, paras.  430 and 478.  
215 Australia's appellee's submission, paras.  428-430. 
216 Australia's appellee's submission, para.  431. 
217 Australia's appellee's submission, para.  449. 
218 Emphasis added.  
219 Article  17.6 of the DSU limits an appeal to "issues of law covered in the panel report and legal 
interpretations developed by the panel" . Article  17.12 of the DSU provides that "[t]he Appellate  Body shall 
address each of the issues raised in accordance with paragraph  6 during the appellate proceeding."  
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  raised by the appellants under Articl e 11 of the DSU. Rather, we consider that it would suffice for us 
to address, jointly, clusters of claims based on cross -cutting themes underpinning these claims.  
6.46.  Still in connection with the cross -cutting themes underpinning the appellants' claims under 
Article 11, we take note of the Dominican  Republic's assertion that, "[i]n accordance with the 
Appellate  Body's guidance", the Dominican  Republic has carefully considered whether, and in which 
specific instances, to challenge the lack of objectivity  of the Panel's assessment of the matter.220 
The Dominican  Republic states that it "challenges solely those errors for which the Panel has 
'exceeded the bounds of its discretion, as the trier of facts', and that are consequential to the Panel's 
findings".221 Honduras,  for its part, contends that the "failures of the Panel, taken individually and 
together", are of such a nature and magnitude as to cast serious doubt on the required "objective 
assessment" of the Panel in the context of this dispute.222 
6.47.  We observe that the Panel's analysis of the contribution of the TPP  measures to Australia's 
objective was quite detailed, covering 166  pages in its Report223, and 125  pages in Appendices  A-D 
to its Report. Yet, as Australia points out, the appellants' claims under Article  11 of  the DSU, 
challenging the Panel's analysis of the contribution of the TPP  measures to Australia's objective, form 
the bulk of their appeal, "collectively comprising nearly 450  pages of their appellants' 
submissions".224 Moreover, with the exception of the Pa nel's findings on the impact of the 
TPP measures on illicit trade, the appellants have challenged all of the intermediate findings that the 
Panel made in its analysis, as well as the Panel's overall conclusion on the contribution of the 
TPP measures to Aus tralia's objective.  
6.48.  The sheer volume of the appellants' claims under Article  11 of the DSU in these appellate 
proceedings is unprecedented. We recall that a claim that a panel has failed to conduct an objective 
assessment of the matter before it is "a very  serious allegation".225 Not every error by a panel 
amounts to a failure by the panel to comply with its duties under Article  11, only those which, taken 
together or singly, undermine the objectivity  of the panel's assessment of the matter before it.226 
Indeed , as an example of the grave implications of claims brought under Article  11, the 
Appellate  Body has considered that a panel's "[d]isregard", "distortion" , and "misrepresentation" of 
evidence, "in their ordinary signification in judicial and quasi -judicial processes, imp ly not simply an 
error of judgment in the appreciation of evidence but rather an egregious error  that calls into 
question the good faith of a panel".227 For these reasons, the Appellate  Body has urged Members to 
consider carefully "whe n and to what extent to challenge a panel's assessment of a matter pursuant 
to Article  11".228 This is in keeping with the objective of the prompt settlement of disputes, and the 
requirement in Article  3.7 of the DSU that Members "exercise judgement in decid ing whether action 
under the WTO dispute settlement procedures would be fruitful".229  
6.49.  Furthermore, the Appellate  Body has said that, in carrying out its duty to make an objective 
assessment of the facts of the case, a panel is required to "consider all the evidence presented to it, 
assess its credibility, determine its weight, and ensure that [the panel's] factual findings have a 
proper basis in that evidence".230 Within these parameters, "it is generally within the discretion of 
 
220 Dominican  Republic's appellant's submission, para.  33 (referring to Appellate  Body Rep orts,  
China – Rare Earths , para.  5.228).  
221 Dominican  Republic's appellant's submission, para.  33 (quoting Appellate  Body Reports,   
EC and certain member States – Large Civil Aircraft (Article  21.5 – US), para.  5.148; US – Wheat Gluten , 
para. 151).  
222 Hondu ras' appellant's submission, para.  697. 
223 Panel  Report, pp.  253-419. 
224 Australia's appellee's submission, para.  424; Dominican  Republic's appellant's submission, 
pp. 25-321 and 346 -358 (308  pages); Honduras' appellant's submission, pp.  193-315 and 317 -340 
(146 pages).  
225 Appellate  Body Report, Peru – Agricultural Products , para.  5.66 (quoting Appellate  Body Reports, 
China – Rare Earths , para.  5.227 (fn  omitted)).  
226 Appellate  Body Reports, Peru – Agricultural Products , para.  5.66; EC and certain member States – 
Large Civil Aircraft , para.  1318; US – COOL , paras.  300 and 321.  
227 Appellate  Body Report, EC – Hormones , para.  133. (emphasis added)  
228 Appellate  Body Reports, China – Rare Earths , para.  5.228.  
229 Appellate  Body Reports, China – Rare Earths , para.  5.228. 
230 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
Brazil  – Retreaded Tyres , para.  185; referring to Appellate Body Reports, EC – Hormones , paras.  132-133; 
Australia – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen (Article  21.5 – India) , paras.  170, 
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  the [p]anel to decide which ev idence it chooses to utilize in making findings."231 Moreover, when 
assessing the probative value of the evidence, a panel is not required to "accord to factual 
evidence  … the same meaning and weight as do the parties".232 As such, a challenge under Article  11 
of the DSU "cannot be made out simply by asserting that a panel did not agree with arguments or 
evidence".233 
6.50.  In this vein, we emphasize that we will not entertain attempts by the appellants to resubmit 
their factual arguments under the guise of challenging  the objectivity of the Panel's assessment of 
the facts of the case. In our view, entertaining such factual arguments would undermine the Panel 
in its role as the trier of facts and the adjudicator of first  instance in WTO dispute settlement. To our 
minds,  entertaining the appellants' factual arguments would not only fail to respect the role, and 
discretion, of the Panel as the trier of facts, but it would also not be in line with the Appellate  Body's 
caution that we: (i)  will not "interfere lightly" with t he panel's fact -finding authority234; (ii) will not 
"second -guess the [p]anel in appreciating either the evidentiary value of … studies or the 
consequences, if any, of alleged defects in [the evidence]"235; and (iii)  will not reach "a finding of 
inconsistency under Article  11 simply on the conclusion that [ we] might have reached a different 
factual finding from the one the panel reached".236 
6.1.2.3.1.4   Approach to addressing the appellants' claims under Article  11 of the DSU and 
order of analysis  
6.51.  Based on the foregoing prel iminary considerations, and our review of the participants' 
submissions, we do not consider it necessary to address, separately, each discrete claim raised by 
the appellants under Article  11 of the DSU. Rather, we address, jointly, clusters of claims based  on 
cross-cutting themes underpinning these claims. That said, we have identified certain of the 
appellants' claims that are not captured sufficiently by the cross -cutting themes, and we shall 
address these discretely. We also consider the Panel's findings  on the anticipated effects of the 
TPP measures to be so seminal to the Panel's overall's conclusion237 such that the appellants' 
challenges to these findings warrant discrete examination.  
6.52.  Additionally, we recall that Article  3.4 of the DSU indicates that "[ r]ecommendations or rulings 
made by the DSB shall be aimed at achieving a satisfactory settlement of the matter ." Article  3.7 
states that "[t]he aim of the dispute settlement mechanism is to secure a positive solution to a 
dispute." These overarching aims of the WTO  dispute settlement mechanism suggest to us that, 
while we are required to address  each issue on appeal in accordance with Article  17.12, we have the 
discretion not to rule on the substance of certain claims when doing so is not necessary to reso lve 
the dispute.238 We consider that we need not rule on the substance of certain of the appellants' 
claims in order to provide a positive solution to the dispute before us.  
6.53.  In sum, following our review of the participants' submissions, we consider it approp riate to 
address the appellants' claims on the basis of these three  approaches: (i)  a minority of the 
appellants' claims warrant discrete examination (the appellants' claims regarding anticipated effects 
of the TPP  measures, as well as a few claims regardi ng the actual effects of the TPP  measures); 
(ii) with respect to the majority of the appellants' claims under Article  11 of the DSU, we address, 
jointly, clusters of claims based on cross -cutting themes underpinning these claims; and (iii)  with 
 
177, and  181; EC – Sardines , para. 299; EC – Tube or Pipe Fittings , para.  125; Japan  – Apples , para.  221; 
Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic Beverages , paras.  161-162; Korea – Dairy , 
para. 138; US – Carbon Steel , para.  142; US – Gambling , para.  363; US – Oil Country Tubular Goods Sunset 
Reviews , para.  313; EC – Selected Customs Matters , para.  258).  
231 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
EC – Hormones , para.  135).  
232 Appellate  Body Report, EC – Fasteners (China) (Article  21.5 – China) , para.  5.61.  
233 Appellate  Body Reports, China – Rare Earths , para.  5.227 (referring to Appellate Body Report, 
Chile – Price Band System (Article  21.5 – Argentina) , para.  238).  
234 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  881. 
235 Appellate  Body Report, Japan – Apples , para.  222 (quoting Appellate  Body Report, EC – Asbestos , 
para. 177, in turn quoting Appellate  Body Report, Korea – Alcoholic Beverages , para.  161).  
236 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  881. (fn  omitted)  
237 See fn  204 above.  
238 Appellate  Body Reports, US – Tuna II (Mexico) (Article  21.5 – US) / US – Tuna II (Mexico) 
(Article  21.5 – Mexico II) , para.  6.318; US – Upland Cotton , paras.  510-511. WT/DS435/AB/R • WT/DS441/AB/R  
 
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  respect to the remainder of the appellants' claims under Article  11 of the DSU, we need not rule on 
the substance of these claims in order to provide a positive solution to the dispute before us.  
6.54.  Accordingly, we proceed with the following order of analysis, addressin g claims concerning: 
(i) the Panel's assessment of the pre -implementation evidence pertaining to the design, structure, 
and intended operation of the TPP  measures; (ii)  the Panel's assessment of the post -implementation 
evidence pertaining to the applicatio n of the TPP  measures; (iii)  the Panel's statements on the future 
impact of the TPP  measures; (iv)  the Panel's assessment of the post -implementation evidence, 
which need not be addressed in order to provide a positive resolution to the dispute before us; and 
(v) the Panel's overall conclusion.  
6.1.2.3.2   The Panel's assessment of the pre -implementation evidence pertaining to the 
design, structure, and intended operation of the TPP  measures  
6.1.2.3.2.1   Overview  
6.55.  The appellants have brought several claims under Article  11 of the DSU in relation to the 
Panel's consideration of the evidence pertaining to the design, structure, and intended operation of 
the TPP  measures (pre -implementation  evidence239), as an element of the Panel's overall 
assessment of the degree of contribution of the TPP  measures to Australia's objective.240 The 
appellants' claims can be broadly categorized into two  groups, namely: (i)  claims pertaining to the 
validity of the Panel's intermediate  conclusion241, reached on the basis of the pre -implementa tion 
evidence, that the complainants failed to demonstrate that the TPP  measures would be incapable of 
contributing to Australia's public health objective through the three  "mechanisms" by which the 
measures are designed to operate, i.e.  reducing the appea l of tobacco products, enhancing the 
effectiveness of the GHWs, and reducing the ability of tobacco packaging to mislead consumers242; 
and (ii)  claims pertaining to whether these intermediate conclusions, together with the evidence 
pertaining to the applicat ion of the TPP  measures (or the "post -implementation" evidence), provided 
sufficient support to the Panel's overall  conclusion on contribution243 - that the complainants failed 
to demonstrate that the TPP  measures are not apt to make a contribution to Austra lia's objective, 
but rather, they are apt to, and do, make a meaningful contribution to that objective, as applied in 
combination with other tobacco control measures maintained by Australia.244 
6.56.  In this section, we address the appellants' claims pertaining to  whether the Panel acted 
inconsistently with Article  11 in reaching its intermediate conclusions based on its assessment of the 
pre-implementation evidence (i.e.  item (i) above). The claims falling under item  (ii) above are 
addressed in section  6.1.2.3.4    below, in which we determine whether the Panel failed to make an 
objective assessment of the matter in arriving at its overall conclusion on contribut ion. 
6.57.  Honduras and the Dominican  Republic each challenge different aspects of the Panel's analysis 
leading to its intermediate conclusions based on the pre -implementation evidence. Honduras claims 
that, in reaching these intermediate conclusions, the Panel failed to provide a reasoned and adequate 
 
239 In their written submissions to the Panel, the parties used the term "pre -implementation evidence" 
to refer to the evidence pertaining to the TPP  measures' design, structure, and intended operation, including in 
particular the studies that provided an evi dentiary base for Australia's adoption of tobacco plain packaging 
measures (TPP  literature). The parties used the term "post -implementation evidence" to refer to the evidence 
pertaining to the measures' application since their entry into force. At the same  time, we note that although 
the Panel stated that the TPP  literature "mostly" consists of studies predating the implementation of the 
TPP measures in Australia, the Panel observed that some of those studies were published after the 
implementation of the T PP measures. (See  Panel  Report, paras.  7.521 and 7.539) As such, technically 
speaking, the implied distinction between the terms "pre -implementation evidence" and "post -implementation 
evidence" may not be entirely accurate. However, given the practical uti lity of these terms, we also use them 
as a shorthand to refer to the evidence pertaining to the design, structure, and intended operation of the 
TPP measures, and to the evidence pertaining to their actual application since their entry into force, 
respecti vely. 
240 See Panel  Report, section  7.2.5.3.5.  
241 Panel  Report, paras.  7.929 -7.930.  
242 Honduras' appellant's submission, section VIII.2.1.2(a) and paras.  1008-1014; Dominican  Republic's 
appellant's submission, section  II.E.2.  
243 Panel  Report, paras.  7.1025 and 7.1043.  
244 Honduras' appellant's submission, sections  VIII.2.1.2(b) and VIII.2.1.2(c); Dominican  Republic's 
appellant's submission, section  II.E.3.  
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  explanation245 and treated the evidence in a one -sided manner  in favour of Australia246, when it 
reasoned that, while there may be "serious limitations" inherent in the individual studies that 
provided an evidentiary base for the adoption of the TPP  measures, any such limitations can be 
overlooked by considering their "combined strength".247 The Dominican  Republic, for its part, claims 
that the Panel failed to engage with the Dominican  Republic's evidence tha t directly contradicted the 
Panel's intermediate conclusion, and, by doing so, the Panel based its conclusion on  "incoherent 
reasoning ".248 
6.1.2.3.2.2   Summary of the Panel's findings  
6.58.  Before the Panel, Australia explained that the design of the TPP  measures reflects a " causal 
chain model " or "mediational model"249, whereby the measures are intended to affect smoking 
behaviour through three  "mechanisms" – or "proximal" or "non -behavioural" outcomes – identified 
in the TPP  Act. These three  mechanisms are:  (i) reducing the ap peal of tobacco products to 
consumers; (ii)  enhancing the effectiveness of GHWs; and (iii)  reducing the ability of the pack to 
mislead consumers about the harmful effects of smoking. According to the "causal chain" model, the 
three  "proximal" outcomes are expected in turn to have an impact on "distal" outcomes, such as 
increased intentions to quit and increased quit attempts, which relate more closely to ultimate 
smoking behaviours, such as initiation, relapse, and cessation, and exposure to second -hand 
smoke.250 
6.59.  The complainants' main c laim251 before the Panel was that the TPP  measures are more 
trade-restrictive than necessary within the meaning of Article  2.2 because they do not, and are not 
apt to, make any contribution to Australia's objective through any of  the three  mechanisms, while 
entailing considerable trade restrictiveness.252 In this context, the complainants argued that the 
assumption underlying the adoption of tobacco plain packaging measures in Australia rests on 
fundamental misconceptions regarding behavioural theories.253 
6.60.  Specifically, the complainants argued that the body of studies – mostly predating the 
implementation of the TPP  measures – that provided the evidentiary base for the adoption of the 
measures (the TPP  literature254) was not of a quality  or methodological rigour sufficient to provide a 
reliable basis to support the measures.255 The complainants  also argued that, even assuming that 
the measures would, as Australia argued, be apt to have an impact on the "proximal" outcomes 
(i.e. reduce the a ppeal of tobacco products, increase the effectiveness of GHWs, or limit the ability 
of packaging to mislead consumers about the harmful effects of smoking), this w ould not have an 
impact on relevant smoking behaviour.256 Instead, the complainants contended t hat the proposition 
underlying the TPP  measures had been refuted by the post -implementation empirical evidence 
 
245 Honduras' appellant's submission, paras.  796-797 and 802.  
246 Honduras' app ellant's submission, paras.  1006 and 1018.  
247 Honduras' appellant's submission, paras.  799-801, 805, 1010 -1011, and 1013.  
248 Dominican  Republic's appellant's submission, section  II.E.2 (see, in particular, para.  658).  
249 Panel  Report, para.  7.488.  
250 Panel  Report, para.  7.491 and fn  1443 thereto.  
251 The complainants argued in the alternative  that, even if the Panel were to conclude that the 
TPP measures make some  contribution to Australia's objective, the TPP  measures would still be "more 
trade -restrictive than  necessary" because various alternative measures would be available to Australia that are 
less trade -restrictive and could achieve an equivalent degree of contribution. (Honduras' first written 
submission to the Panel, para.  911; Dominican  Republic's first  written submission to the Panel, paras.  1019 
and 1021 (referring to para.  736 et seq. , in particular para.  737))  
252 Panel  Report, paras.  7.426 and 7.434.  
253 Panel  Report, paras.  7.426 and 7.434.  
254 We note the Panel's explanation that the term "TPP literatu re" was used in the Panel Report "without 
implying a specific list of relevant studies". The Panel noted that the complainants had presented a set of 
68 studies that they had referred to as "the PP literature" (Panel  Exhibits JE -24(1) -(68)), as well as a n umber 
of expert reports containing reviews of relevant TPP -related studies. The Panel further noted that these lists 
overlapped partially with the literature referred to by Australia. The Panel stated that it referred to this body of 
studies generally as " the TPP  literature". (Panel  Report, fn  1485 to the title of section  7.2.5.3.5.1. See also 
ibid., para.  7.522 and fn  1486 thereto)  
255 Panel  Report, paras.  7.518 -7.521.  
256 Panel  Report, para.  7.520.  
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  available at the time of the Panel proceedings, which purportedly demonstrated that smoking 
prevalence had not been reduced as a result of the TP P measures.257 
6.61.  The Panel began its assessment of the evidence pertaining to the design, structure, and 
intended operation of the TPP  measures by addressing the complainants' overall critique of the 
TPP literature.258 The Panel considered the complainants' crit ique to be  unpersuasive, and instead 
found that "the studies forming the TPP  literature come from respected and qualified sources, focus 
on relevant outcomes and have not been shown to be, overall, so methodologically flawed that they 
should be dismissed i n their entirety as an unreliable evidentiary base in support of tobacco plain 
packaging."259 
6.62.  The Panel then proceeded to examine, with extensive references to the individual studies 
constituting the TPP literature, whether and to what extent the TPP  measures were expected to have 
an impact on the three  proximal outcomes (or mechanisms) and, ultimately, on smoking behaviour. 
With respect to the three  proximal outcomes, the Panel was not persuaded that:  
a. the complainants had shown that the  TPP measures would not be capable of reducing the 
appeal of tobacco products, and thereby contribute to Australia's objective of improving 
public health by reducing the use of, and exposure to, tobacco products260; 
b. the complainants had demonstrated that the  TPP measures would not be capable of 
increasing the effectiveness of GHWs, and thereby contribute to Australia's objective of 
improving public health by reducing the use of, and exposure to, tobacco products261; and 
c. the complainants had demonstrated that th e TPP  measures, by their design, would not be 
capable of reducing the ability of tobacco packaging to mislead consumers about the 
harmful effects of smoking; or that any such contribution could add nothing to what can 
be achieved under the Australian Consu mer Law.262 
6.63.  Accordingly, the Panel found that, overall, the complainants had failed to demonstrate that 
the TPP  measures would be incapable of contributing to Australia's objective of improving public 
health by reducing the use of, and exposure to, tobacco p roducts, through the operation of the 
three  mechanisms identified in the TPP  Act, in combination with other relevant tobacco control 
measures applied by Australia.263 Rather, the Panel considered that:  
[I]n a regulatory context where tobacco packaging would otherwise be the only 
opportunity to convey a positive perception of the product through branding, as is the 
case in Australia, it appears to us reasonable to hypothesize some correlation between 
the removal of such design features and the appeal of the pr oduct, and between such 
reduced product appeal and consumer behaviours. It also does not appear 
unreasonable, in such a context, in light of the evidence before us, to anticipate that 
the removal of these features would also prevent them from creating a co nflicting signal 
that would undermine other messages that seek to raise the awareness of consumers 
about the harmfulness of smoking that are part of Australia's tobacco control strategy, 
including those arising from GHWs.264 
6.64.  The Panel stressed that these con clusions were intermediate in nature, and that the probative 
value of the pre -implementation evidence was to be assessed in light of the Panel's subsequent 
examination of the actual impact of the TPP  measures, based on the evidence pertaining to their 
application  following the measures' entry into force (i.e.  the "post -implementation" evidence).265 
 
257 Panel  Report, paras.  7.485 -7.486.  
258 Panel  Report, section  7.2.5.3.5.1.  
259 Panel  Report, para.  7.639.  
260 Panel  Report, para.  7.777.  
261 Panel  Report, para.  7.868.  
262 Panel  Report, para.  7.927.  
263 Panel  Report, para.  7.929. See also ibid.,  para. 7.1034.  
264 Panel  Report, para.  7.1034. (emphasis original)  
265 See, for example , Panel  Report, paras.  7.495 -7.500, 7.644, 7.779, 7.870, and 7.928.  
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  6.1.2.3.2.3   Whether the Panel acted inconsistently with Article  11 of the DSU by 
inappropriately attaching probative value to the TPP  literature  
6.65.  Honduras claims that the Panel  failed in its duty under Article  11 of the DSU – including by 
failing to provide a reasoned and adequate explanation and by treating the evidence in a one -sided 
manner in favour of Australia – because it inappropriately attached probative value to the stu dies 
forming the TPP  literature.266 In particular, Honduras highlights that the Panel acknowledged that 
the studies forming this  literature focus on "non -behavioural" outcomes (i.e.  "proximal" outcomes 
or the "mechanisms" of the TPP  measures) and that, there fore, they alone are not informative of 
the ultimate question of whether the TPP  measures contribute to Australia's objective of reducing 
the use of, and exposure to, tobacco products.267 Honduras also notes that the Panel accepted that 
the ideal test for ex amining the effectiveness of the TPP  measures would have been a randomized, 
longitudinal, and counterfactual study, but that this was not the methodology used in the 
pre-implementation studies.268 Honduras observes that, notwithstanding the "serious limitati ons" of 
the pre -implementation studies, the Panel stated that such individual flaws were not "fatal" because 
the studies should not be assessed in isolation but, rather, in the wider context of the entire body 
of studies, taking into consideration their "c ombined strength" and consistency with the wider 
literature.269 In Honduras' view, however, "[t]here is no logic in saying that one bad study would be 
more reliable if it is bundled with other bad studies", and, to the contrary, "no probative value or 
weight can be given" to such "bad" studies.270 
6.66.  Australia disagrees wi th Honduras' contention that the Panel failed to conduct an objective 
assessment of the matter before it by assigning probative value to the pre-implementation evidence 
despite its "serious limitations". As Australia sees it, Honduras' claims of error are directed at the 
Panel's discretion to assess the credibility, determine the weight, and make findings on the basis of 
the evidence on the Panel record.271 As such, Australia claims that Honduras is asking us to 
effectively reweigh that evidence.272 Australia s tresses that, contrary to Honduras' assertion, the 
Panel carefully scrutinized the complainants' criticisms of the TPP  literature273 – which were based 
on the focus of the TPP literature; the lack of randomized, longitudinal, and counterfactual studies; 
and the alleged lack of methodological rigour – and explained why it did not find these criticisms 
persuasive.274  
6.67.  We note at the outset that Honduras' claim concerns only a portion of the Panel's analysis of 
the evidence pertaining to the design, structure, and  intended operation of the TPP  measures, 
namely, the section of the Panel  Report where the Panel assessed the overall  quality and reliability 
of the TPP  literature.275 Indeed, in its appellant's submission, Honduras refers primarily to the 
paragraphs276 of sec tion 7.2.5.3.5.1 of the Panel  Report , titled "Critique of the 'plain packaging 
literature' (TPP literature)", where the Panel addressed the complainants' pre -emptive argument 
that this body of evidence, as a whole , suffers from serious methodological flaws  and lacks the 
 
266 Honduras' appellant's submission, paras.  800 and 805.  
267 Honduras' appellant's submission, para.  799 (quoting Panel  Report, paras.  7.553, 7.564, and 7.642). 
See also ibid., para.  1008 (quoting Panel  Report, para.  7.562 and fn  1595 thereto, and para.  7.642).  
268 Honduras' appellant's submission, para.  799 (quoting  Panel  Report, paras.  7.557, 7.588, and 7.605, 
and fn  1681 to para.  7.605). See also ibid., para.  1009.  
269 Honduras' appellant's submission, paras.  800 and 1010 (quoting Panel  Report, paras.  7.627 
and 7.641).  
270 Honduras' appellant's submission, para.  801. Honduras also argues that, by adopting a one -sided 
"totality of evidence" approach, the Panel allowed non -scientific and sub -standard evidence to remain included 
in the overall analysis whenever it supported Australia's case, while rejecting evidence submi tted by the 
complainants as soon as it identified an individual flaw in it. (Ibid., paras.  801-803. See also ibid., 
paras.  1005-1006 and  1018)  
271 Australia's appellee's submission, para.  535. 
272 Australia's appellee's submission, para.  537. 
273 Australia's app ellee's submission, para.  536 (referring to Panel  Report, paras.  7.539 -7.644).  
274 Australia's appellee's submission, para.  536 (referring to Panel  Report, paras.  7.555, 
7.561 -7.562,  7.610, and 7.638 -7.639).  
275 See Panel  Report, para.  7.639.  
276 See, for exam ple, Panel  Report, paras.  7.499, 7.553, 7.557, 7.562, 7.564, 7.588, 7.605, 7.627, 
and 7.641.  
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  scientific rigour and objectivity required to form a reliable evidentiary base for a policy intervention 
of this kind.277  
6.68.  As regards Honduras' contention that the Panel acknowledged the "serious limitations" 
inherent in the individual studies  forming the TPP  literature, we note that Honduras identifies 
two features of those studies as constituting such limitations: (i)  the focus of the TPP  literature on 
"proximal" or "non -behavioural" outcomes, rather than on the ultimate question of whether t he 
TPP measures affect smoking behaviour; and (ii)  the lack of randomized, longitudinal, and 
counterfactual studies that the Panel suggested would have been "ideal".278 
6.69.  We observe that, contrary to what Honduras asserts on appeal, the Panel rejected , rather 
than acknowledged, the view that these features constitute d a flaw in the individual studies forming 
the TPP  literature, of such nature as to fundamentally undermine their probative value.  
6.70.  Specifically, with respect to the  focus of the TPP  literature on no n-behavioural outcomes 
(item  (i) in paragraph  6.68.   above) , the Panel noted that much of the TPP  literature focuses on the 
ability of plain packaging to have an impact on the three  "mechanisms" (or "proximal" or 
"non-behavioural" outcomes) through which the TPP  measures are intended to act, rather than on 
the measures' impact on smoking behaviour279, which is the ultimate target of the TPP  measu res. 
Nonetheless, the Panel considered that the focus of the TPP  literature on non -behavioural outcomes 
"does not … constitute an inherent flaw , provided that this is understood as constituting 
one component of a broader evidence base".280 The Panel explaine d that the TPP  measures were 
designed to act on these "non -behavioural" or "proximal" outcomes, with a view to ultimately 
affecting smoking behaviours, and that the three  "mechanisms" identified in the TPP  Act closely 
reflect the specific "non -behavioural"  outcomes that were studied in a large portion of the 
TPP literature predating the  measures' adoption.281 The Panel also considered that, while a 
consideration of the impact of the measures on smoking behaviour is "directly relevant" to its 
assessment282, ther e is no reason to exclude , ex ante, that the evidence relating to "proximal" 
outcomes also informs that assessment, to the extent that it would inform the impact of the 
measures on smoking behaviour.283 
6.71.  With respect to the alleged lack of randomized, longitu dinal, and counterfactual studies 
(item  (ii) in paragraph  6.68.  above) , the Panel noted that there is "some convergence" among 
researchers that the "ideal test" of the effectiveness of plain packaging would have been "a 
longitudinal randomi zed controlled trial in a population -based setting, where packaging is 
manipulated in some markets but not in others".284 However, t he Panel  observed that the 
evidenc e – including the Dominican  Republic's own evidence285 indicated that there are important 
limitations to the feasibility or utility of conducting such randomized controlled experiments, as well 
 
277 See Panel  Report, para.  7.523. Honduras does not challenge particular aspects of the Panel's 
subsequent  examination, with reference to the individual studies fo rming the TPP  literature and other evidence, 
of whether and to what extent the TPP  measures are expected to have an impact on each of the 
three  "mechanisms" (or "proximal" outcomes) identified in the TPP  Act (i.e.  reducing the appeal of tobacco 
products,  enhancing the effectiveness of GHWs, and reducing the ability of the pack to mislead consumers), 
and, in turn, on smoking behaviour.  
278 Honduras' appellant's submission, para.  799. 
279 Panel  Report, paras.  7.552 -7.553.  
280 Panel  Report, para.  7.555. (emphasis ad ded) 
281 Panel  Report, para.  7.555.  
282 Panel  Report, para.  7.495.  
283 Panel  Report, para.  7.498.  
284 Panel  Report, para.  7.557.  
285 For example, the Panel noted that one of the complainants' experts, Professor Ajzen, explained that 
"the difficulty lies in the fact that the experimental situation created prior to implementation of the [TPP] Act is 
not an exact reproduction of the situa tion that would be encountered afterwards" and that this can jeopardize 
the experiment's external validity. (Panel  Report, para.  7.558 (quoting I. Ajzen, Supplemental Report: 
Pre-Implementation Empirical Testing of Behavioral Theories Relied on by Australi a to Justify Plain Packaging  
(7 July 2015)  (Ajzen Supplemental Report) (Panel  Exhibit DOM/HND/IDN -4), para.  56) Professor Ajzen further 
observed that "a limitation on the study of smoking behavior is of an ethical nature", and that the "practical 
limitatio ns of studying the impact of plain packaging on behavior prior to implementation of the [TPP] Act draw 
attention to the importance of the research … regarding the impact of plain packaging on the theoretical 
determinants  of smoking behavior". (Panel  Report , paras.  7.559 -7.560 (quoting Ajzen Supplemental Report 
(Panel  Exhibit DOM/HND/IDN -4), paras.  57 and 59) (emphasis original)))  
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  as ethical issues that would arise in conducting such experiment s.286 As such, the Panel was not 
persuaded that "the absence of a study, prior to the implementation of the measures, that utilized 
an 'ideal' experimental design allowing an observation of actual smoking behaviours constitutes a 
flaw in the TPP literature, of such nature as to fundamentally undermine its probative value and the 
evidentiary base underlying the adoption of the TPP  measures."287 
6.72.  Accordingly, we disagree with Honduras that the Panel acknowledged  that either of the 
two features of the studies formi ng the TPP  literature constitutes an inherent flaw that is so fatal as 
to fundamentally undermine the probative value of the TPP  literature as a whole.  
6.73.  Honduras also takes issue with the Panel's reasoning that, while some of the studies forming 
the TPP  literature may suffer from certain methodological flaws or limitations, these limitations were 
not "fatal" when taking into account the studies' "combined strength" and consistency with the wider 
literature.288 According to Honduras, "[t]here is no logic in say ing that one bad study would be more 
reliable if it is bundled with other bad studies."289 
6.74.  We disagree. Indeed, rather than offering "no logic" in finding that the TPP literature comes 
from respected and qualified sources, the Panel offered a detailed explanation for why it considered 
that the studies forming this  literature, as a whole, provided a reasonable basis in support of the 
proposition underlying the adoption of the TPP  measures in Australia.  For example, in the context 
of addressing the complainants' argument that the studies forming the TPP  literature are biased and 
lack objectivity290, the Panel took note of Australia's suggestion that this body of studies, "taken 
together as a whole", supports the effectiveness of tobacco plain packaging.291 The Panel agreed 
with Australia, stating that "to the extent that convergent research outcomes would reflect the 
results of a range of studies consistent with accepted standards in their respective fields, this may 
confirm the strength of  the conclusions reached in individual studies, rather than demonstrate 
publication or researcher bias."292 In doing so, the Panel cited specific  evidence in support of its 
view, namely, several expert opinions suggesting that "consistency of association" an d "coherence 
 
286 Panel  Report, para.  7.558 (referring to Ajzen Supplemental Report (Panel  Exhibit DOM/HND/IDN -4), 
paras.  56-57; G. Fong, Supplem ental Report in Response to Professor Ajzen (8  September 2015) ( Fong 
Supplemental Report) (Panel  Exhibit AUS -531), paras.  167-168; C. Moodie, M. Stead, L. Bauld, A. McNeill, 
K. Angusa, K. Hinds, I.  Kwan, J. Thomas, G. Hastings, and A. O'Mara -Eves, Plain To bacco Packaging: 
A Systematic Review,  UK Centre for Tobacco Control Studies, University of Stirling (2012) ( Stirling Review) 
(Panel  Exhibits AUS -140, HND -130, CUB -59), pp.  17-18 and 88 -89; M. Stead, C. Moodie, K. Angus, L. Bauld, 
A. McNeill, J. Thomas, G.  Hastings, K. Hinds, A. O'Mara -Eves, I. Kwan, R. Purves, and S. Bryce, "Is Consumer 
Response to Plain/Standardised Tobacco Packaging Consistent with Framework Convention on Tobacco Control 
Guidelines? A Systematic Review of Quantitative Studies", PLoS One , Vol. 8 (2013), 
doi:10.1371/journal.pone.0075919  (Panel  Exhibit CUB -58), p.  8; S. Ulucanlar, G. Fooks, J.  Hatchard, and 
A. Gilmore, "Representation and Misrepresentation of Scientific Evidence in Contemporary Tobacco Regulation: 
A Review of Tobacco Industry  Submissions to the UK Government Consultation on Standardised Packaging", 
PLoS Medicine , Vol. 11 (2014), doi:10.1371/journal.pmed.1001629 (Panel  Exhibit AUS -501), p.  6; C. Chantler, 
Standardised Packaging of Tobacco: A Report of the Independent Review Und ertaken by Sir  Cyril Chantler 
(April 2014) ( Chantler Report) (Panel  Exhibits AUS -81, CUB -61), para.  1.19; D. Hammond, Standardized 
Packaging of Tobacco Products: Evidence Review, prepared for the Irish Department of Health (March 2014)  
(Hammond Review) (Pa nel Exhibit AUS -555), p.  35). See also ibid., para.  7.561.  
287 Panel  Report, para.  7.562.  
288 Honduras' appellant's submission, paras.  800 and 1010 (quoting Panel  Report, paras.  7.627 
and 7.641).  
289 Honduras' appellant's submission, para.  801. 
290 See Panel  Report, paras.  7.543 -7.551 (under the heading "Objectivity of the TPP  literature").  
291 Panel  Report, para.  7.536 (referring to Australia's first written submission to the Panel, Annex  E, 
para. 4; Expert Report of Dr  Geoffrey T. Fong (4  March 2015) ( Fong Report)  (Panel Exhibit AUS -14); G. Fong, 
Supplemental Report in Response to Professor  Ajzen (8  September 2015) (Fong  Supplemental Report) (Panel 
Exhibit AUS -531); G. Fong, Supplementary Report in Response to Professors Inman and Kleijnen (27  October 
2015) ( Fong S econd Supplemental Report) (Panel Exhibit AUS -585), para.  8; Expert Report of J. Samet 
(5 March  2015) ( Samet Report) (Panel Exhibit AUS -7); F. Chaloupka, Expert Report on Australia's Plain 
Packaging Legislation (7  March  2015) (Panel Exhibit AUS -9); F. Chaloupka, Report on Selected Issues Raised in 
Ongoing Challenges to Australia's Tobacco Plain Packaging Measure (7  December 2015) (Panel 
Exhibit  AUS-590); Expert Report of Dr Paul  Slovic (4  March 2015) ( Slovic  Report) (Panel Exhibit AUS -12)). 
292 Panel  Report, para.  7.550. (fns  omitted)  
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  of association" are of "particular relevance to evaluating the evidence related to plain packaging", 
and that the TPP  literature studies demonstrated both.293 
6.75.  In addition, the Panel examined several expert reports that reviewed the methodologica l 
rigour of the individual TPP  studies, in the context of addressing the complainants' argument that 
these studies fail to meet the accepted standards of methodological rigour. These expert reports 
comprised: (i)  three expert reports commissioned by the co mplainants, namely,  the Inman et al. 
Peer Review Project294, the Kleijnen Systematic Review295, and the Klick TPP Literature Report296; 
and (ii)  external reviews of the TPP  literature conducted outside the Panel proceedings, including in 
particular the Stirling  Review297 and the Chantler  Report.298 The reviews commissioned by the 
complainants (item  (i) above) concluded that the TPP  studies do not provide a sound basis on which 
to base claims about the expected effects of the TPP  measures in Australia299, whereas the 
Stirling Review and the Chantler  Report (item  (ii) above) concluded that the TPP  literature 
reasonably suggests that plain packaging has the potential to contribute to reducing the harm caused 
by tobacco smoking.300  
6.76.  Having examined these expert reports, overa ll, the Panel "accord[ed] particular weight" to 
the assessments contained in the Chantler  Report.301 The Panel considered it significant that this 
report was commissioned outside the context of th ese dispute s, and included a process whereby 
independent revie wers assessed the quality of individual studies comprising the TPP  literature, as 
well as the quality of the systematic review of this literature in the Stirling Review.302 By contrast, 
the Panel questioned the conclusions stated in the complainants' commiss ioned reviews. For 
example, the Panel noted that the Inman et al. Peer Review Project concluded that the plain 
packaging literature "is of surprisingly low quality", such that the studies forming this literature are 
"unacceptable for publication in a major  consumer research journal in their current form".303 In the 
Panel's view, however, the fact that most of the papers at issue had in fact been published in various 
specialized public health and medical journals raised "serious doubts" about the criteria and 
benchmarks used by Professor  Inman.304 The Panel considered that a similar criticism applied to the 
Kleijnen  Systematic Review.305 In short, we observe that, while the Panel ultimately lent more 
credence to the expert opinions in support of Australia's proposi tion (in particular the 
 
293 Panel  Report, para.  7.550 (referring to Samet Report (Panel Exhibit AUS -7), paras.  117, 119, 125, 
and 128; Stirling Review (Panel  Exhibits AUS -140, HND -130, CUB -59), p.  90; Fong Report 
(Panel  Exhibit  AUS-14), para.  71; F ong Second Supplemental Report (Panel  Exhibit AUS -585), para.  31; 
Hammond Review (Panel  Exhibit AUS -555), p.  31).  
294 J. Inman, Plain Packaging Literature Peer Review Project (3  October 2014) ( Inman et al. Peer Review 
Report) (Panel  Exhibit DOM/HND -3). 
295 J. Kleijnen, A. Bryman, and M. Bosnjak, Quality of the Empirical Evidence Testing the Impact of Plain 
Packaging on Tobacco Consumption: A Systematic Review (6  October 2014)  (Kleijnen Systematic Review) 
(Panel  Exhibit DOM/HND -4). 
296 Report by J. Klick on Pla in Packaging Literature and Research Methodology (2  October  2014)  
(Klick  TPP Literature Report) (Panel Exhibit UKR -6). 
297 Stirling Review (Panel  Exhibits AUS -140, HND -130, CUB -59); C. Moodie, K.  Angus, M.  Stead, and 
L. Bauld, "Plain Tobacco Packaging Resear ch: An Update", Centre for Tobacco Control Research, Institute for 
Social Marketing, University of Stirling (2013)  (Stirling Review 2013 Update) (Panel  Exhibits AUS -216, 
CUB-60). 
298 Chantler Report (Panel  Exhibits AUS -81, CUB -61). 
299 Panel  Report, paras.  7.567, 7.571, and 7.578.  
300 Panel  Report, paras.  7.591 (referring to Stirling Review (Panel  Exhibits AUS -140, HND -130, CUB -59), 
p. v; Stirling Review 2013 Update (Panel  Exhibits AUS -216, CUB -60), p.  2) and 7.600 (referring to Chantler 
Report (Panel  Exhibits AU S-81, CUB -61), para.  18). 
301 Panel  Report, para.  7.635. See also ibid., fn  2648 to para.  7.1028.  
302 Panel  Report, para.  7.633.  
303 Panel  Report, para.  7.567 (quoting Inman et al. Peer Review Report (Panel  Exhibit DOM/HND -3), 
para. 69, p.  47). 
304 Panel Report, p ara. 7.569 (referring to Inman et al. Peer Review Report (Panel Exhibit DOM/HND -3), 
para. 13). 
305 Panel  Report, para.  7.577. The Panel noted "the extreme nature of the results of the Kleijnen 
Systematic Review, which identified fatal flaws in each of the as sessed 31 papers (most of which were 
otherwise published in peer -reviewed journals)". This caused the Panel to "question the standard by which the 
studies were judged, and whether the particular context of tobacco control research was taken into account". 
(Ibid.)  
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  Chantler  Report) than to the expert opinions commissioned by the complainants, it explained why 
the former are more reliable than the latter, instead of offering "no logic" in this regard.  
6.77.  In light of the foregoing, we do not agree with Honduras that the Panel erred because it failed 
to offer a reasoned and adequate explanation, or treated evidence in a one -sided manner, in 
reaching its conclusion that the TPP  literature can be considered as coming from respected and 
qualified source s, and therefore should not be dismissed in its entirety.306 Nor do we consider that 
any such alleged error would be so material as to undermine the objectivity of the Panel's 
assessment of the matter before it. In this regard, we emphasize that it was the c omplainants, not 
the Panel, who bore the burden of adducing credible evidence to prove their proposition that the 
TPP measures are incapable of contributing to Australia's objective. Thus, even assuming that the 
pre-implementation evidence had not been of sufficient probative value as argued by Honduras, it 
would not necessarily mean that the Panel erred in reaching its intermediate conclusion, based on 
that evidence, that the complainants had failed to demonstrate  that the TPP  measures would not be 
capable  of contributing to Australia's objective.307 
6.78.  Accordingly, we find that Honduras has failed to demonstrate that the Panel acted 
inconsistently with Article  11 of the DSU by relying on the TPP  literature as part of its broader 
evidentiary base for assessing t he contribution of the TPP  measures.  
6.1.2.3.2.4   Whether the Panel acted inconsistently with Article  11 of the DSU by 
disregarding the Dominican  Republic's evidence  
6.79.  The Dominican  Republic claims that the Panel acted inconsistently with Article  11 of the DSU 
by disreg arding the Dominican  Republic's evidence that directly contradicted the Panel's 
intermediate conclusions that the TPP measures would be apt to affect smoking behaviour by: 
(i) reducing the appeal of tobacco products ( the first mechanism  of the TPP  measures ); and 
(ii) enhancing the effectiveness of GHWs ( the second mechanism  of the TPP  measures ).308 On that 
basis, the Dominican  Republic requests us to reverse these intermediate conclusions, as well as 
other related findings.309 
6.80.  The Dominican  Republic highlights that the Panel's intermediate conclusion that the 
TPP measures would be capable of reducing the appeal of tobacco products (the first mechanism) 
was premised on its proposition that tobacco packaging can function as a mean s to convey 
positive  perceptions  to consumers .310 Similarly, the Dominican  Republic observes that the Panel 
relied on the same proposition when it concluded that the TPP  measures would increase the 
effectiveness of GHWs (the second mechanism)311 by "remov[ing] , or at least significantly 
reduc[ing], the competition (both in terms of attention, and between different goals) between the 
negative message conveyed by the GHW, and branded elements of the package".312 
6.81.  However, in the Dominican  Republic's view, such a pro position was directly refuted by several 
pieces of evidence it submitted to the Panel313, which purportedly demonstrated that, based on 
 
306 Panel  Report, paras.  7.638 -7.639.  
307 Panel  Report, para.  7.929.  
308 Dominican  Republic's appellant's submission, paras.  657-658 (referring to Panel  Report, 
para. 7.1034). We note that the Dominican  Republic takes issue with the Panel's findings rega rding the 
TPP measures' anticipated contribution through the first and second mechanisms only, and not the 
third mechanism (i.e.  reducing the ability of the pack to mislead consumers). See Dominican  Republic's 
appellant's submission, para.  726. 
309 Dominican  Republic's Notice of Appeal, para.  8 (referring to Panel  Report, paras.  7.518 -7.929, 7.931, 
7.1024 -7.1034, and 7.1038).  
310 Dominican  Republic's appellant's submission, paras.  685-694. 
311 Dominican  Republic's appellant's submission, paras.  695-696. 
312 Dominic an Republic's appellant's submission, para.  696 (quoting Panel  Report, para.  7.860).  
313 In its appellant's submission, the Dominican  Republic refers to five  expert reports it submitted to the 
Panel as constituting the evidence that contradicted the Panel's conclusions. These expert reports are: 
(i) I. Ajzen, Examination of Australia's Reliance on Behavioral Theories to Support its Tobacco Plain Packaging 
Legislation (31  May 2015)  (Ajzen Report) ( Panel  Exhibit DOM/HND/IDN -3) (in particular paras . 22, 174 -176, 
and 178); (ii)  I. Ajzen, The Role of Theory and Empirical Evidence in Evaluating the Effectiveness of Plain 
Packaging: Response to Australia and its Experts (27  October 2015) (Ajzen Rebuttal Report) ( Panel Exhibit 
DOM/HND/IDN -5) (in particular sections 3.2.2 and 3.2.3); (iii)  I. Ajzen, Response to Questions 146, 202, 
and 203 by the Panel (8  December 2015) (Ajzen  Response to Panel question Nos.  146, 202, and 203) 
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  Australia's own surveys, tobacco packaging conveyed negative , rather than positive, perceptions to 
adults and adolescents in the context of Australia's market before the implementation of the 
TPP measures.314 The Dominican  Republic thus considers that, in reaching its intermediate 
conclusions by assuming that tobacco packaging can convey positive perceptions in Australia, the 
Panel failed to engage with evidence that was material to the Dominican  Republic's case because it 
directly contradicted the Panel's conclusions.315 The Dominican  Republic also considers that the 
Panel's disregard of its evidence amounts to " incoherent"  reaso ning because the Panel failed to 
reconcile the importance it attached to the ability of tobacco packaging to convey positive 
associations  in the Australian context,  with the empirical evidence showing that partially branded 
tobacco packaging, with large GH Ws, was actually perceived negatively  in the Australian context 
before the implementation of the TPP  measures.316 
6.82.  Australia considers that the Dominican  Republic's claim that the Panel failed to engage with 
its evidence "constitutes a thinly disguised attemp t to discredit the Panel's finding that tobacco 
packaging has been used by the industry for decades to convey positive perceptions  of tobacco 
products".317 As Australia sees it, the Panel's findings are amply documented in the Panel  Report 
and duly supported  by credible evidence from recognized and reputable sources.318 Thus, according 
to Australia, the Panel ha d not exceeded the bounds of its discretion under Article  11 simply by not 
attributing to the Dominican  Republic's evidence the weight and significance that the 
Dominican  Republic attributed to it, or by failing to include an express reference to a specific piece 
of evidence in reaching its findings.319 Australia also disagrees with the Dominican  Republic's 
proposition that there is an internal contradictio n between the Panel's finding that branded tobacco 
packaging can convey positive associations, on the one hand, and evidence of negative perceptions 
of branded tobacco products among many Australians prior to implementation of the TPP  measures, 
on the othe r hand.320 Australia notes in this context that White et al. 2015a (on which the 
Dominican  Republic's evidence relied) found that tobacco plain packaging both "reduced the appeal 
of tobacco packs to adolescents" and "increased negative perceptions of packs"321, which in 
 
(Panel  Exhibit DOM/HND/IDN -6) (in particular para. 49); (iv)  L. Steinberg, Adolescen t Decision -Making and the 
Prevention of Underage Smoking: The Role of Plain Packaging: A Response to Expert Evidence Submitted on 
Behalf of Australia (3  July 2015) ( Steinberg Rebuttal Report) ( Panel  Exhibit DOM/HND -10) (in particular 
paras.  35 and 37); and  (v) L. Steinberg, Adolescent Decision Making and the Prevention of Underage Smoking: 
The Role of Plain Packaging: A Second Response to Expert Evidence Submitted on Behalf of Australia  
(23 October  2015) (Steinberg Second Rebuttal Report) ( Panel  Exhibit DOM /HND -15) (in particular paras.  26, 
33, and 39).  (Dominican  Republic's appellant's submission, fn  617 to para.  701) The Dominican  Republic also 
cites various parts of its written submissions to the Panel in which it referred to this evidence, namely, 
Domini can Republic's second written submission to the Panel, paras.  443-456; response to Panel question 
No. 134, para.  134; opening oral statement at the second  substantive meeting of the Panel, para.  50; 
comments on Australia's response to Panel question No.  170, paras.  273-274; comments on Australia's 
response to Panel question No.  196, paras.  585-601, 633 -634, 663 -665, and 669; comments on Australia's 
response to Panel question No.  200, paras.  783, 797, and 804 -806; comments on Australia's response to Panel 
question No.  201, paras.  878-880; comments on Australia's response to Panel question No.  204, para.  898. 
(Ibid.)  
314 Dominican  Republic's appellant's submission, paras.  703-704, 710, 713, 715, 731, 733, and  745. 
315 Dominican  Republic's appellant's submission, p aras. 701 and 728.  
316 Dominican  Republic's appellant's submission, paras.  740-746. 
317 Australia's appellee's submission, para.  513. 
318 Australia's appellee's submission, paras.  514-516 (referring to Panel  Report, para.  7.660, in turn 
referring to US Departmen t of Health and Human Services, Preventing Tobacco Use Among Youth and Young 
Adults: A Report of the Surgeon General  (Atlanta, 2012) (Panel  Exhibit AUS -76); British American Tobacco, 
Packaging Brief ( 2 January 2001), Bates Nos.  325211963 -325211964 (Panel  Exhibit AUS -23); N. Tavassoli, 
Report on the World Trade Organization Dispute Settlement Proceedings Concerning Australia's Tobacco Plain 
Packaging Legislation  (10 March 2015) ( Tavassoli  Report) (Panel  Exhibit AUS -10); Expert Report of 
Dr Jean-Pierre Dubé ( 9 March 2015) (Panel  Exhibit  AUS-11); Slovic Report (Panel  Exhibit AUS -12); 
N. Tavassoli, Rebuttal to Arguments Raised in Exhibit DOM/HND -14 (26  October 2015) 
(Panel  Exhibit  AUS-588), and para.  7.663).  
319 Australia's appellee's submission, para.  516. 
320 Australia's appellee's submission, para.  525. 
321 Australia's appellee's submission, para.  526 (quoting V. White, T.  Williams, and M.  Wakefield, "Has 
the Introduction of Plain Packaging with Larger Graphic Health Warnings Changed Adolescents' Perceptions of 
Cigarette Packs and Brands?", Tobacco Control , Vol. 24 (2015), ii42 -49 (White et al. 2015a) (Panel  Exhibits 
AUS-186, DOM -235), p.  ii48).  
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  Australia's view is consistent with the Panel finding that in the Australian context, branded packaging 
can be used to convey positive perceptions to consumers.322 
6.83.  While the Dominican  Republic presents rather lengthy arguments as to how the Panel failed 
to make an objective assessment of the matter before it as required under Article  11 of the DSU323, 
these arguments hinge on its proposition that the body of evidence it presented to the Panel directly 
contradicted  the Panel's intermediate conclusions  that the measures would be apt to contribute to 
Australia's objective by reducing the appeal of tobacco packaging (the first mechanism) and by 
increasing the effectiveness of the GHW s (the second mechanism). Indeed, the Dominican  Republic 
repeatedly asser ts and explains that: (i) the Panel's conclusion rests on the assumption that tobacco 
packaging can function as a means to convey positive  perceptions ; and (ii)  such an assumption was 
refuted by the Dominican  Republic's evidence purportedly demonstrating that tobacco packaging 
conveyed negative  perceptions in Australia before the implementation of the TPP  measures.324 
6.84.  We review the relevant Panel findings, as well a s the nature and scope of the evidence in 
question, in order to confirm whether there is indeed such a contradiction.  
6.85.  Looking first at the Panel's findings, we note that the Panel stated that a relevant assumption 
underlying the first mechanism through whi ch the TPP  measures are designed to contribute to 
Australia's objective (i.e.  reducing the appeal of tobacco products to consumers) is that, where 
branding features are available on tobacco products or their retail packaging, they may act as 
advertising an d thereby influence perceptions of tobacco products.325 The Panel noted that the 
complainants disagreed with such an assumption, and alleged that packaging is not a form of 
advertising and does not have an impact on the decision to smoke.326 
6.86.  The Panel examined  relevant evidence, and rejected the complainants' view that tobacco 
packaging cannot act as an advertising or promotional tool, "including in Australia's 'dark market'"327, 
i.e. in the market where product packaging is effectively the only means of brand co mmunication 
due to the significant restrictions on advertising.328 Rather, the Panel found that tobacco packaging 
"may be used, and has in fact been used" by the tobacco industry "to generate positive perceptions 
of tobacco products".329 In making these findin gs, the Panel underscored that a number of 
documents coming from the tobacco industry itself recognize that "a key purpose of the use of 
branding on tobacco products, including packaging , is to generate certain positive perceptions  in 
relation to the produ ct in the eyes of the consumer", and that, in order to attract new consumers, it 
is important to "mak[e] their products appealing  to those most likely to initiate tobacco use 
(i.e. youth), including through branded  packaging ".330 The Panel added that this ob servation is not 
affected by the presence of Australia's expanded GHWs, which occupy 75% of the front pack face.331 
6.87.  With respect to the second mechanism of the TPP  measures (i.e.  enhancing the effectiveness 
of GHWs), the Panel took note of paragraph  46 of th e Article  11 FCTC Guidelines, which states that 
the adoption of plain packaging measures "may increase the noticeability and effectiveness of health 
warnings and messages, prevent the package from detracting attention from them, and address 
industry packag e design techniques that may suggest that some products are less harmful than 
others".332 In this regard, the Panel observed that the negative  message conveyed by GHWs could 
 
322 Australia's appellee's submission, para.  527 (referring to Panel  Report, para.  7.1034). See also 
ibid., paras.  528-531. 
323 Dominican  Republic's appellant's submission, section  II.E.2.  
324 Dominican  Republic's appellant's submission, paras.  703, 707, 711 -713, 715, 718, 724, 726 -728, 
730, 732, 740, and 743 -746. 
325 Panel  Report, para.  7.647.  
326 Panel  Report, paras.  7.647 and 7.649.  
327 Panel  Report, para.  7.663. (fn  omitted)  
328 Panel  Report, para.  7.659.  
329 Panel  Report, para.  7.663. See also ibid., para.  7.1032.  
330 Panel  Report, paras.  7.660 and 7.1032. (emphasis added) See also ibid., para.  7.732.  
331 Panel  Report, para.  7.660.  
332 Panel  Report, para.  7.800 (quoting Guidelines for Implementation of Article  11 (Packaging and 
Labelling of Tobacco Products), Document FCTC/COP3(10), excerpted from Conference of the Parties to the 
WHO FCTC, "Decisions", Third Session, held in Durban, South Africa, 17 to 22  November 2008, 
Document  FCTC/COP/3/DIV/3 (16 February 2009) (Panel  Exhibit  JE-20), Annex, para.  46). 
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  be contradicted  by the positive  imagery conveyed by branding elements on tobacco pac kaging333, 
such that "the removal of the branding elements that may constitute a cause for adolescents to 
associate tobacco products with positive imagery and rewards … would remove, or at least 
significantly reduce, the competition  … between the negative me ssage conveyed by the GHW, and 
branding elements of the package. "334 The Panel also stated that, "in a regulatory context where 
tobacco packaging would otherwise be the only opportunity to convey a positive perception  of the 
product through branding", it is not unreasonable to anticipate that the removal of the design 
features from tobacco packaging "would … prevent them from creating a conflicting signal  that would 
undermine other messages that seek to raise the awareness of consumers about the harmfulness o f 
smoking that are part of Australia's tobacco control strategy, including those arising from GHWs".335 
6.88.  The Panel's reasoning makes two points clear.  First, the Panel found that branding elements  
on tobacco packaging may be used, and indeed have been used, t o communicate positive imagery 
to attract consumers (especially youth) and affect their smoking behaviour (e.g.  initiation, cessation, 
and relapse), including  in Australia's "dark market" and in the presence of large GHWs. The Panel 
therefore considered th at removing the branding elements from tobacco packaging would be apt to 
reduce the relative appeal of tobacco packaging (the first mechanism). Second , the Panel found 
that, in the presence of both branding elements and GHWs, tobacco packaging would carry 
two conflicting  signals, namely, the positive  imagery conveyed by the branding elements and the 
negative  message conveyed by GHWs. Thus, removing the branding elements from tobacco 
packaging would allow GHWs to communicate the message about health risks more effectively, 
without being disturbed by the positive perceptions generated by the branding elements (the 
second  mechanism).  
6.89.  In reaching these determinations, the Panel did not discuss, or make any finding regarding, 
whether tobacco packaging as a whole  – encompassing both the branding elements and the 
GHWs  – would, overall, be perceived positively or negatively by an average person. Instead, the 
Panel's findings speak only to whether the portion  of tobacco packaging  not covered by health 
warnings  could be exploited for purposes of communicating positive imagery to consumers, so as to 
increase the relative  appeal of tobacco packaging, and to mitigate or undermine  the negative 
message conveyed by the GHWs.  
6.90.  Turning to the Dominican  Republic's evidenc e to determine whether it directly contradicted 
the Panel's findings in question, we note that, in its appellant's submission, the Dominican  Republic 
points to five  reports prepared by two  experts for the complainants (including 
the Dominican  Republic), na mely, Professor Ajzen and Professor Steinberg.336 In these expert 
reports, both professors observe that tobacco packaging was perceived negatively  by both 
adolescents337 and adults338 in the Australian market, before the implementation of the 
TPP measures. As th e Dominican  Republic highlights, these observations are based on Australia's 
survey data, namely, the results from the Australian Secondary Students Alcohol Smoking and Drug 
 
333 For example, the Panel noted Professor Tavassoli's discussion of the notion of "selective attention", 
meaning that human brains are not capable of attending to numerous elements that may simultaneously 
compete for attention. (Panel  Report, para.  7.858 (referring to Tavassoli  Report (Panel  Exhibit AUS -10), 
paras.  110-113)) The Panel also noted the discussion of the theory of "goal competition", according to which 
plain packaging can increase GHWs' effectiveness by "a llowing GHWs to activate more effectively already held 
beliefs at critical moments, i.e.  by limiting the activation of competing goals that momentarily inhibit the goal 
of staying healthy", without "requir[ing] GHWs to change consumer beliefs  about the hea lth benefits of not 
smoking". (Ibid.,  para. 7.858 (quoting Tavassoli  Report (Panel Exhibit AUS -10), para.  117)) 
334 Panel  Report, para.  7.860.  
335 Panel  Report, para.  7.1034. (emphasis added; original emphasis omitted) See also ibid., para.  7.860 
(stating that , in the presence of tobacco plain packaging, "the only message communicated by the packaging is 
the GHW", and "no association with rewards is communicated" (emphasis original)).  
336 These expert reports are: (i)  Ajzen Report ( Panel  Exhibit DOM/HND/IDN -3) (in particular paras . 22, 
174-176, and  178); (ii)  Ajzen Rebuttal Report ( Panel Exhibit DOM/HND/IDN -5) (in particular sections 3.2.2 
and 3.2.3); (iii)  Ajzen  Response to Panel question Nos.  146, 202, and 203 ( Panel  Exhibit DOM/HND/IDN -6) 
(in particular para. 49); (iv)  Steinberg Rebuttal Report336 (Panel  Exhibit DOM/HND -10) (in particular paras.  35 
and 37); and (v)  Steinberg Second Rebuttal Report ( Panel  Exhibit DOM/HND -15) (in particular paras.  26, 33, 
and 39).  (Dominican  Republic's appellant's submission, fn  617 to para.  701) 
337 Ajzen  Report (Panel  Exhibit DOM/HND/IDN -3), paras.  22, 174, and 177; Steinberg Second Rebuttal 
Report (Panel  Exhibit DOM/HND -15), para.  26. 
338 See, for example,  Ajzen Response to Panel question Nos.  146, 202, and 203 (Panel  Exhibit 
DOM/HND /IDN-6), para.  49. 
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  (ASSAD) survey reported in White et al. 2015a (for adolescents)339, and the results from the National 
Tobacco Plain Packaging Tracking Survey (NTPPTS) (for adults).340 
6.91.  There is an important limitation in the scope of the evidence referred to by the 
Dominican  Republic: the observations offered by Professors Ajzen and Steinberg in their respective 
expert reports address the appeal of tobacco packaging as a whole , encompass ing both the branding 
elements and the GHWs, as opposed to the branding elements alone.  Indeed, in the ASSAD survey341 
on which Professors Ajzen and Steinberg relied, the respondents were asked to rate  the appeal of 
actual cigarette packs that they had seen in the previous six  months, as well as  of photographic 
images of four  brands of Australian cigarettes .342 Both the cigarette packs and the photographic 
images  included a GHW as mandated at that time.343 Thus, when Professors Ajzen and Steinberg 
state that toba cco packaging was perceived negatively by adolescents based on the results from the 
ASSAD survey, they are discussing whether the overall  perception of tobacco packaging as a whole, 
including both the branding elements and GHWs,  was positive or negative. T he same observation 
applies also to the NTPPTS survey, on the basis of which Professor Ajzen observed that tobacco 
packaging was perceived negatively by adults before the implementation of the TPP  measures.344 
6.92.  In light of these observations, we disagree with  the Dominican  Republic that there is a direct 
contradiction between the Panel's finding that tobacco packaging can be used, and indeed has been 
used, to convey positive perceptions, on the one hand, and the proposition of the 
Dominican  Republic's evidence  that tobacco packaging was perceived negatively before the 
implementation of the TPP  measures, on the other hand. This is because, while the Panel's finding 
spoke to whether the branding elements  of tobacco packaging can generate positive imagery, the 
Dominican  Republic's evidence pertained to the overall  perception of tobacco packaging, 
encompassing both the positive perceptions conveyed by the branding elements and the negative 
message conveyed by the GHWs. We do not consider that saying that the brandin g elements of 
tobacco packs can create positive imagery necessarily means that such positive imagery cannot, 
overall, be outweighed by the negative perception conveyed by the GHWs, such that the overall 
average appeal rating of tobacco packs remains negati ve. 
6.93.  We also do not see any problem with the Panel stating that removal of the branding elements 
by the TPP  measures would reduce the appeal of tobacco packaging/products, even if the overall 
appeal rating of tobacco packs was not positive before the implem entation of the TPP  measures. 
Indeed, we would read such a statement simply to mean that tobacco packs that were not attractive 
(or had negative appeal) before the implementation of the TPP  measures would become even less 
attractive (or have increased nega tive appeal) due to the TPP  measures. Indeed, this is exactly what 
the Dominican  Republic's own expert, Professor  Ajzen, observed when he stated that "there was 
never any reason to doubt that plain packs, with larger GHWs, would be less visually appealing  than 
the packs previously marketed with branding and smaller GHWs."345 He confirmed that proposition 
empirically, explaining that the TPP  measures and enlarged GHWs have resulted in degrees of 
 
339 Ajzen  Report (Panel  Exhibit DOM/HND/IDN -3), paras.  22 and 174 (referring to White et al. 2015a 
(Panel  Exhibits AUS -186, DOM -235)); Steinberg Second Rebuttal Report (Panel  Exhibit DOM/HND -15), 
para. 26 (referring to White et al. 2015a ( Panel  Exhibits AUS -186, DOM -235)).  
340 Ajzen Response to Panel question Nos.  146, 202, and 203 (Panel  Exhibit DOM/HND/IDN -6), para.  49 
(referring to the NTPPTS data). See also Dominican  Republic's appellant's submission, para.  676. 
341 The data from this surve y relate to adolescents' perceptions of cigarette packs and brand appeal, 
before and after the implementation of the TPP  measures and the enlarged GHWs (i.e.  in 2011 and 2013). 
(White  et al. 2015a (Panel  Exhibits AUS -186, DOM -235), p.  ii43) 
342 White  et al. 2015a (Panel  Exhibits AUS -186, DOM -235), pp.  ii43-ii44. 
343 As regards the perception of cigarette packs, we recall that GHWs were required for almost all 
tobacco products in Australia as of 1  March 2006. (Panel  Report, para.  2.534). As regards the perce ption of 
brand appeal, White  et al. 2015a explicitly states that the photographic images shown to the respondents 
included a GHW as mandated at the time. (White  et al. 2015a (Panel  Exhibits AUS -186, DOM -235), p.  ii43) 
344 The NTPPTS survey assessed, inter alia, the extent to which the respondents liked the look of 
tobacco packs, as well as the relative perceptions by smokers of the appeal of the packaging of their current 
cigarettes or tobacco before and after the implementation of the TPP  measures. ( M. Wakef ield, K. Coomber, 
M. Zacher, S. Durkin, M. Brennan, and M. Scollo, "Australian Adult Smokers' Responses to Plain Packaging with 
Larger Graphic Health Warnings One Year After Implementation: Results from a National Cross -Sectional 
Tracking Survey", Tobacco Control , Vol. 24 (2015), ii17 -ii25 (Wakefield et al. 2015) (Panel  Exhibits AUS -206, 
DOM-306), p.  ii18) 
345 Ajzen Response to Panel question Nos.  146, 202, and 203 (Panel  Exhibit DOM/HND/IDN -6), para.  44. 
(emphasis added) See also Ajzen Rebuttal Report (Panel  Exhibit DOM/HND/IDN -5), para.  175. 
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  "declines in appeal" of tobacco packs that are "statistically sig nificant" for adolescents346 and even 
larger for adult smokers.347 
6.94.  For these reasons, we disagree with the premise underlying the Dominican  Republic's claim 
on appeal that the body of evidence that it identifies in these appellate proceedings directly 
contradi cted the Panel's finding that the branding elements on tobacco packaging can convey 
positive perceptions  to consumers, such that their removal would be apt to reduce the appeal of 
packaging (the first mechanism) and enhance the effectiveness of GHWs (the s econd mechanism). 
To the contrary, a careful review of the Panel's findings, as well as of the nature and scope of the 
Dominican  Republic's evidence, reveals that the Dominican  Republic's claim does not reflect a 
correct understanding of the Panel's reason ing or its own evidence.  
6.95.  Accordingly, we find that the Dominican  Republic has failed to demonstrate that the Panel 
acted inconsistently with Article  11 of the DSU by disregarding the evidence that contradicted the 
Panel's conclusion, or by offering incoher ent reasoning when it failed to address the evidence 
pertaining to the issue that the Panel itself acknowledged was crucial to its analysis.  
6.1.2.3.2.5   Conclusion  
6.96.  We have found that Honduras has not demonstrated that the Panel failed to offer a reasoned 
and adequate explanation, or treated evidence in a one -sided manner, in reaching its conclusion 
that the TPP  literature can be considered as coming from respected and qualified sources, and 
therefore should not be dismissed in its entirety.  
6.97.  We have also found that the Dominican  Republic has not demonstrated that the Panel failed 
to engage with the Dominican  Republic's evidence or to provide coherent reasoning. In particular, 
we have rejected the core premise underlying the Dominican  Republic's claim that the evidence in  
question directly contradicted the Panel's intermediate conclusions that the TPP  measures would be 
apt to reduce the appeal of tobacco products (the first mechanism) and to increase the effectiveness 
of the GHWs (the second mechanism).  
6.98.  Accordingly, we uphold the Panel's intermediate conclusion regarding the evidence pertaining 
to the design, structure, and intended operation of the TPP  measures that the complainants failed 
to demonstrate that the TPP  measures are incapable of contributing to Australia's ob jective through 
the three  mechanisms by which the measures are designed to operate (i.e.  reducing the appeal of 
tobacco products,  enhancing the effectiveness of GHWs, and reducing the ability of the pack to 
mislead consumers) and that, to the contrary, thi s evidence is consistent with the proposition that 
the TPP  measures are apt to affect smoking behaviour through these three  mechanisms.348 
6.1.2.3.3   The Panel's asse ssment of the post -implementation evidence pertaining to the 
application of the TPP measures  
6.99.  We recall that the Panel conducted its analysis of the contribution of the TPP  measures to 
Australia's objective in several distinct steps. The Panel first examined evidence concerning the 
measures' design, structure , and intended operation.349 The Panel then examined the impact of the 
TPP measures based on their application.350 This evidence essentially looked at the actual effects of 
 
346 Ajzen  Report (Panel  Exhibit DOM/HND/IDN -3), para.  176.  
347 Ajzen Response to Panel question Nos.  146, 202, and 203 (Panel  Exhibit DOM/HND/IDN -6), 
paras.  48-49. See also Ajzen  Report (Panel  Exhibit DOM/HND/IDN -3), figure  6, para.  175 (based on White  
et al. 2015a (Panel  Exhibits AUS -186, DOM -235)). 
We also note that, in the context of assessing the TPP  measures' actual  impact on proximal outcomes, 
the Panel stated that the available empirical evidence relating to the appli cation of the TPP  measures since 
their entry into force referred to by Ajzen et  al. "confirms, rather than discredits , the 'hypothesized direction', 
i.e. the hypothesis reflected in the TPP  literature that plain packaging would reduce the appeal of tobacco  
products". (Panel  Report, para.  7.954 (referring to I. Ajzen, A. Hortaçsu, J. List, and A. Shaikh, Reconsideration 
of Empirical Evidence on the Effectiveness of Australian Plain Packaging Legislation: Evidence from the National 
Plain Packaging Tracking Su rvey (NPPTS) and Other Datasets (15  September  2015) ( Ajzen et al. Data Report) 
(Panel  Exhibit DOM/IDN -2), paras.  90-91) (emphasis added))  
348 Panel  Report, paras.  7.929 -7.931 and 7.1034.  
349 Panel  Report, paras.  7.518 -7.931.  
350 Panel  Report, paras.  7.932 -7.986 and Appendices A -E.  
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  the TPP  measures in Australia in the approximately three  years from the implementation of the 
TPP measures up to t he establishment of the Panel.351 In this respect, the Panel examined the 
parties' evidence purporting to demonstrate the actual effects of the TPP  measures on so -called 
"proximal" outcomes (Appendix  A to the Panel  Report) and "distal" outcomes ( Appendix  B to the 
Panel  Report). The Panel also looked evidence regarding the effects of the TPP  measures on 
"smoking behaviours" in Australia. The Panel's assessment of the impact of the TPP  measures on 
smoking behaviour was based on data and analysis presented by th e parties regarding smoking 
prevalence  (Appendix  C to the Panel  Report) and consumption  of tobacco products (Appendix  D to 
the Panel  Report). The Panel then assessed the parties' arguments and evidence regarding the 
impact of the TPP  measures on illicit tr ade.352 Finally, the Panel formed an overall conclusion 
regarding the degree of contribution of the TPP  measures to Australia's objective.353 
6.100.   The Panel considered its findings in Appendices A -D, concerning the post -implementation 
evidence of actual effects of the TPP  measures, to be relevant to its determination of the degree of 
contribution of the TPP  measures.354 The Panel stated that the evidence of the TPP  measures' impact 
on proximal and distal outcomes was "consistent with the view that, together with the e nlarged 
GHWs, [the TPP] measures have led in particular to a reduction in the appeal of tobacco products, 
as hypothesized in the TPP  literature, and to a greater noticeability of GHWs".355 Regarding smoking 
prevalence and consumption, the Panel considered th at:  
The fact that pre -existing downward trends in smoking prevalence and overall sales and 
consumption of tobacco products have not only continued but accelerated since the 
implementation of the TPP  measures, and that the TPP  measures and enlarged GHWs 
had a negative and statistically significant impact on smoking prevalence and cigarette 
wholesale sales, is also consistent with the hypothesis that the measures have had an 
impact on actual smoking behaviours, notwithstanding the fact that some of the 
targeted behavioural outcomes could be expected to manifest themselves over a longer 
period of time.356  
6.101.   Overall, the Panel considered the evidence of actual smoking behaviour in Australia since 
the entry into force of the TPP  measures to be "consistent with a fi nding that the TPP  measures 
contribute to a reduction in the use of tobacco products, to the extent that it suggests that, together 
with the enlarged GHWs introduced at the same time, plain packaging has resulted in a reduction in 
smoking prevalence and in  consumption of tobacco products".357 The Panel found that this evidence, 
taken together with the evidence of the TPP  measures' design, structure , and operation, supported 
the view that "the TPP  measures are apt to, and do, make a meaningful contribution to Australia's 
objective of reducing the use of, and exposure to, tobacco products ."358 
6.102.   The appellants argue that the Panel acted inconsistently with Article  11 of the DSU in its 
determination of the contribution of the TPP  measures to Australia's objective. A large number of 
the appellants' arguments in support of this claim relate to the Panel's assessment of the 
post-implementation evidence, concerning the actual effects of the TPP  measures in the three  years 
from implementation to the establishment of the Pa nel.359 In our view, a number of the appellants' 
claims and arguments share common themes, such that it is appropriate and sufficient for us to 
address these arguments thematically. At the same time, certain other arguments either do not 
implicate such commo n themes or are sufficiently nuanced such that a certain level of detail is 
required in our analysis of these issues. We therefore proceed with our analysis by addressing, in 
turn: (i)  a number of discrete claims raised by the appellants; and (ii)  certain claims and arguments 
that are grouped based on cross -cutting themes.  
 
351 The evidence covered the period from the entry into force of the measures in December 2012 up to 
September 2015, "with some variations in the exact period covered, depending on the data used". 
(Panel  Report, para.  7.933)  
352 Panel  Report, paras.  7.987 -7.1023.  
353 Panel  Report, paras.  7.1024 -7.1045.  
354 Panel  Report, para.  7.984.  
355 Panel  Report, para.  7.985.  
356 Panel  Report, para.  7.986.  
357 Panel  Report, para.  7.1037.  
358 Panel  Report, para.  7.1043.  
359 Hondu ras' appellant's submission, paras.  695-794 and 848 -1086; Dominican  Republic's appellant's 
submission, paras.  104-651 and 826 -1151.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.1.2.3.3.1   Discrete claims regarding the Panel's analysis of the actual effects of the 
TPP measures  
6.103.   In this section, we address a number of claims and arguments raised by the appellants 
regarding t he actual effects of the TPP  measures since implementation. We note, at the outset, that, 
with the exception of the parties' arguments regarding certain due process concerns underlying the 
Panel's assessment of the post -implementation evidence, the argumen ts and claims addressed in 
this section predominantly pertain to the Panel's analysis of the impact of the TPP  measures on 
smoking behaviour, contained in Appendices C and D to the Panel  Report.  
6.104.   To that end, we recall that the Panel's analysis of the evid ence submitted by the parties 
regarding the contribution of the TPP  measures to reducing smoking prevalence  is set forth in 
Appendix  C to the Panel  Report.360 The Panel conducted this analysis in three  steps, assessing: 
(1) whether smoking prevalence decreased following the implementation of the TPP  measures; 
(2) whether the decline in smoking prevalence accelerated after the implementation of the 
TPP measures; and (3)  whether the TPP  measures contribute d to the decline in smoking prevalence. 
The Panel concluded that: (i)  "[t]here is evidence that overall smoking prevalence in Australia 
continued to decrease following the introduction of the TPP  measures; (ii)  "[t]he downward trend in 
overall smoking prev alence in Australia appears to have accelerated in the post -TPP period"; and 
(iii) although it is not possible to distinguish between the impact of TPP and the impact of enlarged 
GHWs on the basis of the empirical evidence submitted, "there is some econome tric evidence 
suggesting that the TPP  measures, together with the enlarged GHWs implemented at the same time, 
contributed to the reduction in overall smoking prevalence ", including cigar smoking prevalence, 
since their entry into force.361  
6.105.   In Appendix  D to its Report, the Panel assessed the parties' evidence regarding the 
contribution of the TPP  measures to reducing consumption of tobacco products.362 The Panel 
distinguished in its analysis between the evidence related to cigarettes and  the evidence concerning  
cigars .363 With respect to cigarettes, s imilarly to its analysis of smoking prevalence, the Panel 
proceeded in three  steps, assessing in turn: (1)  whether cigarette consumption had declined  
(measured in terms of cigarette sales volumes)  following the implem entation of the TPP  measures; 
(2) whether the decline in cigarette consumption had accelerated following the implementation of 
the TPP  measures; and (3)  whether the TPP  measures contributed to the decline in cigarette 
consumption. The Panel then assessed s eparately the parties' evidence and arguments as they 
related to the impact of the TPP  measures on consumption of cigars.  The Panel concluded that: 
(i) "[t]here is some evidence that cigarette sales in Australia continued to decrease following the 
introduc tion of the TPP  measures"; (ii)  "[t]he downward trend in cigarette sales in Australia appears 
to have accelerated in the post -TPP period"; (iii)  "[a]lthough it is impossible to distinguish between 
the impact of TPP and enlarged GHWs, there is some economet ric evidence suggesting that the 
TPP measures, in combination with the enlarged GHWs implemented at the same time, contributed 
to the reduction in wholesale cigarette sales, and therefore cigarette consumption, after their entry 
into force"; and (iv)  "[t]he evidence … on the evolution of consumption of cigars in the post -TPP 
period is more limited" and did not allow the Panel "to draw clear conclusions on the effect of the 
TPP measures on cigar consumption in Australia".364 
6.106.   With this background in mind, we pr oceed to address, as discrete  claims , the arguments 
raised by the appellants regarding: (i)  step 1 of the Panel's analysis of smoking prevalence; 
(ii) step 2 of the Panel's analysis of cigarette consumption; (i ii) step 3 of the Panel's analyses of both 
smoking prevalence and cigarette consumption; ( iv) certain due process concerns underlying the 
Panel's analysis of the actual effects of the TPP  measures; and (v)  the consequences of any errors 
by the Panel.  
 
360 Panel  Report, Appendix  C, para.  1.  
361 Panel  Report, para.  7.972; ibid., Appendix  C, para.  123. 
362 Panel  Report, Appendix  D, para. 1.  
363 The Panel noted that three  of the complainants had initially argued that the TPP  measures 
"'backfired' by increasing tobacco sales"; however, this argument was "not developed later in the proceedings". 
(Panel  Report, Appendix  D, para.  4) (fn  omitted) The Panel also noted that the data pertaining to cigarette 
consumption primarily looked at cigarette sales volumes, although some studies looked at reported cigarette 
consumption. (Ibid., para.  2)  
364 Panel  Report, para.  7.979; ibid., Appendix  D, pa ra. 137. WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.107.   Before turning to address these issues, we brie fly note, for the sake of clarity, that many of 
the parties' arguments addressed below relate to the evidence provided by experts on behalf of 
certain parties. These experts included: for the Dominican  Republic, the Institute for Policy 
Evaluation (IPE) an d Professor List; for Honduras, Professor Klick; and, for Australia, Dr  Chipty.  
Step 1 of the Panel's smoking prevalence  analysis  
6.108.   In step  1 of its analysis of whether the TPP  measures reduced smoking prevalence, the Panel 
assessed the parties' evidence r egarding whether smoking prevalence decreased following the 
implementation of the TPP  measures.365 The Panel's review of the datasets revealed that "smoking 
prevalence fluctuates."366 The Panel also noted that , "in the presence of small sample sizes … it can 
be particularly difficult to interpret trends ."367 The Panel found, however, that "most of the 
datasets  …, including the [Roy Morgan Single Source] RMSS data, OECD Dataset on Non -Medical 
Determinants, and  [National Health Survey]  NHS, show continuing declines  in smoking prevalence 
at the national level in the period following the introduction of the TPP  measures ."368 The Panel 
concluded that "[t]here is evidence that overall smoking prevalence in Australia continued to 
decrease following the introduction of the TPP measures."369 
6.109.   The Dominican  Republic argues that, in step  1 of its smoking prevalence analysis, the Panel 
"defined the rate of decline as 'a downward trend in smoking prevalence that has accelerated since 
July 2006 '".370 According to the Dominican  Republic, in the second and third steps of its smoking 
prevalence analysis, the Panel did not take into account its finding in the first step that the rate of 
decline in smoking accelerated since July 2006.371 The Dominican  Republ ic argues that, in the 
absence of any explanation for this by the Panel, the Panel's reasoning is internally incoherent and 
inconsistent with the duty under Article  11 of the DSU to make an objective assessment of the 
matter.372  
6.110.   Australia submits that the f ocus of the Dominican  Republic's arguments  – the "pre -existing 
rate of decline"  – was relevant only to the second and third steps of the Panel's analysis.373 Australia 
submits that the Panel did not identify a pre -existing rate of decline in step  1 because s tep 1 merely 
examined whether smoking prevalence had declined following implementation of the TPP  measures, 
meaning that it was unnecessary to identify a benchmark rate of decline.374 Australia highlights that 
the Panel made no reference to a benchmark rate of decline in step  1 of its analysis and the Panel 
was clear that its findings in step  1 "did not inform the question of acceleration , i.e. the question 
that actually required  a 'benchmark rate of decline'".375 Australia considers that the 
Dominican  Republic  misrepresents the Panel's findings by superimposing a green trend line on 
Figure  C.1 of the Panel's findings that is absent from the Panel's actual Figure  C.1 contained in the 
Panel  Report.376 Since the Panel made no such finding in step  1 of its analysis, Australia asserts, 
there is no inconsistency in the Panel's findings.377  
 
365 Panel  Report, Appendix  C, section 1.  
366 Panel  Report, Appendix  C, para.  40. The Panel also noted "the usefulness of relying on the most 
recent available … and comparable data to analyse trends in smoking prevalence", and considered this 
"particu larly important", because the datasets provided by the parties did not always cover the same period. 
(Ibid., para.  39) The Panel further highlighted the importance of distinguishing between smoking prevalence  
and smoking incidence  (smoking prevalence measu res the proportion of smokers in the population; smoking 
incidence measures the proportion of smokers in a population of smokers and recent quitters). (Ibid.)  
367 Panel  Report, Appendix  C, para.  40.  
368 Panel  Report, Appendix  C, para.  40. (fn  omitted)  
369 Panel  Report, Appendix  C, para.  123.a.  
370 Dominican  Republic's appellant's submission, para.  187 (quoting Panel  Report, Appendix  C, para.  8). 
(emphasis added by the Dominican  Republic)  
371 Dominican  Republic's appellant's submission, paras.  181-184 and 188. The D ominican  Republic 
elaborates that "in steps 2 and 3 of its analysis, without any acknowledgement or explanation, the Panel did 
not apply the rate of decline that it had defined in step 1". (Ibid., para.  188)  
372 Dominican  Republic's appellant's submission, paras.  185-186 and 191.  
373 Australia's appellee's submission, para.  677.  
374 Australia's appellee's submission, para.  682.  
375 Australia's appellee's submission, para.  682. (emphasis original)  
376 Australia's appellee's submission, para.  683.  
377 Australia's appellee's submission, paras.  678 and 703.  
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  6.111.   We recall that the specific issue that the Panel addressed in step  1 of Appendix  C was 
whether, after the implementation of the TPP  measures, smoking prevalence had declined. In order 
to assess this straightforward question of whether smoking prevalence declined , it was only 
necessary for the Panel to compare smoking prevalence after the implementation of the 
TPP measure s to smoking prevalence as it existed at the time of the TPP  measur es' implementation. 
Thus, in step  1 of its smoking prevalence analysis, the Panel was not required to make any findings 
regarding the rate of decline in smoking prevalence prior to the implementation of the 
TPP measures.378  
6.112.   We further note that the Dominica n Republic's assertion that the Panel found that smoking 
prevalence had declined since July 2006 is based exclusively on the Panel's statement in paragraph  8 
of Appendix  C that: "the RMSS data reveal a downward trend in smoking prevalence that has 
accelera ted since July 2006."379 Paragraph  8 of Appendix  C appears in a subsection of the Panel's 
analysis in step  1, titled "Datasets and related analyses".380 This subsection appears equivalent to 
other subsections titled "Datasets and related studies", which are present  in other sections of 
Appendix  C. All such "datasets" subsections precede subsections titled "Analysis by the Panel". This 
structure is similar  to the structure of the other Appendices, which also include distinct "Datasets 
and related analyses" subsections that precede "Analysis by the Panel" subsections.  
6.113.   From our review of the Appendices, it appears that all such "datasets" subsections describ e 
the evidence and arguments provided by the parties to the Panel, and do not appear to contain any 
independent reasoning or findings by the Panel itself. This remains true  for all three steps of the 
Panel's analysis in Appendix  C.381 We also note that the v ery same subsection in which the Panel 
allegedly found a break in the trend  line also contains a "finding" that "the last eight  [National Drug 
Strategy Household Survey ( NDSHS )] reports indicate … that smoking prevalence … has decreased 
along a roughly lin ear trend since 1993", and the subsequent sentence states that "[t]he most recent 
NDSHS survey reveals that smoking rates  … have evolved according to this trend without 'break', 
'shift' or 'kin k' in the trend line that could be attributable to the TPP  meas ures."382  
6.114.   We see no reason to presume that the Panel made directly contradictory factual findings 
within five  paragraphs of one another, when a plain reading of the Panel  Report indicates that these 
so-called findings merely contain descriptions of what the  evidence purported to show, and do not 
amount to affirmative findings of fact by the Panel itself. In our view, the "Datasets and related 
analyses" subsection in which the Panel stated that "the RMSS data reveal a downward trend in 
smoking prevalence that  has accelerated since July 2006" is, on its face, a summary of the evidence 
provided by the parties. Consequently, this so -called "finding" by the Panel is not an affirmative 
finding of fact based on its assessment of the evidence, but simply a descriptio n of what the evidence 
purports to represent.  
 
378 Panel  Report, Appendix  C, paras.  41-42. The issue of what smoking prevalence had looked like prior 
to the implementation of the TPP  measures  only arose at the second  step of the Panel's analysis. This is 
because, at the second step of the analysis, the Panel assessed whether the decline in smoking prevalence had 
accelerated  after the implementation of the TPP  measures. In other words, step 1 assessed in absolute terms 
whether smoking prev alence had declined at all, following implementation of the TPP  measures, while step  2 
assessed whether in relative terms smoking prevalence had declined more after implementation of the 
TPP measures than it had been decreasing prior to TPP  implementation.  
379 Panel  Report, Appendix  C, para.  8.  
380 Panel  Report, Appendix  C, section 1.1.  
381 Indeed, in all sections of Appendix  C, the Panel clearly describes the evidence provided by the parties 
in the "Datasets and related studies" subsection, and then proceeds to  consider and form conclusions regarding  
the probative value of that evidence in the subsequent "Analysis by the Panel" subsection. For example, in the 
"Datasets and related studies" subsection of section 3, the Panel states that, "[o]verall, IPE concludes  that the 
TPP measures had no statistically significant effect on general smoking prevalence and on cigar smoking 
prevalence." (Panel  Report, Appendix  C, para.  64) (fn  omitted) Pursuant to the Dominican  Republic's logic, this 
would appear to be an affirmat ive finding by the Panel that "the TPP  measures had no statistically significant 
effect on … smoking prevalence." (Ibid.) However, in its subsequent "Analysis by the Panel" subsection, the 
Panel stated that it was "not persuaded that these econometric resu lts can be taken at face value". (Ibid., 
para. 103) This would appear to confirm that the so -called "findings" appearing in the "Datasets and related 
analyses/studies" subsections are not affirmative findings by the Panel, but descriptions of the parties' 
arguments and evidence.  
382 Panel  Report, Appendix  C, para.  13. 
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  6.115.   In our view, the Panel's assessment of the evidence and its factual findings based on that 
evidence, pertinent to step  1 of its analysis, are contained entirely in the subsequent subsection, 
titled "Analysis b y the Panel".383 In that "Analysis by the Panel" subsection, the Panel assessed  the 
evidence it had described  in the previous subsection and concluded that "despite different estimates 
and fluctuations of smoking prevalence, most of the datasets  …, including the RMSS data, OECD 
Dataset on Non -Medical Determinants, and NHS, show continuing declines in smoking prev alence at 
the national level in the period following the introduction of the TPP  measures."384 The Panel's 
reliance on all of these datasets confirms that the Panel did not make an affirmative finding of fact 
that the "downward trend in smoking prevalence … has accelerated since July  2006."385  
6.116.   We therefore do not see any inconsistency between the Panel's actual findings in step  1 and 
the remainder of its analysis in Appendix  C.386 
Step 2 of the Panel's cigarette consumption  analysis  
6.117.   As indicated above, in Append ix D to the Panel  Report, the Panel assessed the parties' 
evidence regarding the contribution of the TPP  measures to reducing tobacco product 
consumption.387 The Panel distinguished between evidence concerning cigarettes and evidence 
concerning cigars.388 The Panel assessed the evidence concerning cigarette consumption  in 
three  steps, assessing in turn: (1)  whether consumption had declined following the implementation 
of the TPP  measures; (2)  whether the decline in consumption had accelerated following the 
implementation of the TPP  measures; and (3)  whether the TPP  measures contributed to the decline 
in consumption. In step  2 of its analysis of cigarette consumption, the Panel questioned the validity 
of the econometric results provided by the complainants' exper t, Professor List, for several 
reasons.389 The Panel noted that Australia's expert, Dr  Chipty, re -estimated Professor List's dynamic 
model, using the In-Market -Sales/Exchange of Sales ( IMS/EOS ) data, and replacing the price 
variable with a dummy variable, wh ich "reverse[d] Professor List's conclusion", showing a 
"statistically significant shift in the post -implementation downward trend".390 The Panel observed, 
however, that this shift was "no longer statistically significant when the excise tax changes and 
strategic inventory management associated with such changes [we]re taken into account".391 The 
Panel considered that although Dr  Chipty's model was "slightly more accurate []" in predicting 
per capita sales in the pre -implementation period, it continued to perform poorly, and the Panel 
"continue[d] to have doubts about" its reliability in predicting the per capita sales that would have 
occurred in the absence of the TPP  measures.392 The Panel nevertheless noted that average cigarette 
sales volumes in the post -implementation period were "statistically significantly lower than in the 
pre-implementation period", and highlighted that "the cigarette sales trend in the 
post-implementation period has bec ome steeper compared to the pre -implementation trend, 
 
383 The equivalent subsections in the other sections of Appendix  C are also titled "Analysis by the Panel".  
384 Panel  Report, Appendix  C, para.  40.  
385 Panel  Report, Appendix  C, para.  8.  
386 We note  that aspects of the Dominican  Republic's appellant's submission might be read as indicating 
that the Panel's findings are incoherent as between steps 2 and 3 of its analysis of smoking prevalence. For 
example, the Dominican  Republic states that, "for each  step, the Panel applied a rate of decline that differed 
from the rate of decline found in the previous step" refers to an apparent inconsistency between the Panel's 
findings in steps 2 and 3 of its analysis of smoking prevalence. (Dominican  Republic's app ellant's submission, 
para. 188. See also ibid., paras.  189-193) The Dominican  Republic's claim that the Panel erred, however, 
focuses exclusively on the apparent inconsistency between the Panel's findings in step 1 and its subsequent 
findings in steps 2 an d 3, and most particularly focuses on the Panel's findings in step 2 as compared to step  1. 
(See ibid., paras.  185-212) We therefore do not consider that the Dominican  Republic has asserted that the 
Panel acted inconsistently with Article  11 of the DSU wit h respect to any alleged incoherence as between the 
Panel's findings in steps 2 and 3. In any event, to the extent that such an assertion could be read as implied, it 
is unsubstantiated by any supporting argumentation.  
387 Panel  Report, Appendix  D, para.  1.  
388 The Panel noted that three  of the complainants had initially argued that the TPP  measures 
"'backfired' by increasing tobacco sales"; however, this argument was "not developed later in the proceedings". 
(Panel  Report, Appendix  D, para.  4) (fn  omitted) Th e Panel also noted that the data pertaining to cigarette 
consumption primarily looked at cigarette sales volumes, although some studies looked at reported cigarette 
consumption. (Ibid., para.  2)  
389 Panel  Report, Appendix  D, paras.  40-44. 
390 Panel  Report, Ap pendix  D, para.  45.  
391 Panel  Report, Appendix  D, para.  45. 
392 Panel  Report, Appendix  D, para.  45. 
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  implying th at the fall in cigarette sales has accelerate d in the post -implementation period ."393 The 
Panel observed that the same conclusion could be drawn from the Aztec scanner data.394 On this 
basis, the Panel concluded that "[t]he downward trend in cigarette sales in  Australia appears to have 
accelerated in the post -TPP period."395 
6.118.   Honduras considers that, "without any analysis or explanation, and apparently on the basis 
of its own re -working of the back -up data provided by IPE, the Panel in one short paragraph reaches 
an affirmative conclusion based on its own 'standard mean comparison test' that is simply not 
supported by the facts on the record."396 Honduras further highlights that the Panel itself indicated 
that its conclusion was contradicted by the Nielsen data, as w ell as the IMS/EOS data if a shorter 
time period were used.397 Honduras considers that the Panel's "strong affirmative conclusion" is not 
supported by any explanation or calculation details that would allow the parties to understand its 
finding, and highligh ts that "even the evidence of Australia is not affirmative on this point" and the 
Panel's "own re -calculation only holds true for certain datasets under certain conditions".398 
Honduras highlights that Figure  D.14 was prepared by the Panel based on backup ma terial provided 
by IPE, and there is no explanation as to how it was developed, nor is there any way of testing its 
accuracy.399 In Honduras' view, the fact that it is impossible to review the Panel's findings is a 
"fundamental problem of due process".400 Honduras argues that the Panel "violated the essence of 
its task under Article  11 of the DSU" by failing to engage with the parties "in earnest" on any of the 
technical debates that took place before it, simply "dump[ing] its final analysis on the parties in i ts 
findings", depriving the parties of a meaningful opportunity to comment during the Panel 
proceedings, and failing to include the technical details necessary to review the Panel's findings.401 
6.119.   We note that, in assessing Dr  Chipty's evidence concerning whet her the decline in cigarette 
consumption accelerated after the implementation of the TPP  measures, the Panel made two  distinct 
sets of findings:  
a. The Panel first noted that Dr  Chipty's re -specification of Professor List's dynamic model , 
relying on excise tax dummies instead of a price variable , showed a statistically significant 
negative effect of the TPP  measures on cigarette sales. The Panel acknowledged that this 
effect was no longer statistically significant when excise tax changes, and strategic 
inventory management associated with those tax changes, were  taken into account "in 
the post -implementation estimation ".402 The Panel recalled that it had doubts about the 
reliability of the dynamic model, given that it was not very accurate in predicting actual 
sales, and considered that this was only "slightly" improved in Dr  Chipty's specification 
than it had been in Profes sor List's model.403 The Panel stated that it "continue[d] to have 
doubts" about the accuracy of the model.404  
b. Second, the Panel observed that, under a standard mean -comparison test, "the average 
cigarette sales volumes based on the IMS/EOS data in the post -implementation period are 
statistically significantly lower than in the pre -implementation period."405 The Panel, 
referring to Figure  D.14, considered that this observation was confirmed based on the fact 
that "the cigarette sales trend in the post -implementa tion period has become steeper 
compared to the pre -implementation trend, implying that the fall in cigarette sales has 
accelerated in the post -implementation period."406 The Panel stated that the same 
 
393 Panel  Report, Appendix  D, para.  46. (fn  omitted)  
394 Panel  Report, Appendix  D, para.  46. 
395 Panel  Report, Appendix  D, para.  137.b.  
396 Honduras' appellant's subm ission, para.  893.  
397 Honduras' appellant's submission, para.  894.  
398 Honduras' appellant's submission, para.  894. Specifically, Honduras notes the Panel's finding that a 
"minor change to Dr  Chipty's analysis … leads to the conclusion that … [t]here has no t been any statistically 
significant shift in consumption".  (Honduras' appellant's submission, para.  892 (referring to Panel  Report, 
Appendix  D, para.  45)) 
399 Honduras' appellant's submission, para.  895.  
400 Honduras' appellant's submission, para.  895. 
401 Honduras' appellant's submission, para.  896.  
402 Panel  Report, Appendix  D, para.  45.  
403 Panel  Report, Appendix  D, para.  45.  
404 Panel  Report, Appendix  D, para.  45.  
405 Panel  Report, Appendix  D, para.  46. 
406 Panel  Report, Appendix  D, para.  46.  
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  conclusion could be drawn based on the Aztec data. The Pa nel acknowledged that applying 
this test to the Nielsen data showed no difference between the pre - and 
post-implementation period trends. The Panel emphasized that the Nielsen data was 
available only for the period of February 2011 to December 2013, and wh en the test was 
applied to the IMS/EOS data for that same period it also showed no shift, even though 
that conclusion was reversed when the data was extended to September 2015. The Panel 
therefore did not consider the result using Nielsen data to be releva nt.407 
6.120.   We understand that, with respect to the first part of the Panel's analysis, Honduras considers 
not only that the Panel "uncritically accept[ed] the conclusions and approaches of Dr  Chipty", but 
that the Panel's findings indicate that a "minor change t o Dr Chipty's analysis … leads to the 
conclusion that [t]here has not been any statistically significant shift in consumption".408 In our view, 
the first of these assertions is a significant distortion of the Panel's findings, in part because  we 
agree with t he second assertion. Indeed, the Panel appears to consider Dr  Chipty's evidence in this 
respect to be of questionable probative value, much like Professor List's own expert evidence. 
Specifically, the Panel's findings indicate that it considered Dr  Chipty 's and Professor List's models 
to be equally  unreliable.  
6.121.   We note, however, that the Panel did not end its analysis there. The Panel proceeded with 
its analysis, and ultimately concluded that the downward trend in cigarette sales accelerated in the 
post-implementation period, on the basis of two  observations: (i)  on the basis of a "standard 
mean -comparison" test, the Panel concluded that "average cigare tte sales volumes … in the 
post-implementation period are statistically significantly lower than in the pre -implementation 
period"; and (ii)  the Panel found that this was confirmed based on the fact that "the cigarette sales 
trend in the post -implementation period has become steeper compared to the pre -implementation 
trend ."409 
6.122.   Regarding the Panel's reliance on a  standard mean -comparison test, which Honduras 
challenges on the basis that the Panel provided no explanation or details of its calculation, we 
understand that a mean -comparison test is a simple statistical test that the Panel could have 
conducted when verifying that the parties' methodologies did indeed reveal the results asserted by 
the parties. Indeed, the application of statistical testing to verify statistical results seems to us be 
very much in accordance with the duty of a panel to review the evid ence adduced by the parties. 
We therefore do not consider that the Panel's application of a mean -comparison test indicates that 
the Panel failed to act objectively. To the contrary, it seems perfectly plausible that the Panel's 
mean -comparison test could h ave revealed that the complainants were correct in asserting that the 
decline in cigarette consumption had not accelerated after the implementation of the TPP  measures.  
6.123.   Regarding the Panel's confirmation of its mean -comparison test by assessing the steepn ess 
of the tobacco consumption trend pre - and post -TPP implementation, we address this issue in greater 
detail below.410 It suffices to note here that we do not consider that a panel acts inconsistently with 
Article  11 of the DSU simply by depicting the part ies' evidence in graphical form. Furthermore, we 
do not see how a graphical representation of evidence that was in the parties' possession to begin 
with could imply that the Panel compromised the parties' due process rights. Since the evidence was 
in their  possession, the parties were free to prepare such graphs on their own initiative. Their 
reluctance to do so should not preclude a panel from graphically representing data for the purpose 
of elucidating factual findings.  
6.124.   Finally, we do not consider that t he Panel lacked any reasoning or explanation for its 
conclusions in step  2 of its analysis o f cigarette consumption, including why it considered the Nielsen 
data to be less relevant to its consideration of this issue.411 While the appellants may disagree wit h 
the Panel's review of the factual evidence, as well as its conclusion, the Panel's explanation for how 
it reviewed the evidence and its reasons for its ultimate conclusion are quite clearly expressed. There 
 
407 Panel  Report, Appendix  D, fn 50 to para.  46.  
408 Honduras' appellant's submission, para.  892.  
409 Panel  Report, Appendix  D, para.  46.  
410 See paras.  6.326.   6.328.   below.  
411 See para.  6.119.    above.  
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  is no doubt, in our view, about how and why the  Panel concluded that "[t]he downward trend in 
cigarette sales in Australia appears to have accelerated in the post -TPP period."412  
6.125.   For these reasons, we consider that Honduras has not demonstrated that the Panel failed to 
make an objective assessment of th e matter before it in assessing whether the decline in cigarette 
consumption accelerated after the implementation of the TPP  measures.  
Step 3 of the Panel's smoking prevalence  and cigarette consumption  analyses  
6.126.   In step  3 of its analyses of smoking prevale nce and cigarette consumption, the Panel 
assessed whether the TPP  measures had contributed to the acceleration in the decline in, 
respectively, smoking prevalence and cigarette consumption. The evidence presented by the parties 
consisted primarily of econo metric models that sought to distinguish and assess the impact of the 
TPP measures and other determining factors on, respectively, smoking prevalence and 
consumption.413 In this respect, as elsewhere, the Panel noted that its task was not to conduct its 
own econometric assessment, but rather "to review the robustness of the econometric evidence 
submitted by the parties".414  
6.127.   In step  3 of its smoking prevalence  analysis, the Panel first explained that, of the different 
datasets provided by the parties, it consid ered the RMSS data to be "most suited  … to analyse the 
impact of the TPP  measures on smoking prevalence".415 The Panel then turned to assess the 
robustness of the complainants' experts' econometric models. The Panel identified a large number 
of different con cerns that it had regarding these models.416 Turning to the econometric models 
provided by Australia's expert, Dr  Chipty, the Panel "note[d] that a number of concerns that [it] 
raised while reviewing the complainants' approaches and results [were] addressed by Dr  Chipty".417 
The Panel considered that the "most recent" econometric evidence submitted by Australia suggested 
that the TPP  measures and enlarged GHWs contributed to the reduction in overall smoking 
prevalence in Australia, including cigar smoking preva lence.418 On that basis, the Panel ultimately 
concluded that "there is some econometric evidence suggesting that the TPP  measures, together 
with the enlarged GHWs implemented at the same time, contributed to the reduction in overall 
smoking prevalence as wel l as in cigar smoking prevalence observed after their entry into force."419  
6.128.   In step  3 of its cigarette consumption  analysis, the Panel first addressed the different 
datasets provided by the parties. The Panel found that, "while … no data are perfect,  … the 
IMS/EOS  data [are] the most suitable available market data ."420 Similarly to its analysis of the 
smoking prevalence  evidence, the Panel proceeded to examine the econometric models provided by 
the complainants' experts, and identified different concerns with respect to the robustness of these 
models.421 Regarding the models provided by Australia's expert, Dr  Chipty, the P anel considered 
that "some" of the concerns that it had raised regarding the complainants' experts' approaches were 
 
412 Panel  Report, Appendix  D, para.  137.b.  
413 Panel  Report, Appendix  C, para.  97; ibid., Appendix  D, para.  48.  
414 Panel  Report, Appendix  C, para.  98; ibid., Appendix  D, para.  105. 
415 Panel  Report, Appendix  C, para.  99.  
416 Panel  Report, Appendix  C, paras.  103-119. 
417 Panel  Report, Appendix  C, para.  120. The Panel highlighted that Dr  Chipty addressed the issue of 
overfitting and relied on dummy variables to  avoid the problems of multicollinearity and endogeneity 
(associated with the use of a price variable) as well as non -stationarity (associated with the use of either price 
or tax level variables). (Ibid.) The Panel also considered that Dr  Chipty's economet ric results were "robust to 
alternative specifications, including different TPP starting date[s] …, the use of an excise tax level variable … 
and sample reweighting dummies", and consistently showed a negative and statistically significant impact of 
the TP P measures on overall smoking prevalence. (Ibid., para.  121) (fn omitted) The Panel further observed 
that "in most specifications", Dr  Chipty's analysis continued to show a negative and statistically significant 
impact of the TPP  measures on smoking preval ence even when using Professor List's procedure to compute 
standard errors. (Ibid.)  
418 Panel  Report, Appendix  C, para.  122. 
419 Panel  Report, Appendix  C, para.  123.c. The Panel noted that no post -implementation empirical 
evidence was provided regarding the im pact of the TPP  measures regarding smoking prevalence with respect 
to cigarillos. (Ibid., para.  124) 
420 Panel  Report, Appendix  D, para.  102.  
421 Panel  Report, Appendix  D, paras.  101-114.  
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  "to some extent" addressed by Dr  Chipty.422 The Panel considered that, "[o]verall, based on the 
most recent econometric evidence submitted by Australia, there is some econometric evidence 
suggesting that TPP and enlarged GHWs contributed to the reduction in wholesale cigarette sales in 
Australia."423 On that basis, the Panel concluded ultimately that "[a]lthough it is impossible to 
distinguish bet ween the impact of TPP and enlarged GHWs, there is some econometric evidence 
suggesting that the TPP  measures, in combination with the enlarged GHWs implemented at the same 
time, contributed to the reduction in wholesale cigarette sales, and therefore ciga rette consumption, 
after their entry into force."424 
6.129.   We proceed to address below a number of the appellants' arguments that the Panel acted 
inconsistently with Article  11 of the DSU in its analyses of whether the TPP  measures contributed to 
the decline in sm oking prevalence and cigarette consumption.425  
Impact of tobacco costliness on smoking behaviour  
6.130.   In step  3 of its smoking prevalence  analysis in Appendix  C, the Panel observed that the 
Dominican  Republic's econometric results could not "be taken at face val ue, mainly because most of 
their model specifications are unable to detect the impact of tobacco costliness (including excise tax 
increases) on smoking prevalence", even though "all parties consider tobacco excise tax to be one  of 
the most effective tobacc o control policies."426 In its cigarette c onsumption  analysis in Appendix  D, 
the Panel did not indicate whether any of the parties' models were able to detect the impact of 
tobacco costliness.427 
6.131.   In the Dominican  Republic's view, the Panel acted inconsistently  with Article  11 of the DSU 
by: (i)  treating the parties' evidence inconsistently; and (ii)  failing to engage with the 
Dominican  Republic's evidence and arguments.428 Regarding the Panel's allegedly inconsistent 
treatment of the parties' evidence, the Domini can Republic argues that: (i)  the Panel did not address 
the Dominican  Republic's models that were able to detect the impact of tobacco costliness, although 
it accepted Australia's models that were able to detect the impact of tobacco costliness; and (ii)  the 
Panel rejected the Dominican  Republic's models because they were not able to detect the impact of 
tobacco costliness, but did not reject any of Australia's models even when such a  model detected 
the wrong impact of tobacco costliness.429 As to the Panel's alleged failure to engage with the 
 
422 Panel  Report, Appendix  D, para.  115. In particular, the Panel noted that Dr  Chipty used dummy 
variables to capture the excise tax increases, thus avoiding the endogeneity problems (associated with the use 
of a price variable) and the unit root problem (associated with the use of the price or tax level variables). The 
Panel  also observed that Dr  Chipty's model, while based on IPE's first specification, was modified to account for 
strategic inventory management as well as the 2006 GHW regulation. (Ibid.) The Panel considered that 
Dr Chipty's results were "robust to alternativ e specifications, including different TPP starting date[s] …, and to 
Professor List's procedure to compute standard errors". (Ibid., para.  116) The Panel observed that replacing 
the excise tax hike dummy variables with a tax level variable resulted in the TPP measures' effects no longer 
being statistically significant, but emphasized its earlier explanation that "specification testing suggests tax 
levels are not appropriate", and also observed that "the tax levels variable is likely to be non -stationary." 
(Ibid.)  
423 Panel  Report, Appendix  D, para.  117.c.  
424 Panel  Report, Appendix  D, para.  137.  
425 For the reasons explained above, our discussion of these issues does not  capture every argument 
raised by the appellants concerning these aspects of the Panel's find ings. 
426 Panel  Report, Appendix  C, para.  103.  
427 See, generally, Panel  Report, Appendix  D.  
428 The Dominican  Republic notes the Appellate  Body's statement that "a panel's choice not to discuss a 
piece of evidence that on its face appears to be favourable to the arguments of one of the parties might 
suggest bias or lack of even -handedness in the tre atment of the evidence by the panel, even if in fact the 
panel is making an objective assessment of the facts." (Dominican  Republic's appellant's submission, para.  505 
(quoting Appellate  Body Report, Australia – Apples , para.  270))  
429 Dominican  Republic's a ppellant's submission, paras.  490-497. The Dominican  Republic argues that, 
with respect to cigarette smoking prevalence , "the Panel accepted Dr  Chipty's … model …, despite the fact that 
the specification was unable to detect the impact of two excise tax in creases." (Dominican  Republic's 
appellant's submission, para.  498 (referring to Panel  Report, Appendix  C, para.  121)) The Dominican  Republic 
argues that, with respect to cigar smoking prevalence , "the Panel accepted Dr  Chipty's model … despite the 
fact tha t the cigar smoking models were, again, unable to detect the impact of the 2013 tax increases on cigar 
smoking prevalence."  (Dominican  Republic's appellant's submission, para.  500 (referring to Third Rebuttal 
Report of Dr Tasneem Chipty (1  February 2016) ( Chipty Third Rebuttal Report) (Panel Exhibit AUS -605), 
para. 29 and Table 3, Rows [A] and [C])) With respect to cigarette smoking consumption , "the Panel accepted 
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  Dominican  Republic's arguments, the Dominican  Republic refers to a supplemental submission which 
the Panel agreed to take into consideration, in w hich the Dominican  Republic identified that 
Dr Chipty's consumption model provided to the Panel in her final reports showed that an increase in 
excise tax in 2013 led to an increase in cigarette consumption.430 The Dominican  Republic submits 
that this result  was nonsensical, based on Dr  Chipty's own views, and that it explained as much to 
the Panel.431 The Dominican  Republic argues, however, that "[w]ithout engaging with this evidence, 
the Panel relied on Dr  Chipty's updated consumption model as a basis for its  finding that the 
TPP measures have reduced cigarette consumption."432  
6.132.   Regarding the Dominican  Republic's arguments that the Panel treated the same class of 
evidence inconsistently, Australia submits that the Dominican  Republic mischaracterizes the 
"purpose " for which Australia submitted its evidence.433 According to Australia, "[t]he Panel did not 
need to find – nor did it find – that Dr  Chipty's revisions to the complainants' econometric models 
fully resolved the complainants' problems with tobacco costlines s in order to draw these conclusions 
from Dr  Chipty's submissions."434 In any event, Australia submits that the Panel did address all 
relevant models, and critiqued the parties' models on grounds other than just whether they detected 
the impact of tobacco co stliness.435 As to the Dominican  Republic's arguments regarding the alleged 
failure of the Panel to address the parties' evidence and arguments, Australia notes that this 
argument relates to a letter to the Panel of 17  February  2016 that was styled as a requ est for the 
Panel to take steps to protect the due process rights of the parties, but included in and of itself 
"substantive comments" on Dr  Chipty's Third Rebuttal Report.436 According to Australia, the Panel 
accepted these comments and provided Australia w ith an opportunity to respond.437 On 
16 March  2016, Australia commented on the Dominican  Republic's comments.438 Australia argues 
that the Panel summarized these events but, "in light of the fact that the Dominican  Republic's 
additional comments had not raised  any issues that the parties had not already debated extensively, 
the Panel did not discuss the parties' post -proceeding submissions elsewhere in its Report."439 
Australia considers that "the Panel's decision not to refer to these events further speaks for i tself: 
the Panel reviewed the parties' additional submissions and concluded, correctly, that these 
 
Dr Chipty's updated consumption model … even though it reached the 'nonsensical' finding that  an increase in 
excise tax led to an increase in smoking consumption."  (Ibid., para.  499 (referring to Dominican  Republic's 
Communication to the Panel (17  February  2016); Response by the Dominican  Republic to the Panel's 
Communication of 2  March  2016 (4  March 2016)) (emphasis omitted))  
430 Dominican  Republic's appellant's submission, para.  506 (referring to Dominican  Republic's 
Communication to the Panel (17  February  2016)).  
431 Dominican  Republic's appellant's submission, paras.  63-64 (referring to Rebuttal R eport of 
Dr Tasneem Chipty (14  September 2015) ( Chipty Rebuttal Report) (Panel Exhibit AUS -535 (SCI)), para.  39). 
432 Dominican  Republic's appellant's submission, para.  510. In the Dominican  Republic's view, "[n]othing 
in the Panel's reasoning 'reveals that it has nevertheless assessed the significance of [the 
Dominican  Republic's] evidence' that Dr  Chipty's model produced 'nonsensical' tax results." (Ibid., para.  511 
(quoting Appellate  Body Reports, Philippines – Distilled Spirits , para.  135)).  
433 Australia's appellee's submission, para.  809. Australia submits that the Dominican  Republic's 
arguments treat Dr  Chipty's rebuttal evidence "as if she set out – and was required – to fix all of the flaws in 
the complainants' econometric models". (Ibid., p ara. 810 (emphasis original))  
434 Australia's appellee's submission, para.  810. (emphasis original; fn  omitted)  In Australia's view, the 
Panel "properly evaluated all of the econometric evidence on the record in relation to the burden of proof and 
in relatio n to the purposes for which the evidence was submitted". (Ibid., para.  811) 
435 Regarding the Dominican  Republic's first alleged inconsistency, Australia submits that the 
Dominican  Republic's reference to the Panel not mentioning the model specifications tha t were able to detect 
the impact of tobacco costliness is misleading given that accepting Professor List and IPE's models required 
"acceptance of one or more methodological choices that the Panel specifically faulted". (Australia's appellee's 
submission, p ara. 800 (emphasis omitted) ) Australia considers that the Panel did indeed address the 
Dominican  Republic's models that were able to detect the impact of tobacco costliness.  Australia highlights in 
particular the Panel's rejection of the position that the sample period should begin in July  2006, as well as the 
Panel's observation that the Dominican  Republic's model suffered from overfitting. (Ibid., para.  800) As to the 
second alleged inconsistency in the Panel's treatment of the evidence, Australia similar ly explains that "the 
notion that the Dominican  Republic's experts came up with models 'that detected the impact of tobacco 
costliness' overlooks the fact that the Panel identified numerous problems with all of the Dominican  Republic's 
models – not just 't hose filed early in the proceedings' – that led the Panel to question their validity and 
probative value." (Ibid.,  para. 808 (emphasis original))  
436 Australia's appellee's submission, para.  814.  
437 Australia's appellee's submission, para.  816.  
438 Australia' s appellee's submission, para.  817.  
439 Australia's appellee's submission, para.  818. (emphasis omitted)  
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  post-proceeding submissions had not added anything  to the extensive evidence that the parties had 
already submitted on this topic."440  
6.133.   We note at the outset t hat the Dominican  Republic's position that the Panel "rejected" certain 
models is misleading. The Panel did not "reject" or "accept" any model per se  on the basis of any 
individual criterion of robustness. The different criteria applied by the Panel to tes t robustness were 
not "silver bullets" used to accept/reject models such that there could be only  one (or even none) 
left standing at the end of the day. Rather, the Panel assessed the parties' evidence, starting with 
the complainants' evidence, and noted multiple reasons to doubt the reliability of that evidence.441 
When compar ing the co mplainants' evidence  to Australia's evidence, which showed an entirely 
different outcome, the Panel considered that Australia's evidence was, in relative terms, more 
credible and reliable than the complainants' evidence, all the while recognizing that no model 
submitted by any expert was perfect.442 Based on its examination of the different evidence, the 
Panel ultimately considered that Dr  Chipty's models were sufficiently reliable to conclude that "there 
is some econometric evidence suggesting that the TPP  measures, together wi th the enlarged GHWs 
implemented at the same time, contributed to the reduction in overall smoking prevalence  and 
cigarette consumption .443 The appellants have not argued, much less demonstrated, that this 
approach by the Panel was in error.  
6.134.   We further note that, in assessing the parties' smoking prevalence evidence, although the 
Panel had doubts about certain of the complainants' models on the ground that they were unable to 
detect the impact of tobacco costliness, the Panel did not  explicitly indicate that Australia's models 
were able to detect this impact. In other words, the Panel did not rely on this as a reason for finding 
that Australia's models were more reliable than the complainants' models. This was despite 
Australia's expert explicitly arguing  that her smoking prevalence models revealed that "both tax 
policies and Plain Packaging have significantly reduced smoking prevalence ."444 Since the Panel did 
not rely on this as a reason to find Australia's models more credible than the complainants' models, 
we see no inconsistency in the Panel's treatment of the parties' smoking prevalence evidence with 
respect to this "criterion" of robustness.445 Consequently, we do not consider that the Panel treated 
the parties' evidence inconsistently with respect to its ass essment that Australia's smoking 
prevalence evidence was more credible than the complainants' evidence and its overall conclusion 
that there was some evidence suggesting that the TPP  measures contributed to the reduction in 
smoking prevalence.  
6.135.   Turning to the Panel's analysis of the consumption evidence, we note that the Panel did not 
identify whether any of the models submitted by any party was able to detect the impact of tobacco 
costliness on consumption. Since this was not relevant to the Panel's determ ination that Dr  Chipty's 
 
440 Australia's appellee's submission, para.  820. (emphasis original)  Australia also argues that the 
Dominican  Republic "seeks to turn a discretionary act by the Panel  – one necessitated by the 
Dominican  Republic's own litigation tactics – into a basis for challenging the Panel's good faith". (Ibid., 
para. 819) 
441 See also para.  6.272.    below.  
442 This is evidenced by the Panel's statements in comparing Dr  Chipty's models to those of the 
complainants that Dr  Chipty only resolved "a number" and "some" of its concerns with the complainants' 
models. (Panel  Report, Appendix  C, para.  120; ibid., Appendix  D, para.  115) 
443 Panel  Report, Appendix  C, para.  123; ibid., Appendix  D, para.  7.979.  
444 Chipty Third Rebuttal Report (Panel Exhibit AUS -605), para.  3(d).  
445 We note that certain of the Panel's fin dings might be understood as implicitly suggesting that 
Australia's models were able to detect an impact of tobacco costliness.  The Panel appeared to attribute the 
complainants' models' failure to detect an impact of tobacco costliness on smoking prevalenc e to various 
concerns the Panel noted in those models, including "overfitting" of the smoking prevalence trend, the manner 
in which the tobacco price control policy is specified, issues of multicollinearity and non -stationarity, the 
manner in which the pop ulation sampling corrections in the RMSS data were controlled for, and the manner in 
which the complainants' experts calculated standard error (for purposes of assessing the statistical significance 
of the independent variables). (See Panel  Report, Appendi x C, paras.  104-110) When assessing Australia's 
evidence, the Panel noted that Dr  Chipty addressed a number of these concerns. (Ibid., para.  120) In our view, 
however, there is a clear distinction in the Panel's findings between these different concerns, a nd the Panel's 
overarching observation that the complainants' models were unable to detect the impact of tobacco costliness.  
We therefore do not consider that the Panel's findings that Dr  Chipty addressed these specific concerns are 
sufficient for us to co nclude that the Panel also considered Dr  Chipty's models' ability to detect the impact of 
tobacco costliness as a reason to consider Australia's models to be more robust than the complainants' models.  
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  models were more credible than the complainants', we see no reason to conclude that the Panel's 
treatment of the parties' evidence, on its face, was inconsistent.  
6.136.   Having said that, we note that, on appeal, the Dominican  Republic h as identified a 
communication that it sent to the Panel in which it alleged that Dr  Chipty's consumption models 
showed that excise tax increases led to an increase in consumption.446 Specifically, on 
17 February  2016, the Dominican  Republic wrote a communica tion to the Panel in which it stated 
that "[w]ith the submission of the parties' respective Comments on 3  February  2016, the briefing 
phase of these Panel proceedings has now come to an end."447 The Dominican  Republic further noted 
that, in those comments, " the complainants and Australia … provided the Panel with considerable 
further material, including several expert reports and other exhibits."448 The Dominican  Republic 
stated that "there are many comments that could now be made in respect of Australia's new 
argument and evidence", and noted "[a]s an example", a "material inconsistency" in Dr  Chipty's 
analysis.449 According to the Dominican  Republic, Dr  Chipty – who had previously stated that a result 
in which excise tax increases are shown to cause an increase in prevalence or consumption is 
"nonsensical" – had nonetheless made such a finding in her final report.450 The Dominican  Republic 
further claimed that Dr  Chipty's finding that the September 2013 tax increase had led to an increase 
in consumption also explai ned her conclusion that the TPP  measures had led to a statistically 
significant reduction in consumption.451 The Dominican  Republic requested that the Panel take 
appropriate steps "to ensure that the parties' due process interests are respected".452 
6.137.   The Panel,  after having invited and received comments from Australia on the 
Dominican  Republic's request453, sent a communication on 2  March  2016 to the parties in which it 
noted several considerations to be taken into account.454 The Panel considered that "an appropria te 
balance" could be struck, by which it would "accept the Dominican  Republic's comments of 
17 February  2016 with respect to the specific criticisms of [Dr  Chipty's Third Rebuttal Report] 
expressly identified in that communication regarding the use of tax dummies to control for the 
costliness of tobacco products in Dr  Chipty's event study on tobacco consumption using IMS  data as 
being on the record".455 On this basis, the Panel requested the Dominican  Republic to provide the 
Panel with the econometric results  in support of its observations.456 The Panel also gave Australia 
the opportunity to respond to the Dominican  Republic's comments and noted that such comments 
"shall be strictly limited to addressing the specific criticisms … identified in the Dominican  Republic's 
communication of 17  February  2016".457 The Panel "stress[ed] the very limited scope" of the 
opportunity to "provide further comments".458 
6.138.   On 4 March  2016, the Dominican  Republic sent a communication to the Panel containing the 
statistical results in sup port of its arguments regarding Dr  Chipty's model.459 In that submission, the 
Dominican  Republic explained that "as the effect of the 2013 tax increase becomes more positive 
 
446 Dominican  Republic's Communication to the Panel, 17  February  2016, p.  2. 
447 Dominican  Republic's Communication to the Panel, 17  February  2016, p.  1. 
448 Dominican  Republic's Communication to the Panel, 17  February  2016, p.  1. 
449 Dominican  Republic's Communication to the Panel, 17  February  2016, p.  1. 
450 Dominica n Republic's Communication to the Panel, 17  February  2016, p.  2. 
451 Dominican  Republic's Communication to the Panel, 17  February  2016, p.  2. 
452 Dominican  Republic's Communication to the Panel, 17  February  2016, p.  3. 
453 Australia objected to the Dominican  Republic's request. (See Communication from Australia to the 
Panel, 19 February 2016)  
454 Specifically, the Panel highlighted: (i)  the fact that "the Panel's timetable [was] already protracted 
far beyond that which is envisaged by the DSU"; (ii)  the "considerab le amount of argumentation and evidence 
[that had] already been exchanged"; (iii)  the observation that "a panel, in pursuing prompt resolution of a 
dispute, needs to 'exercise control over the proceedings in order to bring an end to the back and forth 
exchange of competing evidence by the parties'"; and (iv)  the fact that the Dominican  Republic had not 
specifically requested an opportunity to comment on Dr  Chipty's report but had "nonetheless identified certain 
criticisms" of the report in its letter of 17  February  2016. (Communication from the Panel to the Parties, 
2 March 2016, pp.  2-3) 
455 Communication from the Panel to the Parties, 2 March 2016, p.  3. 
456 Communication from the Panel to the Parties, 2 March 2016, p.  3. 
457 Communication from the Panel to the Parties, 2  March  2016, p.  3. 
458 Communication from the Panel to the Parties, 2  March  2016, p.  3. 
459 Dominican  Republic's Communication to the Panel, 4  March  2016.  
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  and more significant, the [T]PP  effect for the same start date becomes more negative  and more 
significant."460 
6.139.   On 16 March 2016, Australia responded to the Dominican  Republic's criticism of Dr  Chipty's 
model. Australia explained that IPE had previously made similar criticisms, which Dr  Chipty had 
previously addressed by explaining that "the inability to estimate pr ecisely an effect from the 2013 
excise increase was not due to any issue with her model, but rather was a result of insufficient data 
following the 2013 excise [tax] increase ."461 According to Australia, Dr  Chipty only had "five months 
of data … available to  estimate the 2013 tax effect", and the imprecision identified by IPE did not 
affect the estimated effect of the TPP  measures.462 Australia also stated that "the results that the 
Dominican  Republic present[ed] in Table 1 of its 4  March  2016 submission [we]re  based on the 
backup production for Dr  Chipty's December 2015 report – not her latest report"463 and that, given 
that the modified analysis in Dr  Chipty's final report was identical to the result presented in her 
December 2015 report, the Dominican  Republic had had an adequate opportunity to review that 
finding and respond previously, but chose not to do so.464 Australia also provided considerable 
additional arguments specifically addressing the claims that the positive 2013 tax effect was a 
nonsensical result and that the negative effects of the TPP  measure were "driven" by the positive 
2013 tax effect.465  
6.140.   It is uncontested that the Panel did not explicitly address the parties' arguments relating to 
the factual allegation that Australia's consumption  model showe d a positive effect of the 2013 tax 
increase on consumption. The Panel 's decision not to address these arguments was notwithstanding 
the considerable debate between the parties over this issue and the fact that the Panel had explicitly 
indicated that such arguments and evidence were "on the record".466 We note Australia's argument, 
on appeal, that the Panel implicitly addressed this issue by refraining from addressing it, because 
the Dominican  Republic's letter and supplementary submission "had not added anyt hing to the 
extensive evidence that the parties had already submitted on this topic".467 In our view, however, 
the Panel's decision not to explicitly address the Dominican  Republic's arguments and evidence 
regarding Australia's consumption evidence is brough t into question by virtue of the fact that the 
Panel relied on almost identical reasoning  to critique the complainants' smoking prevalence models.  
6.141.   In other words, even though the Panel did not rely on the impact of tobacco costliness as a 
reason to consid er Australia's smoking prevalence models more credible than the complainants' 
models, such that the Panel did not act inconsistently in assessing the parties' smoking prevalence  
models , the Panel did indicate that the inability of a model to detect the imp act of tobacco costliness 
is a reason to doubt its results.468 The Panel came to this conclusion on the basis that "all parties 
consider tobacco excise tax to be one of the most effective tobacco control policies."469 Yet, when 
the Dominican  Republic presented  evidence in support of its argument that Australia's consumption 
model showed that tobacco excise tax led to an increase in consumption, the Panel did not address 
this argument and proceeded to find that Australia's consumption model was more credible tha n the 
complainants' consumption models, sufficient for the Panel to conclude that there was some 
econometric evidence that the TPP  measures contributed to reducing cigarette consumption.  
6.142.   We note Australia's argument that the Panel was not required to find that Australia had 
resolved all flaws that were present in the complainants' own models. We agree. If the Panel had 
found that the complainants' consumption models were doubtful on the gr ound that those models 
failed to show a statistically significant effect of tobacco costliness on consumption, and then 
 
460 Dominican  Republic's Communication to the Panel, 4  March  2016, para.  5. (emphasis original)  
461 Australia's Communication to the Panel, 16  March  2016, para.  10. 
462 Australia's Communication to the Panel, 16  March  2016, para.  10 (referring to Surrebuttal Report of 
Dr Tasneem Chipty (26  October 2015) ( Panel Exhibit AUS -586), para.  62(c)).  
463 Australia' s Communication to the Panel, 16  March  2016, para.  12. (emphasis omitted)  
464 Australia's Communication to the Panel, 16  March  2016, para.  12. 
465 Australia's Communication to the Panel, 16  March  2016, paras.  14-27. 
466 Communication from the Panel to the Parties, 2 March 2016, p.  3. We emphasize that Australia 
acknowledges that, other than summarizing the procedural events as they occurred, the Panel  did not "refer to 
these events further". (Australia's appellee's submission, para.  820) 
467 Australia's appellee's submission, para.  820. (emphasis omitted)  
468 Panel  Report, Appendix  C, para.  103.  
469 Panel  Report, Appendix  C, para.  103 (referring to Australi a's first written submission to the Panel, 
para. 719; Honduras' first written submission to the Panel, para.  589; Dominican  Republic's first written 
submission to the Panel, paras.  758 and 1027; Cuba's first written submission to the Panel, para.  276; 
Indonesia's first written submission to the Panel, para.  63). WT/DS435/AB/R • WT/DS441/AB/R  
 
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  refrained from re ferring to this shortcoming as a reason to consider Australia's models to be more 
credible (just as the Panel treated t he parties' smoking prevalence  evidence), there would be no 
inconsistency or issue with the Panel's treatment of the parties' evidence. This is because the Panel 
openly acknowledged that Dr Chipty's models did not resolve all issues present in the complain ants' 
models, implying that her models indeed retained some of the shortcomings of the complainants' 
models. However, in the absence of any factual finding indicating whether the complainants' 
consumption models  failed to show a statistically significant e ffect of tobacco costliness , one  can 
only speculate. Indeed, bearing in mind that Australia's models were deliberately specified differently 
to those of the complainants' models, this issue  identified by the Dominican  Republic may have been 
specific to Aus tralia's models and may not have been  present in the complainants' models, which, 
by virtue of the Panel's own reasoning, would seem to be a reason to doubt the merits of Australia's 
consumption models as compared to the complainants' consumption models.  
6.143.   We therefore consider that the Panel's  failure to address the Dominican  Republic's argument 
and supporting evidence alleging that Dr  Chipty's consumption models showed that excise tax 
increases led to an increase in cigarette consumption constituted an error in the Panel's appreciation 
of the evidence. However, not every error constitutes a violation of Article  11 of the DSU. We  assess 
the consequences and materiality of the Panel's error below.470  
6.144.   We emphasize, however, that the Panel's error in this respect is limited to the Panel's 
assessment  of whether the TPP  measures contributed to the decline in cigarette consumption. In 
our view, the Dominican  Republic's arguments do not suggest that the Panel acted unobjectively in 
relying on this as a measure of robustness, or credibility, in the contex t of assessing the relative 
merits of the parties' smoking prevalence evidence. Furthermore, since the Dominican  Republic did 
not raise any concerns about Dr  Chipty's smoking prevalence models in its letter of 17 February 
2016, the Panel could not have fai led to address any such arguments. Thus, the Panel's error only 
implicates the Panel's conclusion in step  3 of its cigarette consumption analysis.  
Proportionality assumption  
6.145.   In step  3 of its smoking prevalence  analysis, the Panel observed that two  of the 
complainants' experts, namely IPE and Professor List, had used different types of variables to 
account for tobacco excise tax increases (i.e.  tobacco costliness) in different smoking prevalence 
models. Specifically, they had used, at various times, dummy  variables, tax level  variables, and 
price variables. Regarding the use of tax level  variables, the Panel observed that such variables rely 
on the "assumption that the effect of the tax increase on prevalence is proportional to the size of 
the tax increase".471 Subsequently, in step  3 of its cigarette consumption  analysis, the Panel 
observed that one of the reasons to doubt certain of IPE's results was that IPE "ignore[d] the fact 
that the proportionality assumption underlying the use of the tax level in the an alysis of the IMS/EOS 
data is rejected".472 In assessing Australia's evidence, in the form of Dr  Chipty's models, the Panel 
noted that Dr  Chipty "specifie[d] excise tax increases dummy variables".473 The Panel observed that 
replacing her dummy variables with a  tax level variable result ed in the TPP  measures' effects 
no longer being statistically significant.474 The Panel recalled, however, that "specification testing 
suggests tax levels are not appropriate in the model specification ."475 
6.146.   The Dominican  Republic cons iders that the Panel failed to provide a reasoned and adequate 
explanation for its findings regarding the proportionality assumption.476 According to the 
Dominican  Republic, the Panel criticized IPE for ignoring the fact that the proportionality assumption 
was rejected, notwithstanding that IPE could not have addressed this issue because "it was asserted, 
for the first time, in Dr  Chipty's final submission, at the closing of the written exchange between the 
 
470 See paras.  6.258.   6.267.    below.  
471 Panel  Report, Appendix  C, para.  106. 
472 Panel  Report, Appendix  D, para.  106. The Panel also observed that when IPE's model used excise tax 
dummy variables, "which were initially proposed by IPE itself in its first report but later rejected as inferior 
control variables, most results suggest the TPP  measures had a negative and statistically significant impact on 
wholesales cigarette sales". (Ibid.)  
473 Panel  Report, Appendix  D, para.  115.  
474 Panel  Report, Appendi x D, para.  116.  
475 Panel  Report, Appendix  D, para.  116. (fn  omitted)  
476 Dominican  Republic's appellant's submission, para.  572.  
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  parties ."477 Furthermore, according to the Dominican  Republic, Dr  Chipty's conclusion that the 
proportionality assumption was rejected was based on her updated consumption model, which the 
Dominican  Republic had shown included a finding that the 2013 excise tax hike had increased 
consumption of tobacco produc ts. The Dominican  Republic submits that Dr  Chipty's model was 
mis-specified and consequently her "testing of whether there was proportionality between the size 
of a tax increase and its effect on consumption was inevitably distorted by her model's finding that 
an increase in excise tax led to an increase in consumption ."478 The Dominican  Republic argues that 
"the Panel accepted the results of Dr  Chipty's testing for the proportionality assumption … without 
engaging with the Dominican  Republic's eviden ce and argument that Dr  Chipty's  model estimated 
that Australia's 2013 tax increase … increased consumption", and "failed to … reconcile its 
acceptance of Dr  Chipty's proportionality testing … with evidence demonstrating that Dr  Chipty's 
model was mis -specified precisely because it failed correctly to estimate the impact of one  of those 
three  tax increases".479 
6.147.   Australia submits that the Dominican  Republic "misapprehends the purpose for which each 
side submitted expert evidence … as well as the role of the Pa nel in evaluating that evidence".480 
Australia notes that it is uncontested that the proportionality assumption was required in order for 
the Dominican  Republic's models to be valid. According to Australia, the Dominican  Republic's 
arguments imply that "its experts were allowed to lack an understanding of their own model's 
assumptions … unless and until Australia's experts pointed out the problem" and that "the Panel had 
no choice but to accept the validity of these models unless and until Australia submitted  rebuttal 
evidence highlighting the problem."481 Australia submits that such propositions are "fundamentally 
untenable … in light of the Panel's duty to scrutini se the evidence" and assess its probative value.482 
As to the Dominican  Republic's argument that Dr  Chipty's model did not correctly estimate the 
impact of tax increases on tobacco consumption, such that her test of the proportionality assumption 
was distorted, Australia submits that this argument is "merely a reversion back to the arguments 
that [the D ominican  Republic] made when it submitted comments on Dr  Chipty's third  rebuttal 
report after the period for substantive submissions had ended".483 Australia submits that it addressed 
this "issue" in responding to the Dominican  Republic's arguments regarding  tobacco costliness.484 
6.148.   Regarding the Dominican  Republic's argument that IPE could not have addressed the 
proportionality assumption because Dr  Chipty identified this issue too late in the proceedings, we 
note that the Dominican  Republic itself fully acknowl edges the importance of satisfying the 
proportionality assumption in order for a model's results to be meaningful (to the extent that the 
model uses tax level variables).485 It follows that the reliability of a model's results is called into 
question when th e proportionality assumption is not respected, regardless of whether or when this 
issue is identified by a party engaged in WTO dispute settlement proceedings. Furthermore, 
regardless of whether and when anybody identified this issue, the complainants' exp erts had the 
responsibility to check the robustness of their results and, if necessary, modify or change their 
 
477 Dominican  Republic's appellant's submission, para.  575. (fn  omitted)  
478 Dominican  Republic's appellant's submission, para.  576. According to the Dominican  Republic, 
"[w]hen using a model to test whether the proportionality assumption holds, a key assumption is that the 
model is capable of accurately estimating the impact of the different tax increases." (Ibid., para.  578 
(emphasis  original))  The Dominican  Republic elaborates that, "[t]o be proportionate, relative to the size of 
each tax increase, the three  tax increases [included in IPE and Dr  Chipty's models] must have a similar 
(i.e. proportionate) impact on consumption", and "[i ]f the estimate for one tax increase goes in the wrong 
direction, … the three  tax increases will never have a similar … impact on consumption in the right direction." 
(Ibid., para.  580 (italics and underlining original))  
479 Dominican  Republic's appellant's submission, para.  581. (emphasis original)  
480 Australia's appellee's submission, para.  840. Australia also notes that "Dr  Chipty discussed the issue 
of proportionality in her final submission because it was necessitated by IPE's use of tax level variables in its 
immediately preceding submission ." (Ib id., fn  1085 to para.  840 (emphasis original))  
481 Australia's appellee's submission, para.  840. (emphasis original)  
482 Australia's appellee's submission, para.  840. 
483 Australia's appellee's submission, para.  841.  
484 Australia's appellee's submission, para.  841. See para.  6.132.    above.  
485 The Dominican  Republic accepts that "[t]he use of tax levels as a control for tobacco costliness 
implicitly assumes that the proportionality assumption holds" and that "if there is no proportionality between 
the size of a tax increase and its effect, the use of tax levels is inappropriate as a control for tobacco 
costliness." (Dominican  Republic's appellant's submission, par a. 561) 
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  models in order to make their evidence as credible as possible.486 We see no error in the Panel 
relying on Dr  Chipty's observations (observation s which the Dominican  Republic itself considers to 
be relevant) to question the credibility of the complainants' models.  
6.149.   Turning to the Dominican  Republic's argument that "the Panel failed to explain how it could 
reconcile its acceptance of Dr  Chipty's  propo rtionality testing … with evidence demonstrating that 
Dr Chipty's model was mis -specified"487, we note that, with the exception of the interim review 
process, the Dominican  Republic should not  have been given the opportunity to raise such 
arguments in the pa nel process, given that Dr  Chipty's Third  Rebuttal Report was Australia's final 
filing in the dispute. It cannot be ignored, however, that the Dominican  Republic did notify the Panel 
of at least one concern that it had relating to Dr  Chipty's Third Rebutta l Report, a concern which the 
Panel proceeded to accept and considered to be "on the record".488 In that letter the 
Dominican  Republic did not identify Dr  Chipty's treatment of IPE's evidence in the Third Rebuttal 
Report as a concern.489 Rather, the Dominican  Republic's 17  February  2016 communication alleged 
only that Dr  Chipty's consumption model showed that the 2013 excise tax hike led to an increase in 
consumption. In our view, the Dominican  Republic had the opportunity to raise its argument 
regarding the pr oportionality assumption to the Panel and failed to do so. Its failure to do so means 
that the factual arguments that the Dominican  Republic now makes on appeal essentially constitute 
the Dominican  Republic's rebuttal of Dr  Chipty's evidence. This amounts to relitigating a factual 
issue, and would require us to second -guess the Panel's appreciation of the evidence. We decline to 
do so.  
6.150.   For these reasons, we consider that the Dominican  Republic has not demonstrated that the 
Panel erred in referring to the p roportionality assumption in its assessment of the credibility of the 
evidence.  
The use of a linear trend versus a quadratic trend  
6.151.   In step  3 of its smoking prevalence  analysis, after highlighting that most of the models 
provided by the Dominican  Republic and Indonesia's experts  – IPE and Professor List  – were unable 
to detect the impact of tobacco costliness, the Panel elaborated that, "[t]he manner in which the 
smoking prevalence trend is modelled with respect to the sample period considered … has an 
important consequence on whether the econometric analysis is able to identify the impact of other 
variables ."490 The Panel noted that the relevant variables can contribute to creating the smoking 
prevalence trend, a problem the Panel referred to as "overfitt ing".491 Turning to assess the models 
provided by Honduras' expert, Professor Klick, the Panel questioned his results on the basis that, 
inter alia , "as demonstrated by Dr  Chipty, the use of a quadratic trend to capture the downward 
trend in smoking prevalen ce leads the predicted tobacco price variable to be not significant."492 The 
Panel elaborated that , "[a]s explained above, specifying an excessively flexible smoking prevalence 
trend (i.e.  quadratic trend) is likely to overfit the data on smoking prevalence and make redundant 
any other variables, such as individual tobacco control policies, that can potentially have also an 
impact on smoking prevalence."493 Subsequently, in comparing Dr  Chipty's models to those of the 
complainants, the Panel highlighted that "D r Chipty acknowledges and addresses the issue of 
overfitting associated with a too flexible trend" and, by using dummy variables instead of a price 
variable to capture the impact of excise tax increases, Dr  Chipty "avoids the problems of 
 
486 We note that, unlike the Panel's concerns regarding multicollinearity and non -stationarity (which the 
Panel developed of its own accord), the problem of the proportionality assumption was identified by one of the 
parties' experts in the course of  the Panel proceedings. In our view, the mere fact that the Panel proceedings 
entails a back -and-forth of views from the parties should not preclude a Panel from relying on the concerns and 
views expressed by whomever has the last word. In our view, a dist inct concern is raised when a Panel 
identifies concerns with the parties' evidence of its own accord. We address the parties' due process arguments 
in paras.  6.226.   6.257.    below.  
487 Dominican  Republic's appellant's submission, para.  581.  
488 Communication from the Panel to the Parties, 2 March 2016, p. 3. 
489 Nor did the Dominican  Republic raise this issue in its subsequent elaboration of those arguments on 
4 March 2016, in response to the Panel's request for the Dominican  Republic to provide the statistical basis for 
its argument.  
490 Panel  Report, Appendix  C, para. 104.  
491 Panel  Report, Appendix  C, para.  104. 
492 Panel  Report, Appendix  C, para.  112.  
493 Panel  Report, Appendix  C, para.  112.  
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  multicollinearity and endogeneity associated with the inclusion of the price variable (in combination 
with a quadratic trend variable)".494 
6.152.   Honduras claims that the Panel disregarded expert rebuttal evidence offered by Professor 
Klick against criticism by Dr  Chipty as to the use of a quadratic trend to analyse the RMSS data.495 
Honduras points to Professor Klick's argument that the use of a linear trend is incorrect because the 
data rejected the hypothesis that the background trend in smoking prevalence was linear.496 
Honduras not es that the Panel  Report failed to address this argument and instead rejected the 
robustness of Honduras' model, based on Dr  Chipty's arguments.497 
6.153.   Australia argues that "Professor Klick failed to persuade the Panel that the use of a quadratic 
trend variable  instead of a linear trend variable … was appropriate ."498 Australia submits that 
Honduras disregards "the Panel's carefully documented reasons for rejecting Professor Klick's 
evidence".499 Australia also argues that this aspect of Honduras' arguments relates to the 
Panel's  authority to weigh the evidence, and that a "panel does not err simply because it declines to 
accord to the evidence the weight that one of the parties believes should be accorded to it".500  
6.154.   We note that, before the Panel, Honduras provided e xpert evidence in which its expert, 
Professor Klick, stated that "the RMSS data pretty clearly reject the hypothesis that the background 
trend in smoking prevalence is linear", on the basis of "a locally weighted regression of the average 
(weighted) preval ence by month in the RMSS data on a time indicator", which revealed a "quadratic 
curvature with respect to the time variable".501 Professor Klick backed up this analysis with graphs 
visually depicting how the RMSS data followed a curved trend rather than a l inear trend. Professor 
Klick also provided the results of his regression analysis, which showed that (although the linear 
trend was also statistically significant), "the quadratic trend is statistically significant … [and] 
generates a higher adjusted R2 than the competing models, suggesting that it explains more of the 
variation in the data, and it generates a lower R oot Mean Squared Error (RMSE) than the other 
models, which implies that it does a better job predicting the observed data."502 
6.155.   The Panel did not  explicitly address this argument. We note, however, that the Panel 
questioned Professor Klick's model on the basis that the price variable was not statistically 
significant, and that this might be attributable to overfitting (for example, by using a quadr atic 
trend).503 Specifically, the Panel stated that "specifying an excessively flexible smoking prevalence 
trend (i.e.  quadratic trend) is likely to overfit the data on smoking prevalence and make redundant 
any other variables, such as individual tobacco con trol policies, that can potentially have also an 
impact on smoking prevalence."504 Thus, we understand that the Panel considered that the very 
thing that, in Professor Klick's view, made his quadratic trend superior to a linear trend was, in fact, 
problemati c because it might have resulted in a lack of statistical significance with respect to the 
price variable. In other words, the Panel did explain why it considered a linear trend to be more 
useful. While Honduras may disagree with the Panel's conclusion in that respect, we do not consider 
that Honduras has demonstrated that the Panel erred in appreciating the relative merits of a 
quadratic trend versus a linear trend.   
 
494 Panel  Report, Appendix  C, para.  120.  
495 Honduras' appellant's submission, para.  1085 (referring to J. Klick, Third Supplem ental Rebuttal 
Report – A Reply to Dr Chipty and Professor Chaloupka (8  December 2015) (Klick Third Supplemental Rebuttal 
Report) (Panel Exhibit HND -166), paras.  16-19, 29 -32, and 46 -48). 
496 Honduras' appellant's submission, para.  1085 (referring to Klick T hird Supplemental Rebuttal Report 
(Panel Exhibit HND -166), para.  16). 
497 Honduras' appellant's submission, para.  1085 (referring to Panel  Report, Appendix  C, para.  112).  
498 Australia's appellee's submission, para.  941 (referring to Panel  Report, Appendix  C, para.  112). 
(fns omitted)  
499 Australia's appellee's submission, para.  942. (fn  omitted)  
500 Australia's appellee's submission, para.  943 (referring to Appellate  Body Report,  US – Tuna II 
(Mexico) (Article  21.5 – Mexico) , para.  7.219).  
501 Klick Third Supplemental Rebuttal Report (Panel Exhibit HND -166), paras.  16-17. 
502 Klick Third Supplemental Rebuttal Report (Panel Exhibit HND -166), para.  19. 
503 Panel  Report, Appendix  C, para.  112. 
504 Panel  Report, Appendix  C, para.  112.  
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  Endogeneity  
6.156.   In step  3 of its smoking prevalence  analysis, concerning whether the TPP  measures 
contributed to reducing smoking prevalence, the Panel observed that IPE and Professor  List's 
specifications of one of the independent variables, specifically the "tobacco price control policy" 
(i.e. excise tax es), had at various times included the use of dummy variables, tax level variables, 
and price variables.505 In assessing the merits of these different types of variables, the Panel 
highlighted that a price variable (unlike a dummy variable or a tax level var iable) accounts for 
all factors that influence price, including, but not limited to, excise tax increases.506 The Panel 
referred to this as a problem of "endogeneity".507 The Panel observed that, unlike another of the 
complainants' experts (Professor Klick), n either IPE nor Professor List "address[ed] the fact that the 
TPP measures might affect the price variable", and consequently their models were "unable to 
distinguish between the impact specific to the price variable and the TPP  measures", leading the 
Panel  to "question the econometric results based on the price variable".508 The Panel contrasted this 
problem, which in this context appears specific to the use of a price variable, with the "exogenous" 
nature of a dummy variable or a tax level variable.509 The Pan el noted that Dr  Chipty's model 
specification used dummy variables to capture excise tax increases, and thus avoided the problem 
of endogeneity.510  
6.157.   Subsequently, in step  3 of its cigarette consumption  analysis, in assessing whether the 
TPP measures contribu ted to a decline in consumption of tobacco products, the Panel similarly 
observed that IPE's  analysis of the IMS/EOS data, which also included a price variable to take 
account of excise tax increases, "fail[ed] to take into account the potential impact of the 
TPP measures on tobacco prices".511 The Panel also "question[ed] the validity of IPE's results based 
on the Nielsen data for … the use of the price variable".512 Again, the Panel noted that Dr  Chipty's 
model was specified with dummy variables to capture ex cise tax increases, thus avoiding the 
problem of endogeneity in the use of a price variable.513 
6.158.   The Dominican  Republic argues that the Panel's treatment of the evidence was inconsistent, 
because: (i)  while the Panel found that Australia's model using tax -based (tax dummies and tax 
levels) control variables avoided the problem of endogeneity, it did not extend that finding to the 
models provided by the Dominican  Republic that used tax -based variables514; and (ii)  while the Panel 
rejected the models provided by t he Dominican  Republic that used a price -based variable, the Panel 
did not reject the Australian models using a price -based control variable.515  
6.159.   Regarding the Panel's alleged failure to address the Dominican  Republic's models that used 
tax dummies or tax lev els, Australia argues that the Panel did address IPE's "'later' [smoking] 
prevalence models and identified multiple reasons for questioning the validity and probative value 
 
505 Panel  Report, Appendix  C, paras.  106-107. 
506 Panel  Report, Appendix  C, para.  107. 
507 See, for example, Panel  Report, Appendix  C, paras.  117 and 120; ibid.,  Appendix  D, paras.  57, 76, 
and 115, and fn  134 to para.  104. 
508 Panel  Report, Appendix  C, para.  107.  
509 Panel  Report, Appendix  C, para.  106. 
510 Panel  Report, Appendix  C, para.  120.  
511 Panel  Report, Appendix  D, para.  106. 
512 Panel  Report, Appendix  D, para.  107. 
513 Panel  Report, Appendix  D, para.  115.  
514 Dominican  Republic's appellant's submission, para.  550. The Dominican  Republic refers, specifically, 
to its aggregate prevalence and one -stage prevalence models for cigarettes, as well as its aggregate 
prevalence model for cigars. (Ibid. (referring to D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Empirical 
Assessment of Australia's Plain Packaging Regime, Institute for Policy Evaluation (8  December  2015) 
(IPE Third Updated Report) (Panel Exhibit DOM -375), paras.  30, 64 -66, 84, and 109 -112))  
515 Dominican  Republic's appellant's submission, para.  553. The Dominican  Republic refers specifically to 
the two -stage prevalence models submitted by the Dominican  Republic and Australia. (Ibid.  (referring to 
Second Rebuttal Report of Dr Tasneem Chipty (8  December 2015)  (Chipty S econd Rebuttal Report) (Panel 
Exhibit AUS -591), Table 5, Row [B]; J. List, A Further Synthesis of the Newly -Available Evidence on Australia's 
Plain Packaging Policy (8 December 2015) (List Third Supplemental Report) (Panel Exhibit DOM/IDN -7)), 
Table  5). Ac cording to the Dominican  Republic, "while the Panel rejected Professor List's approach, it 
considered Dr  Chipty's model to be sufficiently robust to rely on it as a basis for its smoking prevalence 
findings." (Ibid.)  
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  of the results that these models produced".516 Australia similarly submits that the 
Dominican  Republic's later consumption models were also critiqued on multiple grounds.517 As to the 
argument that the Panel did not address Australia's two -stage prevalence model that relied on price 
levels, Australia submits that "Dr  Chipty never endorsed th e use of price as a control", and 
"consistently identified problems with the use of price as a control".518 Furthermore, Australia argues 
that the so -called "model" identified by the Dominican  Republic as Dr  Chipty's two -stage model is in 
fact "a single row in a table where Dr  Chipty conducted a sensitivity analysis of various model results" 
that was included in order to be "comprehensive".519  
6.160.   We recall that the Panel did not reject outright any individual model on the basis of perceived 
flaws. Rather, the Pan el assessed the parties' evidence, starting with the complainants', and noted 
multiple reasons to doubt the reliability of that evidence. The Panel considered that Australia's 
evidence was, in relative terms, more credible and reliable than the complainant s' evidence, all the 
while recognizing that no model submitted by any expert was perfect. Consequently, any 
inconsistency in the Panel's treatment of the parties' evidence can only relate to the reasons the 
Panel provided for concluding that Australia's ev idence was, in relative terms, more credible than 
the complainants' evidence.  
6.161.   We recall, in this respect, that the Panel provided several reasons that it considered 
Australia's evidence to be more credible than those of the complainants.520 The Panel's reasoning 
with respect to endogeneity related specifically to the complainants' price -specified models, and the 
fact that Dr  Chipty's primary model was not specified with a price variable (thereby avoiding the 
problem of endogeneity). We under stand that the Dominican  Republic's concerns with the Panel's 
approach relate to: (i)  the Panel's treatment of the Dominican  Republic's models that were 
not specified with price variables; and (ii)  the Panel's treatment of Australia's models that were 
specified with a price variable.  
6.162.   With respect to the Panel's treatment of the Dominican  Republic's models that were not 
specified with a price variable, we note that the Panel's reasons for preferring Dr  Chipty's 
specification included the fact that  Dr Chipty : (i) addressed the issue of overfitting; and (ii)  avoided 
the issue of non -stationarity of the tax level variables.521 These reasons alone would appear to 
indicate that the Panel did indicate its reasons for preferring Dr  Chipty's non -price specified model 
to the Dominican  Republic's non -price specified model s. In any event, the Panel proceeded to also 
note that Dr  Chipty's results were robust to alternative specifications, including different TPP starting 
dates, the use of a tax level variable, the use of s ample reweighting dummies, and the fact that 
when Dr  Chipty used Professor List's procedure to calculate standard error (a procedure about which 
the Panel had previously expressed its doubts522), the impact of the TPP  measures on smoking 
prevalence remained negative and statistically significant in most specifications.523 We therefore do 
not consider that the Panel disregarded the Dominican  Republic's models specified with tax level 
variables and tax dummy variables, and the Panel clearly explained its reasons for concluding that 
Dr Chipty's models were more credible than the Dominican  Republic's models.  
6.163.   Turning to the Dominican  Republic's argument that the Panel rejected the models provided 
by the Dominican  Republic that used a price -based variable524, but did n ot reject the Australian 
 
516 Australia's appellee's submission, pa ra. 830. Australia refers specifically to those models' use of 
"inappropriate sample periods [and] … trend variables that overfit the data". (Ibid.)  Australia also considers 
that, in its assessment of smoking prevalence, IPE relied on tax dummy variables i n its later models, but 
"made multiple other changes … that the Panel expressly identified as additional reasons for questioning the 
results". (Ibid. (emphasis original))  
517 Australia's appellee's submission, para.  830. Australia refers to those models' reliance on the 
proportionality assumption. (Ibid.)  
518 Australia's appellee's submission, para.  833. 
519 Australia's appellee's submission, para.  833 (referring to Dominican  Republic's appellant's 
submission, fn  476, in turn referring to Chipty Second Rebuttal Report (Panel Exhibit AUS -591), Table  5, 
Row [B]). 
520 See Panel  Report, Appendix  C, paras.  120-121.  
521 Panel  Report, Appendix  C, para.  120.  
522 Panel  Report, Appendix  C, paras.  109-110, and fns  131-132 to para.  110.  
523 Panel  Report, Appendix  C, para.  121.  
524 We recall that the Panel questioned the results of price -based models on the basis of endogeneity,  
multicollinearity, and non -stationarity.  
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  models using a price -based variable525, we again note that the Panel did not "reject" any models on 
the basis of any individual criterion, but rather weighed the credibility of the evidence provided by 
the different parties. In any e vent, we understand that this aspect of the Dominican  Republic's 
arguments is based on the assertion that the Panel gave probative value to Dr  Chipty's so -called 
"two-stage model".  
6.164.   We note that the Panel's analysis of Dr  Chipty's evidence consists of thre e paragraphs. In 
the first paragraph, the Panel considers that Dr  Chipty addressed several of its concerns with the 
complainants' approaches, and emphasizes that "Dr  Chipty's model specification … includes 
the excise tax  increases  dummy variables  and thus avoids  the problems of multicollinearity and 
endogeneity … [as well as] the issue of non -stationarity of the price or tax level variables."526 In the 
second paragraph, the Panel notes that Dr  Chipty's evidence showed that "alternative specifications" 
also showed a "negative and statistically significant impact of the TPP  measures on overall smoking 
prevalence".527 The Panel specifically explains that such alternative specifications included a 
"different TPP  starting date", the use of "excise tax level variable[ s]", and "sample reweighting 
dummies".528 In support of these statements, the Panel refers to a page in Dr  Chipty's Third Rebuttal 
Report containing "sensitivity analys es" of three  models, which purport to show that "[w]hen the 
proportionality assumption is valid, both models with tax indicators and models with a tax level 
variable produce reliable model estimates."529 None of the models referred to in the Third Rebuttal 
Report are based on price level variables. The Panel also refers to two  pages  in Dr  Chipty's 
Second  Rebuttal Report.530 Both pages contain Dr  Chipty's re -analysis of five  models presented by 
the complainants, one of which is indeed Professor List's two -stage analysis that incorporated price 
level variables. We note that three  of thes e five  models are very similar (if not identical)  to the 
models that Dr  Chipty subsequently re -assessed in her sensitivity analysis in the Third Rebutta l 
Report. Finally, in the third  paragraph of its analysis, the Panel concluded that "based on the most 
recent  econometric evidence submitted by Australia, there is econometric evidence suggesting that 
TPP and enlarged GHWs contributed" to reducing smoking prevalence.531  
6.165.   We understand that the Dominican  Republic considers that the Panel gave probative value 
or weight to Dr  Chipty's alleged two -stage model, because this is one of the models referred to in 
those pages of the Chipty Second Rebuttal Report that is cited by the Panel in the second  paragraph 
of its analysis. We note, however, that in the first paragr aph of its analysis, the Panel clearly indicates 
that one of the advantages of "Dr  Chipty's model specification" is that it does not rely on price level 
variables.532 This paragraph therefore shows no indication that the Panel gave any weight to any 
model us ing a price level variable and, in fact, suggests that the Panel did not give any weight to 
any such model. Furthermore, in its second paragraph, when the Panel noted that Dr  Chipty's 
econometric results were "robust to alternative specifications, includin g … the use of an excise tax 
level variable"533, the Panel identified certain specifications that led it to this conclusion, and while 
it specifically mentioned a specification using tax level  variable s, the Panel did not mention any 
models using price level  variables. Additionally, the Panel's conclusion on Dr  Chipty's evidence states 
that " the most recent econometric evidence  submitted by Australia" suggests that the TPP  measures 
contributed to reducing smoking prevalence.534 Dr Chipty's final econometric mod el was presented 
in her Third Rebuttal Report. The Dominican  Republic has not identified anywhere in the 
Third Rebuttal Report that Dr  Chipty relied on a model specified with a price variable. We note that 
the only reason to consider that the Panel did, in  fact, give any prob ative weight to Dr  Chipty's 
two-stage specification is that it is one of five  models identified in the relevant pages of Dr  Chipty's 
Second Rebuttal Report that are referred to by the Panel in its footnote indicating that Dr Chipty's 
 
525 Dominican  Republic's appellant's submission, para.  553. The Dominican  Republic refers specifically to 
the two -stage prevalence models submitted by the Dominican  Republic and Australia. (Ibid.  (referring to Chipt y 
Second Rebuttal Report (Panel Exhibit AUS -591), Table 5, Row [B]; List Third Supplemental Report (Panel 
Exhibit DOM/IDN -7)), Table 5) According to the Dominican  Republic, "while the Panel rejected Professor  List's 
approach, it considered Dr  Chipty's mode l to be sufficiently robust to rely on it as a basis for its smoking 
prevalence findings." (Ibid.)  
526 Panel  Report, Appendix  C, para.  120. (emphasis added)  
527 Panel  Report, Appendix  C, para.  121.  
528 Panel  Report, Appendix  C, para.  121.  
529 Chipty Third Rebutt al Report (Panel Exhibit AUS -605), para.  30, and Table 4 on p.  22. 
530 Chipty Second Rebuttal Report (Panel Exhibit AUS -591), pp.  33 and D.2.  
531 Panel  Report, Appendix  C, para.  122. 
532 Panel  Report, Appendix  C, para.  120.  
533 Panel  Report, Appendix  C, para.  121.  
534 Panel  Report, Appendix  C, para.  122. (emphasis added)  
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  results were robust to alternative specifications. However, it is plausible that that footnote is 
intended to refer exclusively to the four  other models identified on that page of Dr Chipty's 
Second  Rebuttal Report (none of which included a price variable).  
6.166.   On balance, we do not consider that the Panel gave any weight to Dr Chipty's price -specified 
model, and consequently the Panel did not treat the parties' price -specified models inconsistently. 
We also note that, even if  the Panel did give any weight to Dr  Chipty's price -specified model, it was 
only by way of support for Dr  Chipty's primary model, specified with dummy variables.535 We see 
no inconsistency between th e Panel giving most weight to Dr  Chipty's tax dummy  model, over and 
above price -specified models prepared by both the Dominican  Republic and Dr Chipty. In other 
words, the fact that the Panel considered Dr  Chipty's tax dummy model to be the most relevant a nd 
probative model is not called into question by the fact that there may have been an inferior, 
price-specified model that contradicted the Dominican  Republic's similarly  inferior price -specified 
model.  
6.167.   For these reasons, we do not consider that the Domi nican  Republic has demonstrated that 
the Panel erred in referring to endogeneity in its assessment of the parties' econometric evidence.536  
Multicollinearity  
6.168.   In step  3 of its smoking prevalence  analysis, in addition to identifying the endogeneity of 
the pri ce variable as a potential concern, the Panel also observed "evidence of multicollinearity 
between the price variable and the linear trend variable, in particular when the sample period is 
restricted to July 2006 to September 2015".537 The Panel explained, w ithout reference to any 
evidence on or off the Panel record, that multicollinearity arises when "two (or more) explanatory 
variables convey the same information", in which case "the predictive power of the model remains 
unchanged, but the confidence interv al of the coefficient estimates may increase" and "the coefficient 
estimates may become very sensitive to minor changes in the model specification or data."538 The 
Panel considered that one way to mitigate multicollinearity is to increase the sample period, but that 
"including a second linear trend specific to the July 2006 -September 2015 period, as suggested by 
IPE, would not resolve th[e] issue ."539 The Panel also observed that "[e]vidence of multicollinearity 
is confirmed by the variance inflation factors [( VIF)] statistic."540 Given that the complainants' 
experts did not address the issues of multicollinearity and endogeneity, the Panel called into question 
the econometric results based on the price variable.541 In assessing Dr  Chipty's analysis, the Panel 
obser ved that her use of dummy variables to capture excise tax increases avoided the problems of 
both multicollinearity and endogeneity associated with the price variable.542 
6.169.   In step  3 of its  cigarette  consumption  analysis, the Panel highlighted that IPE's modifi ed 
trend analysis and autoregressive integrated moving average with explanatory variable ( ARIMAX ) 
model included "both a price variable and a time trend variable, which happen to be highly collinear 
with each other".543 The Panel similarly noted that in different stages of Professor  Klick's 
difference -in-difference model, based on different datasets, th ere was multicollinearity between 
 
535 Panel  Report, Appendix  C, paras.  120-121. The Panel's findings show that the Panel gave the most 
weight to the latter model specification and only considered Dr  Chipty's alternative specification s to be relevant 
to the extent that they confirmed the robustness of Dr  Chipty's dummy variable model.  
536 We note the Dominican  Republic's argument that the Panel's findings were insufficiently reasoned 
and adequate, because the Panel failed to address the  fact that IPE demonstrated that "even when it used the 
tax dummies to control for tobacco costliness in … aggregate and one -stage models, it did not find a 
TPP effect", and consequently IPE "concluded that there was no evidence of 'endogeneity"'. 
(Dominic an Republic's appellant's submission, para.  531 (emphasis original). See also ibid., paras.  555-557; 
Australia's appellee's submission, para.  835) In our view, this aspect of the Dominican  Republic's arguments 
constitutes relitigating the factual aspects o f the case on appeal.  
537 Panel  Report, Appendix  C, para.  107.  
538 Panel  Report, Appendix  C, para.  107.  
539 Panel  Report, Appendix  C, para.  107.  
540 Panel  Report, Appendix  C, fn 119 to para.  107. 
541 Panel  Report, Appendix  C, para.  107.  
542 Panel  Report, Appendix  C, para.  120.  
543 Panel  Report, Appendix  D, para.  106. The Panel also observed that multicollinearity appeared to be 
"even more marked when the … ARIMAX model include[d] five  lags of the logarithm of per capita sales 
variables and of the price variable". ( Ibid.)  
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  different variables.544 The Panel did not refer to multicollinearity when assessing Australia's models, 
prepared by Dr  Chipty.545  
6.170.   The appellants argue that, in relying on the notion of multicollinearity to critique the partie s' 
models, the Panel acted inconsistently with Article  11 of the DSU by compromising the complainants' 
due process rights, making the case for Australia, treating the parties' evidence inconsistently, and 
failing to provide reasoned and adequate explanatio ns for its findings.546  
6.171.   We address the appellants' arguments regarding due process (including the 
Dominican  Republic's arguments that the Panel made the case for Australia) in 
paragraphs  6.226.   -6.257.   below. As to the Dominican  Republic's arguments that the Panel failed 
to provide a reasoned and adequ ate explanation for its findings547, we consider that the Panel 
adequately explained the basis for its concerns related to multicollinearity.548 Having explained in 
paragraphs  116 of Appendix B and 107 of Appendix C why it considered the presence of 
multicollinearity in a model to be a reason to doubt the reliability of that model, the Panel identified 
throughout its analysis certain models that di d or did not suffer from this shortcoming. We see no 
reason for the Panel not to apply well -known statistical tests of rigour to evidence that is statistical 
in nature, insofar as the Panel ensures that the due process rights of the parties are respected, and, 
in our view, the appellants have not demonstrated how the brevity of the Panel's explanation for 
why and how it tested for multicollinearity implies that it failed to make an objective assessment of 
the matter.  
6.172.   Turning to the appellants' arguments th at the Panel treated the evidence inconsistently in 
its reliance on multicollinearity, both appellants argue that the Panel faulted the analyses of 
Honduras' and the Dominican  Republic's experts for suffering from the problem of multicollinearity, 
but fail ed to assess Australia's models for that same problem.549 Honduras notes the Panel's 
statement that Dr  Chipty's smoking prevalence models "avoid[ed] the problems of multicollinearity 
and endogeneity"; however, Honduras submits that "there is no analysis of a ny kind" to show that 
the Panel actually examined Dr  Chipty's models for multicollinearity.550 Honduras also argues that 
the Panel contradicts itself by finding at one point that the issue of multicollinearity is "less severe" 
when using tax dummies yet noti ng later that Dr  Chipty "avoids" the problem of multicollinearity by 
using those same dummies.551 The Dominican  Republic similarly argues that "the Panel stated that 
Australia's smoking prevalence  models were not affected by multicollinearity" and "accepted the 
model specifications as robust evidence that the TPP  measures had reduced smoking prevalence", 
without "stat[ing] whether it had applied a VIF test to these models and, if it did so, what the results 
of the test were" and addressing "whether Australia' s consumption  models were affected by 
multicollinearity".552 
 
544 Panel  Report, Appendix  D, paras.  109-110.  
545 Panel  Report, Appendix  D, paras.  115-117. We also note that, in step 2 of its cigarette consumption 
analysis, the Panel indicated that the only explanatory variable that was statistically significant in Professor 
List's dynamic models based on IMS/EOS data was the "time trend variable when the pri ce variable [wa]s 
omitted or replaced by a tax level variable", which suggested that "the price variable and the time trend might 
be collinear", rendering "one of them … redundant". (Panel  Report, Appendix  D, para.  43) Similarly to its 
analysis in step 3, the Panel did not refer to multicollinearity in comparing Australia's evidence to the 
complainants' evidence, and, in fact, the Panel indicated that it "continue[d] to have doubts" about Australia's 
evidence. (Panel  Report, Appendix  D, para.  45. See also i bid., para.  46)  
546 Honduras' appellant's submission, paras.  1036-1045; Dominican  Republic's appellant's submission, 
paras.  362-424. 
547 Dominican  Republic's appellant's submission, paras.  413-418.  
548 See Panel  Report, Appendix B, para.  116; Appendix  C, paras . 107-108 and 120, fn  119 to para.  107, 
and fn  122 to para.  108; Appendix  D, paras.  43, 106, and 109 -110. See also Appendix  E, paras.  29 and 51 -54.  
549 Honduras' appellant's submission, para.  1038; Dominican  Republic's appellant's submission, 
paras.  407-408 (referring to Panel  Report, Appendix  C, paras.  107 and 120) and 411.  
550 Honduras' appellant's submission, paras.  1043-1044 (quoting Panel  Report, Appendix  C, para.  120).  
551 Honduras' appellant's submission, para.  1044 (quoting Panel  Report, Appendix  C, fn 122 to 
para. 108).  
552 Dominican  Republic's appellant's submission, paras.  407-408 (referring to Panel  Report, Appendix  C, 
paras.  107 and 120) and para.  411. (emphasis omitted (para.  408); emphasis original (para.  411)) The 
Dominican  Republic further argues that, by applying the VIF test statistic with the same VIF threshold of 14 to 
Australia's models, " each of Australia's one -stage models and each of the prevalence models that controlled for 
reweighting, on which the Panel relied to find an actual impact of  the TPP  measures on smoking prevalence, 
have a VIF of 14 or above", which means that they are also "affected by the type of multicollinearity problem 
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  6.173.   Australia argues that the Panel's treatment of the econometric evidence submitted by the 
appellants was entirely consistent with the allocation of the burden of proof.553 Australia argues that, 
since the appellants did not meet their initial burden of proof, there was no need for the Panel to 
assess the Australian models with the rigour reserved for rebuttal evidence , as would be appropriate 
if the burden of proof had shifted to Australia.554 Australia therefore considers that the Panel 
appropriately assessed the evidence for the purpose of determining whether the burden of proof was 
met. Consequently, in Australia's view, there is no violation of Article  11 of the DSU for lack of 
even-handedness in its inquiry.555  
6.174.   We recall that the Panel did not "reject" any models or evidence on the basis of 
multicollinearity. Rather, the Panel considered that models suffering from multicollinearity may be 
less reliable than models not suffering from multicollinearity. Importantly, the Panel assessed the 
reliability of different models on the basis of a number of different considerations, one of which was 
the presence of multicollinearity. In comparing Dr  Chipty's smoking prevalence and consumption 
models to the complain ants' smoking prevalence and consumption models, the Panel did not find 
that Dr  Chipty's models were flawless or cured all of the problems present in the complainants' 
models. Rather, the Panel stated that Dr  Chipty's models addressed some  of the concerns that it 
had raised with respect to the complainants' evidence.556 Consequently, it does not follow that the 
Panel considered that Dr  Chipty's models were superior on the basis that they did not suffer from 
multicollinearity, except  to the extent that the Pan el explicitly indicated this.  
6.175.   With this in mind, we note that, in the context of comparing the participants' smoking 
prevalence  models, the Panel's only reference to multicollinearity as a reason to prefer Dr  Chipty's 
models was very specific to the fact that Dr  Chipty's model specified with dummy variables  avoided 
the problem of multicollinearity present in a price-specified model .557 We see no way to doubt the 
veracity of this finding without second -guessing the Panel's appreciation of the evidence. In any  
event, this finding does not suggest that Dr  Chipty's alternative specifications (i.e.  those models 
specified with tax levels) did not suffer from precisely the same issue of multicollinearity as the 
complainants' models.  
6.176.   As to Honduras' consideration that the Panel's findings are contradictory because the Panel 
found that "the issue of mul ticollinearity is less severe when excise tax increase dummies … are 
used", we note that Honduras is seeking to generalize an observation that the Panel made in the 
specific context of assessing the level of multicollinearity present in Professor List's mo dels when 
seeking to control for reweighting corrections in the RMSS data.558 Thus, the Panel did not find that 
every single model submitted by every party suffered from multicollinearity, and, in any event, even 
if the Panel had made such a generic finding we would see no contradiction between that finding 
and the Panel's ultimate conclusion that Dr  Chipty's dummy variable model avoided the problem of 
multicollinearity present in a price -specified model.559 In short, the Panel's reliance on 
 
identified by the Panel". (Dominican  Republic's appellant's submission, para.  410 (emphasis original)) We  note 
that the Dominican  Republic's arguments related to its own testing of the VIF statistic are inappropriate on 
appeal and essentially require the Appellate  Body to second -guess the Panel's appreciation of the evidence. We 
therefore decline to take such  arguments into account. (See paras.  6.329.   -6.331.    below)  
553 Australia's appellee's submission, paras.  737-738. 
554 Australia's appellee's submission,  paras.  741-742. 
555 Australia's appellee's submission, paras.  744-745. 
556 In comparing the participants' smoking prevalence models, the Panel stated that "a number of 
concerns that [it] raised while reviewing the complainants' approaches and results [were] a ddressed by 
Dr Chipty."  (Panel  Report, Appendix  C, para.  120) In comparing the participants' consumption models, the 
Panel stated that "some concerns that [it] raised regarding the experts of the Dominican  Republic's, 
Honduras's and Indonesia's approaches and results of the market data [were] to some extent addressed by 
Dr Chipty." (Ibid., Appendix  D, para.  115) 
557 Panel  Report, Appendix  C, para.  120.  
558 Panel  Report, Appendix  C, fn 122 to para.  108.  
559 To the extent that the Panel's statement that "the issu e of multicollinearity is less severe when 
excise tax increase dummies … are used" is a universally applicable statement, this would actually appear to 
support the Panel's conclusion that a model specified with tax dummies is more robust than a model speci fied 
with price variables. (Panel  Report, Appendix  C, fn 122 to para.  108) This is because the Panel did not appear 
to consider multicollinearity to be a binary issue whereby a model must be "accepted" or "rejected" depending 
whether or not it suffered fro m any multicollinearity. Rather, the Panel considered that a model might suffer 
"more" or "less" such that a model specified with dummy variables "avoids" the specific multicollinearity 
problem present in a model specified with a price -variable. (Panel  Report, Appendix  C, para.  120) This follows 
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  multicollinearity a s a reason to favour Dr  Chipty's models was extremely limited and shows no lack 
of even -handedness.  
6.177.   As to the Panel's comparison of the participants' consumption  models, the Panel did not, in 
any way, suggest that Dr  Chipty's models were more credible tha n the complainants' on the basis 
that Dr  Chipty's models did not suffer from multicollinearity.560 Since the Panel's reasons for 
considering Dr  Chipty's consumption models to be more reliable than the complainants' consumption 
models were unrelated to multic ollinearity, it follows that the Panel did not apply a different standard 
of robustness in assessing Dr  Chipty's models than it applied to the complainants' models.  
6.178.   We therefore consider that the Panel did not treat the participants' evidence inconsistent ly 
in assessing the relative merits of the complainants' econometric evidence and Australia's 
econometric evidence with respect to multicollinearity.  
Non-stationarity  
6.179.   As stated above, in step  3 of its smoking prevalence  analysis, the Panel "call[ed] into  
question the econometric results based on the price variable" because the Dominican  Republic's 
experts had not addressed the issue of multicollinearity or the potential impact of the TPP  measures 
on prices.561 The Panel "also note[d] that the expert reports  submitted by the Dominican  Republic, 
Honduras and Indonesia (and Australia) failed to mention that standard unit root tests suggest that 
the tax level and the price variables are not stationary".562 The Panel explained that "[a] variable is 
said to be stati onary, when its statistical properties, such as mean and variance are all constant over 
time."563 The Panel stated that "econometric theory recommends not estimating a model when the 
dependent variable (i.e.  smoking prevalence) is stationary and one of the e xplanatory variables 
(i.e. tax level or price) is not stationary in order to avoid spurious and biased results."564 The Panel's 
findings suggest that a "standard unit root test" can reveal whether a variable is stationary.565 In 
assessing Australia's evidence,  the Panel observed that Dr  Chipty's use of tax dummy variables 
"avoid[ed] the issue of non -stationarity of the price or tax level variables" .566 The Panel noted that, 
in any event, Dr  Chipty's results were robust to alternative specification s, including the  use of a tax 
level variable.567 
6.180.   In step  3 of its  cigarette  consumption  analysis, the Panel highlighted that, in its analysis of 
the IMS/EOS data, IPE did "not address the fact that the price variable and the tax level variable 
appear to be non -stationary".568 With respect to Professor Klick's analysis, the Panel questioned 
one of his models on the ground that "none of the explanatory variables, except the constant, are 
statistically significant."569 The Panel observed, in this respect, that the "variable reporting the 
number of stores covered by the Aztec data is not stationary".570 In its analysis of Australia's 
evidence, the Panel observed that Dr  Chipty's model specified with excise tax dummy variab les 
"avoids … the unit root problem of the price or tax level variables".571 The Panel noted that 
Dr Chipty's results were robust to some alternative specifications, but highlighted that the 
TPP measures' effects were no longer statistically significant when  the tax dummy variables were 
replaced with a tax level variable.572 The Panel further noted, however, that "specification testing 
 
from the very fact that the Panel considered it relevant to note that the problem of multicollinearity was "less 
severe" in Professor List's models when tax dummies were used.  
560 Panel  Report, Appendix  D, paras.  115-116.  
561 Panel  Report, Appendix  C, para.  107. 
562 Panel  Report, Appendix  C, para.  107.  
563 Panel  Report, Appendix  C, fn 120 to para.  107. 
564 Panel  Report, Appendix  C, para.  107.  
565 See, for example, Panel  Report, Appendix  C, para.  107; ibid., Appendix  D, fn 46 to para.  43.  
566 Panel  Report, Appendix  C, para.  120.  
567 Panel  Report, Appendix  C, para.  121.  
568 Panel  Report, Appendix  D, para.  106.  
569 Panel  Report, Appendix  D, para.  109. (fn  omitted)  
570 Panel  Report, Appendix  D, fn 146 to para.  109. 
571 Panel  Report, Appe ndix D, para.  115.  
572 Panel  Report, Appendix  D, para.  116.  
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  suggests tax levels are not appropriate" and , "[f]urthermore, the tax levels variable is likely to be 
non-stationary."573 
6.181.   The app ellants assert that the Panel's reliance on non -stationarity to critique the parties' 
models was inconsistent with Article  11 of the DSU because it: (i)  compromised the complainants' 
due process rights; (ii)  made the case for Australia; (iii)  treated the p arties' evidence inconsistently; 
and (iv)  failed to provide reasoned and adequate explanations for its findings.574  
6.182.    We address the appellants' arguments regarding due process (including the argument that 
the Panel made the case for Australia) below.575 As to the Dominican  Republic's arguments that the 
Panel failed to provide a reasoned and adequate explanation for its findings576, we consider that the 
Panel adequately explained the basis for its concerns related to non -stationarity.577 We see no reason 
for the Pa nel not to apply well -known statistical tests of rigour to evidence that is statistical in nature  
insofar as the Panel ensures that the due process rights of the parties are respected, and, in our 
view, the appellants have not demonstrated how the brevity of the Panel's explanation for why and 
how it tested for non -stationarity implies that it failed to make an objective assessment of the matter 
before it.  
6.183.   Turning to the appellants' arguments regarding the Panel's allegedly inconsistent reliance on  
non-stationarity in assessing the parties' evidence, the appellants argue that the Panel faulted 
several of the complainants' models on the basis that they suffered from non -stationarity, but failed 
to assess whether Australia's models suffer from the same proble m.578 In Honduras' view, the Panel 
did not indicate whether it had "examined whether Australia's evidence suffered from a similar 
problem of stationarity" .579 The Dominican  Republic, for its part, submits that the Panel's treatment 
of the evidence was inconsistent for three  reasons. First, the Dominican  Republic asserts that the 
Panel relied on non -stationarity to reject the robustness of the Dominican  Republic 's models that 
used price or tax level variables, but relied on Australia's econometric models even when those 
models used price variables.580 Second, the Dominican  Republic submits that the standard unit root 
tests applied to Dr  Chipty's models using tax du mmy variables show that the tax dummy variables 
were non -stationary.581 Third, the Dominican  Republic submits that the Panel was inconsistent in 
accepting Dr  Chipty's models using tax dummies but disregarding the Dominican  Republic's models 
that relied on ta x dummies.582 
 
573 Panel  Report, Appendix  D, para.  116.  
574 Honduras' appellant's submission, paras.  1046-1052; Dominican  Republic's appellant's submission, 
paras.  267-361.  
575 See paras.  6.226.   -6.257.    below.  
576 Dominican  Republic's ap pellant's submission, paras.  347-353.  
577 Having explained, in paragraph  107 of Appendix  C, why it considered the presence of 
non-stationarity in a model to be a reason to doubt the reliability of that model, the Panel identified throughout 
its analysis cer tain models that did or did not suffer from this shortcoming. (See Panel  Report, Appendix  C, 
paras.  107 and 120, and fn  120 to para.  107; ibid., Appendix  D, paras.  44, 106, and 116, fn  46 to para.  43, 
and fn  146 to para.  109)  
578 Honduras' appellant's submi ssion, paras.  1046-1051; Dominican  Republic's appellant's submission, 
paras.  330-346. Honduras refers to the Panel's finding that standard unit root tests suggested that the tax 
level and price variables were non -stationary. (Honduras' appellant's submissi on, para.  1047 (referring to 
Panel  Report, Appendix  C, para.  107))  Honduras also refers to several consumption models that the Panel 
allegedly rejected on the basis of non -stationarity. (Ibid., paras.  1048-1050 (referring to Panel  Report, 
Appendix  D, paras . 44 and 106))  
579 Honduras' appellant's submission, para.  1051.  
580 Dominican  Republic's appellant's submission, para.  336 (referring to Panel  Report, Appendix  C, 
para. 120). The Dominican  Republic specifically refers to the Panel's finding that Professor Li st's two -stage 
model was affected by non -stationarity and might produce biased results since it used price as a control for 
tobacco costliness, and its finding that "Dr  Chipty's two -stage model, which … used price as a control for 
tobacco costliness, was not affected by non -stationarity …, and produced reliable results." (Ibid., 
paras.  337-338 (referring to Panel  Report, Appendix  C, paras.  107 and 120) (italics and underlining original))  
581 Dominican  Republic's appellant's submission, para.  342. The Dominica n Republic submits that the 
Panel "should have reached the same conclusion for Australia's models as it did for the Dominican  Republic's 
models".  (Ibid., para.  343) The Dominican  Republic also notes that, "[i]n any event, the Panel … failed to 
provide any explanation for its assertion that the use of tax dummies 'avoids the issue of non -stationarity of 
the price or tax level variable s'." (Ibid., para.  342) (fn  omitted)  
582 Dominican  Republic's appellant's submission, para.  345 (referring to IPE Third Updated Report (Panel 
Exhibit DOM -375), Tables 2.1 -1, 2.1 -4, 2.1 -7, 2.2 -1 to 2.2 -4, 2.2 -6, and 2.3 -1 to 2.3-4; D. Afshartous, 
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  6.184.    Australia argues that the Dominican  Republic's argument "misapprehends the burden of 
proof in this dispute, as well as the purpose for which Australia submitted Dr  Chipty's rebuttal 
evidence".583 According to Australia, given that Dr  Chipty was simply rebutting the 
Dominican  Republic's expert evidence, the Panel "did not need to find that Dr  Chipty's rebuttal 
evidence corrected all deficiencies in the complainants' econometric models … in order to find that 
the complainants' evidence was insuffic ient to sustain their burden of proving that no portion of the 
observed declines in prevalence and consumption could be attributed to the TPP  measures".584 
Australia also submits that the Panel was not required to find that Dr  Chipty cured all defects in the  
complainants' models in order to find that those models, "as revised by Dr  Chipty in certain important 
respects, provided 'some econometric evidence' to suggest that the TPP  measures had made a 
statistically significant contribution to the observed declin es in prevalence and consumption".585 
6.185.   We recall that the Panel was not seeking to assess whether any model was flawless, but 
rather was assessing the credibility of the complainants' evidence and Australia's competing 
evidence. The Panel did not have to find  that Australia's evidence cured all shortcomings in the 
Dominican  Republic's evidence in order to find that Australia's evidence was more credible. We 
therefore proceed to examine whether it acted inconsistently in assessing the evidence, to the extent 
that it relied on non -stationarity as a specific reason to consider Australia's evidence more credible 
than the complainants' evidence.  
6.186.   In this respect, we note that the Panel relied on the notion of non -stationarity, amongst 
other things, in both its smoki ng prevalence and consumption analyses to find that Australia's 
evidence was more credible than the complainants' evidence. With this in mind, we turn to the 
different allegations of inconsistency alleged by the appellants.  
6.187.   First, regarding the argument t hat the Panel relied on Dr  Chipty's model specified with a 
price variable while rejecting the complainants' price -specified models on the basis of, inter alia , 
non-stationarity, we have addressed a similar argument above and concluded that the Panel gave 
no weight  to Dr Chipty's two -stage (price -specified) model in its smoking prevalence analysis.586 To 
the extent that the Panel gave any weight in its smoking prevalence analysis to Dr Chipty's model 
specified with price variables, it was merely to note that t his alternative (and inferior) model 
supported the conclusion in Dr  Chipty's main, superior model (specified with tax dummy 
variables).587 We see no indication in the Panel's cigarette consumption analysis that it relied on any 
price-specified model at all.588 We therefore see no inconsistency in the Panel's treatment of the 
parties' price -specified models.  
6.188.   As to the argument that the Panel should have found that Australia's models specified with 
tax dummy variables suffered from non -stationarity, we note that  the Panel's findings, read on their 
face, indicate that the Panel did assess all models for non -stationarity.589 On appeal, the 
Dominican  Republic has argued that, as a factual matter, the Panel was incorrect, and Australia's 
models specified with dummy var iables do suffer from non -stationarity.590 In our view, this argument 
 
M. Hagedorn, A.  Kaul, and M.  Wolf, Summary of Findings:  Empirical Assessment of Australia's Plain Packaging 
Regime, Institute for Policy Evaluation  (1 February 2016) ( IPE Summary Report) (Panel Exhibit DOM -379), 
Tables 3.1 -2, Row [A], 3.1 -3, 3.2 -2 to 3.2-4, and 3.3 -2, Row [A]).  
583 Australia's appellee's submission, para.  771. 
584 Australia's appellee's submission, para.  771. (emphasis original)  
585 Australia's appellee's submission, para.  771. 
586 See paras.  6.163.   6.166.  above.  
587 See para.  6.166.    above.  
588 Panel  Report, Appendix  D, paras.  115-116. We note, in particular, that the Pa nel specifically 
addressed the fact that Dr  Chipty's models specified with a tax level variable did not  give the same result as 
her model specified with a tax dummy variable. The Panel explained why it considered that this was not a 
critical flaw. (Panel  Report, Appendix  D, para.  116) The fact that the Panel did not refer to any price -specified 
model reinforces our understanding that the Panel did not give any probative weight to any model specified 
with prices, including any such model adduced by Australia .  
589 This follows from the Panel's statements in both Appendices C and D that the use of the tax dummy 
variables avoids the issue of non -stationarity of the price or tax level variables. (Panel  Report, Appendix  C, 
para. 120; ibid., Appendix  D, para.  115) 
590 The Dominican  Republic states that when it applied standard unit root tests to Dr  Chipty's models 
using tax dummies, "the results consistently show that the tax dummies were non -stationary." (Dominican 
Republic's appellant's submission, para.  342) See als o paras.  6.329.   6.331.   below.  
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  merely constitutes relitigating the facts and expects the Appellate  Body to second -guess the Panel's 
factual findings. We decline to do so.  
6.189.   Finally, regarding the argument that the Panel accepted Australia's models specified wi th tax 
dummy variables but disregarded the complainants' models specified with tax dummy variables, we 
recall that non -stationarity was merely one concern relied on by the Panel to weigh the credibility of 
the parties' evidence. In the Panel's smoking prev alence analysis, the Panel highlighted that 
Dr Chipty's tax dummy variables model avoided the problem of overfitting and was robust to 
alternative specifications.591 Similarly, in its consumption analysis, the Panel highlighted that "part 
of Dr Chipty's mode l specification is based on the first specification proposed by the IPE but modified 
to account for strategic inventory management and the 2006 GHWs regulation ."592 The Panel also 
noted that Dr  Chipty's results were robust to certain alternative specificatio ns.593 In our view, this 
explanation by the Panel shows why it accorded greater weight to Dr  Chipty's consumption model 
specified with tax dummy variables than it did to the complainants' models specified with tax dummy 
variables.  
6.190.   We therefore consider that the appellants have not demonstrated that the Panel treated the 
parties' evidence inconsistently with respect to the Panel's reliance on the notion of non -stationarity 
to test the complainants' models.594 
Reweighting events in the data  
6.191.   In step  3 of its smoking prevalence  analysis, the Panel noted the importance of "attempting 
to control for sample re -weighting events in the RMSS data", and stated that, in their initial reports, 
neither IPE nor Professor List controlled for this issue.595 Furthermo re, the Panel highlighted that 
IPE's and Professor List's proposed solutions to this issue "increase[d] the issue of multicollinearity, 
in particular when the price (or tax level) and trend variables are included in the specification".596 
The Panel emphasize d how few of the explanatory variables were statistically significant (at 5%) 
when accounting for this sample reweighting issue and explained that "[s]ome results of IPE's 
modified trend analysis even suggest that the TPP  measures have led to a statistical ly significant 
increase in cigar smoking prevalence", without being able to explain why this would be the case.597 
For these reasons, the Panel considered that "[o]verall, and based on the above, [it had] doubts 
about the reliability of the results obtained when the price variable, time trend and sample 
reweighting dummies [we]re included in the model specifications."598  
6.192.   The Dominican  Republic argues that the Panel violated Article  11 of the DSU by: (i)  treating 
the parties' evidence inconsistently with no exp lanation; and (ii)  reasoning in an internally 
incoherent manner.599 We address each set of arguments in turn.  
 
591 Panel  Report, Appendix  C, paras.  120-121.  
592 Panel  Report, Appendix  D, para.  115.  
593 Panel  Report, Appendix  D, para.  116. 
594 We note that, in step 2 of its cigarette consumption analysis in Appendix  D to its Report, the Panel 
observed that, inter alia , Professor List's dynamic model based on Aztec data was affected by non -stationarity. 
(See Panel Report, Appendix  D, para.  44) The Panel did not, however, rely on non -stationarity to find in favour 
of Australia in step  2 of its analysis. (See Panel  Report, App endix  C, paras.  45-46) 
595 Panel  Report, Appendix  C, para.  108. We understand that this issue related to the fact that the 
RMSS  data underwent periodic "reweighting" in order to ensure that it was representative of the Australian 
population, and in order to conduct a meaningful econometric analysis of that data, it is necessary to control 
for such reweighting events when analysing the data. The Dominican  Republic elaborates that "[a]s 
demographic changes to the underlying population occur, data providers peri odically reweight the surveyed 
sample, to ensure that it remains representative of the population it purports to represent." 
(Dominican  Republic's appellant's submission, para.  431 (emphasis original)) We understand that this is 
uncontested by Australia. ( See Australia's appellee's submission, para.  782) 
596 Panel  Report, Appendix  C, para.  108. 
597 Panel  Report, Appendix  C, para.  108. (fn  omitted; emphasis added)  
598 Panel  Report, Appendix  C, para.  108. 
599 Dominican  Republic's appellant's submission, paras.  446, 4 53, 457, and 461. In terms of inconsistent 
treatment, the Dominican  Republic asserted that the Panel "treated 'the same class of quantitative evidence' 
inconsistently". (Dominican  Republic's appellant's submission, para.  461 (quoting Appellate  Body Report,   
US – Upland Cotton (Article  21.5 – Brazil) , para.  294)) We note that the Appellate  Body in US – Upland Cotton 
(Article  21.5 – Brazil) , in relevant part, found that "[t]he Panel's internally incoherent treatment of the same 
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  6.193.   The Dominican  Republic raises several arguments in support of its view that the Panel 
treated the parties' evidence inconsistently. The Dominican  Republic first submits that the Panel 
accepted Dr  Chipty's two -stage model that controlled for reweighting, but rejected the robustness 
of the same model when presented by Professor List.600 Second, the Dominican  Republic asserts 
that the Panel relied on Dr  Chipty's use of the two -stage model in a specification that did not even 
control  for the declining trend in smoking601, even though the Panel elsewhere took the position that 
"an econometric model (when presented by the complainants) must not only control  for the declining 
trend …, but … must also be able to detect  that this trend has a statistically significant downward 
effect on smoking prevalence."602 Third, the Dominican  Republic submits that the Panel rejected the 
robustness of the Dominican  Republic's mode ls on the grounds that their approach to control for 
reweighting increased multicollinearity, even though the Panel accepted Australia's econometric 
models that controlled for reweighting despite the presence of multicollinearity.603 
6.194.   Australia submits that t he Dominican  Republic's claims "depend heavily upon the proposition 
that Australia was required to prove" that the decline in smoking prevalence and consumption was 
attributable to the TPP  measures.604 Australia submits that the Panel's role was to assess wh ether 
the complainants had "proven their assertion that no portion of the observed declines in prevalence 
and consumption could be attributed to the TPP  measures".605 Australia therefore submits that the 
Panel was not required to find that Australia's expert s had fixed the reweighting problem in the 
complainants' models, in order to question the validity of those models.606 Australia further argues 
that the Dominican  Republic's assertion that Dr  Chipty relied on Professor List's results is incorrect. 
Rather, Australia explains, Dr  Chipty merely demonstrated that "Professor List's own results showed 
a negative and statistical ly significant effect of the TPP  measures when reported under the normal 
convention" for reporting statistically significant events.607 Australia elaborates that the footnote to 
the Panel's statement that "Dr  Chipty's econometric results further show[] that the negative and 
statistically significant effect of the TPP  measures on overall smoking prevalence is robust to 
alternative specifications" reveals that the Panel was referring to "tables in which Dr  Chipty 
summarised the results of the complainants' experts' models, accepting one or more of the 
methodological choices that Dr  Chipty considered erroneous".608 In Australia's view, the Panel did 
not endorse  these methodological choices that it criticized elsewhere, but rather observed that, even 
accepting the r esults of those models, such models showed a negative and statistically significant 
effect of the TPP  measures.609  
6.195.   We note that the first and second alleged inconsistencies identified by the 
Dominican  Republic610 relate specifically to the Panel's purported r eliance on Dr  Chipty's specification 
of Professor List's two -stage model, in the context of its smoking prevalence  analysis . As stated 
above, the Panel did not give any weight to Dr  Chipty's results based on her examination of the 
two-stage model.611 Moreove r, even if the Panel did give weight to Australia's price -specified model, 
it plainly considered such model to be of substantially inferior value to Australia's model specified 
with tax dummy variables.612 We therefore do not consider that the Panel treated the parties' 
evidence inconsistently in assessing the price -specified models of the complainants and Australia.  
6.196.   As to the third inconsistency alleged by the Dominican  Republic – that the Panel rejected the 
Dominican  Republic's models on the basis that con trolling for reweighting increased multicollinearity, 
but accepted Australia's models that suffered from exactly the same problem  – we recall that the 
 
class of quantitative evidence thus vitiates the conclusion it drew based on the financial data submitted by the 
parties." ( Appellate  Body Report, US – Upland Cotton (Article  21.5 – Brazil) , para.  294) 
600 Dominican  Republic's appellant's submission, paras.  441-445 and 449 -453 (referring to Panel  Report, 
Appendix  C, paras.  108 and 121, and fn  143 to para.  121; Chipty Second Rebuttal Report (Panel Exhibit 
AUS-591), p.  D.2). 
601 Dominican  Republic's appellant's submission, para.  454. 
602 Dominican  Republic's appellant's submission, para.  455. (emphasis original)  
603 Dominican  Republic's appellant's submission, para.  461.  
604 Australia's appellee's submission, para.  789. (emphasis original)  
605 Australia's appellee's submission, para.  789.  
606 Australia's appellee's submission, para.  790. 
607 Australia's appellee's submission, para.  792. (emphasis original)  
608 Australia's appellee's submission, para.  793 (quoting Panel Report, Appendix  C, para.  121). 
(emphasis original)  
609 Australia's appellee's su bmission, para.  794. 
610 See para.  6.193.    above.  
611 See paras.  6.163.   6.166.   above.  
612 See para.  6.166.   above.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  Panel did not "accept" or "reject" the various models that were put to it on the basis of any 
one factor.  Rather, the Panel assessed the relative merits and credibility of the parties' competing 
evidence. We therefore do not consider that the Panel rejected the complainants' models on this 
basis; rather , the Panel indicated a number of reasons to consider tha t Australia's evidence was 
more credible than the complainants' evidence. The fact that Dr  Chipty's primary model, specified 
with tax dummy variables, was robust to alternative specifications, notwithstanding that those other 
specifications may have suffer ed from many of the same  issues that affected the complainants' 
models, appears to be secondary to the fact that her primary model was more credible and 
convincing than the complainants' models. We also note that there is a difference between a 
specificati on that increases  the issue of multicollinearity in a particular model, and the presence of 
multicollinearity in a particularly specified model. We therefore do not consider that the 
Dominican  Republic has demonstrated that the Panel treated the parties' e vidence inconsistently 
with respect to sample reweighting.  
6.197.   We next address the Dominican  Republic's arguments that the Panel's findings were 
internally incoherent. In this respect, the Dominican  Republic argues that "the data provider 
identified four inst ances of reweighting in the RMSS sample …, each of which could affect the model's 
estimate of the impact of the TPP  measures on smoking prevalence."613 The Dominican  Republic 
submits that, unlike Dr  Chipty, who controlled only for three  of the four  reweighting events, the 
Dominican  Republic's experts controlled for all four reweighting events.614 On the Panel's finding that 
"Australia's evidence was 'robus t' to controlling for reweighting events,"615 the Dominican  Republic 
asserts that the Panel "ignored that Dr  Chipty's models did not 'attempt[…] to control' for all 
four reweighting events".616 The Dominican  Republic submits that this is in conflict with the P anel's 
recognition of "the importance of attempting to control for sample re -weighting events in the 
RMSS  data" .617 The Dominican  Republic further submits that "the Panel's error seems to be 
consequential in particular for the Panel's cigar prevalence findin g" because "if the control for the 
fourth reweighting event  … is added to Dr  Chipty's cigar prevalence model, the model no longer finds 
any impact of the TPP  measures on cigar prevalence."618 
6.198.   Australia submits that, for the same reasons that the Panel did no t treat the parties' evidence 
inconsistently, the Panel's reasoning was not internally incoherent. Australia submits, in this respect, 
that the Panel was simply not required to find that Dr  Chipty had controlled for all RMSS reweighting 
events in order to take into account her sensitivity analysis, which was based on Professor List's 
models. Australia also states that Dr  Chipty's sensitivity anal ysis "controlled for only 
three  reweighting events due to the sample period [Professor List] chose".619 
6.199.   In our view , the Dominican  Republic's arguments are based on a misunderstanding 
regarding the Panel's findings with respect to the importance of accounting for reweighting events 
in the RMSS data. We recall that the Panel did indeed "recognize the importance of attem pting to 
control for sample re -weighting events in the RMSS data".620 This, however, is different to a finding 
by the Panel that the absence of any attempt to control for such re -weighting events would render 
a model completely useless or unreliable. Further more, when examining how the complainants' 
experts sought to control for such reweighting events, the Panel highlighted that the inclusion of 
dummy variables increased the issue of multicollinearity, "in particular when the price (or tax level) 
and trend v ariables are included in the specification", and further noted that the problem was 
"accentuated when a fully flexible reweighting correction [was] adopted".621 The Panel highlighted 
other concerns regarding the complainants' experts' attempts to control for  reweighting, including 
the lack of statistical significance of explanatory variables, and the fact that at least one  model 
showed a statistically significant increase in cigar smoking prevalence caused by the 
 
613 Dominican  Republic's appellant's submission, para.  463. 
614 Dominican  Republic's appellant's submission, paras.  463-464. 
615 Dominican  Republic's appellant's submission, para.  465. 
616 Dominican  Republic's appellant's submission, para.  465 (q uoting Panel Report, Appendix  C, 
para. 108).  
617 Dominican  Republic's appellant's submission, para.  464 (referring to Panel  Report, Appendix  C, 
para. 108).  
618 Dominican  Republic's appellant's submission, para.  467. 
619 Australia's appellee's submission, para.  795.  
620 Panel  Report, Appendix  C, para.  108.  
621 Panel  Report, Appendix  C, para.  108.  
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  TPP measures.622 The Panel ultimately concluded that, overall, it had "doubts about the reliability of 
the results obtained when the price variable, time trend and sample reweighting dummies are 
included in the model specifications".623 We therefore understand that, although the Panel 
recognized the impor tance of attempting to control for sample reweighting events, IPE and Professor 
List were unable to account for such reweighting events without raising other concerns about the 
reliability of their results. This was one of the reasons that the Panel had do ubts regarding their 
models.  
6.200.   Turning to Australia's evidence, the Panel did not mention sample reweighting at all in the 
context of noting that Dr  Chipty had addressed "a number of [its] concerns" with the complainants' 
evidence.624 In other words, the Pane l did not consider that Dr  Chipty had resolved the problems 
related to either accounting  for the reweighting events or not accounting for those reweighting 
events.625 The Panel did note, however, that Dr  Chipty's model was "robust to alternative  
specificatio ns", including "sample reweighting dummies".626 This analysis by Dr  Chipty appears to 
have been directly based on Professor List's own models in which he controlled for three sample 
reweighting corrections (in 2009, 2010, and 2014) by adding dummy variables.627 It was on the 
basis of these specifications that Dr  Chipty ran her own analysis, albeit with a longer sample period, 
stretching back to 2001 (instead of 2006). We note, in this respect, that it was Professor List who 
identified that the RMSS da ta had been subject to such population corrections in the first place , and 
that when he identified these corrections, he indeed referred to only three such corrections, in 2009, 
2010, and 2014.628 Subsequently, in IPE's final submission, after which time the  parties in principle 
no longer had the opportunity to submit additional evidence629, IPE indicated that RMSS had made 
a reweighting correction in 2004.630 Thus, by the time that there was any evidence on the record 
indicating that there had been a reweighting  correction in 2004, the opportunity for Dr  Chipty to 
re-specify Professor List's models in order to account for the 2004 correction had already passed.  
6.201.   The question, therefore, is whether the Panel erred by taking into account Dr  Chipty's 
alternative spe cification  as support for its conclusion that Australia's models were more reliable than 
the complainants' models, notwithstanding that the Panel had recognized the importance of 
accounting for reweighting events and Dr  Chipty's alternative specification o nly accounted for 
three  of the four  reweighting events for which there was evidence on the Panel  record. We note that, 
although the evidence of the fourth reweighting event was only provided at the final hour, the Panel 
could have given Dr  Chipty and Profe ssor List the opportunity to resubmit their models in order to 
account for the fourth reweighting event. Notwithstanding the Panel's failure to do so, we do not 
consider that the Panel's decision to take into account Dr  Chipty's alternative specification i s per se 
incoherent. The Panel's findings indicate that the Panel had reservations about controlling for 
reweighting, regardless of the number of reweighting events taken into account. Thus, the Panel did 
not consider the parties' models, in which they acc ounted for reweighting events, to be dispositive 
of anything.  Furthermore, the Panel did not fault Professor List's evidence on the grounds that it 
 
622 Panel  Report, Appendix  C, para.  108.  
623 Panel  Report, Appendix  C, para.  108.  
624 Panel Report, Appendix  C, para.  120. 
625 We note that the Panel's silence on this issue stands in contrast to Dr  Chipty's own arguments that 
her one -stage microeconometric model controlled for demographics, meaning that there was "no concern 
about the reweighting of RMSS  data because the model a dequately control[led] for changes in the population 
composition". (Chipty Third Rebuttal Report (Panel Exhibit AUS -605), fn  155 to para.  70(c)(ii)) Dr  Chipty had 
previously stated that, "[w]ith the right microeconometric model that controls for demographi cs (like the 
one-stage microeconometric model I have presented), there is no need to worry about the reweighting 
because the model adequately controls for changes in the population composition." (Chipty Second Rebuttal 
Report (Panel Exhibit AUS -591), para.  37) Dr  Chipty elaborated that all of her models in her final submission to 
the Panel controlled for a "set of sociodemographic characteristics". (Chipty Third Rebuttal Report (Panel 
Exhibit AUS -605), para.  71) 
626 Panel  Report, Appendix  C, para.  121 (referr ing to Chipty Third Rebuttal Report (Panel 
Exhibit  AUS-605), p.  22; Chipty Second Rebuttal Report (Panel Exhibit AUS -591), p.  D2). (emphasis added)  
627 Chipty Second Rebuttal Report (Panel Exhibit AUS -591), para.  34. See also J. List, A Synthesis of the 
Evidence on Australia's Plain Packaging Policy (28  October 2015) (List Second Supplemental Report) (Panel 
Exhibit DOM/IDN -5), para.  141; Panel  Report, Appendix  C, para.  108 (referring to List Second Supplemental 
Report (Panel Exhibit DOM/IDN -5), Table  8 on p.  43; List  Third Supplemental Report (Panel Exhibit 
DOM/IDN -7), Table  13 on p.  32). 
628 List Second Supplemental Report (Panel Exhibit DOM/IDN -5), Appendix B.  
629 Notwithstanding that the Panel made a special exception regarding the Dominican  Republic's 
communication to the Panel of 17  February 2016. (See paras.  6.136.   -6.139.    above)  
630 See IPE Summary Report (Panel Exhibit DOM -379), fn  53 to para.  53. 
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  failed to account for all  reweighting events. The Panel therefore showed no indication that a failure 
to acc ount for one reweighting event was a fatal error in assessing the merits of a given model. 
Finally, the Panel merely relied on Dr  Chipty's alternative specification as a supporting reason to 
take into account her results. Since the failure to account for a  reweighting event was not fatal, we 
see no error or incoherence in the Panel considering that Dr  Chipty's alternative specification 
supported her results.  
6.202.    For these reasons, we consider that the appellants have not demonstrated that the Panel 
erred in a ssessing the parties' efforts to account for reweighting events in the RMSS data.   
The procedure for calculating standard error  
6.203.   In step  3 of its smoking prevalence  analysis, the Panel addressed the issue of how the 
parties' experts calculated standard erro r for purposes of assessing the statistical significance of the 
different variables in their models. The Panel explained that "a standard error is required to 
determine the estimated coefficient's level of statistical significance", and that "statistical 
significance is essential because, as well as being the variable's estimated coefficient, it is also 
important to determine whether the coefficient's variable is statistically different from zero ."631 The 
Panel highlighted "the importance of com puting standard errors that are robust to heteroscedasticity 
and autocorrelation".632 The Panel elaborated that, the parties' "treatment of standard errors evolved 
over the course of the proceedings."633 According to the Panel:  
Initially, Professor  List and IP E chose to apply the STATA software command ivreg2 to 
calculate standard errors that are robust to heteroscedasticity and serial correlation 
using the automatic bandwidth selection procedure by Newey and West (1994). 
Subsequently, Professor  List, and later  on IPE, applied an alternative way of calculating 
standard errors, that, according to Professor  List, is adjusted to reflect more accurately 
the original suggestion by Newey and West (1994). Technically speaking, the 
disagreement between Professor  List (a s well as IPE and Professor  Klick) and Dr  Chipty 
concern[ed] the procedure to correct for autocorrelation, in particular the choice of the 
maximum amount of time, defined as the maximum lag, that the data can be correlated 
over time. Professor  List propose [d] to set a smaller parameter value, resulting also in 
a smaller maximum lag than the one specified in the ivreg2 command. A careful review 
of the evidence and discussions shows that the choice of the maximum lag is not well 
established in the statistics and econometric literature, as pointed out  … in an email 
exchange with STATA developers. As a result, it is unclear whether the results 
associated with Professor  List's procedure would have changed for a range of parameter 
values, taking into consideration  the fact that the maximum lag should be able to take 
into account all lags until the serial correlation in the data vanishes.634 
6.204.   The Panel also observed that, in the email exchange between the parties and the 
STATA  software developers, the developers explai ned that "the automatic choice of the maximum 
 
631 Panel  Report, Appendix  C, para.  109.  
632 Panel  Report, Appe ndix C, para.  109.  
633 Panel  Report, Appendix  C, para.  110.  
634 Panel  Report, Appendix  C, para.  110 (referring to D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, 
Empirical Assessment of Australia's Plain Packaging Regime, Institute for Policy Evaluation (7  October 2014) 
(IPE Report) (Panel Exhibit DOM -100); D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Updated Empirical 
Assessment of Australia's Plain Packaging Regime, Institute for Policy Evaluation (14  September 2015) 
(IPE Updated Report) (Panel Exhib it DOM -303); J. List, A Consideration of the Empirical Evidence on the Effects 
of Australia's Tobacco Plain Packaging Legislation (1  June 2015) (List Report) (Panel Exhibit  DOM/IDN -1); 
J. List, A Further Consideration of the Empirical Evidence on the Effec ts of Australia's Tobacco Plain Packaging 
Legislation (16  September 2015) (List Rebuttal Report) (Panel Exhibit  DOM/IDN -3); D. Afshartous, 
M. Hagedorn, A.  Kaul, and M.  Wolf, Updated Empirical Assessment of Australia's Plain Packaging Regime, 
Institute for Policy Evaluation (27  October 2015) ( IPE Second Updated Report) (Panel Exhibit  DOM-361); 
IPE Third Updated Report (Panel  Exhibit  DOM-375); IPE Summary Report (Panel Exhibit DOM -379); List 
Second Supplemental Report (Panel Exhibit  DOM/IDN -5); List Third Sup plemental Report (Panel Exhibit 
DOM/IDN -7); J. List, Concluding Summary on Australia's Plain Packaging Policy (2  February 2016) (List 
Summary Report) (Panel Exhibit  DOM/IDN -9); IPE Summary Report (Panel Exhibit DOM -379), p.  70; 
Chipty  Second Rebuttal Repor t (Panel Exhibit AUS -591), pp.  B1-B2). (fns  omitted)  
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  lag in the command ivreg2 is in line with the criteria necessary for asymptotic optimality."635 The 
Panel further noted that Professor List had "present[ed] the results of simulations to compare the 
frequency of so-called false positives using [his] procedure and the ivreg2's automatic selection 
procedure" .636 The Panel considered that, although "Professor  List conclude[d] that the 
STATA  ivreg2's automatic selection procedure leads to a wrong finding of a statistica lly significant 
result 16% of the time, instead of 5%", his results were based on a sample size of 111 observations 
(from July 2006 to September 2015), while Dr  Chipty considered a larger sample period of 
177 observations (from  January  2001 to September  2015).637 The Panel considered that it was 
"unclear to what extent Professor  List's results would change if the sample size increases, taking 
into account the fact that according to the STATA developers the formulae used in ivreg2 meet the 
criteria necessary f or asymptotic optimality".638  
6.205.   In assessing Australia's smoking prevalence and consumption evidence, the Panel did not 
refer to Dr  Chipty's use of the STATA ivreg2 formula as a reason to consider her results more reliable 
than those of the complainants' expe rts.639 The Panel did, however, note that, in Dr  Chipty's smoking 
prevalence models, "the impact of the TPP  measures on overall smoking prevalence remains 
negative and statistically significant in most specifications when Professor List's procedure to 
comput e standard errors is implemented ."640 Similarly, the Panel noted that, in Dr  Chipty's cigarette 
consumption models, "the negative and statistically significant impact of the TPP  measures on 
wholesale cigarette sales is robust to alternative specifications, i ncluding … Professor List's procedure 
to compute standard errors ."641 
6.206.   Honduras contends that "the complainants' experts expressed concern over the … use of the 
erroneous IVREG formula", and that the Panel did not "explain how it deal[t] with these concerns".642 
Honduras argues that the Panel completely ignored Professor Klick's argument that "there is no 
support for the approach used by Dr  Chipty and that the very literature she relies on makes clear 
that her use of an outlier approach was inappropriate."643 Honduras notes that "[t]he Panel does not 
even mention this exhibit in this context."644 Honduras also argues that the Panel misrepresented 
the evidence. According to Honduras, " Professor List responded to a criticism [by] Dr Chipty about 
an alleged error in the  STATA program used and when Professor List started to examine this 
allegation, he found that it was Dr  Chipty that had simply taken something off the internet that was 
wrong and that he stood by the results in his September and June reports."645 According t o 
Honduras, "[t]he Panel misrepresents this entire discussion as one of technical experts not being 
able to agree about a technical issue that the community in general is not in agreement about."646 
Honduras submits that, in reality, Dr  Chipty "made a mistak e in taking a command off the internet" 
and "Professor List exposed this error and double -checked his original results by going back to the 
authors of the method followed by all experts which confirmed his analysis."647 Honduras considers 
that the Panel's fi ndings were insufficiently reasoned and adequate; that the Panel mischaracterized 
 
635 Panel  Report, Appendix  C, fn 131 to para.  110 (referring to IPE Summary Report (Panel 
Exhibit  DOM-379), p.  70; Chipty Second Rebuttal Report (Panel Exhibit AUS -591), pp.  B1-B2). 
636 Panel  Report, Appendi x C, fn 132 to para.  110 (referring to List Summary Report (Panel 
Exhibit  DOM/IDN -9), paras.  95-98). 
637 Panel  Report, Appendix  C, fn 132 to para.  110. 
638 Panel  Report, Appendix  C, fn 132 to para.  110. 
639 Specifically, we note that the Panel considered that Dr  Chipty resolved a number of the concerns that 
it had identified with the complainants' models. The Panel proceeded to identify those particular concerns. The 
Panel did not mention the manner in which Dr  Chipty calculated standard error as resolving any co ncerns. 
(See Panel  Report, Appendix  C, para.  120; ibid., Appendix  D, para.  115) 
640 Panel  Report, Appendix  C, para.  121.  
641 Panel  Report, Appendix  D, para.  116.  
642 Honduras' appellant's submission, para.  884.  
643 Honduras' appellant's submission, para.  944 (referring to J. Klick, Fourth Supplemental Rebuttal 
Report – Comments on Additional Arguments Raised by Dr  Chipty (3  February 2016) ( Klick Fourth 
Supplemental Report) (Panel Exhibit HND -169), para.  18). 
644 Hondu ras' appellant's submission, para.  945. 
645 Honduras' appellant's submission, para.  943 (referring to List Second Supplemental Report 
(Panel  Exhibit  DOM/IDN -5, paras.  98-102)).  
646 Honduras' appellant's submission, para.  943.  
647 Honduras' appellant's submissio n, para.  943.  
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  and misstated the facts on the record and made findings that lacked a basis in the Panel  Record; 
and that the Panel disregarded, distorted, and misrepresented certain evidenc e.648 
6.207.   Australia submits that the Panel's description of the event s surrounding how the parties' 
experts calculated standard error is accurate.649 Australia argues that, based on its review of the 
evidence, the Panel "expressed 'reservations regarding IPE and Professor List's methodologies' for 
calculating standard errors and therefore 'question[ed] their results, based on these 
methodologies'".650 Australia further submits that the Panel made similar findings with respect to 
the complainants' consumption evidence.651 In Australia's view, "it was entirely appropriate for the 
Panel to take into account the inconsistency of the complainants' experts on an important 
methodological issue when evaluating the weight to attribute to the evidence they submitted."652 
6.208.   In addressing these issues, we note at the outset that the Panel  Report does not express 
any firm opinion on the correct  procedure for calculating stan dard error. Rather, the Panel expressed 
its doubts regarding both Professor List's procedure for calculating standard error653 and his 
argument that Dr  Chipty's procedure (using the STATA ivreg2 command) was flawed.654 
Nevertheless, our review of the Panel's f indings shows that the Panel appears to have given both 
Professor List's procedure and the ivreg2 procedure roughly equivalent weight when comparing the 
credibility of the complainants' evidence to Australia's evidence. This follows because the Panel did 
not identify Dr  Chipty's procedure for calculating standard error as a reason to consider Australia's 
evidence more credible than the complainants' evidence.655 To the contrary, the Panel took into 
account the fact that Dr  Chipty's models continued to show a negative statistically significant impact 
of the TPP  measures on smoking prevalence and consumption, even when using Professor List's 
procedure to compute standard error.656 We therefore understand that Honduras' arguments on 
 
648 Honduras' appellant's submission, paras.  942-946.  
649 According to Australia, IPE had originally indicated the importance of accounting for 
heteroscedasticity and autocorrelation in calculating standard error, and IPE had relied on a comman d in the 
STATA computer programme known as "ivreg2", which "automatically accounts for autocorrelation but requires 
an additional command to account for heteroscedasticity". (Australia's appellee's submission, para.  663) 
Australia submits that both IPE and  Professor List failed to account for heteroscedasticity, with the 
consequence that their standard errors "were significantly overstated". (Ibid. (referring to Chipty Second 
Rebuttal Report (Panel Exhibit AUS -591), fn  24)) Australia argues that, after Prof essor List accounted for the 
problem of heteroscedasticity in calculating standard error, he claimed to have discovered an error in the 
ivreg2 command that affected how it accounted for autocorrelation. (Ibid., para.  664) Australia considers that 
"Professo r List's professed identification of an 'error' in ivreg2  was a red herring to distract attention away from 
the fact that his own models, as with IPE's original model results, showed a negative and statistically 
significant effect of plain packaging upon p revalence and consumption once autocorrelation and 
heteroscedasticity were taken into account using the method they originally proposed." (Ibid., para.  665 
(emphasis original)) According to Australia, Dr  Chipty showed that all of IPE and Professor List's m odels 
showed statistically significant declines in prevalence and consumption when relying on the ivreg2 command, 
and further showed that "in any event, using Professor List's newly -adopted methodology for calculating 
standard errors, and fixing other issu es in his models, the estimated effects of tobacco plain packaging were 
still negative and the majority of those estimated effects were still statistically significant." (Ibid.)  
650 Australia's appellee's submission, para.  667 (quoting Panel  Report, Appendix  C, para.  111) 
651 Australia's appellee's submission, para.  668 (referring to Panel  Report, Appendix  D, para.  107 and 
fn 141 to para.  108).  
652 Australia's appellee's submission, para.  669.  
653 The Panel explained that a "careful review of the evidence and disc ussions shows that the choice of 
the maximum lag is not well established in the statistics and econometric literature, as pointed out … in an 
email exchange with STATA developers", and considered that, as a result, it was "unclear whether the results 
assoc iated with Professor  List's procedure would have changed for a range of parameter values, taking into 
consideration the fact that the maximum lag should be able to take into account all lags until the serial 
correlation in the data vanishes." (Panel  Report , Appendix  C, para.  110 (fns  omitted))  
654 The Panel noted that, although "Professor  List conclude[d] that the STATA ivreg2's automatic 
selection procedure leads to a wrong finding of a statistically significant result 16% of the time, instead of 5%", 
his re sults were based on sample size of 111 observations (from July 2006 to September 2015), while 
Dr Chipty considered a larger sample period of 177 observations (from  January  2001 to September  2015). 
(Panel  Report, Appendix  C, fn 132 to para.  110) The Panel c onsidered that it was "unclear to what extent 
Professor  List's results would change if the sample size increases, taking into account the fact that according to 
the STATA developers the formulae used in ivreg2 meet the criteria necessary for asymptotic opt imality". 
(Ibid.)  
655 Panel  Report, Appendix  C, paras.  120-121; ibid., Appendix  D, paras.  115-116.  
656 Panel  Report, Appendix  C, para.  121; ibid., Appendix  D, para.  116. We note that, with respect to 
Dr Chipty's smoking prevalence models, the impact of the TP P measures on overall smoking prevalence 
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  appeal are essentially challengi ng the merits of the Panel's conclusion that Dr  Chipty's procedure for 
calculating standard error was not inferior  to Professor List's methodology.  
6.209.   We first address Honduras' argument that the Panel lacked a reasoned and adequate 
explanation for its findi ngs.657 In our view, the Panel fully explained its reasons for both questioning 
Professor List's procedure and for considering the ivreg2 procedure to be relatively reliable.658 We 
do not see how Honduras' disagreement with either the merits of the Panel's rea soning or the Panel's 
weighing and balancing of the evidence implies that the Panel failed to make an objective assessment 
of the matter before it. In our view, it is outside the scope of our mandate to second -guess the 
Panel's appreciation of the evidence .  
6.210.   Turning to Honduras' argument that the Panel disregarded certain evidence, we understand 
that Honduras has identified a sentence from an exhibit submitted to the Panel, where Professor  Klick 
stated that, "[g]iven that the literature on this issue (inclu ding the very paper cited by Dr  Chipty) 
indicates that the normal distribution is inappropriate, Dr  Chipty's p values are incorrect and her 
claims of statistical significance are likewise wrong in any case ."659 We agree with Honduras that the 
Panel does not appear to have addressed this argument. We note, however, that a panel's summary 
of a party's evidence does not have to be comprehensive and, indeed, a panel could not be expected 
to reflect each and every aspect of every argument set forth in every exhibi t submitted by every 
party in order to comply with the obligation to make an objective assessment of the matter before 
it. In any event, we do not consider that Honduras has demonstrated that the Panel's failure to 
explicitly address Professor Klick's argu ment in the Panel  Report constitutes a material error. We 
highlight, in particular, that the Panel identified its own reasons for doubting Professor  List's 
methodology, yet ultimately appears to have given equal weight to Professor List's methodology as 
it does to the ivreg2 methodology.  
6.211.   Regarding  Honduras' argument that the Panel misrepresented the evidence of the parties, 
we understand that Honduras  considers that "the treatment of standard errors did not just 'evolve 
over the course of the proceedings'" and that "[t]he Panel misrepresents this entire discussion as 
one of technical experts not being able to agree about a technical issue that the comm unity in 
general is not in agreement about."660 According to Honduras, "Dr  Chipty was looking for a way to 
change the results of Professor List and she made a mistake in taking a command off the internet in 
order to do so. Professor List exposed this error a nd double -checked his original results by going 
back to the authors of the method followed by all experts which confirmed his analysis."661  
6.212.   We note that, according to the Panel:  
Initially, Professor  List and IPE chose to apply the STATA software command ivr eg2 to 
calculate standard errors that are robust to heteroscedasticity and serial correlation 
using the automatic bandwidth selection procedure by Newey and West (1994). 
Subsequently, Professor  List, and later on IPE, applied an alternative way of calculat ing 
 
remained negative and statistically significant in most specifications when using Professor List's procedure for 
calculating standard error. (Ibid., Appendix  C, para.  121) 
657 In this respect, Honduras argues that "Professor List showed that [Dr  Chipty's] approach was 
incorrect as it led to many more false positives than did his approach." (Honduras' appellant's submission, 
para. 946) Honduras recognizes that the "the Panel rej ects the evidence submitted by Professor List that shows 
the high number of false positive[s] associated with the method used by Dr  Chipty based on a sample of 
111 observations because '[i]t is… unclear to what extent Professor List's results would change if the sample 
size increases' noting that Dr  Chipty relies on 177  observations." (Ibid., quoting Panel Report, Appendix  C, 
fn 132 to para.  110) Honduras submits that that "is hardly a reasoned and adequate explanation for concluding 
this debate in favour o f Australia's expert", and highlights that "Dr  Chipty did not show that if you apply the 
same test to her 177 observations, the false positives would be less", which demonstrates, in Honduras' view, 
that the Panel applied a "double standard of proof". (Ibi d.) 
658 See paras.  6.203.   6.204.   above.  
659 Honduras' appellant's submission, para.  944 (quoting Klick Fourth Supplemental Report 
(Panel  Exhibit HND -169), para.  18).  
660 Honduras' appellant's submission, para.  943 (quoting Panel  Report, Appendix  C, para.  110).  
661 Honduras' appellant's submission, para.  943.  
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  standard errors, that, according to Professor  List, is adjusted to reflect more accurately 
the original suggestion by Newey and West (1994).662 
6.213.   We proceed by reviewing whether this statement by the Panel  misrepresents the evidence . 
We note that the Panel  referred to both Professor List and IPE. With respect to IPE, we note that 
IPE's first report to the Panel states that it employed " heteroskedasticity - and 
autocorrelation -consistent (HAC) standard errors … implemented in the STATA command 'ivreg2'" .663 
IPE's second  report similarly states that it used "autocorrelation -robust standard errors", and in the 
case of heteroskedasticity, "heteroskedasticity -robust standard errors", and that the procedure was 
"implemented in the STATA  command 'ivreg2', version 04.1 .08".664 IPE therefore clearly relied on 
ivreg2 in its first and second reports. It is uncontested that, subsequently, IPE changed from relying 
on ivreg2 to Professor  List's approach to calculating standard error. We therefore understand that 
the Panel's cha racterization of IPE's methodology for calculating standard error is correct.  
6.214.   Turning to Professor List's procedure for calculating standard error, we note that, in 2015, 
Professor List submitted four  reports to the Panel, in June, September, October, and December. In 
his fourth report, Professor List addressed Dr  Chipty's concerns regarding his calculations for 
standard error. In this respect, Professor List explained that, "in my June and September Reports, 
I mirrored the statistical procedur es conducted by IPE, which sought to report standard errors that 
were robust to two  sources of potential bias: heteroskedasticity and autocorrelation."665 He further 
stated that, upon revisiting his previous calculations of standard error he "decided to move away 
from the open source add -on ('ivreg2 ') that Chipty uses to correct our standard errors in the 
Stata  software package" .666 We further note that Dr  Chipty asserted that Professor List initially used 
ivreg2.667 Thus, there was ample evidence before the Panel indicating that Professor List initially 
used ivreg2 before implementing a new procedure to calculate standard error. We therefore 
understand that the  Panel correctly characterized the "evolution" of both the Dominican  Republic's 
and Honduras' experts' evidence, and that it is Honduras who now, on appeal, appears to 
mischaracterize that evolution.  
6.215.   Before concluding, we briefly note Honduras ' assert ion that the Panel's statement  that "there 
is uncertainty about the appropriate method to use and … that 'according to the STATA  developers 
the formulae used in ivreg2 meet the criteria necessary for asymptotic optimality'" is a false 
reflection of the email e xchange between Dr  Chipty's team and the STATA developers.668 Honduras 
asserts that "[t]he STATA developers simply responded to the specific question about lag times that 
Dr Chipty posed and replied that there is no golden rule but that one needs to adapt th is where 
necessary. The STATA developers did not say that the 20 lag time that Dr  Chipty used was accurate; 
they did not say that Ivrge2 [ sic] was appropriate and they in fact insisted on the need to check this 
issue on a case by case basis."669  
6.216.   We note tha t this argument concerns the Panel's finding that "according to the 
STATA  developers the formulae used in ivreg2 meet the criteria necessary for asymptotic 
optimality ."670 We observe that, subsequent to Dr  Chipty's communications with the 
 
662 Panel  Report, Appendix  C, para.  110 (referring to IPE Report (Panel Exhibit DOM -100); IPE Updated 
Report (Panel Exhibit DOM -303); List Report (Panel Exhibit DOM/IDN -1); Lis t Rebuttal Report (Panel 
Exhibit  DOM/IDN -3); IPE Second Updated Report (Panel Exhibit DOM -361); IPE  Third Updated Report 
(Panel  Exhibit  DOM-375); IPE Summary Report (Panel Exhibit DOM -379); List Second Supplemental Report 
(Panel Exhibit  DOM/IDN -5); List Th ird Supplemental Report (Panel Exhibit DOM/IDN -7); List Summary Report 
(Panel Exhibit  DOM/IDN -9)). (fns  omitted)  
663 IPE Report (Panel Exhibit DOM -100), fn  83 on p.  70.  
664 IPE Updated Report (Panel Exhibit DOM -303), fn  52 to para.  65. 
665 List Third Supplement al Report (Panel Exhibit DOM/IDN -7), para.  44.  
666 List Third Supplemental Report (Panel Exhibit DOM/IDN -7), para.  46.  
667 According to Dr  Chipty, "Professor List himself used the same Stata code, in both his June 2015 and 
September 2015 reports." (Chipty Se cond Rebuttal Report (Panel Exhibit AUS -591), para.  13) (emphasis 
omitted)  
668 Honduras' appellant's submission, para.  946 (quoting Panel Report, Appendix  C, fn 132 to 
para. 110).  
669 Honduras' appellant's submission, para.  946. 
670 Panel  Report, Appendix  C, fn 132 to para.  110 (referring to List Summary Report (Panel 
Exhibit  DOM/IDN -9), paras.  95-98). 
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  STATA  developers671, IPE communicated with the developers.672 In their response to 
IPE's communication, the STATA developers stated that "the choice of this parameter is not 
well-established in the literature, and the formulae we use meet the criteria necessary for asymptotic 
optimality."673 In our view, Honduras seems to have simply based its argument on appeal on 
Dr Chipty's correspondence with the STATA developers and completely ignored IPE's correspondence 
with the developers. The Panel plainly based its finding on the evidenc e before it.  
6.217.   We therefore consider that Honduras has not demonstrated that the Panel erred with respect 
to the Panel's assessment of the parties' disagreement regarding the procedure to calculate standard 
error.  
Scollo et al. 2015a  
6.218.   In step  3 of its cigarette consumption  analysis, in summarizing the "[d]atasets and related 
studies" provided by the parties, the Panel noted that "Scollo et  al. 2015a used the NTPPTS data to 
assess changes in reported price paid and changes in reported numbers of cigarettes co nsumed 
following the introduction of TPP and enlarged GHWs in the period up to and after the large increase 
in excise duty on 1  December  2013."674 The Panel explained that, "[o]verall, Scollo et  al. 2015a 
conclude, among other [] things, that the introduction  of TPP and enlarged GHWs [was]  not 
associated with a change in consumption among daily, regular or current smokers or among smokers 
of brands in any market segment during the first year of implementation of the TPP  measures."675 
6.219.   Honduras argues that, in ste p 3 of the Panel's cigarette consumption analysis, the Panel did 
not attempt "to square Dr  Chipty's conclusion with all of the evidence that points in the opposite 
direction, including the peer -reviewed article by Dr  Scollo which was published in Tobacco C ontrol , 
despite its stated 'totality of evidence' approach".676 Honduras argues that the Panel zeroed the 
contrary evidence and "fail[ed] to provide a reasoned and adequate conclusion of how its 'overall 
conclusions' fit with the rest of the facts on the record including but not limited to this important 
study by Dr  Scollo".677 
6.220.   Australia submits that a panel does not "exceed the scope of its fact-finding authority when 
it assesses contradictory expert evidence and determines that one  expert's evidence is more 
persuasive or reliable".678 Australia elaborates that "a panel does not 'zero' or 'disregard' or 'ignore' 
evidence merely because it ultim ately determines that evidence should be weighed less heavily or 
rejected."679  
6.221.   We note that, in step  3 of its cigarette consumption analysis, the Panel did not make any 
specific  observations regarding the independent merits of the Scollo et al. 2015 article . We further 
note, however, that the Scollo study was based on NTPPTS data, whereas Dr Chipty's results relied 
on IMS/EOS data.680 In this respect, the Panel explicitly indicated that it "agree[d] with Australia 
that the IMS/EOS data is the most suitable ava ilable market data submitted by the parties".681 The 
Panel stated that "the other market data sources … suffer from a number of drawbacks in comparison 
with the IMS/EOS data", and elaborated on why the other market data sources were inferior to the 
 
671 See Chipty Second Rebuttal Report (Panel Exhibit AUS -591), figures  B.1 and B.2 on pp.  B.1 and B.2.  
672 IPE Summary Report (Panel Exhibit DOM -379), Figure  6.1-3 on p. 70.  
673 IPE Summary Report (Panel Exhibit DOM -379), Figure  6.1-3 on p.  70.  
674 Panel  Report, Appendix  D, para.  89 (referring to M. Scollo, M. Zacher, K. Coomber, M.  Bayly, and 
M. Wakefield, "Changes in Use of Types of Tobacco Products by Pack Sizes and P rice Segments, Prices Paid and 
Consumption Following the Introduction of Plain Packaging in Australia", Tobacco Control , Vol. 24 (2015) 
(Scollo et  al. 2015a) (Panel Exhibits HND -133, DOM -237, DOM -311)).  
675 Panel  Report, Appendix  D, para.  90. The Panel also observed that "the authors find that reported 
consumption among regular smokers declined significantly following the December  2013 tax increase." (Ibid.)  
676 Honduras' appellant's submission, para.  903.  
677 Honduras' appellant's submission, para.  903.  
678 Australia's appellee's submission, para.  438 (referring to Appellate  Body Reports, China – Rare 
Earths , para.  5.193; US – Upland Cotton (Article  21.5 – Brazil) , para.  435).  
679 Australia's appellee's submission, para.  438 (quoting Honduras' appellant's sub mission, paras.  728, 
775, 793, 813, 885, 903, and 1034; Dominican  Republic's appellant's submission, paras.  746, 874, 906, and 
934; referring to Appellate  Body Reports, Brazil – Retreaded Tyres , para.  202; China – Rare Earths , 
para. 5.197; US – Clove Cigar ettes, para.  212).  
680 Panel  Report, Appendix  D, paras.  60 and 89.  
681 Panel  Report, Appendix  D, para.  102.  
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  IMS/EOS d ata.682 We therefore understand that the Panel's findings do address the relative merits 
of the Scollo article vis -à-vis Dr Chipty's econometric results, and consequently Honduras has not 
demonstrated that the Panel disregarded that evidence or failed to exp lain why it considered 
Dr Chipty's econometric results to be more credible than those of Scollo et al. 2015a.  
Brevity of the Panel's explanation for its reliance on Australia's evidence  
6.222.   Honduras submits that "[t]wo conclusory and short paragraphs to 'expl ain' a determination 
that closes a debate that continued over more than a year and involved about 15 expert reports and 
rebuttal reports [are] not adequate under any standard ."683 
6.223.   Australia does not specifically address this argument.  
6.224.   We understand that thi s argument refers to the Panel 's description of Dr  Chipty's 
econometric models in both its smoking prevalence and its cigarette consumption analyses, each of 
which is only two  paragraphs long (excluding a brief concluding paragraph for each analysis).684 In 
our view, there may be any number of reasons for a panel to be concise in its treatment of the 
evidence (for example, a panel may consider an entire swathe of evidence to be inapposite to the 
question at hand). In the present dispute, a review of the Panel 's findings indicates that the Panel's 
overall conclusion was formed on the basis of its assessment of the merits of all  the evidence, 
including both Australia 's and the complainants ' evidence. Indeed, it was only on the basis of 
comparing  the robustness of Australia's models to the complainants ' models that the Panel was able 
to consider Australia's model s to be more credible. We see nothing unobjective per se about the fact 
that the Panel was able to summarize, in two  paragraphs, its reasons f or considering that Australia's 
evidence was more credible than the complainants' evidence.  
6.225.   We therefore do not consider that Honduras has demonstrated how the brevity of the Panel's 
explanation for its reliance on Australia's evidence demonstrates any la ck of objectivity in the Panel's 
assessment of the matter before it.  
Due process concerns  
6.226.   The appellants claim that the Panel failed to make an objective assessment of the facts of 
the case, as required under Article  11 of the DSU, when assessing certain p ost-implementation 
econometric evidence submitted by the parties.685  
6.227.   Honduras submits that, in exercise of its powers under Article  13 of the DSU and Article  14.2 
of the TBT  Agreement, the Panel should have appointed an expert to assist it in addressing the  
 
682 Panel  Report, Appendix  D, paras.  103-104. We also note, in this respect, the Panel's distinction 
between market  data and survey datasets , and highlig ht that the NTPPTS dataset consisted of survey  data 
rather than market data. (Panel  Report, Appendix  D, paras.  23 and 87 -88) The Panel stated that the survey 
datasets on cigarette consumption that were used by some of the complainants' experts to analyse t he impact 
of the TPP  measures would be "reviewed in detail when discussing the econometric analysis". (Ibid., 
Appendix  D, para.  23) While the Panel did not further critique the NTPPTS data in Appendix  D, the Panel did 
state, in the context of assessing the  merits of the CITTS data, that "survey data, such as the CITTS data, 
may… be more suited to analysing the impact of the TPP  measures on proximal outcomes … than more distal 
outcomes, such as smoking behaviours." (Ibid., Appendix  D, para.  112) In Appendix B, which referred to 
CITTS data, as well as  NTPPTS  data, the Panel observed, without distinction, that "survey data … may … be 
more suited to analysing the impact of the TPP  measures and enlarged GHWs on proximal outcomes … than 
more distal outcomes." (Ibi d., Appendix B, para.  118) That statement by the Panel followed very closely an 
argument by Australia that "the structure of the NTPPTS  is likely to be more suited to detecting changes in 
proximal outcomes than in more distal variables, such as quitting -related behaviours." (Ibid., Appendix B, 
para. 73 (emphasis added))  Furthermore, in Appendix  C, in the context of criticizing the data sources 
considered by Professor Klick, the Panel stated that the NTPPTS dataset "do[es] not actually measure smoking 
preval ence, because the sample is based only on smokers and recent quitters". (Ibid.,  Appendix  C, para.  100) 
In our view, there is no reason to consider that the foregoing criticisms by the Panel of survey datasets, 
including the NTPPTS dataset, are not equally applicable to the Panel's assessment of the Scollo et al. 2015a 
study.  
683 Honduras' appellant's submission, para.  885.  
684 Panel  Report, Appendix  C, paras.  120-121; ibid., Appendix  D, paras.  115-116.  
685 Honduras' appellant's submission, paras.  696, 709, 719, and 1055 -1071; Dominican  Republic's 
appellant's submission, paras.  51-52, 304, 390 -391, and 395.  
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  post-implementation evidence in Appendices A -E to the Panel  Report.686 Instead, the Panel relied 
"on a 'ghost' expert of some kind to assist it".687 As a result, "the parties were not in a position to 
respond to a number of the (misguided) criticisms that the  Panel independently developed through 
this 'ghost expert'."688 Honduras claims that, by taking upon itself the task of assessing the probative 
nature of the econometric evidence without seeking the advice of an expert, the Panel acted 
inconsistently with Ar ticle 11 of the DSU.689  
6.228.   The Dominican  Republic claims that the Panel's assessment of non -stationarity and 
multicollinearity was conducted without respecting the Dominican  Republic's due process rights.690 
The Dominican  Republic points out that the concepts of  non-stationarity and multicollinearity were 
never discussed with the parties during the briefing phase of the Panel proceedings.691 Yet, according 
to the Dominican  Republic, the Panel rejected the complainants' econometric evidence because of 
non-stationari ty and multicollinearity concerns that the Panel identified by itself, using an 
econometric test that the Panel had developed and executed on its own initiative, without giving the 
parties any opportunity to comment.692 In the Dominican  Republic's view, this  resulted in "a 
fundamental denial of due process rights, which lie at the heart of any fair and independent dispute 
resolution system".693 The Dominican  Republic also submits that, by coming up with these concerns 
on its own initiative, the Panel "made the case" for Australia, inconsistently with Article  11 of the 
DSU.694 
6.229.   Australia responds that at no point in the more than two  years of Panel proceedings did the 
appellants request the Panel to exercise its authority under Article  13 of the DSU or Article  14.2 of 
the TBT  Agreement to appoint an expert or group of experts to examine the econometric evidence 
submitted to the Panel.695 Australia submits that a panel's discretionary authority under Article  13 
of the DSU and Article  14.2 of the TBT  Agreement extends to  deciding whether and when to seek 
additional information.696 Moreover, Australia asserts that an important part of a panel's 
discretionary authority relates to the reasoning that it adopts in addressing the parties' claims and 
that the panel has the authority to develop its own reasoning and is not limited to the arguments 
advanced by the parties.697 For Australia, a panel does not "make the case" for one  party where that 
party has put forward relevant substantiating arguments and evidence and the panel  proceeds to 
"fully scrutinize such evidence and argumentation".698 Australia refers to the Appellate  Body's 
explanation that "a panel is not required to test its intended reasoning with the parties", so long as 
the panel does not "adopt[] an approach that d eparts so radically from the cases put forward by the 
parties that the parties are left guessing as to what proof they need to adduce".699 Finally, Australia 
points out that Honduras and the Dominican  Republic could have used the interim review procedures 
under Article  15 of the DSU to request the Panel to review the relevant parts of the Panel  Report, 
but did not do so.700 
6.230.   As a preliminary issue, we take note of a difference in the scope of the appellants' claims. 
In response to questioning at the second heari ng, Honduras clarified that its claim concerns both: 
(i) who undertook the analysis on behalf of the Panel (with Honduras alleging that it was a "ghost 
 
686 Honduras' appellant's submission, paras.  1055 and 1068 -1069. For Honduras, the arguments of the 
parties were of such a technical and fundamental nature that the Panel was "under an obligation to have 
sought the assistance of an expert, or group of experts , to support the assessment of the probative nature of 
the evidence submitted". (Ibid., para.  1068)  
687 Honduras' appellant's submission, para.  1070.  
688 Honduras' appellant's submission, para.  1070.  
689 Honduras' appellant's submission, para.  1071.  
690 Dominican  Republic's appellant's submission, para.  57. 
691 Dominican  Republic's appellant's submission, paras.  41, 296, and 382 -383.  
692 Dominican  Republic's appellant's submission, paras.  42, 298 -299, and 390.  
693 Dominican  Republic's appellant's submission, para.  49. 
694 Dominican  Republic's appellant's submission, paras.  354-361 and 419 -424. 
695 Australia's appellee's submission, para.  429. 
696 Australia's appellee's submission, paras.  469-470. 
697 Australia's appellee's submission, para.  439 (referring to Appellate  Body Repo rt,  
EC – Hormones , para.  156).  
698 Australia's appellee's submission, para.  440 (referring to Appellate  Body Report, EC – Fasteners 
(China) , para.  566).  
699 Australia's appellee's submission, para.  441 (quoting Appellate  Body Report, US – Tuna II (Mexico) 
(Article 21.5 – Mexico) , para.  7.177).  
700 Australia's appellee's submission, paras.  458-466. 
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  expert" instead of an expert or a group of experts appointed under Article  13 of the DSU or 
Article  14.2 of the TBT  Agreement); and (ii)  the alleged failure by the Panel to provide the parties 
with a meaningful opportunity to comment on the Panel's analysis.701 In its appellant's submission, 
Honduras indicated that its claims pertain to the entirety of the Pan el's analysis in Appendices  A-E 
to the Panel  Report.702 
6.231.   By contrast, in its submissions, and as it confirmed in response to questioning at the 
second  hearing, the Dominican  Republic indicates that its claim is narrower in scope. According to 
the Dominican  Republic, its claim is limited to the second of the concerns raised by Honduras, i.e.  the 
alleged failure by the Panel to provide the parties with a meaningful opportunity to comment on the 
Panel's analysis. Specifically, the Dominican  Republic alleges that the Panel developed and executed 
certain econometric tests "on its own, without giving the parties any opportunity whatsoever to 
comment".703 The focus of the Dominican  Republic's claim is the Panel's employment of the 
econometric tools of "multicollinearity " and "non -stationarity".704 Nonetheless, we recall the 
Dominican  Republic's confirmation at the first hearing that it had incorporated by reference into its 
appeal, without exception, all of Honduras' claims and arguments on appeal.705 
6.232.   Turning to Honduras' as sertion that its claims pertain to the Panel's analysis in the entirety 
of Appendices  A-E to the Panel  Report706, we observe that Appendices  A-E comprise 150 pages of 
the Panel's analysis. In substantiating its claims on appeal, Honduras refers only to parti cular aspects 
of the Panel's analysis, specifically the Panel's reliance on "new" robustness criteria 
(i.e. multicollinearity and non -stationarity) "that were not even raised by Australia and that were 
never discussed during the two  years that this proceed ing was ongoing".707 Hence, our analysis 
focuses on the Panel's reliance on these two  criteria.  
6.233.   We start by addressing Honduras' argument that the Panel was obliged to appoint experts 
under Article  13 of the DSU and Article  14.2 of the TBT  Agreement and that , by not doing so, it failed 
to conduct an objective assessment of the matter, as required under Article  11 of the DSU.708 We 
note that Honduras did not raise a claim under Article  13 of the DSU or Article  14.2 of the 
TBT Agreement. Instead, Honduras conside rs that a panel's discretion to appoint experts under 
these provisions "is not boundless ".709 In Honduras' view, given the nature of the evidence at issue, 
the Panel was under an obligation to appoint experts to conduct an objective assessment of the 
matter under Article  11 of the DSU.710 
6.234.   We recall that Article  13.1 of the DSU711 identifies the "right", not obligation, of a panel to 
seek information and technical advice from any individual or body which it deems appropriate.712 
 
701 See also Honduras' appellant's submission, paras.  696, 719, 938, and 980.  
702 Honduras' appellant's submission, para.  1068.  
703 Dominican  Republic's appellant's submissi on, para.  42. (emphasis omitted)  
704 Dominican  Republic's appellant's submission, paras.  42 and 377. In addition, in response to 
questioning at the second hearing, the Dominican  Republic indicated that it also had concerns as to the Panel's 
development of a number of statistically significant variables and graphical analyses.  We understand that the 
Dominican  Republic is referring to its arguments regarding the Panel's reliance on Figure  C.19 of Appendix  C to 
the Panel  Report. (See Dominican  Republic's appella nt's submission, paras.  202-212) We address this issue in 
paras.  6.344.   6.345.   below.  
705 We recall that, in its Notice of Appeal, the Dominican  Republic stated that it "incorporate[d] by 
reference into this appeal the clai ms on appeal made by Honduras". (Dominican  Republic's Notice of Appeal, 
para. 16) Furthermore, in response to questioning at the first hearing of these appellate proceedings, the 
Dominican  Republic confirmed that it incorporated all of Honduras' claims and  arguments on appeal. 
Accordingly, we understand that any reference to Honduras' claims and arguments throughout these Reports 
also includes a reference to the claims and arguments of the Dominican  Republic.  
706 Honduras' appellant's submission, para.  1068.  
707 Honduras' appellant's submission, para.  1075.  
708 Honduras' appellant's submission, paras.  1068-1069.  
709 Honduras' appellant's submission, para.  1057.  
710 Honduras' appellant's submission, paras.  938 and 1055 -1063.  
711 Article  13.1 of the DSU provides, in relev ant part, that "[e]ach panel shall have the right to seek 
information and technical advice from any individual or body which it deems appropriate."  
712 Appellate  Body Reports, US – Carbon Steel , para.  153; EC – Sardines , para.  302; US – Continued 
Zeroing , paras. 343-344. 
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  Similarly, both Article  13.2 of the D SU713 and Article  14.2 of the TBT  Agreement714 employ the 
auxiliary verb "may" to express the permissive intent of these provisions. Moreover, the panel's 
authority under Article  13 of the DSU is "comprehensive"715, and it "includes the authority to decide 
not to seek  such information or advice at all".716 
6.235.   In light of the comprehensive authority to seek information vested into the panel under 
Article  13 of the DSU, we consider that it was within the Panel's discretion t o decide whether to seek 
expert assistance.717 We do not consider that the technical nature of the evidence addressed in 
Appendices  A-E automatically implies that the Panel was "under an obligation" to seek external 
expert advice in order to assess this evid ence. Moreover, with respect to the econometric evidence 
that the Panel assessed in Appendices  A-E to its Report, we note that none of the complainants 
requested the Panel to engage experts, pursuant to Article  14.2 of the TBT  Agreement, "to assist in 
questions of a technical nature". Absent a request by the complainants under Article  14.2 of the 
TBT Agreement, we cannot accept Honduras' argument on appeal that the Panel somehow 
compromised the parties' due process rights by failing to seek expert assistanc e on its own initiative . 
If the parties were of the view that it was, as Honduras puts it, "indispensably necessary"718 for the 
Panel to seek expert assistance, they were free to request the Panel to do exactly that. The Panel 
did not act inconsistently with  its duty to conduct an objective assessment of the matter under 
Article  11 of the DSU simply by seeking to assess the evidence put before it without engaging 
experts.  
6.236.   We now turn to address the appellants' claims regarding the Panel's alleged failure to grant 
due process to the complainants by not providing them with an opportunity to comment on the 
Panel's concerns over multicollinearity and non -stationarity.  
6.237.   We recall the Panel's explanation that  multicollinearity  arises when "two (or more) 
explanatory variables convey the same information", in which case "the predictive power of the 
model remains unchanged, but the confidence interval of the coefficient estimates may increase" 
and "the coefficient estimates may become very sensitive to minor  changes in the model specification 
or data."719 The Panel considered that one  way to mitigate multicollinearity is to increase the sample 
period.720 The Panel also observed that "[e]vidence of multicollinearity is confirmed by the variance 
inflation factors s tatistic."721 With respect to non-stationarity, the Panel explained that "[a] variable 
is said to be stationary, when its statistical properties, such as mean and variance are all constant 
over time."722 The Panel stated that "econometric theory recommends not  estimating a model when 
the dependent variable (i.e.  smoking prevalence) is stationary and one of the explanatory variables 
(i.e. tax level or price) is not stationary in order to avoid spurious and biased results."723 
6.238.   In the present dispute, the Panel reli ed on multicollinearity as a robustness criterion to test 
the weight and probative value of certain of the parties' econometric models addressed in 
Appendices  B-E.724 The Panel also relied on the concept of non -stationarity as a robustness criterion 
 
713 Article  13.2 of the DSU provides, in relevant part, that "[p]anels may seek information from any 
relevant source and may consult experts to obtain their opinion on certain aspects of the matter."  
714 Article  14.2 of the TBT  Agreement states that, "[a]t the request of a party to a dispute, or at its own 
initiative, a panel may establish a technical expert group to assist in questions of a technical nature, requiring 
detailed consideration by experts."  
715 Appellate  Body Report, US – Shrimp , para.  104. 
716 Appella te Body Report, US – Shrimp , para.  104. (emphasis original) See also Appellate  Body 
Reports, Canada – Continued Suspension , para.  439; US – Continued Suspension , para.  439; EC – Hormones , 
para. 147. 
717 We further recall that the Panel made extensive use of the facility under Article  13 of the DSU. 
During the Panel proceedings, the parties requested the Panel to exercise its authority to seek information 
under Article  13 of the DSU on various occasions, regarding information relating to evidence submitted by 
another party. The Panel also exercised its authority under Article  13 to seek information from the WHO and 
the FCTC  Secretariats, the International Bureau of WIPO, CCQ, and CCV. (Panel  Report, paras.  1.56-1.57)  
718 Honduras' appellant's submission, para.  1060.  
719 Panel  Report, Appendix  C, para.  107.  
720 Panel  Report, Appendix  C, para.  107.  
721 Panel  Report, Appendix  C, fn 119 to para.  107; ibid., Appendix  D, fn 143 to para.  109. 
722 Panel  Report, Appendix  C, fn 120 to para.  107. 
723 Panel  Report, Appendix  C, para.  107. 
724 Panel  Report, Appendix  B, para.  116; ibid., Appendix  C, paras.  107-108 and 120; ibid., Appendix  D, 
paras.  106-110; ibid., Appendix  E, paras.  29, 51, and 54.  We observe that, with respect to its assessment of 
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  to test the weight and probative value of certain of the parties' econometric models addressed in 
Appendices  C-D.725 
6.239.   Importantly, in its examination of the post -implementation evidence of smoking prevalence 
and consumption, the Panel did not reject any econometric m odels submitted by the parties on the 
basis of any individual robustness criteria.726 Rather, the Panel identified a number of concerns with 
the complainants' econometric evidence, noted that Australia's evidence addressed a number of 
these concerns, and pro ceeded to reach conclusions on the basis of Australia's evidence. We further 
recall that multicollinearity and non -stationarity were two of the concerns identified by the Panel in 
the complainants' evidence.727 The Panel considered that certain smoking prevalence and 
consumption models provided by Australia's expert, Dr  Chipty, avoided the problems of 
multicollinearity and non -stationarity.728 The Panel relied on this consideration, inter alia, to conclude 
that Dr  Chipty's smoking prevalence and consumption evidence was more credible than the 
complainants' evidence, which was sufficient for the Panel to conclude that there was some 
econometric evidence that the TPP  measures had contributed to the reduction in smoki ng prevalence 
and consumption.729 
6.240.   The review of empirical and econometric evidence has routinely been undertaken by 
WTO panels. In US – Upland Cotton (Article  21.5 – Brazil) , the Appellate  Body commented on a 
panel's duty when reviewing econometric evidence and models submitted by parties, noting that 
"the relative complexity of a model and its parameters is not a reason for a panel to remain agnostic 
about them."730 Rather, a panel should "reach conclusions with respect to the probative value it 
accords to eco nomic simulations or models presented to it".731  
6.241.   However, in support of its claim, Honduras indicates that it "is deeply concerned about the 
Panel's novel and technical analysis of the evidence presented".732 Likewise, the Dominican  Republic 
states that it "d oes not take issue with the Panel's decision to use the robustness criterion [of 
multicollinearity ] per se, but instead with the process that the Panel followed, which lacked 
objectivity".733 These statements, as well as the appellants' responses to question s at the 
second  hearing , suggest to us that neither Honduras nor the Dominican  Republic considers that the 
Panel's use of the econometric tools of multicollinearity and non -stationarity was prohibited under 
Article  11 of the DSU, per se. Rather, the appell ants contend that the Panel's appreciation and 
assessment of the facts before it , leading to its factual findings, and particularly its reliance on 
multicollinearity and non -stationarity, should have been tested with the parties.  
 
the post -implementation evidence on distal outcomes, in Appendix  B to its Report, the Panel made a single 
reference to "multicollinearity". Specifically, the Panel questioned the Ajzen et  al. estimation results, which had 
been obtained with the resampled data base d on the multiple testing procedure. The Panel noted that the 
results "could suggest that the resample data are subject to multicollinearity". This singular reference to 
"multicollinearity" and the statement in which it is contained appears anecdotal, as t he Panel does not rely on 
this statement or any consideration of "multicollinearity" in arriving at its conclusion on the association 
between proximal outcomes and distal outcomes based on the NTPPTS data. (Panel  Report, Appendix  B, 
paras.  111-116) Accordi ngly, we do not consider that the Panel's reference to "multicollinearity" in Appendix  B 
warrants further scrutiny.  
725 Panel  Report, Appendix  C, para.  107; ibid., Appendix  D, paras.  44, 106, and 116.  
726 See para.  6.133.   above.  
727 Regarding multicollinearity, see Panel  Report, Appendix B, para.  116; ibid., Appendix  C, 
paras.  107-108 and 120, fn  119 to para.  107, and fn  122 to para.  108; ibid., Appendix  D, paras. 43, 106, and 
109-110; ibid., Appendix  E, paras.  29 and 51 -54. Regarding non -stationarity, see Panel  Report, Appendix  C, 
paras.  107 and 120, and fn  120 to para.  107; ibid., Appendix  D, paras.  44, 106, and 116, fn  46 to para.  43, 
and fn  146 to para.  109. 
728 Panel  Report, Appendix  C, para.  120; ibid., Appendix  D, para.  115. 
729 Panel  Report, Appendix  C, para.  123; ibid., Appendix  D, para.  137.  
730 Appellate  Body Report, US – Upland Cotton (Article  21.5 – Brazil) , para.  357. 
731 Appellate  Body Report, US – Upland Cotton (Article  21.5 – Brazil) , para.  357. In this regard, not only 
should the panel "examine[] the model, the parameters used by each party, and the arguments made by the 
parties, [noting] the different results generated by the simulations conducted by  each party, the Panel [can go] 
further in its evaluation and comparative analysis of the economic simulations and the particular parameters 
used". (Ibid., paras.  357-358) (fn  omitted)  
732 Honduras' appellant's submission, para.  938. 
733 Dominican  Republic's a ppellant's submission, para.  364. 
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  6.242.   For its part, Australia p osits that a panel, in developing its reasoning, is free to examine 
certain evidence more intensively if doing so is warranted by the facts.734 In the same vein, Australia 
submits that panels may conduct additional analyses of statistical evidence in order t o resolve more 
fully certain factual issues735, and a panel does not exceed its discretion in attributing less probative 
value to or rejecting certain evidence in light of concerns regarding reliability.736  
6.243.   In performing its function under Article  11 of the D SU to "make … an objective assessment 
of the facts of the case", a panel "has the duty to examine and consider all the evidence before it, 
not just the evidence submitted by one or the other party, and to evaluate the relevance and 
probative force of each piece thereof".737 While a panel may not "make affirmative findings that lack 
a basis in the evidence contained in the panel record"738, in assessing the probative value of the 
evidence, it is not required to "accord to factual evidence … the same meaning and weight as do the 
parties".739 In addition, "[a] panel might well be unable to carry out an objective assessment of the 
matter, as mandated by Article  11 of the DSU, if in its reasoning it had to restrict itself solely to 
arguments presented by the parties to  the dispute."740 We further recall that a complainant must 
satisfy its burden of proof by adducing evidence and arguments sufficient to make a prima  facie case 
in relation to each of the elements of its claims. Where the complainant has made out a prima  facie 
case, a panel may "in principle draw from arguments and evidence on the record, or develop its own 
reasoning in reaching its findings, provided that it does so consistently with the requirements of due 
process".741  
6.244.   The Appellate  Body has addressed the importance of due process many times. Among the 
things said is that the protection of due process is "an essential feature of a rules -based system of 
adjudication, such as that established under the DSU", and  that "due process is fundame ntal to 
ensuring a fair and orderly conduct of dispute settlement proceedings."742 Moreover, due process is 
intrinsically connected to notions of fairness, impartiality, and "the rights of parties to be heard and 
to be afforded an adequate opportunity to pur sue their claims, make out their defences, and 
establish the facts in the context of proceedings conducted in a balanced and orderly manner, 
according to established rules".743 While making an objective assessment of the matter before it, a 
panel should expl ore with the parties all pertinent issues arising in the dispute over the course of 
the proceedings.744 At the same time, this does not oblige the panel to test its intended reasoning 
with the parties or engage with the parties on the findings and conclusion s that it intends to adopt 
in resolving the dispute.745 However, due process could be compromised in circumstances where the 
panel adopts an approach that departs so radically from the cases put forward by the parties that 
the parties are left guessing as to  what proof they would have needed to adduce.746 
 
734 Australia's appellee's submission, para.  440. 
735 Australia's appellee's submission, para.  439 and fn  569 thereto (referring to Appellate  Body Report,   
US – Upland Cotton (Article  21.5 – Brazil) , paras.  357-358).  
736 Austral ia's appellee's submission, para.  438 (referring to Appellate  Body Reports, China – Rare 
Earths , paras.  5.197 and 5.212).  
737 Appellate  Body Report, Korea – Dairy , para.  137. 
738 Appellate  Body Report, US – Carbon Steel , para.  142. 
739 Appellate  Body Report, EC – Fasteners (China) (Article  21.5 – China) , para.  5.61.  
740 Appellate  Body Report, EC – Hormones , para.  156. 
741 Appellate  Body Report, US – Tuna II (Mexico) (Article  21.5 – Mexico) , paras.  7.176 -7.177 (referring 
to Appellate  Body Reports, Canada – Aircraft , para.  192; EC – Hormones , paras.  98 and 156; Chile – Price 
Band System , paras.  166 and 181; US – Gambling , para.  140, 270, 280, and 282;  Mexico – Anti-Dumping 
Measures on Rice , para.  156; Canada – Renewable Energy  / Canada  – Feed-in Tariff Program , para.  5.215; 
US – Wool Shirts and Blouses , p. 16, DSR  1997:I, p.  336; Japan – Apples , para.  159; Japan  – Agricultural 
Products  II, para.  129; EC – Fasteners (China) , para.  566; Thailand – Cigarettes (Philippines) , para.  150; 
Australia – Salmon , para.  278; EC – Bananas III , para.  141; Korea – Various Measures on Beef , para.  88; 
Dominican  Republic  – Import and Sale of Cigarettes , para.  121; US – Large Civil Aircraft (2nd complaint) , 
fn 2323 to para.  1137; US – Continued Zer oing, paras.  343 and 347).  
742 Appellate  Body Reports, Canada – Continued Suspension , para.  433; US – Continued Suspension , 
para. 433; Thailand – H-Beams , para.  88. 
743 Appellate  Body Report, Thailand – Cigarettes (Philippines) , para.  147. 
744 Appellate  Body Report, US – Large Civil Aircraft (2nd complaint) , para.  1137.  
745 Appellate  Body Report, US – Tuna II (Mexico) (Article  21.5 – Mexico) , para.  7.177.  
746 Appellate  Body Report, US – Tuna II (Mexico) (Article  21.5 – Mexico) , para.  7.177. See als o 
Appellate  Body Reports, US – Large Civil Aircraft (2nd complaint) , fn 2323 to para.  1137; US – Continued 
Zeroing , para.  347. 
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  6.245.   Turning back to the circumstances of this case, we recall that, in its examination of the 
post-implementation evidence of smoking prevalence and consumption747, multicollinearity and 
non-stationarity were two of  the concerns identified by the Panel pertaining to certain evidence 
provided by the complainants.748 Moreover, the Panel relied on, inter alia, the fact that certain pieces 
of Australia's evidence did not suffer from these concerns, in order to conclude tha t the 
TPP measures contributed to reducing smoking prevalence and consumption .749 Our review of the 
Panel record suggests that these concerns were not identified by the parties, but were introduced 
by the Panel itself. Furthermore, the Panel did not pose que stions to the parties or otherwise invite 
them to comment on the use of these robustness criteria in a ddressing the parties' evidence. It 
appears that the parties first became aware of possible concerns relating to multicollinearity and 
non-stationarity wh en the Panel issued its Interim Report to the parties on 2  May 2017.750 At the 
interim review stage, the complainants did not raise concerns regarding the Panel's identification of 
these concerns.751 
6.246.   We note that, in order to identify the concerns regarding mu lticollinearity and 
non-stationarity in the parties' evidence, the Panel was obliged to conduct VIF and unit root tests.752 
The Panel's reliance on these technical tests was relevant to its assessment of the credibility of the 
evidence, and its ultimate dete rmination that the TPP  measures contributed to reducing smoking 
prevalence and consumption. These complex technical tests thus had an important role in the Panel's 
assessment of the evidence. We further note that the application of these tests involved a c ertain 
degree of discretion on the part of the Panel as to whether, and  to what extent , concerns regarding 
multicollinearity and non -stationarity were legitimate reasons to question the reliability of the 
evidence.753 Given that these concerns were not intro duced by the parties, but emanated from the 
Panel itself, and in light of their highly technical nature and of the Panel's discretion in relying on 
these concerns, we consider that the Panel should have explored these issues with the parties.  
6.247.   We take note  of Australia's argument that the complainants could have used the interim 
review stage to request the Panel to review the relevant parts of the Panel  Report pursuant to 
Article  15 of the DSU, but chose not to do so.754 Australia points out that the "conduct  of the parties" 
is a relevant consideration in the evaluation of a party's due process claim and that such a claim 
should be rejected where the party failed to raise its objections notwithstanding an opportunity to 
do so.755 
6.248.   We recall that Article  15.2 of t he DSU provides, in relevant part:  
Within a period of time set by the panel, a party may submit a written request for the 
panel to review precise aspects of the interim report prior to circulation of the final 
report to the Members. At the request of a par ty, the panel shall hold a further meeting 
with the parties on the issues identified in the written comments. If no comments are 
received from any party within the comment period, the interim report shall be 
considered the final Panel  Report and circulated  promptly to the Members.  
6.249.   Article  15.2 concerns the panel's Interim Report and the interim review stage of the panel 
proceedings. The second sentence of Article  15.2 permits parties, during the interim review stage of 
panel proceedings, "to submit comments on the draft report issued by the panel, and to make 
requests 'for the panel to review precise aspects of the interim report'".756 In addition, the 
 
747 Panel  Report, Appendices  C and D.  
748 See fn725  to para.  6.239.    above.  
749 See para.  6.239.    above.  
750 Panel  Report, para.  1.32.  
751 Panel  Report, paras.  6.1-6.103.  
752 Panel  Report, Appendix  C, para.  33; ibid., Appendix  D, para.  115, fn  46 to para.  43, and fn  146 to 
para. 109. 
753 By contrast, we understand that the Panel's application of, and reliance on, a mean -comparison test 
in step 2  of its cigarette consumption analysis did not entail such discretion in interpreting the results, but 
rather amounted to simply verifying whether the parties' competing assertions were borne out by the evidence. 
(See para. 6.122.   above)  
754 Australia's appellee's submission, para.  464. 
755 Australia's appellee's submission, para.  466. 
756 Appellate  Body Report, EC – Sardines , para.  301. (fn  omitted)  
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  third sentence grants parties the right to request a meeting "on the issues identified in the written  
comments".757 
6.250.   Panels have understood Article  15.2 to imply that the "purpose of the interim review stage 
is to consider specific and particular aspects of the interim report".758 Along these lines, panels have 
declined requests for a "whole of report review"759 or "whole sections of the report".760 Likewise, 
panels have considered that interim review is "not the appropriate forum for relitigating arguments 
already put before a panel".761 Furthermore, the Appellate  Body has explained that "[t]he interim 
review stage is not an appropriate time to introduce new evidence."762 
6.251.   We recall that the parties appear to have first become aware of the Panel's reliance on 
multicollinearity and non -stationarity when the Panel issued its Interim Report to the parties on 
2 May 2017.763 In its letter to the parties forwarding the Interim Report, the Panel invited the parties 
to submit any comments on the Interim Report, or request an interim review meeting by 6  June 
2017. Absent any request for an interim review meeting, the Panel invited the parties to submit 
further written comments on the other parties' requests for review on 4  July 2017.  
6.252.   On 6 June 2017, the Dominican  Republic submitted its comments on the Interim Report to 
the Panel. The Dominican  Republic did not request an interim rev iew meeting. Instead, in its cover 
letter, the Dominican  Republic "record[ed] its disappointment with the Panel's interim report".764 
The Dominican  Republic also submitted, as interim comments, a table, which by the 
Dominican  Republic's own description, "con tain[ed] an indicative list of typographical, clerical and 
grammatical errors in the interim reports".765 In the table, the Dominican  Republic made 
one reference to "collinearity", pointing out that in paragraph  52 of Appendix  E the Panel had 
omitted the art icle "the" before the word "collinearity". The Dominican  Republic made no reference 
at all to the Panel's reliance on "non -stationarity".  
6.253.   On 6 June 2017, Honduras submitted its comments on the Interim Report to the Panel. As 
with the Dominican  Republic, Ho nduras did not request an interim review meeting. In its comments 
on the Interim Report, Honduras made no mention of the Panel's reliance on "multicollinearity" or 
"non-stationarity".  
6.254.   Indeed, it appears that, as Australia argues, while the complainants bec ame aware of the 
Panel's use of multicollinearity and non -stationarity when they received the Panel's Interim Report, 
they did not request a review of the relevant aspects of the Interim Report. In our view, if a party 
disagrees with certain aspects of the  Interim Report, requesting the panel "to review precise aspects" 
of its Interim Report would be the normal course of action.766 We consider it unfortunate that the 
parties did not raise their concerns regarding multicollinearity and non -stationarity at the interim 
review stage.  
 
757 We not e that the panel in Canada – Continued Suspension  explained that it is for a party, and not for 
a panel, to decide whether an additional interim review meeting would be useful. (Panel  Report, 
Canada  – Continued Suspension , para.  6.2. See also Panel  Report,  US – Continued Suspension , para.  6.2) 
758 Panel  Report, Japan – Alcoholic Beverages II , para.  5.2, DSR 1996:I, p.  125. 
759 Panel  Report, Australia – Salmon , para.  7.3. 
760 Panel  Reports, Canada – Continued Suspension , paras.  6.16-6.17; US – Continued Suspension , 
paras.  6.17-6.18.  
761 Panel  Report, US – Poultry (China) , para.  6.32 (referring to Panel  Report, Japan – DRAMs (Korea) , 
para. 6.2). 
762 Appellate  Body Report, EC – Sardines , para.  301. 
763 Panel  Report, para.  1.32.  
764 Dominican  Republic's letter to the Panel, forwarding the Dominican  Republic's comments on the 
Panel's Interim Report, 6  June 2017.  
765 Dominican  Republic's letter to the Panel, forwarding the Dominican  Republic's comments on the 
Panel's Interim Report, 6  June 2017.  
766 We underscore that Articl e 15 of the DSU refers to "precise aspects of the interim report", which 
suggests that such aspects must be sufficiently specific. Previous panels and the Appellate  Body understood 
that, at the interim review stage, the parties cannot introduce new evidenc e, ask for a review of a whole 
report, or enter into a debate about the merits of a panel's interpretation of relevant legal provisions. 
(See Appellate  Body Report, EC – Sardines , para.  301; Panel  Reports, Australia – Salmon , para.  7.3;  
Indonesia – Iron o r Steel Products , Annex A -3, paras.  2.3-2.4) 
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  6.255.   We are mindful that the Appellate  Body has previously indicated that, when a Member wishes 
to raise an objection in dispute settlement proceedings, "it is always incumbent on that Member to 
do so promptly."767 We also recall that the Ap pellate  Body in Thailand – Cigarettes (Philippines)  
considered that the conduct of the parties is among the considerations that are germane to a party's 
claim under Article  11 of the DSU.768 Importantly, in Thailand – Cigarettes (Philippines) , the 
Appellate  Body explained that it rejected Thailand's claim of due process violation, in particular, 
because the evidence at issue "did not raise or relate to a new issue, previously unknown to Thailand 
or unexplored by the Panel, and it was not the only evidence sup porting the Panel's conclusion".769 
The Appellate  Body noted that the exhibit in question "related to a key and highly disputed issue" 
and that the parties would have been aware of the importance of this piece of evidence when it was 
submitted.770 By contrast,  in the present case, the parties only became aware of the Panel's use of 
multicollinearity and non -stationarity to reject some of the complainants' evidence at the interim 
review stage.  
6.256.   Moreover, we emphasize that the Panel's reliance on the concerns ove r multicollinearity and 
non-stationarity entailed a degree of discretion on the part of the Panel in applying and interpreting 
the results of the technical tests regarding the relative robustness of different econometric models. 
In our view, although Hondu ras and the Dominican  Republic could have raised their concerns 
regarding the Panel's reliance on these econometric tools during the interim review stage, in the 
circumstances of the present dispute, their failure to do so does not detract from the Panel's  due 
process violation in its treatment of certain evidence submitted by the complainants. While the 
interim review affords parties an opportunity to raise and address numerous aspects of a Panel's 
findings, in our view , the interim review process contemplated under Article  15 would not have been 
sufficient to enable the parties to adequately explore these issues, given the review's limited nature 
and late stage.771 
6.257.   In light of the above, we consider that, by introducing in  its Interim Report novel econometric 
criteria that it had not tested with the parties, in its examination of the post -implementation evidence 
of smoking prevalence and consumption, the Panel denied the parties their due process rights and 
thus acted incon sistently with its duty to conduct an objective assessment of the facts under 
Article  11 of the DSU.772 We thus find that the Panel erred  in the instances where it relied on 
multicollinearity and non -stationarity in its assessment of the parties' post -implem entation evidence 
of smoking prevalence and consumption.   
Consequences of the Panel's errors in Appendices C and D  
6.258.   We have found certain errors in the Panel's analysis of the impact of the TPP  measures on 
smoking prevalence and cigarette consumption. Speci fically, we have found that the Panel erred 
with respect to its assessment of multicollinearity, non -stationarity, and the impact of tobacco 
costliness, in finding that Australia's econometric evidence was more credible than the complainants' 
econometric e vidence. In the view of the appellants, these errors implicat e: (i) the Panel's 
intermediate conclusion regarding the evidence of actual effects; and (ii)  the Panel's overall 
conclusion regarding the degree of contribution of the TPP  measures. Specifically , the 
 
767 Appellate  Body Report, Mexico – Corn Syrup (Article  21.5 – US), para.  50. 
768 Appellate  Body Report, Thailand – Cigarettes (Philippines) , para.  155. In that dispute, Thailand 
argued that the Panel violated Thail and's due process rights and acted inconsistently with Article  11 of the DSU 
by accepting and relying on an exhibit without affording Thailand the right to comment on that piece of 
evidence. The Appellate  Body rejected Thailand's claim, inter alia , because  "Thailand could have requested an 
opportunity to respond when the Philippines submitted the exhibit in question, but it did not." (Ibid., para.  160 
(fn omitted))  
769 Appellate  Body Report, Thailand – Cigarettes (Philippines) , para.  160.  
770 Appellate  Body Report, Thailand – Cigarettes (Philippines) , para.  158.  
771 The Appellate  Body in EC – Sardines  underscored the limited nature of the interim review by pointing 
out that the interim review "cannot properly include an assessment of new and una nswered evidence". 
(Appellate  Body Report, EC – Sardines , para.  301) 
772 In light of this finding, we do not consider it necessary to address the Dominican  Republic's argument 
that the Panel "made the case" for Australia. (Dominican  Republic's appellant's su bmission, paras.  354-361 and 
419-424) Having said that, we wish to emphasize that we would see no due process issues arising if the Panel 
had, in fact, explored the issues of non -stationarity and multicollinearity with the parties prior to the issuance 
of the Interim Report and in a manner sufficient to substantiate the complainants' due process rights of notice 
and an opportunity to respond to the case against them.  
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  Dominican  Republic requests to reverse the Panel's finding that the TPP  measures have reduced 
smoking prevalence and consumption of tobacco products.773  
6.259.   Australia argues that, even assuming that the Panel made any errors, the appellants are 
required t o demonstrate that such errors materially undermine the Panel's findings.774 In Australia's 
view, materiality "turns on whether 'other elements of the Panel's analysis' support its conclusion".775 
In Australia's view, the appellants failed to demonstrate that any errors by the Panel were material 
to its intermediate findings.776 Australia further submits that, in any event, the appellants also failed 
to demonstrate how any errors, even to the extent that they were material to the Panel's 
intermediate findings, we re also material to the Panel's overall finding on contribution.777 Australia 
emphasizes the Panel's findings that the post -implementation evidence was "consistent with a 
finding that the TPP  measures contribute to a reduction in the use of tobacco products"  and that the 
complainants had failed to demonstrate the TPP  measures are not apt to make a contribution to the 
objective.778 In Australia's view, the pre -implementation evidence and the undisputed aspects of the 
Panel's findings on the post -implementation e vidence are sufficient to support the Panel's overall 
finding on the contribution of the measures, notwithstanding any errors by the Panel.779  
6.260.   We note that the Panel's errors in assessing the evidence relate to two very specific aspects 
of its analysis of t he impact of the TPP  measures on smoking prevalence and cigarette consumption, 
specifically: (i)  the Panel failed to examine the Dominican  Republic's arguments and evidence 
indicating that Australia's consumption models showed a positive impact of tobacco costliness on 
cigarette consumption; and (ii)  the Panel compromised the parties' due process rights by failing to 
explore the issues of multicollinearity and non -stationarity with the parties prior to the issuance of 
the interim report. In our view, it is important to examine the implications of the Panel's errors for 
its findings that there was some econometric evidence indicating that the TPP  measure s contributed 
to reducing smoking prevalence and cigarette consumption.  
6.261.   With respect to the Panel's reliance on the impact of tobacco costliness to critique the parties' 
evidence, we recall our finding that the Panel's error in this respect is limited to step  3 of the Panel's 
cigarette consumption analysis (i.e.  whether the TPP  measures reduced  cigarette  consumption ), and 
does not implicate the Panel's smoking prevalence findings. This is because, as explained above, the 
appellants have failed to identify any errors in this respect regarding the Panel's appreciation of the 
parties' smoking prevalence  evidence.780 Having said that, we note that the Panel's smoking 
prevalence findings reveal the importance that the Panel attached to the question of whether a given 
model indicated an impact of tobacco costliness. The Panel stated that it was "not persuaded that  
[the parties' smoking prevalence] econometric results can be taken at face value, mainly because 
most of their model specifications are unable to detect the impact of tobacco costliness … on smoking 
prevalence".781 Thus, the Panel's findings indicate that t he impact of tobacco costliness was a 
primary consideration in assessing the probative value of the parties' evidence.  
6.262.   It follows, by virtue of the Panel's own reasoning, that if Australia's consumption models had 
indicated an incorrect impact of tobacco costliness on consumption (as asserted by the 
Dominican  Republic), while the complainants' models did not, this would have been a significant 
reason for the Panel to conclude that Australia's models were less credible than the complainants' 
models. We ther efore consider that the Panel's failure to address the 
Dominican  Republic's  arguments in this respect fatally undermine s the Panel's determination that 
Australia's evidence was more credible than the complainants' evidence, on which it based its 
conclusion  that "there is some econometric evidence suggesting that the TPP  measures … 
 
773 Dominican  Republic's appellant's submission, paras.  584-586.  
774 Australia's appellee's s ubmission, para.  884. (emphasis omitted)  
775 Australia's appellee's submission, para.  884 (quoting Appellate  Body Report, US – Large Civil Aircraft 
(2nd complaint) , para.  722).  
776 Australia's appellee's submission, paras.  866 and 874.  
777 Australia's appellee' s submission, para.  893.  
778 Australia's appellee's submission, paras.  901-903 (referring to Panel  Report, paras.  7.1025 
and 7.1037).  
779 Australia's appellee's submission, paras.  905-914. 
780 See paras.  6.134.   6.144.    above.  
781 Panel  Report, Appendix  C, para.  103.  
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  contributed to the reduction in wholesale cigarette sales, and therefore cigarette consumption ."782 
We therefore conclude that the Panel's error vitiates this factual finding.  
6.263.   Regarding multicollinearity and non -stationarity, we note that the Panel partially relied on 
concerns related to non -stationarity and multicollinearity in step  3 of both its smoking prevalence 
and cigarette consumption analyses, in order to conclude that Austr alia's evidence was more reliable 
than the complainants' evidence.783 We have already concluded above that the Panel's factual finding 
in step  3 of its cigarette consumption analysis is vitiated by the Panel's failure to address the 
Dominican  Republic's asse rtion that Australia's consumption evidence indicated an incorrect impact 
of tobacco costliness. We therefore do not consider it necessary to further assess the implications 
for the Panel 's consumption  analysis of the Panel's errors with respect to non -stationarity and 
multicollinearity.  
6.264.   Turning to the Panel's smoking prevalence analysis, we recall that the Panel's reasons for 
favouring Australia's evidence were that: (i)  Australia's expert, Dr  Chipty, addressed "a number of 
concerns" that  the Panel  had rai sed while assessing the complainants' evidence; and (ii)  Dr Chipty's 
results were robust in a number of alternative specifications.784 We note that the Panel's only 
references to multicollinearity and non -stationarity were in concluding that dummy variables were 
preferable to price or tax level variables, to account for tobacco costliness. Specifically, the Panel 
noted that "Dr  Chipty's model specification … includes the excise tax increases dummy variables and 
thus avoids the problems of multicollinearity an d endogeneity associated with the inclusion of the 
price variable (in combination with a quadratic trend variable)".785 The Panel also highlighted that, 
"[i]n addition, the use of the tax dummies avoids the issue of non -stationarity of the price or tax 
level variables ."786 
6.265.   We recall that we have found no errors in the Panel's references to endogeneity in concluding 
that dummy variables  were preferable to a price variable.787 Since the Panel relied on 
multicollinearity (at least in its smoking prevalence analysis)  only in comparing dummy variables to 
price variables, and since the Panel's preference for dummy variables over price variables stands on 
the basis of endogeneity al one, it follows that vitiating the Panel's reliance on multicollinearity has 
no impact on the Panel's conclusion that Australia's smoking prevalence evidence was more reliable 
than the complainants' evidence.  
6.266.   By contrast, we note that the Panel's only rea son (in its smoking prevalence analysis) to 
prefer dummy variables to tax level  variables was on the basis of non -stationarity.788 Consequently, 
vitiating the Panel's reliance on non -stationarity does indeed suggest that an aspect of the Panel's 
reasoning fa lls away, in that there is no basis for the Panel's preference for dummy variables over 
tax levels. In our view, however, this is not sufficient to call into question the Panel's determination 
that Australia's evidence was more credible than the complainan ts' evidence. We highlight that the 
Panel also considered it relevant that Dr  Chipty addressed "the issue of overfitting associated with a 
too flexible trend" and, moreover, the Panel highlighted that Dr  Chipty's results were robust to 
alternative specific ations, including the use of an excise tax level variable .789 It thus follows, in our 
view, that vitiating the Panel's reliance on non -stationarity and multicollinearity has no impact on 
the Panel's conclusion that "there is econometric evidence suggesting t hat [the TPP  measures] 
contributed to the reduction in overall smoking prevalence in Australia ."790 
6.267.   We have concluded above that the Panel's errors vitiate its factual finding in step  3 of its 
cigarette consumption analysis in Appendix  D that "there is some econometric evidence suggesting 
that the TPP  measures … contributed to the reduction in wholesale cigarette sales, and therefore 
cigarette consumption ."791 We assess in section  6.1.2.3.4    below the question of whether this 
 
782 Panel  Report, Appendix  D, para.  137.c.  
783 Panel  Report, Appendix  C, para.  120; ibid., Appendix  D, para.  115.  
784 Panel  Report, Appendix  C, para s. 120-121.  
785 Panel  Report, Appendix  C, para.  120.  
786 Panel  Report, Appendix  C, para.  120.  
787 See paras.  6.156.   6.167.   above.  
788 Panel  Report, Appendix  C, para.  120.  
789 Panel  Report, Appendix  C, paras.  120-121.  
790 Panel  Report, Appendix  C, para.  122. (fn  omitted)  
791 Panel  Report, Appendix  D, para.  137.c.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  implicates the Panel's overall conclusion on the degree of contribution of the TPP  measures, and the 
Panel's overall conclusion in its application of Article  2.2 of the TBT  Agreement.  
6.1.2.3.3.2   Groups of claims based on cross -cutting themes  
6.268.   As mentioned in paragraph  6.51.   above, following a review of the participants' submissions, 
we do not consider it necessary to address, separately, each discrete claim raised by the appellants 
under Article  11 of the DSU. Ra ther, we address, jointly, clusters of claims based on the cross -cutting 
themes that underpin these claims. In addressing these claims, we recognize that there may be 
some overlap in certain of these themes. Likewise, certain of these themes have also been  
highlighted in sections  6.1.2.3.2    and 6.1.2.3.3.1    above . 
Representation of the Panel findings  
6.269.   We observe that a number of the appellants' allegations are based on an apparent 
misapprehension of the Panel 's findings.792 For example, Honduras argues that the Panel materially 
misrepresented and distort ed Honduras' evidence by implying that "the econometric evidence 
submitted by … Honduras … suggests that the TPP  measures have increased pack concealment 
among adult cigarette smokers"793, without including a footnote indicating which econometric 
evidence by  Honduras this assertion could refer to.794 By providing an incomplete quotation, 
Honduras mischaracterizes the Panel's statement and implies that the Panel attributed the quoted 
"suggestion" to Honduras' evidence.795 We note, instead, that the Panel statement in question 
followed the Panel's extensi ve engagement with the evidence submitted by the parties. At the 
beginning of its analysis section, the Panel offered the following summary of its finding before 
identifying, in subsequent paragraphs796, the bases in the parties' evidence for its finding:  
A careful assessment of Durkin et  al. 2015, Yong et  al. 2015 and Zacher et  al. 2014, 
2015 and the econometric evidence submitted by the Dominican  Republic, Honduras 
and Indonesia suggests that the TPP  measures have increased pack concealment 
among adult ciga rette smokers. However, empirical evidence of the impact of the 
TPP measures on stubbing out cigarettes before finishing them due to thoughts about 
the harms caused by smoking and stopping smoking among adult cigarette smokers is 
much more limited and mixe d.797 
6.270.   As a second example, we note the Dominican  Republic's argument that "the Panel accepted 
the robustness of Australia's econometric models, without indicating whether, and if so, how it had 
tested for multicollinearity."798 However, in Appendix  C to its Re port, the Panel stated, inter alia, 
that: 
Dr Chipty's model specification also includes the excise tax increases dummy variables 
and thus avoids the problems of multicollinearity and endogeneity associated with the 
 
792 With respect to the Panel's analysis of proximal and distal outcomes, Honduras' appellant's 
submission, Annex, paras.  1082-1084; Dominican  Republic's appellant's submission, paras.  887-888 and 923. 
With respect to the Panel's analysis of smoking be haviour, Honduras' appellant's submission, paras.  877-880, 
883-885, 931, 933, 974, and 1083; Dominican  Republic's appellant's submission, paras.  407-408. We note 
that Australia also takes issue with the appellants' representation of the Panel's findings. F or example, with 
respect to the Dominican  Republic's claims challenging the Panel's analysis of the evidence concerning Quitline 
calls in Appendix  B to its Report, Australia's appellee's submission, paras.  588-596 (referring to 
Dominican  Republic's appella nt's submission, paras.  926-934). With respect to Honduras' claims concerning the 
Panel's treatment of Professor Klick's evidence, Australia's appellee's submission, paras.  858-859 and Annex  2 
(referring to Honduras' appellant's submission, section  VIII.2. 2). 
793 Honduras' appellant's submission, Annex, p.  322, para.  1084 (quoting Panel  Report, Appendix  B, 
para. 72). 
794 Honduras' appellant's submission, Annex, p.  322, para.  1084 (referring to J. Klick, The Effect of 
Australia's Plain Packaging Law on Smoking: Evidence from Survey and Market Data (26  July 2014) (Panel 
Exhibit UKR -5), pp.  54-56). 
795 Honduras' appellant's submission, Annex, p.  322, para.  1084 (referring to Panel  Report, Appendix  B, 
para. 72). 
796 Panel  Report, Appendix  B, paras.  73-77. 
797 Panel  Report, Appendix  B, para.  72. 
798 Dominican  Republic's appellant's submission, para.  408 (referring to Panel  Report, Appendix  C, 
para. 120).  
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  inclusion of the price variable (in combi nation with a quadratic trend variable). In 
addition, the use of the tax dummies avoids the issue of non -stationarity of the price or 
tax level variables.799 
6.271.   Thus, it is incorrect for  the Dominican  Republic to suggest that the Panel simply accepted 
the robus tness of Australia's econometric models. Nor is it correct for the Dominican  Republic to 
assert that the Panel failed to indicate whether it had tested Dr  Chipty's models for multicollinearity.  
6.272.   As a third example, we note that the appellants make several a llegations challenging the 
Panel's assessment of the evidence on smoking behaviour, on the grounds that the Panel erroneously 
rejected the complainants' econometric models on the basis of an individual robustness criterion 
(endogeneity, multicollinearity, non-stationarity, or reweighting).800 These allegations ignore the 
fact that the Panel did not accept or reject the models submitted by the parties. Rather, the Panel 
assessed the relative merits of each model, comparing the flaws in Dr  Chipty's models to th e flaws 
in the complainants' models, and finding the former to be more credible than the latter. The Panel 
did not apply an absolute standard of "robustness".801 
6.273.   In light of the foregoing, we reject the appellants' allegations that are based on a 
misapprehen sion of the Panel 's findings, including the three  examples cited above.802 
6.274.   Still under the broad rubric of allegations that incorrectly represent the Panel's findings, we 
take note of Honduras' contention that the Panel was not "even -handed" in its assessmen t of the 
facts of the case because, unlike in its evaluation of the TPP  measures, the Panel did not combine 
the effect of the alternative measure with the effect of the unchallenged large GHWs when it 
examined the alternative measures proposed by the compl ainants.803 In particular, we highlight 
Honduras' assertion that "the Panel clearly did not combine the effect of the alternative measure 
with the effect of the unchallenged large GHW."804  
6.275.   Honduras' assertion appears to suggest that the separate effect of the  enlarged GHWs, which 
came into force in Australia at the same time as the TPP  measures, was not only perceptible but was 
also identified on the Panel record. However, this suggestion is inaccurate. In response to 
questioning at the second hearing, the par ticipants all agreed that there was no evidence on the 
Panel record showing the separate effects of the TPP  measures and the enlarged GHWs. Indeed, the 
Panel  Report expressly states that the post -implementation evidence submitted by the parties to the 
Panel, especially the empirical econometric evidence relating to smoking prevalence ( Appendix  C)805, 
consumption (Appendix  D)806, and down -trading (Appendix  E)807, did not distinguish between the 
impact of the TPP  measures and the impact of the enlarged GHWs.  Consequently, absent such 
evidence by the parties, the Panel could not have been expected to disentangle the impact of the 
TPP measures from that of the enlarged GHWs.  
The allocation of the burden of proof under Article  2.2 of the TBT  Agreement  
6.276.   We recall t hat "the party who asserts a fact, whether the claimant or the respondent, is 
responsible for providing proof thereof."808 Significantly, the burden of proving that a Member's 
 
799 Panel Report, Appendix  C, para.  120. 
800 Honduras' appellant's submi ssion, paras.  887, 939, 959, 970, and 975 -976; Dominican  Republic's 
appellant's submission, paras.  548-551 and 555 -559. 
801 See, for example, Panel  Report, Appendix  C, paras.  104, 108, 110, and 120 -122. 
802 With respect to the Panel's analysis of proximal and distal outcomes in Appendices  A and B to its 
Report, Honduras' appellant's submission, para.  757, and Annex, paras.  1082-1084; Dominican  Republic's 
appellant's submission, paras.  887-888 and 923. With respect to the Panel's analysis of smoking behaviour in  
Appendices  C and D to its Report, Honduras' appellant's submission, paras.  877-880, 883 -885, 931, 933, 974, 
1026-1035, and 1083; Dominican  Republic's appellant's submission, paras.  407-408 and 926 -934. 
803 Honduras' appellant's submission, paras.  1021-1025.  
804 Honduras' appellant's submission, para.  1022.  
805 Panel  Report, Appendix  C, paras.  1-2. 
806 Panel  Report, Appendix  D, paras.  1-3. 
807 Panel  Report, Appendix  E, paras.  1-2. 
808 Appellate  Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p.  335. See also 
Appellate  Body Reports, US – Carbon Steel (India) , para.  446; US – Gambling , paras.  138-140; US – Carbon 
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  measure is inconsistent with specific provisions of covered agreements rests on th e complainant.809 
This is in line with the Appellate  Body's explanation that "under the usual allocation of the burden of 
proof, a responding Member's measure will be treated as WTO -consistent , until sufficient evidence 
is presented to prove the contrary."810 
6.277.   Turning back to the case before us, we recall that the burden of demonstrating that the 
TPP measures are inconsistent with Article  2.2 of the TBT  Agreement rested on the complainants.811 
Specifically, as regards the main set of the complainants' arguments vi s-à-vis the contribution of the 
TPP measures to Australia's objective, Honduras argued before the Panel that the TPP  measures 
make no contribution to Australia's objective, nor are they apt to do so.812 The Dominican  Republic 
contended that well -accepted axi oms of social and medical science confirm that the TPP  measures 
will not be effective in achieving Australia's stated goals.813 The Dominican  Republic also argued 
that, at this stage, evidence of actual operation is far more valuable than mere expectations o f the 
effects of the TPP  measures.814 Australia argued that the TPP  measures improve public health by 
impacting the three mechanisms identified in the TPP  Act, namely: (i)  reducing the attractiveness of 
tobacco packaging; (ii)  reducing positive perceptions o f taste; and (iii)  reducing positive perceptions 
of smokers.815 Australia argued further that, with regard to the nature of the objective of the 
TPP measures, their characteristics as revealed by their design and structure, and the nature, 
quantity , and qual ity of evidence available, the Panel should determine the measure's degree of 
contribution in qualitative terms.816 
6.278.   The fact that the complainants bore the burden of proving that the TPP  measures are 
inconsistent with Article  2.2 of the TBT Agreement implies , inter alia, that, in order to prevail on 
their main contention of no contribution, the complainants were required to adduce sufficient 
evidence to persuade the  Panel that the TPP  measures are not apt to, and do not, make any 
contribution to Australia's l egitimate objective. Given that the burden of proof rests on the 
complainant, where a panel finds that a complainant's proposition that the challenged measures 
makes no contribution is contradicted by evidence (e.g.  because the respondent has presented 
credible evidence suggesting that the measure does make some contribution), then the panel is 
required to reject the complainant's proposition of no contribution. This was the determination of 
the Panel in these proceedings when it found that:  
[T]he complaina nts have not demonstrated that the TPP  measures are not apt to make 
a contribution to Australia's objective of improving public health by reducing the use of, 
and exposure to, tobacco products. Rather, we find that the evidence before us, taken 
in its tota lity, supports the view that the TPP  measures, in combination with other 
tobacco -control measures maintained by Australia (including the enlarged GHWs 
introduced simultaneously with TPP), are apt to, and do in fact, contribute to Australia's 
objective of r educing the use of, and exposure to, tobacco products.817 
 
Steel, para.  157; Canada – Dairy (Article  21.5 – New Zealand and US II) , para.  66; Japan – Apples , para.  159; 
EC – Hormones , para.  98; Japan – Agricultural Products II , para.  129. 
809 As the Appellate  Body stated in US – Gambling : 
The complaining party bears the burden of proving an inconsistency with specific provisions of 
the covered agreements. …  
Where the complaining party has established its prima  facie case, it is then for the responding 
party to rebut it. …  
A prima  facie case must be based on "evidence and legal argument" put forward by the 
complaining party in relation to each of the elements of the claim. A complaining party may not 
simply  submit evidence and expect the panel to divine from it a claim of WTO -inconsistency. Nor 
may a complaining party simply allege facts without relating them to its legal arguments.  
(Appellate  Body Report, US – Gambling , paras.  138-140. (emphasis original; f ns omitted))  
810 Appellate  Body Report, Canada – Dairy (Article  21.5 – New Zealand and US II) , para.  66. (emphasis 
original)  
811 Appellate  Body Report, US – Tuna II (Mexico) , para.  323. (fn  omitted) See also Appellate  Body 
Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208.  
812 Panel  Report, para.  7.426.  
813 Panel  Report, para.  7.437.  
814 Panel  Report, para.  7.438.  
815 Panel  Report, para.  7.451.  
816 Panel  Report, para.  7.455.  
817 Panel  Report, para.  7.1025.  
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  6.279.   However, as  Australia points out818, certain of the appellants' arguments challenging discrete 
aspects of the Panel's intermediate findings and its overall conclusion appear to be premised on the 
Appell ate Body accepting a reversal of the burden of proof under Article  2.2 of the TBT  Agreement.819 
Such a reversal would imply that the primary burden of proof was on Australia to establish that the 
TPP measures are apt to, and do, make a contribution to Australia's objective, rather than the onus 
of establishing the lack of contribution of the TPP  measures to Australia's objective being on the 
complainants.  
6.280.   For example, Honduras submits that, even "taking them as a given", the Panel's "limited" 
findings on proximal and distal outcomes, addressed in Appendices  A and B to the Panel  Report, are 
insufficie nt to support the Panel's overall conclusion that the TPP  measures contribute to Australia's 
objective.820 According to Honduras, there is therefore no basis for the Panel to have concluded that 
the TPP  measures "are apt to and actually do contribute to the 'ultimate target' of reducing use of 
tobacco products".821 In a similar vein, the Dominican  Republic notes the Panel's explanation that 
the TPP  measures were expected to work through a "causal chain" 
(proximal  outcomes  → distal  outcomes  → smoking  behaviours) , and that it was insufficient to look 
exclusively at the impact of the TPP  measures on proximal outcomes.822 The Dominican  Republic 
contends that the Panel failed to assess the post -implementation evidence on the impact of the 
TPP measures on proximal and d istal outcomes in light of the expected "causal chain".823  
6.281.   We recall that the Panel's analysis was aimed primarily at establishing "'to what degree, or 
if at all' the TPP  measures contribute to Australia's objective of improving public health by reducing 
the use of, and exposure to, tobacco products" .824 In this regard, the Panel acknowledged that the 
"fulfilment of this objective through the TPP  measures is predicated on their ability to influence 
smoking behaviours , such as initiation, cessation, and relapse."825 For this reason, the Panel 
considered that the impact of the measures on such behaviours is , "a priori, directly relevant to an 
assessment of the degree of contribution of the measures to this objective".826 Moreover, the Panel 
made it clear t hat they did not "exclude" that "evidence relating to 'proximal' outcomes reflecting 
the three mechanism [s] of the TPP  Act"827, in combination with other relevant evidence before the 
Panel, could inform the Panel's assessment of the degree of contribution of  the measures to 
Australia's objective.828 However, the Panel also made it clear that such evidence was only relevant 
"to the extent that it would inform the impact of the measures on the smoking behaviours that are 
the ultimate target of the measures".829  
6.282.   Thus, while the "causal chain" model was a useful prism through which the Panel examined 
the impact of the TPP  measures insofar as post -implementation evidence of the various mechanisms 
in the chain was available to the Panel, we understand the focus of the Panel's analysis to have been 
on the impact of the TPP  measures on smoking behaviours.  As such, the possible absence of 
convincing evidence with respect to a certain step in the chain would not, by itself, diminish the 
probative value of the other evidence , including in particular the evidence of the impact of the 
TPP measures on smoking behaviours. Moreover, we view the Panel's evaluation of the evidence 
through the prism of the causal chain as an analytical tool that the Panel employed. We do not 
understa nd the Panel to have considered the "causal chain" to be a rigid model or the only way by 
which it could have assessed the contribution of the TPP  measures to Australia's objective. We find 
support for this view in the Panel's explanation that, while it di d not "exclude" that "evidence relating 
to 'proximal' outcomes reflecting the three mechanism [s] of the TPP  Act"830, in combination with 
 
818 Australia's appellee's submission, paras.  478-492. 
819 For example, see Honduras' appellant's submission, section  VIII.2.1.1.2; Dominican  Republic's 
appellant's submission, paras.  777, 872 -875, 882 -885, and 894 -895. 
820 Honduras' appellant's submission, paras.  746-747. 
821 Honduras' appellant's submission, para.  757. 
822 Dominican  Republic's appellant's submission, para.  883 (referring to Panel  Report, paras.  7.488, 
7.491, 7.519, 7.580, 7.610, 7.648, 7.684, and 7.1030).  
823 Dominican  Republic's appellant's submission, para.  885. 
824 Panel  Report, para.  7.483.  
825 Panel  Report, para.  7.495. (emphasis original)  
826 Panel  Report, para.  7.495.  
827 Panel  Report, para.  7.498.  
828 Panel  Report, para.  7.498.  
829 Panel  Report, para.  7.498.  
830 Panel  Report, para.  7.498.  
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  other relevant evidence before the Panel, could inform the Panel's assessment of the degree of 
contribution of the measur es to Australia's objective831, such evidence was only relevant "to the 
extent that it would inform the impact of the measures on the smoking behaviours that are the 
ultimate target of the measures" .832 
6.283.   As noted above, it was the complainants, not Australia or  the Panel, that bore the burden of 
proving that the TPP  measures are not apt to, and do  not, make a contribution to Australia's objective 
of improving public health by reducing the use of, and exposure to, tobacco products. This allocation 
of the burden o f proof informs the question of whether the Panel's conclusion that "the complainants 
have not demonstrated that the TPP  measures are not apt to make a contribution to Australia's 
objective"833 is supported by the Panel's intermediate findings. As we see it,  the Panel's function was 
to assess objectively whether the complainants' proposition of the absence of any contribution was 
supported or undermined by the evidence before it. Contrary to what the appellants' arguments 
suggest, in answering the question be fore it, the Panel was not itself supposed to demonstrate, 
throughout its intermediate findings, that the TPP  measures made a precise or quantifiable degree 
of positive contribution to Australia's objective.  
6.284.   Thus, to the extent that these claims by the app ellants are premised on the reversal of the 
allocation of the burden of proof, we reject this premise. Consequently, we find that these claims 
lack merit and warrant no further scrutiny.834 
The Panel's discretion as the trier of facts  
6.285.   Australia alleges that "this dispute is overwhelmingly an attack on the Panel's findings of fact 
and, in particular, the findings of the Panel on the post -implementation evidence."835 Australia 
contends that, having failed to persuade the Panel that the TPP  measures a re not apt to contribute 
to Australia's legitimate public health objective, "the appellants have used their right to appellate 
review under Article  17.6 of the DSU to try to discredit the manner  in which the Panel evaluated 
nearly every piece of contested evidence, especially the available quantitative evidence of 
contribution in the limited period following the implementation of the TPP  measures."836 For 
Australia, the appellants' attacks on the objectivity of the Panel in evaluating this evidence are 
comple tely unfounded and, more broadly, "implicate grave systemic concerns about the use of 
appellate review to re -litigate a panel's findings of fact".837 Australia underlines its concern with the 
following explanation:  
[T]he appellants have simply resumed the li tigation tactics they pursued before the 
Panel. During the panel proceedings, the complainants inundated Australia and the 
Panel with over 3,500  pages of submissions, 1,000  exhibits and more than 50  expert 
reports authored by some 25  separate experts, appa rently with the intention of 
overwhelming both Australia and the Panel with the sheer volume of evidence and 
expert testimony. Having failed completely in that exercise before the Panel, the 
appellants have evidently decided to nonetheless rely on that sam e strategy in their 
appeals. Their apparent goal is to convince the Appellate  Body that the magnitude of 
their challenges to the panel's fact -finding must mean that at least some of their claims 
have merit.838 
6.286.   We recall that, in carrying out its duty to make  an objective assessment of the facts of the 
case, a panel is required to "consider all the evidence presented to it, assess its credibility, determine 
its weight, and ensure that [the panel's] factual findings have a proper basis in that evidence".839 
 
831 Panel  Report, para.  7.498.  
832 Panel  Report, para.  7.498.  
833 Panel  Report , para.  7.1025.  
834 Honduras' appellant's submission, section  VIII.2.1.1.2; Dominican  Republic's appellant's submission, 
paras.  777, 872 -875, 882 -885, and 894 -895. 
835 Australia's appellee's submission, para.  20. 
836 Australia's appellee's submission, para.  20. (emphasis added)  
837 Australia's appellee's submission, para.  20. 
838 Australia's appellee's submission, para.  425. 
839 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report,  
Brazil – Retreaded Tyres , para.  185; referring to Ap pellate Body Reports, EC – Hormones , paras.  132-133; 
Australia – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen (Article  21.5 – India) , paras.  170, 
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  Within these parameters, "it is generally within the discretion of the [p]anel to decide which evidence 
it chooses to utilize in making findings."840 Moreover, when assessing the probative value of the 
evidence, a panel is not required to "accord to factual evide nce … the same meaning and weight as 
do the parties".841 As such, a challenge under Article  11 of the DSU "cannot be made out simply by 
asserting that a panel did not agree with arguments or evidence".842 Crucially, the Appellate  Body 
has cautioned that it: (i ) will not "interfere lightly" with the panel's fact -finding authority843; (ii) will 
not "second -guess the [p]anel in appreciating either the evidentiary value of … studies or the 
consequences, if any, of alleged defects in [the evidence]"844; and (iii)  will n ot reach "a finding of 
inconsistency under Article  11 simply on the conclusion that [it] might have reached a different 
factual finding from the one the panel reached".845 The Appellate  Body has also considered it 
unacceptable for an appellant to simply reca st factual arguments that it made before the panel in 
the guise of an Article  11 claim.846 Instead, an appellant must identify specific errors regarding the 
objectivity of the panel's assessment847, and "it is incumbent on a participant raising a claim under 
Article 11 on appeal to explain why the alleged error meets  the standard of review under that 
provision."848 
6.287.   Turning to the case before us, we take note of several instances with respect to which it 
appears that the appellants' arguments are not focused on th e objectivity of the Panel's assessment 
of the facts of the case. Instead, the appellants' arguments seem to challenge the accuracy or merit 
of the Panel's factual findings following its weighing of the parties' evidence.849 
6.288.   For example, the appellants alleg e that the Panel merely accepted "Australia's argument 
that the dataset was ill  suited to provide information on distal outcomes"850, and that the Panel 
"failed to engage with the Dominican  Republic's evidence showing that the datasets are not less 
suited to  measuring the impact on distal outcomes".851 Contrary to the appellants' assertions, we 
note that in its evaluation of the post -implementation evidence on quitting -related and other distal 
outcomes in Appendix  B to its Report, the Panel engaged repeatedly w ith the parties' respective 
views of the limitations or otherwise of the NTPPTS  dataset. For instance, in its evaluation of the 
evidence concerning quitting -related cognitions, the Panel took account of the concerns about the 
"particular features of the NT PPTS data" raised by Australia's expert, Professor Chaloupka, as well 
as the rebuttal to Professor  Chaloupka that was proffered by the complainants' (Dominican  Republic 
and Indonesia) experts, Ajzen et al.852 The Panel also took note of the contention of Ajz en et al. that 
Professor  Chaloupka's assertion that the NTPPTS data underestimated changes in some measures 
 
177, and  181; EC – Sardines , para. 299; EC – Tube or Pipe Fittings , para.  125; Japan – Apples , para. 221; 
Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic Beverages , paras.  161-162; Korea – Dairy , 
para. 138; US – Carbon Steel , para.  142; US – Gambling , para.  363; US – Oil Country Tubular Goods Sunset 
Reviews , para.  313; EC – Selected Customs Matters , para.  258).  
840 Appellate  Body Reports, China – Rare Earths , para.  5.178; EC – Hormones , para.  135. 
841 Appellate  Body Report, EC – Fasteners (China) (Article  21.5 – China) , para.  5.61.  
842 Appellate  Body Reports, China – Rare Earths , para.  5.227; (referring to Appellate Body Report, 
Chile – Price Band System (Article  21.5 – Argentina) , para.  238).  
843 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  881. 
844 Appellate  Body Report, Japan – Apples, para.  222 (quoting Appellate  Body Reports, EC – Asbestos , 
para. 177; Korea  – Alcoholic Beverages , para.  161).   
845 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  881. (fn  omitted)  
846 Appellate  Body Reports, China – Rare Earths , para.  5.178; EC – Fasteners (China) , para.  442;  
US – Steel Safeguards , para.  498; Chile – Price Band System (Article  21.5 – Argentina) , para.  238. 
847 Appellate  Body Reports, China – Rare Earths , para.  5.178; EC – Fasteners (China) , para.  442 
(referring to Appellate  Body Reports, US – Steel Safeguards , para.  498; Chile – Price Band System 
(Article  21.5 – Argentina) , para.  238).  
848 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
EC – Fasteners (China) , para.  442). (emphasis original)  
849 With respect to proximal and distal outcomes, Honduras' appellant's submission, paras.  781-783; 
Dominican  Republic's appellant's submission, paras.  1015-1016. With respect to smoking behaviours, 
Honduras' appellant's submission, paras.  908-910, 916 -920, 931 -933, and 1026 -1035; Dominican  Republic's 
appellant's submission, paras.  555-559. With respect to the Panel's overall conclusions, Honduras' appellant' s 
submission, paras.  734, 753, and 759 -769; Dominican  Republic's appellant's submission, paras.  908-915. With 
respect to the Panel's discussion of GHWs, Honduras' appellant's submission, para.  1021. With respect to the 
Panel's assessment of the cigar -specific evidence, Honduras' appellant's submission, paras.  853 and 856 -858; 
Dominican  Republic's appellant's submission, paras.  213, 797, and 1073 -1074.  
850 Honduras' appellant's submission, para.  783. 
851 Dominican  Republic's appellant's submission, para.  1016. ( emphasis original)  
852 Panel  Report, Appendix  B, paras.  15-18. 
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  of intention because recent quitters who gave up smoking had not been asked was unfounded. 
According to Ajzen et al., the TPP  measures did not incre ase quitting behaviours in the short term.853 
In its analysis, the Panel highlighted this point of contention about the NTPPTS data, and expressed 
the following view:  
Ajzen et  al. further report a small and statistically significant decrease in the proportio n 
of adult smokers reporting their interest in quitting and intention to quit. We note that 
Ajzen et  al. do not offer an explanation as to why the TPP  measures would have 
decreased  smokers' interest in quitting and intention to quit. We note that it is 
conceivable that these findings could partly result from the fact that, as observed by 
Australia, questions on quitting intention were not asked of recent quitters, contrary to 
Ajzen et al.'s claim that the question was asked to both smokers and recent quitters, 
although it is not clear, in the absence of specific evidence relating to the number of 
recent quitters, to what extent this circumstance may account for the results.854 
6.289.   The Pane l also took account of the parties' concerns about reliance on the NTPPTS  data in 
the context of the Panel's evaluation of the evidence relating to pack concealment and 
micro -indicators of concern.855 Likewise, the Panel took account of the parties' concerns  about 
reliance on the NTPPTS data in the context of the Panel's evaluation of the evidence relating to 
relating to quit attempts.856  
6.290.   These paragraphs in Appendix  B to the Panel  Report undermine the suggestion by the 
appellants that the Panel failed to enga ge with the complainants' evidence concerning the reliability 
of the NTPPTS data in the context of quitting -related and other distal outcomes. Rather, it appears 
that the Panel was not persuaded by the complainants' views in this respect.  
6.291.   As the Appellate  Body has found, a challenge under Article  11 of the DSU "cannot be made 
out simply by asserting that a panel did not agree with arguments or evidence".857 Thus, the mere 
fact that the Panel did not agree with the arguments put forward by the complainant rega rding the 
reliability of the NTPPTS  data with respect to quitting -related and other distal outcomes is not, by 
itself, sufficient to sustain a claim that the Panel failed to "objectively assess the facts of the case" 
in accordance with Article  11 of the DS U. 
6.292.   In a similar vein, Honduras challenges a number of aspects of the Panel's treatment of the 
complainants' expert reports in Appendix  C. Honduras characterizes the Panel as having " wilfully 
ignored " the complainants' evidence and takes issue with the Pane l's reasons for doing that.858 
However, we do not read the Panel as having " wilfully ignored " or "disregarded" the complainants' 
models. Rather, we understand that the Panel assessed the credibility of competing evidence, and 
selected one set of evidence (sp ecifically, Australia's evidence) on the basis that it was more credible 
than the complainants' evidence.  
6.293.   For these reasons, we reject the attempts by the appellants to resubmit their factual 
arguments under the guise of challenging the objectivity of the Panel's assessment of the facts of 
the case. As noted in paragraph  6.50.   above , if the Appellate  Body were to entertain such factual 
arguments, th is would undermine the Panel in its role as the trier of facts and the adjudicator of 
first instance in WTO dispute settlement.859 
 
853 Panel  Report, Appendix  B, para.  18. 
854 Panel  Report, Appendix  B, para.  39. (emphasis original; fn  omitted)  
855 Panel  Report, Appendix  B, paras.  50-51 and 73.  
856 Panel  Report, Appendix  B, paras.  84-85 and 101.  
857 Appellate  Body Reports, China – Rare Earths , para.  5.227 (referring to Appellate Body Report, 
Chile – Price Band System (Article  21.5 – Argentina) , para.  238).  
858 Honduras' appellant's submission, paras.  931-933 (referring to Panel  Report, App endix  C, paras.  102 
and 105).  
859 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  881. 
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  Honduras' allegations that the Panel disregarded, significantly misrepresented, or 
distorted Honduras' evidence  
6.294.   Honduras submits th at "on many occasions" the Panel disregarded, significantly 
misrepresented, and distorted the evidence as presented by Honduras in the form of expert reports 
by Professor Klick related to the various aspects of the degree of contribution of the TPP  measure  to 
Australia's objective.860 Australia does not address each "occasion" identified by Honduras. Instead, 
Australia contends that, first, as a factual matter, the Panel did in fact examine the arguments 
presented by Professor Klick that Honduras claims it "d isregarded".861 Second, Australia reiterates 
that the types of grievances alleged by Honduras with respect to the Panel's treatment of Professor 
Klick's evidence do not constitute errors under Article  11 of the DSU.862 For Australia, the Panel's 
treatment of P rofessor Klick's evidence lies squarely within the bounds of its proper discretionary 
authority. Australia considers that Honduras' allegations that the Panel "materially misrepresented" 
and "distorted" Professor Klick's evidence, and did not "objectively assess" Professor Klick's critiques 
of Australia's evidence863, do nothing more than challenge the weight  that the Panel accorded to his 
evidence.864 Likewise, Australia contends that Honduras' numerous allegations that the Panel 
"disregarded" Professor Klick's rebuttals do nothing more than challenge the particular evidence that 
the Panel chose to rely on and cite in its final report.865 For Australia, since such allegations fail to 
meet the requirements of a claim under Article  11, they must be rejected.866 
6.295.   In our view, a significant number of Honduras' allegations that the Panel disregarded, 
significantly misrepresented, or distorted Honduras' evidence867 are yet another attempt by 
Honduras to relitigate, before us, its factual case before the Panel under the guise of a claim under 
Article  11 of the DSU. As discussed above, in making an objective assessment of the facts of the 
case, a panel is required to " consider all the evidence presented to it, assess its credibility, determine 
its weight, and ensure that [the panel's] factual findings have a proper basis in that evidence".868 In 
this regard, a panel "has the duty to examine and consider all the evidence b efore it, not just the 
evidence submitted by one or the other party, and to evaluate the relevance and probative force of 
each piece thereof".869 Within these parameters, "it is generally within the discretion of the [p]anel 
to decide which evidence it choos es to utilize in making findings."870 Moreover, an allegation that a 
panel has failed to conduct the "objective assessment of the matter before it" required by Article  11 
is "a very serious allegation".871 In this vein, the Appellate  Body has considered that a llegations that 
there was "'disregard' and 'distortion' and 'misrepresentation' of the evidence" by a panel "impl y not 
simply an error of judgment in the appreciation of evidence but rather an egregious error that calls 
into question the good faith of a pa nel".872 Bearing these considerations in mind, we highlight 
two examples of allegations that the Panel disregarded, distorted , or misrepresented evidence.  
 
860 Honduras' appellant's submission, Annex, p.  315, para.  1082.  
861 Australia's appellee's submission, Annex  2, para.  941. 
862 Australia's app ellee's submission, Annex  2, para.  943. 
863 Australia's appellee's submission, Annex  2, para.  944 and fn  1214 thereto (quoting Honduras' 
appellant's submission, Annex, pp.  318-319, 321, 324 -325, 328, and 340).  
864 Australia's appellee's submission, Annex  2, para. 944 (referring to Honduras' appellant's submission, 
Annex, pp.  319-320 and 324).  
865 Australia's appellee's submission, Annex  2, para.  944 (referring to Honduras' appellant's submission, 
Annex, p.  318, 337, and 330).  
866 Australia's appellee's submission, Annex  2, para.  944. 
867 Honduras' appellant's submission, paras.  879-890; ibid., Annex, paras.  1082-1084.  
868 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
Brazil  – Retreaded Tyres , para.  185; referring to Appellate B ody Reports, EC – Hormones , paras.  132-133; 
Australia – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen (Article  21.5 – India) , paras.  170, 
177, and  181; EC – Sardines , para. 299; EC – Tube or Pipe Fittings , para.  125; Japan – Apples , para.  221; 
Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic Beverages , paras.  161-162; Korea – Dairy , 
para. 138; US – Carbon Steel , para.  142; US – Gambling , para.  363; US – Oil Country Tubular Goods Sunset 
Reviews , para.  313; EC – Selected Customs Matters , para.  258).  
869 Appellate  Body Report, Korea – Dairy , para.  137. 
870 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
EC – Hormones , para.  135).  
871 Appellate  Body Reports, China – Rare Earths , para. 5.227 (quoting Appellate Body Report, 
EC – Poultry , para.  133).  
872 Appellate  Body Report, EC – Hormones , para.  133. (fn  omitted)  
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  6.296.   First, we take note of Honduras' assertion that the Panel failed to reflect and address relevant 
expert  evidence prepared by Professor Klick rebutting arguments by Australia's expert, Professor 
Chaloupka, in relation to the NTPPTS data.873 In Honduras' view, Professor Klick addressed and 
rebutted the allegations by Professor Chaloupka that his analyses and re liance on the NTPPTS data 
were flawed, demonstrating that the survey data from the NTPPTS regarding smoker perceptions 
and intentions did not indicate a systematic improvement following the introduction of the 
TPP measures.874 Honduras maintains that "nowher e in the Panel  Report is there an indication that 
the Panel objectively assessed this material evidence."875 
6.297.   Before the Panel, Honduras relied on Professor Klick's Third Supplemental Rebuttal Report 
in support of its arguments relating to the post -implementa tion evidence on smoking behaviours, 
not proximal outcomes. This is why the Panel referred extensively to this exhibit in its evaluation of 
the post -implementation evidence on smoking behaviours876, and not in relation to proximal 
outcomes. We recall that th e mere fact that a panel has not explicitly referred to each and every 
piece of evidence in its reasoning is insufficient to establish a claim under Article  11 of the DSU . 
Rather, an appellant "must explain why such evidence is so material to its case that  the panel's 
failure to address it explicitly has a bearing on the objectivity of its factual assessment".877 In this 
regard we note that, in connection with proximal outcomes, the Panel did in fact take account of 
Professor  Klick's and Professor Chaloupka's  divergent opinions regarding the NTPPTS data.878 
Following its review of the available evidence, the Panel "agree[d] with Professor  Chaloupka that the 
impact of the TPP  measures is likely to be smaller for the less proximal outcomes, when looking at 
the imp act in an overall survey sample composed of smokers and recent quitters".879 As the 
Appellate  Body has stated, a challenge under Article  11 of the DSU "cannot be made out simply by 
asserting that a panel did not agree with arguments or evidence".880 
6.298.   Second, we  highlight Honduras' challenge to the Panel's conclusion, in Appendix  C to its 
Report, that "there is some econometric evidence suggesting that the TPP  measures  … contributed 
to the reduction in overall smoking prevalence."881 Honduras contends that the Pane l's conclusion 
was "based exclusively on one  dataset and one expert's re -assessment of the analysis presented by 
the complainants of that dataset".882 Honduras elaborates that, even though the Panel considered 
the RMSS dataset to be the "most suitable", that does not explain why the Panel's conclusions were 
based exclusively on that dataset, and did not take into account the other datasets (such as the 
official prevalence data of New South Wales, the most populous state in Australia).883 Australia 
argues that the Panel "provided a detailed explanation for its RMSS finding but nevertheless 
examined other models that were not based on the RMSS data".884 Austra lia also considers more 
generally that the Panel examined all the evidence and found the complainants' evidence 
unpersuasive.885  
 
873 Honduras' appellant's submission, Annex, p.  316, para.  1083 and fn  676 thereto (referring to 
Panel  Report, Appendix  A, par as. 34-41). 
874 Honduras' appellant's submission, Annex, pp.  316-317, para.  1083 (referring to Klick Third 
Supplemental Rebuttal Report (Panel Exhibit HND -166), section  III). 
875 Honduras' appellant's submission, Annex, p.  317, para.  1083.  
876 See, for example, Panel  Report, Appendix  C, paras.  69-70, 101, and 112; ibid., Appendix  D, 
paras.  20, 56 -59, and 71.  
877 Appellate  Body Report, EC and certain member States – Large Civil Aircraft (Article  21.5 – US), 
para. 5.147. (fn  omitted) See also Appellate  Body Reports, Australia – Apples , paras.  275-276; US – COOL , 
para. 322; Philippines – Distilled Spirits , para. 135. 
878 Panel  Report, Appendix  A, paras.  39-41. 
879 Panel  Report, Appendix  A, para.  68 (referring to F. Chaloupka, Rebuttal Report on Selected Issues 
Raised in Ongoing Challenges to Australia's Tobacco Plain Packaging Measure (26 October 2015) (Panel 
Exhibit  AUS-582), para.  9). 
880 Appellate  Body Reports, China – Rare Earths , para.  5.227 (referring to Appellate Body Report, 
Chile – Price Band System (Article  21.5 – Argentina) , para.  238).  
881 Panel  Report, Appendix  C, para.  123.c.  
882 Honduras' appellant's submission, para.  885.  
883 Honduras' appellant's submission, para.  879. 
884 Australia's appellee's submission, fn  1102 to para.  853 (referring to Panel  Report, Appendix  C, 
paras.  113-116).  
885 Australia's appellee's submission, para.  853.  
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  6.299.   We observe that the Panel examined the results of Professor Klick's models based on all  the 
relevant datasets submitted to it.886 The Panel did not ignore any models that were not based on 
the RMSS data. At the same time, one of the Panel's criticisms (among several others) of Professor 
Klick's models based on non -RMSS data was that they were based on non -RMSS data. This, among 
other  things, led the Panel to question the credibility of those models. We recall that the Panel's 
analysis was aimed at assessing the contribution of the TPP measures to Australia's objective.  
6.300.   We further note that some of the evidence before the Panel indicated that the TPP  measures 
did indeed contribute to reducing smoking prevalence, while other evidence before the Panel 
indicated that the measures made no contribution. Honduras seems to consider that, even though 
the Panel considered one set of evide nce to be more credible than the other, unless there was a 
reason to completely disregard the other evidence, the less credible evidence should have also been 
taken into account.887 
6.301.   We disagree. Given that the two  sets of evidence were directly contradictory  (one indicating 
that the TPP  measures resulted in a reduction in smoking prevalence and the other showing no 
contribution), it would appear to be internally incoherent and contradictory for the Panel to have 
based its conclusions on both sets of contradic tory evidence, notwithstanding that it had determined 
that one  set of evidence was more credible than the other. Moreover, the fact that a panel considers 
one set of evidence to be more credible than a contradictory set of evidence does not  imply that it 
failed to take account of the less credible evidence. Rather, in emphasizing one  set of evidence over 
another, the Panel simply exercised its discretion as the trier of fact "to decide which evidence it 
chooses to utilize in making findings" .888 Indeed, to th e extent that Honduras' arguments suggest 
that the Panel erred in attributing little to no relevance to one set of evidence adduced by the parties, 
such argument seems to us to be a disguised attempt to challenge the Panel's assessment of the 
probative val ue of the evidence before it.  
6.302.   As the two  examples above illustrate, a significant number of Honduras' allegations that the 
Panel disregarded, significantly misrepresented, or distorted Honduras' evidence889 are yet another 
attempt by Honduras to relitigate  its factual arguments, which were rejected by the Panel, under 
the guise of a claim under Article  11. 
Connection between Honduras' evidence and arguments before the Panel  
6.303.   Honduras makes several allegations that the Panel failed to take account of certain ev idence 
submitted in support of its arguments during the Panel proceedings. However, we observe that with 
respect to a number of these allegations, the evidence that Honduras refers to was not plainly 
connected, during the Panel proceedings, to the argument s that Honduras refers to on appeal.890 
6.304.   For example, in relation to the Panel's findings on proximal and distal outcomes, Honduras 
claims that the Panel disregarded important findings by Professor Klick concerning the Cancer 
Institute New South Wales Trackin g Survey (CITTS), and particularly Professor Klick's statements 
that the claims relied on by Australia were the result of "cherry -picking" CITTS results.891 Honduras 
considers this to be evidence that was "material" to demonstrating the lack of robustness an d 
probative value of Dunlop et al. 2014. Honduras argues that Dunlop et al. 2014 formed the basis for 
the Panel's finding that "there is some empirical evidence suggesting that the TPP  measures have 
reduced the appeal of tobacco products among adult cigare tte smokers, in terms of pack dislike, 
 
886 See Panel  Report, Appendix  C, paras.  112-118. 
887 Honduras' appellant's submission, paras.  877-880. 
888 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
EC – Hormones , para.  135).  
889 Honduras' appellant's submission, par as. 879-890; ibid., Annex, paras.  1082-1084.  
890 With respect to proximal and distal outcomes, Honduras' appellant's submission, Annex, para.  1083. 
With respect to smoking behaviours, Honduras' appellant's submission, paras.  949 and 1072. See also ibid., 
Annex, paras.  1085-1086.  
891 Honduras' appellant's submission, Annex, para.  1083 (referring to Panel  Report, Appendix  A, 
paras.  17-19; J. Klick, Second Supplemental Rebuttal Report – A Review of Australian Survey Data From 
New South  Wales (28  October 2015) (Kli ck Second Supplemental Rebuttal Report) (Panel Exhibit HND -165), 
paras.  35-61). 
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  product dislike, perceived lower quality, satisfaction and value, lower brands' prestige, and 
connection and identification."892 
6.305.   We note the Panel's explanation that the CITTS is a weekly tracking telephone survey of 
smokers and recent quitters (who quit in the past 12  months), involving approximately 50  interviews 
conducted per week throughout the year. The CITTS  monitors smoking -related thoughts and 
behaviours among adult smokers and recent quitters in New South Wales.893 The Panel observed 
that Dunlop et  al. 2014 used the CITTS data to investigate the impact of Australia's TPP  measures 
on two of the specific mechanisms: (i)  decreasing the promotional appeal of packaging; and 
(ii) increasing the impact of health warnings.894 The Panel noted that, overall, Dunlop et  al. 2014 
had concluded that the TPP  measures had an "early statistically significant effect" in reducing the 
promotional appeal of the packaging among adult smokers.895 Following its review of the evidence 
relating to the appeal of tobacco products, the Panel stated that:  
A careful review of Wakefield et  al. 2015 and Dunlop et  al. 2014 and the econometric 
evidence submitted by the Dominican  Republic, Honduras and Indones ia leads us to 
conclude that there is some empirical evidence suggesting that the TPP  measures have 
reduced the appeal of tobacco products among adult cigarette smokers, in terms of 
pack dislike, product dislike, perceived lower quality, satisfaction and v alue, lower 
brands' prestige, and connection and identification.896 
6.306.   The Panel observed, in a footnote to the above conclusion, that "in his review of 
Dunlop  et al.'s 2014 analysis, Professor  Klick did not discuss and re -analyse the questions of the 
CITTS rel ated to appeal."897 The Panel noted further that "Professor  Klick did not mention in his 
reports whether the commissioned Roy Morgan Research Survey also asked questions related to the 
appeal of tobacco products."898 Thus, the Panel's engagement with Professor  Klick's evidence was 
limited to noting that it did not relate to the inquiry in question, i.e.  the appeal of tobacco products.  
6.307.   On appeal, Honduras submits that Professor Klick's conclusions concerning the 
"cherry -picking" of specific CITTS results apply t o Dunlop et al. 2014 as a whole and should therefore 
have been objectively assessed by the Panel.899 Rather tellingly, in its appellant's submission, 
Honduras does not cite any of its arguments before the Panel. Instead, in support of its allegation, 
Hondura s identifies the last 26  paragraphs of Professor Klick's Second Supplemental Rebuttal 
Report.900 This exhibit accompanied Honduras' opening statement at the Panel's second substantive 
meeting with the parties. Honduras relied on this exhibit to address the p ost-implementation 
evidence of "actual smoking behaviours" and "quitting behaviours".901 It does not appear that 
Honduras relied on this exhibit when making its submissions regarding the post -implementation 
evidence relating to the appeal of tobacco products . In response to questioning at the 
second  hearing, Honduras confirmed that during the Panel proceedings, it did not link its arguments 
on the appeal of tobacco products to Professor Klick's Second Supplemental Rebuttal Report.  
6.308.   The Appellate  Body has said that "[a] complaining party may not simply submit evidence 
and expect the panel to divine from it a claim of WTO -inconsistency. Nor may a complaining party 
 
892 Honduras' appellant's submission, Annex, para.  1083 (quoting Panel  Report, Appendix  A, para.  29). 
893 Panel  Report, Appendix  A, para.  17. 
894 Panel  Report, Appendix  A, para.  18 (referring to S. Dunlop, T. Dobbins, J. Young, D. Perez, and 
D. Currow, "Impact of Australia's Introduction of Tobacco Plain Packs on Adult Smokers' Pack -Related 
Perceptions and Responses: Results from a Continuous Tracking Survey", BMJ Open , Vol. 4 (2014),  
doi:10.1136/bmjopen 2014 005836 (Dunlop et al. 2014) (Panel Exhibits AUS -207, HND -132, DOM -199).  
895 Panel  Report, Appendix  A, para.  19 (referring to Department of Health, Post -Implementation Review: 
Tobacco Plain Packaging 2016, Australian Government (2016 ) (Tobacco Plain Packaging PIR) (Panel Exhibit 
AUS-624), paras.  77-80). 
896 Panel  Report, Appendix  A, para.  29 (referring to Wakefield et al. 2015 (Panel Exhibits  AUS-206, 
DOM-306); Dunlop et al. 2014 (Panel Exhibits AUS -207, HND -132, DOM -199); Ajzen et al. Data Report (Panel 
Exhibit DOM/IDN -2), paras.  89-97 and 148 -150, and Appendix  A, pp.  78-80). 
897 Panel  Report, Appendix  A, fn 36 to para.  29. 
898 Panel  Report, Appendix  A, fn 36 to para.  29. 
899 Honduras' appellant's submission, Annex, p.  316, para.  1083.  
900 Honduras' appellant's submission, Annex, p.  315, para.  1083 (referring to Panel  Report, Appendix  A, 
paras.  17-19; Klick Second Supplemental Rebuttal Report (Panel Exhibit HND -165), paras.  35-61). 
901 Honduras' opening statement at the second Panel meeting, as de livered, paras.  41-42. 
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  simply allege facts without relating them to its legal arguments."902 Given the sheer volume of 
eviden ce and submissions submitted to the Panel in these proceedings, it would be unreasonable to 
have required the Panel to have engaged with every argument  in every piece of evidence presented 
to it, in the absence of a party asserting, to the Panel, the relev ance of that particular aspect of the 
evidence.  
6.309.   In any event, a review of Professor Klick's Second Supplemental Rebuttal Report903 shows 
that Professor Klick indicated that he would "examine the CITTS data on the non -behavioral metrics 
that led Dunlop et al.  to come to [their] conclusion about the increased effectiveness of health 
warnings resulting from plain packaging and the reduction of the promotional appeal of tobacco 
products that allegedly moved consumers 'closer to cessation'" .904 However, Professor Kl ick's 
Second  Supplemental Rebuttal Report includes no discussion specific to the appeal of tobacco 
products. This observation is supported by Honduras' own assertion that Professor Klick's conclusions 
concerning the "cherry -picking" of specific CITTS resul ts apply to Dunlop et al. 2014 as a whole  and 
should therefore have been objectively assessed by the Panel.905 These arguments seem to imply 
that even if Honduras did not make a specific connection between Professor Klick's 
Second  Supplemental Rebuttal Repor t and its arguments concerning the appeal of tobacco products, 
the Panel failed to carry out its function under Article  11 of the DSU by not making this connection 
and addressing the concerns in Professor Klick's report.  
6.310.   We recall that "[a]  prima  facie case must be based on 'evidence and legal argument' put 
forward by the complaining party in relation to each of the elements of the claim."906 Thus, the onus 
was on Honduras to connect its arguments to its evidence, and not "expect the panel to divine", 
from th e totality of Honduras' evidence and arguments, "a claim of WTO -inconsistency".907 
Panels need not address every argument raised by the parties  
6.311.   We recall that "a panel is not obligated to consider each and every argument put forward by 
the parties in support  of their respective claims, as long as it completes an objective assessment of 
the matter before it, in accordance with Article  11 of the DSU."908 Thus, where an appellant 
challenges a panel's failure to address a particular argument, the appellant must exp lain why such 
argument or evidence "is so material to its case that the panel's failure to address it explicitly has a 
bearing on the objectivity of its factual assessment".909 
6.312.   In this regard, we note that Honduras makes several claims alleging that the Panel 
disregarded certain of Professor Klick's rebuttals to Dr  Chipty's evidence.910 For example, Honduras 
claims that the Panel disregarded Professor Klick's rebuttals to Dr  Chipty's argument that the 
RMSS  data showed that Australians cited health concerns as the primary reason for quitting while 
New Zealanders cited costs as the primary reason for quitting.911 We note that, although Dr  Chipty 
made such an argument, the Panel did not appear to rely on this argument anywhere in its analysis. 
Honduras has not id entified any such instance, although Honduras does point to the fact that the 
Panel at least acknowledged Dr  Chipty's arguments in summarizing the experts' opinions, whereas 
the Panel did not acknowledge Professor Klick's rebuttal.912 Given that the Panel di d not actually rely  
on Dr  Chipty's argument in its own analysis of Professor Klick's evidence, we are not persuaded that 
 
902 Appellate  Body Report, US – Gambling , para. 140. (fn  omitted)  
903 Honduras' appellant's submission, Annex, p.  315, para.  1083 (referring to Panel  Report, Appendix  A, 
paras.  17-19; Klick Second Supplemental Rebuttal Report (Panel Exhi bit HND -165), paras.  35-61). 
904 Klick Second Supplemental Rebuttal Report (Panel Exhibit HND -165), para.  35. 
905 Honduras' appellant's submission, Annex, p.  316, para.  1083.  
906 Appellate  Body Report, US – Gambling , para.  140. (emphasis original, fn omitted)  
907 Appellate  Body Report, US – Gambling , paras.  140. (fn  omitted)  
908 Appellate  Body Report, Colombia – Textiles , fn 71 to para.  5.18. 
909 Appellate  Body Report, EC and certain member States – Large Civil Aircraft (Article  21.5 – US), 
para. 5.147 . (fn omitted ) See also Appellate  Body Reports, Australia – Apples , paras.  275-276; US – COOL , 
para. 322; Philippines – Distilled Spirits , para. 135. 
910 Honduras appellant's submission, Annex, paras.  1085-1086.  
911 Honduras' appellant's submission, Annex, pp.  328-329, para.  1085 (referring to J. Klick, Rebuttal 
Report – A Reply to Dr  Chipty (8  July 2015) (Panel Exhibit HND -118), paras.  71-75).  
912 Honduras' appellant's submission, Annex, p.  328, para.  1085 (referring to Panel  Report, Appendix  C, 
para. 23).  
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  the Panel's failure to explicitly acknowledge Professor Klick's rebuttal undermines the objectivity of 
the Panel's assessment.  
6.313.   As a sec ond example, we take note of Honduras' claim that the Panel disregarded Professor 
Klick's rebuttal of Dr  Chipty's criticisms of his smoking prevalence analysis using data from the 
New South Wales Population Health Survey ( NSWPHS ).913 According to Honduras, P rofessor  Klick 
"comprehensively" responded to Dr  Chipty's criticisms: "(i)  [that] the RMSS dataset is more suitable 
than the NSW data; (ii)  that the timeframe of the NSW  data is inadequate to properly study the 
effects of plain packaging and, relatedly, th at the tax increases in Australia make the data unsuitable 
for a pre/post -implementation analysis; and (iii)  that the change in survey methodology of how the 
NSW data was collected limits the usability of the data".914 We recall that the Panel's only critici sm 
of Professor Klick's analysis of the NSWPHS  data was that "the nature of the data (i.e.  yearly 
observations) limits the number of observations to two  post-packaging observations (2013 and 
2014), which prevents distinguishing between the TPP  measures and  tobacco excise tax increases 
in 2013 and 2014."915 The Panel also considered that only two observations are "extremely short in 
comparison with the RMSS data encompassing up to 34 post -TPP observations (December 
2012-September 2015)".916 We therefore understa nd the Panel as not having relied on the other 
aspects of Dr  Chipty's criticism of Professor Klick's analysis of the NSWPHS data (such as the change 
in survey methodology). Thus, similar to the first example cited above, given that the Panel did not 
rely on Dr Chipty's argument in its own analysis of Professor Klick's evidence, we are not persuaded 
that the Panel's failure to explicitly acknowledge Professor Klick's rebuttal undermines the objectivity 
of the Panel's assessment.  
6.314.   In sum, and in line with the examples discussed above, in instances where the Panel did not 
rely on Dr  Chipty's argument in its own analysis of Professor Klick's evidence, we are not persuaded 
that the Panel's failure to address a counter -argument raised by Professor  Klick in response  to 
Dr Chipty's argument amounts to a failure by the Panel to make an objective assessment of the 
facts of the case. In this vein, we find that Honduras has not demonstrated that Professor Klick's 
arguments that were not reflected in the Panel  Report were "so material to its case that the [P]anel's 
failure to address [them] explicitly has a bearing on the objectivity of its factual assessment".917 
Allegations that the Panel's findings are based on "incoherent reasoning" or lacked 
a "reasoned and adequate expl anation"  
6.315.   With respect to several of their claims under Article  11 of the DSU, the appellants allege that 
the Panel failed to provide "reasoned and adequate explanations" or "coherent reasoning" for its 
findings.918 For example, Honduras claims that the Panel  erred under Article  11 of the DSU by failing 
to provide a reasoned and adequate explanation919, because the Panel's limited findings on the actual 
impact of the TPP  measures on proximal and distal outcomes were inconsistent with the Panel's 
proposition that  the TPP  measures are "working as intended".920 Similarly, the Dominican  Republic 
claims that the Panel erred under Article  11 because the Panel's findings on the actual impact of the 
TPP measures on proximal and distal outcomes were incoherent with its find ing that the 
 
913 Honduras' appellant's submission, Annex, pp.  331-332, para.  1085 (referring to J.  Klick, 
Supplemental Rebuttal Report – A Review of N ew and Updated Australian Survey and Market Data 
(16 September 2015) (Panel Exhibit HND -122), para.  42; Klick Third Supplemental Rebuttal Report (Panel 
Exhibit HND -166), paras.  9-28).  
914 Honduras' appellant's submission, Annex, pp.  331-332, para.  1085 (ref erring to Klick Third 
Supplemental Rebuttal Report (Panel Exhibit HND -166), paras.  9-28).  
915 Panel  Report, Appendix  C, para.  115.  
916 Panel  Report, Appendix  C, para.  100.  
917 Appellate  Body Report, EC and certain member States – Large Civil Aircraft (Article  21.5 – US), 
para. 5.147. (fn  omitted) See also Appellate  Body Reports, Australia – Apples , paras.  275-276; US – COOL , 
para. 322; Philippines – Distilled Spirits , para. 135. 
918 Honduras' appellant's submission, paras.  696, 753, 880, 889 -890, 916 -917, 940 -941, 949 -951, 
958-959, 962 -963, 968, 971 -972, 976, 979, and 987 -989; Dominican  Republic's appellant's submission, 
paras.  34, 555 -559, and 893.  
919 See Honduras' appellant's submission, para.  734. 
920 Honduras' appellant's submission, section  VIII.2.1.1.2. See ibid., para.  753. 
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  TPP measures are expected to contribute to Australia's objective through the operation of the 
hypothesized "causal chain".921 
6.316.   Australia challenges the appellants' claims that the Panel failed to provide "reasoned and 
adequate explanations" for i ts findings, arguing that, in raising such claims, "the appellants dispense 
with even the pretence of a legitimate grievance."922 Australia highlights that the appellants indicate 
that they are "not request[ing] the Appellate  Body to reach any conclusions as  to whether the Panel 
was correct" in its factual analysis, while at the same time the appellants "devote so much space to 
a panel's alleged failure to provide 'reasoned and adequate' explanations".923 For Australia, the 
appellants' claims to this effect dem onstrate that their strategy for this appeal is simply to put as 
much as possible of the complainants' factual evidence before the Appellate  Body to relitigate the 
issues they lost before the Panel.924 
6.317.   We recall that, in making an objective assessment of the  facts of the case, a panel is required 
to "consider all the evidence presented to it, assess its credibility, determine its weight, and ensure 
that [the panel's] factual findings have a proper basis in that evidence".925 The Appellate  Body has 
also highlighted that an "essential part of a panel's task under Article  11 is to explain  its objective 
assessment of the matter before it".926 Hence, demonstrating that a panel's reasoning is internally 
inconsistent may, in some inst ances be sufficient to implicate the objectivity of a panel's assessment 
under Article  11.927 
6.318.   In the present proceedings, we observe that, with respect to a large number of their claims, 
when Honduras or the Dominican  Republic refer s to the Panel 's failure  to provide a reasoned and 
adequate explanation, they are contending either that: (i)  the Panel's reasoning was internally 
inconsistent or lacked coherence928; (ii)  the Panel disregarded, distorted, or misrepresented 
evidence929; (iii) the Panel's findings lacke d a sufficient evidentiary basis on the Panel record930; or 
(iv) the Panel was not even -handed in its treatment of the parties' evidence.931 It is noted that when 
an appeal is brought under Article  11 of the DSU, the Appellate  Body examines a panel's 
explanati ons, not to verify the correctness  of these explanations, but as a means of checking whether 
the panel was objective  in its assessment of the facts. To this end, the Appellate  Body may consider 
that a panel's objectivity is implicated if the appellant succ essfully demonstrates that (i)  the panel's 
reasoning was internally inconsistent or lacked coherence932; (ii) the panel disregarded, distorted, 
or misrepresented evidence933; (iii) the panel's findings lacked a sufficient evidentiary basis on the 
 
921 Dominican  Republic's appellant's submission, paras.  893 (referring to Panel  Report, para.  7.1030) 
and 895.  
922 Australia's appellee's submission, para.  431. 
923 Australia's appellee's submission, para.  431 (quoting Dominican  Republic's appellant's submission, 
para. 325).  
924 Australia's appellee's submission, para.  431. 
925 Appellate  Body Reports, China – Rare Earths , para. 5.178 (quoting Appellate Body Report, 
Brazil  – Retreaded Tyres , para.  185; referring to Appellate Body Reports, EC – Hormones , paras.  132-133; 
Australia – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen (Article  21.5 – India) , paras.  170, 
177, and  181; EC – Sardines, para. 299; EC – Tube or Pipe Fittings , para.  125; Japan – Apples , para.  221; 
Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic Beverages , paras.  161-162; Korea – Dairy , 
para. 138; US – Carbon Steel , para.  142; US – Gambling , para.  363; US – Oil Country Tubular Goods Sunset 
Reviews , para.  313; EC – Selected Customs Matters , para.  258).  
926 Appellate  Body Report, US – Continued Zeroing , para.  338 (quoting Panel  Report, US – Continued 
Zeroing , para.  7.180). (emphas is original)  
927 Appellate  Body Reports, EC and certain member States – Large Civil Aircraft , para.  894;  
Russia – Commercial Vehicles , paras.  5.81-5.82; US – Upland Cotton (Article  21.5 – Brazil) , para.  295. 
928 See, for example, Honduras' appellant's submiss ion, paras.  734, 753, and 797; Dominican  Republic's 
appellant's submission, paras.  177 and 888.  
929 See, for example, Honduras' appellant's submission, para.  717 and Annex; Dominican  Republic's 
appellant's submission, paras.  559 and 574 -577. 
930 See, for examp le, Honduras' appellant's submission, paras.  13, 696, 721, and 772; 
Dominican  Republic's appellant's submission, paras.  194-197, 293, and 416 -417. 
931 See, for example, Honduras' appellant's submission, paras.  729-730; Dominican  Republic's 
appellant's submis sion, paras.  257 and 797.  
932 Appellate  Body Reports, EC and certain member States – Large Civil Aircraft , para.  894;  
Russia – Commercial Vehicles , paras.  5.81-5.82; US – Upland Cotton (Article  21.5 – Brazil) , para.  295. 
933 Appellate  Body Report, EC – Hormones , para.  133. 
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  panel record934; or (iv)  the panel was not even -handed in its treatment of the parties' evidence.935 
Accordingly, the appellants' references to "reasoned and adequate explanation" insofar as they relate 
to the means of testing the Panel's objectivity could be viewed as a p urely semantic issue, given 
that the substance of these allegations fall s squarely within the scope of appellate review with 
respect to claims under Article  11 of the DSU.  
6.319.   Having said that, we take note of Honduras ' assertion that, where a panel reviews th e 
determinations of domestic investigating authorities, the Appellate  Body has held that a panel must 
assess whether the explanations provided by the authority are "reasoned and adequate", and that 
the panel must also assess "the coherence of its reasoning ".936 According to Honduras, the 
Appellate  Body has clarified that essentially the same standard that is imposed on domestic 
authorities applies "in cases where a panel operates as the initial trier of facts, such as this one".937 
Honduras requests that the Ap pellate  Body "be equally critical and searching of the Panel's alleged 
'careful review' and fault the Panel for failing to provide a reasoned and adequate explanation of 
how the facts supported the determination made."938 
6.320.   As we see it, this line of argumenta tion invites us to engage in a factual assessment of the 
evidence that was before the Panel in order to determine whether the Panel provided a "reasoned 
and adequate explanation" of its findings. Such a proposition fails to recogni ze the differences 
betwee n: (i) the role of the Appellate  Body and its scope of appellate review, as governed by 
Article  17.6 of the DSU, on the one hand939; and (ii)  the role of a panel, as trier of fact, when 
reviewing an investigating authority's determinations under the SCM Agreement and the 
Anti-Dumping  Agreement, on the other hand.940 Given these differences, we reject Honduras' 
assertion that the standard of review that applies to a panel's factual  assessment, when a panel is 
reviewing the determinations of domestic auth orities, applies equally to the scope of appellate review 
"in cases where a panel operates as the initial trier of facts, such as this one" .941 
Allegations challenging the Panel's graphical representation of the parties' 
evidence  
6.321.   These allegations concern Figure B.1 in Appendix  B and Figure D.14 in Appendix  D to the 
Panel  Report.  
6.322.   With respect to Appendix  B, the Dominican  Republic contests the Panel's findings that "the 
empirical evidence on the impact of the TPP  measures on calls t o Quitline is unambiguous", and that 
"the TPP  measures and enlarged GHWs have statistically significantly increased calls to Quitline."942 
In support of its claims, the Dominican  Republic challenges the Panel's reliance on Figure  B.1. The 
 
934 Appellate  Body Reports, China – Rare Earths , para.  5.178; Brazil – Retreaded Tyres , para.  185;  
EC – Hormones , paras.  132-133; Australia – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen 
(Article  21.5 – India) , paras.  170, 177, and  181; EC – Sardines , para. 299; EC – Tube or Pipe Fittings , 
para. 125; Japan – Apples , para.  221; Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic 
Beverages , paras.  161-162; Korea – Dairy , para.  138; US – Carbon Steel , para.  142; US – Gambling , 
para. 363; US – Oil Country Tubular Goods Sunset Reviews , para.  313; EC – Selected Customs Matters , 
para. 258. 
935 Appellate  Body Report, Korea – Alcoholic Beverages , para.  163. 
936 Honduras' appellant's submission, para.  703 (quoting Appellate  Body Report, US – Softwood  
Lumber VI (Article  21.5 – Canada) , para.  97). 
937 Honduras' appellant's submission, para.  703 (quoting Appellate  Body Report, US – Upland Cotton 
(Article  21.5 – Brazil), fn 618 to para.  293).  
938 Honduras' appellant's submission, para.  707 (referring to Appellate  Body Report, US – Wheat Gluten , 
paras.  160-161).  
939 Specifically,  Article  17.6 of the DSU provides no fact -finding role for the Appellate  Body.  Hence, the 
scope of appellate review, as it pertains to claims under Article  11 of the DSU, is limited to evaluating the 
objectivity of a panel's assessment and does not extend to a usurping of the role of the panel as trier of fact.  
940 Appellate  Body Reports, Korea – Pneumatic Valves (Japan) , para.  5.221; China – HP-SSST (Japan) / 
China – HP-SSST (EU) , para.  5.255; Russia – Commercial Vehicles , para.  5.102; US – Washing Machines , 
para. 5.258; US – Steel Safeguards , para.  299; Argentina – Footwear (EC) , para.  121; US – Anti-Dumping and 
Countervailing Duties (China) , para.  379; US ‒ Softwood Lumber VI (Article  21.5 – Canada) , para.  93. 
941 Honduras' appellant's submission, para.  703 (quoting Appellate  Body Report, US – Upland Cotton 
(Article  21.5 – Brazil) , fn 618 to para.  293).  
942 Dominican  Republic's appellant's submission, para.  959 (quoting Panel  Report, para.  7.963.c; ibid., 
Appendix  B, para.  103).  
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  Dominican  Republic avers that "[a]lthough the Panel attributes Figure  B.1 to Ajzen et al., the figure 
does not appear in Ajzen et al. Therefore, the Panel itself must have produced Figure  B.1 on its own 
initiative, without testing it with the parties during the proceedings."943 
6.323.   In this regard, we highlight the Panel's statement that "Ajzen et  al. find that, as reported in 
Figure  B.1, there was a statistically significant increase in the number of calls to the Quitline after 
the introduction of the TPP  measures, which occurred a pproximately three weeks before the sale of 
plain packs with enlarged GHWs became mandatory."944 The Dominican  Republic's assertion is 
correct insofar as it reads this statement by the Panel as suggesting that Figure  B.1 in Appendix  B 
is copied from the Ajze n et al. Data Report.  There are clear visual differences between the Panel's 
graph and that of Ajzen et al. First,  the time period covered in Ajzen et al. is from 6  March  2005 to 
4 March 2013, while the Panel's graph is limited to the period between Januar y 2011 and April  2013. 
Second, the Panel's graph, as the Panel itself notes945, moves the position of the TPP  line (the red 
line in Ajzen et al.) to December  2012, in order to reflect accurately when the TPP  measures came 
into effect with respect to imported  tobacco products. That said, the visible differences between the 
two graphs do not necessarily mean that the data depicted in both graphs covering the period from 
January  2011 to March 2013 are different.  
6.324.   We understand the Panel to have used the graph me rely as a visual aid to illustrate its 
observation that, as Ajzen et al. had found, "there was a statistically significant increase in the 
number of calls to the Quitline after the introduction of the TPP  measures."946 In fact, beyond stating 
that the Panel produced the graph "on its own initiative"947, the Dominican  Republic does not appear 
to contest the accuracy of what is depicted in the graph. Moreover, in response to questioning at 
the second hearing, the Dominican  Republic clarified that it does not ques tion the accuracy of the 
information depicted in the graph, and that it understands this information to have been extracted 
from the parties' evidence. Indeed, the Dominican  Republic appears to presume the accuracy of the 
Panel's graph in Figure  B.1 when i t states that , "[a]s both Young et al. 2014 and Ajzen et al. found, 
the blue spike shows that Quitline calls peaked several weeks after the sale of plain packs was 
permitted (October 2012) but before  the sale of plain packs became mandatory 
(December  2012) ."948 
6.325.   We recall that in making an objective assessment of the facts of the case, a panel is required 
to "consider all the evidence presented to it, assess its credibility, determine its weight, and ensure 
that [the panel's] factual findings have a proper bas is in that evidence".949 Within these parameters, 
"it is generally within the discretion of the panel to decide which evidence it chooses to utilize in 
making findings."950 In the same vein, as long as the panel's reasoning is based on the parties' 
evidence on the panel record, we consider it to be within the discretion of the panel to decide how 
it represents its analysis and reasoning. Thus, nothing prohibits panels from using visual aids in 
representing th eir understanding and analysis of the evidence submitted by the parties.  
6.326.   With respect to Appendix  D, Honduras challenges several aspects of the Panel's analysis of 
Dr Chipty's evidence with respect to step  2 of its cigarette consumption analysis in Appendi x D to 
the Panel  Report. This step concerned whether the decline in cigarette sales accelerated after the 
implementation of the TPP  measures. Among its arguments, Honduras highlights that Figure  D.14 
was prepared by the Panel based on backup material provi ded by IPE, and there is no explanation 
 
943 Dominican  Republic's appellant's submission, para.  969. (fn  omitted)  
944 Panel  Report, Appendix  B, para.  93. 
945 Panel  Report,  Appendix  B, para.  93, note to Figure  B.1. 
946 Panel  Report, Appendix  B, para.  93. See also ibid., para.  103; Ajzen et al. Data Report (Panel 
Exhibit  DOM/IDN -2), para.  250. 
947 Dominican  Republic's appellant's submission, para.  969. 
948 Dominican  Republic's appe llant's submission, para.  969. (emphasis original)  
949 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
Brazil  – Retreaded Tyres , para.  185; referring to Appellate Body Reports, EC – Hormones , paras.  132-133; 
Australia  – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen (Article  21.5 – India) , paras.  170, 
177, and  181; EC – Sardines , para. 299; EC – Tube or Pipe Fittings , para.  125; Japan – Apples , para.  221; 
Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic Beverages , paras.  161-162; Korea – Dairy , 
para. 138; US – Carbon Steel , para.  142; US – Gambling , para.  363; US – Oil Country Tubular Goods Sunset 
Reviews , para.  313; EC – Selected Customs Matters , para.  258).  
950 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
EC – Hormones , para.  135).  
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  as to how it was developed, nor is there any way of testing its accuracy.951 In Honduras' view, the 
fact that it is impossible to review the Panel's findings is a "fundamental problem of due process".952 
Honduras argues that the Panel "violated the essence of its task under Article  11 of the DSU" by 
failing to engage with the parties "in earnest" on any of the technical debates that took place before 
it, "simply dump[ing] its final analysis on the parties in its findings" , depriving the parties of a 
meaningful opportunity to comment during the Panel proceedings, and failing to include the technical 
details necessary to review the Panel's finding.953  
6.327.   Figure  D.14 is a graphical representation of the trends in cigarette sales volumes pre - and 
post-implementation of the TPP  measures. In the Panel  Report, the stated source for Figure  D.14 is 
the backup material to the IPE Summary Report, which included the entire contents of the RMSS, 
IMS/EOS, and Aztec data. As we understand it,  the Panel constructed Figure  D.14 on its own, relying 
on the data submitted by the parties. We therefore understand that the Panel developed this line of 
reasoning of its own accord, constructed the graph itself, based on the data, and concluded that the 
trend lines were different. As discussed above, we see nothing wrong with this approach. As long as 
the Panel's reasoning is based on the parties' evidence on the Panel record, we consider it to be 
within the discretion of the Panel to decide how it repres ents its analysis and reasoning. Honduras 
has failed to demonstrate that Figure  D.14 is not based on the evidence on the Panel record. 
Honduras has also not demonstrated that Figure  D.14 serves any purpose beyond serving as a visual 
aid for the Panel to re present its understanding and analysis of the evidence submitted by the 
parties.  
6.328.   Accordingly, with respect to the Panel's inclusion of Figures  B.1 and D.14 in its Report, we 
find that Honduras has not demonstrated that the Panel failed to make an objective  assessment of 
the facts of the case.  
Submitting facts that are not on the Panel record  
6.329.   It is well settled that the Appellate  Body's review of any issues raised on appeal must be 
based on the factual findings of the panel or uncontested facts on the panel record.954 This limitation 
is especially relevant in the context of our evaluation of whether a panel failed to make an objective 
assessment of the facts of the case as required under Article  11 of the DSU. We recall that, in 
carrying out its duty under Arti cle 11 of the DSU, a panel is required to "consider all the evidence 
presented to it , assess its credibility, determine its weight, and ensure that [the panel's] factual 
findings have a proper basis in that evidence".955 Hence, an assessment of whether a pan el failed to 
make an objective assessment of the facts of the case is limited to those facts that were presented 
to the panel. Consequently, any facts not on the panel record are be yond the remit of 
appellate  review.  
6.330.   In this regard, we observe that, in con nection with smoking prevalence, Honduras' 
appellant's submission contains factual information pertaining to the "most recent official prevalence 
data of Australia", drawn from "[t]he latest Australian government data (National Drug Strategy 
 
951 Honduras' appellant's submission, para.  895. 
952 Honduras' appellant's submission, para.  895. 
953 Honduras' appellant's submission, para.  896.  
954 Appellate  Body Report, US – Hot-Rolled Steel , paras.  174 and 180. As the Appellate  Body said in  
US – Offset Act (Byrd Amendment) : 
Article  17.6 is clear in limiting our jurisdiction to issues of law covered in panel reports and legal 
interpretations d eveloped by panels. We have no authority to consider new facts on appeal. The 
fact that the documents are "available on the public record" does not excuse us from the 
limitations imposed by Article  17.6. We note that the other participants have not had an 
opportunity to comment on those documents and, in order to do so, may feel required to adduce 
yet more evidence. We would also be precluded from considering such evidence.  
(Appellate  Body Report, US – Offset Act (Byrd Amendment) , para.  222) 
955 Appellate  Body Reports, China – Rare Earths , para.  5.178 (quoting Appellate Body Report, 
Brazil  – Retreated Tyres , para.  185). (emphasis added) See also Appellate  Body Reports, EC – Hormones , 
paras.  132-133; Australia – Salmon , para.  266; EC – Asbestos , para.  161; EC – Bed Linen (Article  21.5 – 
India) , paras.  170, 177, and  181; EC – Sardines , para. 299; EC – Tube or Pipe Fittings , para.  125; 
Japan  – Apples , para.  221; Japan – Agricultural Products  II, paras.  141-142; Korea – Alcoholic Beverages , 
paras.  161-162; Korea – Dairy , para.  138; US – Carbon Steel , para.  142; US – Gambling , para.  363; US – Oil 
Country Tubular Goods Sunset Reviews , para.  313; EC – Selected Customs Matters , para.  258. 
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  Household Surv ey) from 2016".956 Likewise, in connection with the Panel's reliance on 
multicollinearity, the Dominican  Republic indicates that, "[s]ince obtaining the Panel  Report, the 
Dominican  Republic has applied the VIF  test statistic to Australia's models using the t echniques 
described in the literature ."957 Similarly, in support of its claim challenging the Panel's findings in 
Appendix  B958, the Dominican  Republic refers to factual information contained in the amicus  curiae  
submission of Professor Sinclair Davidson, rece ived by the Appellate  Body on 7  August 2018.  The 
Dominican  Republic states that "[i]n his submission to the Appellate  Body, Professor Sinclair 
Davidson has explained, pursuant to information obtained under Australia's Freedom of Information 
Act, that, in the contract commissioning the NTPPTS, the Australian Government required that the 
NTPPTS address distal outcomes, such as 'quit intentions' and 'quit attempts'."959 
6.331.   This information, submitted by the appellants, did not form part of the Panel record. 
Conseq uently, in accordance with Article  17.6 of the DSU, in deciding this appeal, we are precluded 
from taking into account any factual information submitted by the participants that was not on the 
Panel record.  
6.1.2.3.3.3   Claims concerning the Panel's statements on the f uture impact of the 
TPP measures  
6.332.   Honduras alleges that the Panel failed to make an objective assessment of the facts of the 
case by accepting "the speculative assertion of a 'future generation' effect" of the TPP  measures, 
"without a reasoned and adequate explanation of how this conclusion was supported by the facts on 
the record".960 The Dominican  Republic, for its part, indicates that in the event that the Division does 
not reverse the Panel's overall conclusion on contribution for other reasons, the Domini can Republic 
raises the conditional appeal that the Panel erred in the application of Article  2.2 of the 
TBT Agreement and failed to conduct an objective assessment of the matter under Article  11 of the 
DSU in reviewing the potential future impact of the T PP measures.961 Specifically, the 
Dominican  Republic contends that "the Panel simply accepted Australia's 'suggestion' that the 
TPP measures would, in future, contribute to Australia's objective, on the basis that it found this 
suggestion 'reasonable'."962 In the Dominican  Republic's view,"[t]he Panel did not address any 
evidence to establish that Australia's hypotheses were properly 'tested and supported by sufficient 
evidence', as required by the Appellate  Body."963 The Dominican  Republic requests that the 
Appellate Body declares the Panel findings regarding the future impact moot and of no legal effect 
if it finds unnecessary to address this ground of appeal.964 In response to questioning at the 
second  hearing, the Dominican  Republic indicated that it did not con sider the Panel's statements on 
the future impact of the TPP  measures to be findings or conclusions, but rather more akin to mere 
"remarks". The Dominican  Republic also stated that it did not consider the Panel's remarks to be an 
integral part of the Panel 's assessment of the contribution of the TPP  measures to Australia's 
objective.  
6.333.   We recall that, in its analysis of the contribution of the TPP  measures to Australia's  objective 
under Article  2.2 of the TBT  Agreement, the Panel examined the relevant evidenc e relating to the 
design, structure , and intended operation of the TPP  measures and the evidence relating to the 
application of the TPP  measures since their entry into force in December 2012.965 On the basis of 
such evidence, the Panel reached its overall co nclusion that "the TPP  measures are apt to, and do, 
make a meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
 
956 Honduras' appellant's submission, para.  920. 
957 Dominican  Republic's appellant's submission, paras.  410-412. 
958 Dominican  Republic's appellant's submission, para.  1015 (quoting Panel  Report, Appendix  B, 
paras.  39 and 118).  
959 Dominican  Republic's appellant's  submission, para.  1028. (emphasis omitted)  
960 Honduras' appellant's submission, para.  847. 
961 Dominican  Republic's appellant's submission, para.  1182.  
962 Dominican  Republic's appellant's submission, para.  1220 (quoting Panel  Report, paras.  7.940 and 
7.1044).  
963 Dominican  Republic's appellant's submission, para.  1220 (quoting Panel  Report, para.  7.982, in turn 
quoting Appellate  Body Report, Brazil – Retreade d Tyres , para.  151).  
964 Dominican  Republic's appellant's submission, para.  1183.  
965 Panel  Report, para.  7.1024.  
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  tobacco products ."966 Having reached this conclusion, in the penultimate paragraph of the section 
on its  overall conclusions, the Panel made the following observation:  
In making this determination, we are also mindful that the impact of the TPP  measures 
may evolve over time. Our determination is based on the evidence available to us at 
the time of our assessment and is not intended to prejudge the future evolution of the 
contribution of the TPP  measures to the reduction of the use of, and exposure to, 
tobacco products. We note, however, that we find reasonable Australia's suggestion 
that the measures may be expect ed to have an impact in particular on future 
generations of young people whose exposure to tobacco advertising or promotion in 
Australia will have been generally limited, and that impacts on smoking cessation for 
existing smokers will also take some time t o produce their full effects.967 
6.334.   To our minds, given that the TPP  measures had been in force for a very brief period by the 
time the Panel proceedings got under way, the Panel's observation that "the impact of the 
TPP measures may evolve over time" seems rea sonable. Moreover, we note that the Panel made the 
observation that the impact of the TPP  measures may evolve over time only after it had concluded 
that "the TPP  measures are apt to, and do, make a meaningful contribution to Australia's objective 
of reduci ng the use of, and exposure to, tobacco products ."968 Moreover, in making this observation, 
the Panel stated that its conclusion was "based on the evidence available to [the Panel] at the time 
of [the Panel's] assessment and is not intended to prejudge the f uture evolution of the contribution 
of the TPP  measures to the reduction of the use of, and exposure to, tobacco products".969  
6.335.   Furthermore, to the extent that the Panel made intermediate observations regarding the 
future effects of the TPP  measures, in section 7.2.5.3.6 of its Report, we read these statements in 
the context of the Panel's weighing of the probative value of the post -implementation evidence, as 
compared to the pre -implementation evidence. We note that, after finding persuasive Australia's 
suggestion that, in the early period of application, the data and evidence relating to actual smoking 
behaviours "may not provide a complete picture of the extent to which the measures contribute"970, 
the Panel stated that:  
We also consider that, in this context , and in light of the nature of the design of the 
measures, as discussed in preceding sections, available empirical evidence relating to 
the impact of the measures on "proximal" outcomes, as well as evidence relating to 
"distal outcomes" that may be precur sors of actual smoking behaviours, may usefully 
inform our assessment of the actual contribution of the TPP  measures to their objective, 
together with evidence before us relating to actual smoking behaviours since the entry 
into force of the measures.971 
6.336.   Likewise, later in its analysis, the Panel stated that it would "consider the evidence before 
[it] in relation to the application of the TPP  measures with awareness that the time -period for which 
evidence of application of the measures is available may have a n impact on the nature and extent 
of the conclusions that may be drawn from this evidence" .972 
6.337.   We understand the Panel's statements as suggesting that, because it was too early to 
evaluate conclusively the contribution of the TPP  measures to Australia's obje ctive, the Panel would 
rely on the evidence pertaining to the design and structure of the TPP  measures to inform its 
understanding of the limited evidence available to it of the actual impact of the TPP  measures, 
following their entry into force. Thus, in making these statements, the Panel addressed and rejected 
the complainants' arguments that evidence regarding the TPP  measures ' actual effects should be 
given more weight than the pre -implementation evidence in the Panel's assessment.  
6.338.   In sum, given the lim ited period following the entry into force of the TPP  measures and the 
possibility of the evolution of the impact of the TPP  measures over time, the Panel did not consider 
 
966 Panel  Report, para.  7.1043.  
967 Panel  Report, para.  7.1044.  
968 Panel  Report, para.  7.1043.  
969 Panel  Report, para.  7.1044.  
970 Panel  Report, para.  7.940. 
971 Panel  Report, para.  7.940.  
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  the evidence regarding the actual effects of the TPP  measures to be dispositive. Mor eover, the Panel 
did not take account of "evidence" of the future impact of TPP  measures. Nor were its general 
remarks regarding possible evolution over time decisive for its overall conclusion regarding 
contribution of the TPP  measures to Australia's obje ctive. For these reasons, we are not persuaded 
that the appellants' claims challenging the Panel's statements on the possible future impact of the 
TPP measures warrant further scrutiny.  
6.1.2.3.3.4   Claims that we need not address for purposes of resolving th ese dispute s 
6.339.   The following treaty provisions are relevant to our consideration of whether, in order to 
resolve th ese dispute s, it is necessary for us to address certain allegations of error put forward by 
the appellants.  Article  17.12 of the DSU provides that  "[t]he Appellate  Body shall address each of 
the issues raised in accordance with paragraph  6 during the appellate proceeding."973 Article  3.4 of 
the DSU  indicates that "[r]ecommendations or rulings made by the DSB shall be aimed at achieving 
a satisfactory settlement of the matter", while Article  3.7 of the DSU states that "[t]he aim of the 
dispute settlement mechanism is to secure a positive solution to a dispute." These overarching aims 
of the WTO  dispute settlement mechanism suggest to us that, while we a re required to address each 
issue on appeal, we have the discretion not to rule on certain claims when doing so is not necessary 
to resolve the dispute.974 
The Dominican  Republic's claims concerning the Panel's assessment of the 
evidence relating to the NTPP TS and ITC datasets in proximal and distal outcomes  
6.340.   The Dominican  Republic notes that the parties presented, to the Panel, evidence and 
argument s based on the NTPPTS and ITC datasets, which measured the impact of the TPP  measures 
on a number of proximal an d distal outcomes. Australia's evidence was based on published papers 
that analysed these datasets (Wakefield et al. 2015, Durkin et al. 2015, and Yong et al. 2015975), 
while the Dominican  Republic's evidence was based on a re -analysis of these datasets by 
Ajzen et al., which was presented in several expert reports.976 According to the Dominican  Republic, 
"the Panel criticized Ajzen et al .'s analysis in a manner that failed to respect the Dominican  Republic's 
due process rights and that lacked even -handedness ."977 Despite these allegations, the 
Dominican  Republic expressly states that it "has decided not to challenge the Panel's failure to 
conduct an objective assessment of Ajzen et al, because these errors are not consequential for the 
Panel's findings on proxima l and distal outcomes" .978 
6.341.   In order to reverse a panel's finding on the basis of Article  11, we must "be satisfied that 
the Panel's errors, taken together or singly, undermine the objectivity of the Panel's assessment", 
such that the panel's factual finding "no longer ha[s] a sufficient evidentiary and objective basis".979 
Given the Dominican  Republic's own admission that any potential errors made by the Panel in its 
criticisms of Ajzen et al. are "not consequential for the Panel's findings on proximal and dist al 
outcomes"980, we consider it unnecessary to address the Dominican  Republic's allegations in this 
regard.  
 
973 Article  17.6 limits an appeal to "issues of law covered in the panel report and legal interpretations 
developed by the panel".  
974 Appellate  Body Reports, US – Tuna II (Mexico) (Article  21.5 – US) / US – Tuna II (Mexico) 
(Article  21.5 – Mexico II) , para.  6.318; US – Upland Cotton , paras.  510-511. 
975 Wakefield et al. 2015 (Panel Exhibits AUS -206, DOM -306); H. Yong, R. Borland, D. Hammond, 
J. Thrasher, K.  Cummings, and G. Fong, "Smokers' Reactions to the New Larger Health Warning Labels on Plain 
Cigarette Packs in Australia: Findings from the ITC Australia Project", Tobacco Control  (19 February 2015), 
doi:10.1136/tobaccocontrol -2014-05197 ( Yong et al. 2015) (Panel Exhibit DOM -382); S. Durkin, E.  Brennan, 
M. Coomber, M.  Zacher, M.  Wakefield, and M.  Scollo, "Short -Term Changes in Quitting -Related Cognitions and 
Behaviours After the Implementation of Plain Packaging with Larger Health Warnings: Fin dings from a National 
Cohort Study with Australian Adult Smokers", Tobacco Control , Vol. 24 (2015), ii26 -ii32 (Durkin et al. 2015) 
(Panel Exhibits AUS -215 (revised), DOM -305).  
976 Dominican  Republic's appellant's submission, para.  948. See also ibid., fn  861 to para.  949. 
977 Dominican  Republic's appellant's submission, para.  949. 
978 Dominican  Republic's appellant's submission, para.  949 (referring to Panel  Report, Appendix  A, 
para. 101 and fn  39 thereto).  
979 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  1318.  
980 Dominican  Republic's appellant's submission, para.  949. 
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  GHWs  
6.342.   Honduras contends that the Panel was not "even -handed" in its assessment of the facts of 
the case because, unlike in its evaluation of the TPP  measures, the Panel did not combine the effect 
of the alternative measure with the effect of the unchallenged increase in the mandatory size of the 
GHWs on tobacco packaging when it examined the alternative measures proposed by the 
complainants.981 Honduras co ntends that "if the Panel had, in the required even -handed manner, 
examined the alternative measures in combination with the enlarged GHWs which were never 
challenged by the complainants, it would not have made the findings it made on 'equivalent 
contribut ion' and should not have rejected these alternatives."982 
6.343.   As discussed in paragraph  6.313.    above, in response to questioning at the second hearing, 
the participants all agreed that there was no evidence on the Panel r ecord that showed the separate 
effects of the TPP  measures and the enlarged GHWs.983 In any event, we observe that this contention 
by Honduras, brought as a claim under Article  11 of the DSU, challenges the objectivity of the Panel's 
assessment of the facts in relation to the Panel's analysis of the contribution of the TPP measures  to 
Australia's objective. This claim mirrors another of Honduras' claims, in which Honduras alleges that 
"the Panel's failure to compare the degree of contribution of the alternati ve measure in light of the 
other tobacco control measures that were not challenged constitutes an additional error of law" 
under Article  2.2 of the TBT  Agreement.984 This claim by Honduras challenges the Panel's analysis 
of the contribution of the proposed a lternative measures, and is discussed in 
section  6  6.1.4.3   below. In response to questioning at the second hearing, Honduras clarified that 
it was not c hallenging the Panel's failure to separate the effects of the TPP  measures from the effects 
of the GHWs. Rather, its appeal was about the lack of even -handedness in the context of the Panel's 
examination of alternative measures, where, according to Hondura s, the Panel did not even consider 
the possibility that GHWs may have some effect. Given this clarification by Honduras, we do not 
consider it necessary or appropriate, for purpose of resolving th ese dispute s to address it s claim 
under Article  11 of the DS U in the context of the Panel's analysis of the contribution of the 
TPP measures.  
Step 2 of the Panel's smoking prevalence analysis  
6.344.   The Dominican  Republic argues that "[t]he Panel's finding in step  2 [of its smoking 
prevalence analysis] that the rate of decline accelerated in the post -TPP period appears to be based 
on the Panel's own original analysis of the RMSS data, which is depicted in Figure  C.19 of its 
Report."985 According to the Dominican  Republic, "the Panel did not present Figure  C.19 … to the 
parties during the proceedings" nor did the Panel explain in its Report "how it produced 
Figure  C.19".986 The Dominican  Republic considers that the Panel's conclusion in step  2 was not 
based on reasoned or adequate findings, lacked a basis in the evidence conta ined on the Panel 
record, failed to respect the Dominican  Republic's due process rights, and inappropriately made the 
case for Australia, which demonstrates that the Panel failed to make an objective assessment of the 
matter before it.987  
6.345.   The Panel's conclu sion in step  2 of its smoking prevalence analysis states that, based on the 
most recent available RMSS data, smoking prevalence in Australia "has not only continued to 
 
981 Honduras' appellant's submission, paras.  1021-1025.  
982 Honduras' appellant's submission, para.  1024. (emphasis omitted)  
983 We emphasize that, even if the isolated e ffect of the unchallenged large GHWs were to be 
established, as Australia points out, Honduras bore the burden of establishing, before the Panel, that the 
combined effects of its proposed alternative measures and the enlarged GHWs would make an equivalent 
contribution to Australia's objective, to the contribution resulting from the combined effects of the 
TPP measures and the enlarged GHWs. As the Appellate  Body has stated, "the party who asserts a fact, 
whether the claimant or the respondent, is responsibl e for providing proof thereof." (Appellate  Body Report,  
US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p.  335. See also Appellate  Body Reports, US – Carbon Steel 
(India) , para.  446; US – Gambling , paras.  138-140; US – Carbon Steel , para.  157; Canada – Dairy 
(Article  21.5 – New Zealand and US II) , para.  66; Japan – Apples , para.  159; EC – Hormones , para.  98;  
Japan – Agricultural Products II , para.  129) 
984 Honduras' appellant's submission, paras.  645-657. 
985 Dominican  Republic's appellant's submission, para.  159.  
986 Dominican  Republic's appellant's submission, para.  162 (referring to Panel  Report, Appendix  C, 
para. 51).  
987 Dominican  Republic's appellant's submission, para.  194.  
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  decrease following the introduction of the TPP  measures, but … has accelerated with a st eeper slope 
of the smoking prevalence trend between December  2012 and September  2015 … compared to the 
pre-TPP periods".988 The Panel did not explicitly refer to Figure  C.19 when forming this conclusion. 
We note that, in summarizing Dr  Chipty's arguments in the relevant "[d]atasets and related studies" 
subsection989, the Panel not only purported to visually depict the RMSS data in Figure  C.19, but also 
referred to two graphs submitted to the Panel by Australia, namely , Figure  2 of the 
Chipty  Second  Rebuttal Rep ort and a "similar graphic for the period January 2001 -September 2015" 
that was included in the Tobacco Plain Packaging Post -Implementation Review (PIR).990 We further 
note that Figure  C.19 of the Panel  Report, Figure  2 of the Chipty  Second  Rebuttal Report, and 
Figure  3 of the Tobacco Plain Packaging PIR all indicate a steepening trend after the implementation 
of the TPP  measures. Since all three  graphs substantiate the Panel's finding that "the downward 
trend in smoking prevalence has accelerated with a stee per slope of the smoking prevalence trend 
between December  2012 and September  2015", and there is no reason to question two of those 
three  graphs, we do not consider it necessary to examine whether the Panel erred in relying on 
Figure  C.19.991  
6.1.2.3.4   Whether the P anel erred in its overall conclusion on the contribution of the 
TPP measures to Australia's objective  
6.346.   Honduras asserts that, in reaching its overall conclusion on the contribution of the 
TPP measures to Australia's objective, the Panel failed to provide a reasoned and adequate 
explanation of the quality and probative value of the pre -implementation evidence in light of the 
post-implementation evidence.992 In addition, Honduras claims that the Panel erred under Article  11 
of the DSU by failing to provide a reasoned and adequate  explanation of how the facts supported 
the determination made993 because the Panel's findings relating to the TPP  measures' actual effects 
on smoking behaviour do  not support its overall conclusion that the measures actually " do" make a 
meaningful contribution to Australia's objective.994 
6.347.   The Dominican  Republic claims that the Panel erred under Article  11 of the DSU by offering 
internally incoherent reasoning in relation to whether the actual effects of the TPP  measures 
confirmed  its findings on the measures' anticipated effects reached on the basis of the 
pre-implementation evidence.995 The Dominican  Republic submits that the Panel did not address 
these "discrepancies" between the predicted effects and the actual affects resulting from the 
operation of the TPP  measures, or offer any justification for adopting a different approach to 
assessing those outcomes for which the predicted effects were discredited, rather than confirmed, 
by the evidence on the actual impact of the TPP  measur es.996 The Dominican  Republic adds that, if 
the Appellate  Body were to reverse the Panel's findings on the actual effects of the TPP  measures 
on smoking prevalence and consumption, none of the remaining intermediate Panel findings – 
i.e. neither the Panel's findings on the anticipated  impact of the TPP  measures nor its findings on 
the actual  impact of the measures on "proximal" and "distal" outcomes – would be sufficient to 
sustain its overall conclusion on the contribution of the TPP  measures.997 
6.348.   Australia con siders that, contrary to what the appellants assert, the Panel did assess  the 
pre-implementation evidence against the post -implementation evidence.998 Australia also maintains 
that Honduras' allegation, that the Panel's findings concerning smoking prevalence  and consumption 
 
988 Panel  Report, Appendix  C, para.  56.  
989 Panel Report, Appendix  C, section  2.1, paras.  43-52. 
990 Panel  Report, Appendix  C, para.  51 and fn  48 thereto (referring to Australia's comments on the 
complainants' responses to Panel question No.  146, para.  15; Chipt y Second Rebuttal Report (Panel 
Exhibit  AUS-591), paras.  8-12; Tobacco Plain Packaging PIR (Panel Exhibit  AUS-624), p.  35). 
991 Panel  Report, Appendix  C, para.  56.  
992 Honduras' appellant's submission, para.  797. 
993 Honduras' appellant's submission, para.  721. 
994 Honduras' appellant's submission, paras.  735-737. See also ibid., paras.  724 and 726.  
995 Dominican  Republic's appellant's submission, para.  763. 
996 Dominican  Republic's appellant's submission, paras.  777. 
997 See Dominican  Republic's appellant's submission,  para. 593. 
998 Australia's appellee's submission, para.  540. 
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  do not support the Panel's overall conclusion, is based on a "mischaracterization" of the Panel's 
actual findings and conclusions.999 
6.349.   We recall that, before the Panel, Honduras' main contention1000 was that the TPP  measures 
make no contribution  to Australia's objective, nor are they apt to do so.1001 The Dominican  Republic 
contended that well -accepted axioms of social and medical science confirm that the TPP  measures 
will not be effective in achieving Australia's stated goals.1002 The Panel understood  the parties' 
arguments as follows:  
In essence, the complainants consider that the TPP  measures cannot contribute to their 
objective through the mechanisms identified in the TPP  Act, and that 
post-implementation evidence shows that smoking prevalence has n ot in fact been 
reduced as a result of the TPP  measures. Australia in essence responds that, contrary 
to the complainants' assertions, the measures are designed on the basis of a sound 
evidence base, and that available post -implementation evidence confirms  that the 
measures are contributing to their objective of reducing smoking.1003 
6.350.   Hence, in addressing the parties' arguments, the Panel sought to determine the degree to 
which the TPP  measures, "as written and applied, contribute, if at all, to Australia's leg itimate 
objective of improving public health by reducing the use of, and exposure to, tobacco products".1004 
In this regard, the Panel acknowledged that the "fulfilment of this objective through the 
TPP measures is predicated on their ability to influence smo king behaviours , such as initiation, 
cessation, and relapse."1005 For this reason, the Panel considered that the impact of the measures 
on such behaviours , is "a priori, directly relevant to an assessment of the degree of contribution of 
the measures to this objective".1006 Moreover, the Panel made it clear that it did not "exclude" that 
"evidence relating to 'proximal' outcomes reflecting the three  mechanism [s] of the TPP  Act"1007, in 
combination with other relevant evidence before the Panel, could inform the Panel 's assessment of 
the degree of contribution of the measures to Australia's objective.1008 However, the Panel also made 
it clear that such evidence was relevant  only "to the extent that it would inform the impact of the 
measures on the smoking behaviours that are the ultimate target of the measures".1009 
6.351.   Bearing in mind the TPP  Act's depiction of the intended operation of the TPP  measures, the 
Panel first assessed the anticipated effect of the TPP  measures, based on their design, structure , 
and expected operation.1010 Thereafter, the Panel assessed the evidence relating to the actual effects 
of the TPP  measures following their entry into force. Specifically, the Panel assessed the impact of 
the TPP  measures on: (i)  "non-behavioural" or "proxima l" outcomes (i.e . the appeal of packaging, 
the effectiveness of the GHWs, and the ability of packaging to mislead consumers)1011; (ii) "distal" 
outcomes (i.e.  intention and behavioural outcomes, such as increased intentions to quit and 
increased quit attempts )1012; and (iii)  smoking behaviour (i.e.  prevalence and consumption).1013 The 
Panel also examined the impact of the TPP  measures on illicit trade.1014 In carrying out this task, the 
Panel considered that it had a duty to examine and consider all the evidence before  it and to 
"evaluate the relevance and probative force of each piece thereof".1015 
 
999 Australia's appellee's submission, para.  843. 
1000 We recall that the complainants made two sets of arguments in the alternative in support of their 
claim under Article  2.2. See para.  6.5.  above.  
1001 Panel  Report, para.  7.426.  
1002 Panel  Report, para.  7.437.  
1003 Panel  Report, para.  7.485. We note that the Panel's characterization of the parties' argumen ts is not 
challenged on appeal.  
1004 Panel  Report, para.  7.424. See also ibid., para.  7.483.  
1005 Panel  Report, para.  7.495. (emphasis original)  
1006 Panel  Report, para.  7.495.  
1007 Panel  Report, para.  7.498.  
1008 Panel  Report, para.  7.498.  
1009 Panel  Report, para.  7.498.  
1010 Panel  Report, section  7.2.5.3.5.  
1011 Panel  Report, para.  7.491.  
1012 Panel  Report, para.  7.491.  
1013 Panel  Report, section  7.2.5.3.6.  
1014 Panel  Report, section  7.2.5.3.7. The Panel's findings on illicit trade are not appealed.  
1015 Panel  Report, para.  7.517 (quoting Appellate  Body Report, Korea  – Dairy , para.  137).  
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  6.352.   Throughout its analysis, the Panel emphasized that the operation of the TPP  measures, 
including their contribution to Australia's objective, must be viewed in the broader conte xt of other 
tobacco control measures maintained by Australia. The Panel explained that, while this broader 
context does not remove or reduce the need "to identify the contribution that the challenged 
measures themselves make to Australia's objective", it w as a relevant consideration in the Panel's 
assessment, to the extent that "it informs and affects the manner in which the measures are applied 
and operate, as a component of a broader suite of complementary tobacco control measures."1016 
6.353.   Following its examina tion of the pre - and post -implementation evidence before it1017, the 
Panel concluded as follows:  
7.1025. Overall, we find that the complainants have not demonstrated that the 
TPP measures are not apt to make a contribution to Australia's objective of improvin g 
public health by reducing the use of, and exposure to, tobacco products. Rather, we 
find that the evidence before us, taken in its totality, supports the view that the 
TPP measures, in combination with other tobacco -control measures maintained by 
Austral ia (including the enlarged GHWs introduced simultaneously with TPP), are apt 
to, and do in fact, contribute to Australia's objective of reducing the use of, and exposure 
to, tobacco products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evid ence before us supports 
the view that, as applied in combination with the comprehensive range of other tobacco 
control measures maintained by Australia and not challenged in these proceedings, 
including a prohibition on the use of other means through which  branding could 
otherwise contribute to the appeal of tobacco products and to misleading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, and do, make a 
meaningful contribution to Australia's objective of reducing the use of, an d exposure to, 
tobacco products.1018 
6.354.   We observe that, in its summary of the bases for its overall conclusion, the Panel emphasized 
the significance of the pre -implementation evidence pertaining to the anticipated effects of the 
TPP measures1019, while highlighti ng the limitations of the post -implementation evidence pertaining 
to the actual impact of the TPP  measures.1020 For instance, in connection with the evidence of the 
anticipated effects of the TPP  measures, the Panel provided the following explanation:  
7.1027 . [W]e are not persuaded that the complainants have established that the largely 
convergent conclusions reflected in the body of studies at issue, and the overall 
conclusions drawn from them, should be considered to be so fundamentally flawed as 
to provide no support for the proposition that the TPP  measures are capable of 
contributing to their objective through these mechanisms.  
7.1028 . We are comforted in this conclusion by the fact that this body of literature has 
been subject to various reviews conducted outside the context of these proceedings, 
which have concluded that the body of studies at issue supports the proposition that 
tobac co plain packaging would be apt to reduce the appeal of tobacco products, enhance 
the effectiveness of GHWs and reduce the ability of tobacco packaging to mislead 
consumers about the risks of smoking. We note in particular the conclusions of the 
independen t review conducted on behalf of the UK Government [*], which considered 
both the quality of a previous systematic review of the evidence base relating to tobacco 
plain packaging and the quality of the underlying evidence itself, and concluded that 
the quant itative studies reviewed were "conducted to a high standard", that "the 
conclusions that were drawn are a reasonable reflection of the evidence available" and 
that the review of the qualitative studies at issue was "a high quality systematic review", 
 
1016 Panel  Report, para.  7.506 (referring to Appellate  Body Report, Brazil  – Retreaded Tyres , para.  154).  
1017 Panel  Report, para.  7.1024.  
1018 Panel  Report, paras.  7.1025 and 7.1043.  
1019 Panel  Report, paras.  7.1026 -7.1034.  
1020 Panel  Report, paras. 7.1035 -7.1039.  
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  which  was "clearly documented and follows recognised best practice for such 
reviews".1021  
_____________________________________________________________
[*fn original]  2648 We attach particular weight to this assessment conducted by independent 
reviewers who are no t among the frequently cited "plain packaging" authors and were 
commissioned for the purposes of making an independent assessment of the relevant literature.  
6.355.   While, as quoted above, the Panel expressed confidence in the strength of its conclusions 
based on  the evidence of the anticipated effects of the measures, we observe that the Panel was 
rather more circumspect concerning the evidence of the actual effects of the TPP  measures following 
their entry into force. For example, as regards the post -implementation evidence of smoking 
prevalence and consumption, the Panel was careful to note that "the extent to which the data 
available at the time of our assessment can inform an overall assessment of the actual and expected 
contribution of the measures  to their objective is disputed. The data before us in these proceedings 
relate [] to a period of up to three  years following the entry into force of the TPP  measures."1022 In 
addition to the limitation of time affecting the availability of the post -implementa tion evidence, the 
Panel observed further that:  
The overall impact of the TPP  measures is difficult to quantify in terms of the magnitude 
of changes in smoking behaviours attributable to the measures, on the basis of the 
evidence available to us. In partic ular, this impact … is difficult to isolate empirically, on 
the basis of the evidence before us, from other factors that also affect the evolution of 
smoking behaviours, including other tobacco control measures applied simultaneously 
with the TPP  measures.1023 
6.356.   Based on the foregoing, we understand the Panel to have identified the limited time following 
the entry into force of the TPP  measures, as well as the difficulty of isolating the effects of the 
TPP measures, as factors undermining the quality of the avai lable post -implementation evidence on 
the actual effects of the TPP  measures. By contrast, the Panel's explanations suggest that the Panel 
accorded greater probative weight to the pre -implementation evidence pertaining to the anticipated 
effects of the TPP  measures.  
6.357.   Furthermore, we recall the Panel's observation that the impact of the TPP  measures may 
evolve over time. The Panel made this observation only after it had concluded that "the 
TPP measures are apt to, and do, make a meaningful contribution to Au stralia's objective of reducing 
the use of, and exposure to, tobacco products ."1024 As stated above, given that the TPP  measures 
had been in force for a very brief period by the time the Panel proceedings got under way, the 
Panel's observation that "the impac t of the TPP  measures may evolve over time"1025 seems 
reasonable.  
6.358.   In our view, having examined properly all the relevant evidence before it, the Panel was well 
within the bounds of its discretion, as the trier of fact, to accord greater probative weight to th e 
evidence of the anticipated effects of the TPP  measures than to the evidence of the actual effects of 
the TPP  measures. For these reasons, we reject Honduras' assertion that, in reaching its overall 
conclusion on the contribution of the TPP  measures to A ustralia's objective, the Panel failed to 
provide a reasoned and adequate explanation of the quality and probative value of the 
pre-implementation evidence in light of the post -implementation evidence.1026 
6.359.   Moreover, as discussed in sections  6.1.2.3.2   6.1.2.3.3    above , we are not persuaded that 
the appellants have demonstrated that  the Panel , in arriving at its intermediate findings, failed to 
make an objective assessment of the facts of the case.  We also do not agree with t he 
Dominican  Republic's assertion that, if the Panel's findings on the actual  effects of the TPP  measures 
 
1021 Panel Report, paras.  7.1027 -7.1028 (referring to Chantler Report (Panel Exhibits AUS -81, CUB -61)); 
ibid., Annex  D, p. 49 (referring to Stirling Review (Panel Exhibits AUS -140, HND -130, CUB -59)); ibid., 
Annex  E, p. 56 (referring to Stirling Review (Panel Exhibi ts AUS -140, HND -130, CUB -59)). 
1022 Panel  Report, para.  7.1037.  
1023 Panel  Report, para.  7.1040.  
1024 Panel  Report, para.  7.1043.  
1025 Panel Report, para.  7.1044.  
1026 Honduras' appellant's submission, para.  797. 
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  on smoking prevalence and consumption are reversed, none of the Panel 's remaining intermediate 
findings – i.e. neither the Panel's findings on the anticipated impact of the TPP  measures nor its 
findings on the actual impact of the measures on "proximal" and "distal" outcomes – would be 
sufficient to sustain its overall conclusion on the contribution of the TPP  measures.1027 
6.360.   In this regard, we recall our finding in section  6.1.2.3.2    above  that the complainants have 
not demonstrated that the Panel failed to make an objective assessment of the case with respect to 
its assessment of the evidence of the anticipated effects of the TPP  measures. Accordingly, the 
complainants have not demonstrated that the Panel erred in finding as follows:  
7.929 . Overall, our review of the evidence before us in relation to the design, structure 
and intended operation of the TPP  measures does not persua de us that, as the 
complainants argue, they would not be capable of contributing to Australia's objective 
of improving public health by reducing the use of, and exposure to, tobacco products, 
through the operation of the mechanisms identified in the TPP  Act, in combination with 
other relevant tobacco control measures applied by Australia.  
7.930 . Rather, our review of the relevant evidence suggests that it is recognized that 
various branding features are capable of being used on tobacco packaging in order t o 
convey certain positive associations with the products, and that a body of research 
exists, that sought to investigate the impact of removing  this type of feature [] through 
plain packaging of tobacco products, on the types of "proximal outcomes" now refl ected 
in the TPP  Act. …  
7.931 . We also take note of the body of research devoted to the study of the relationship 
between product perceptions, intentions and behaviours discussed by the parties  …[.] 
Overall, this evidence, while it makes clear the complex ity and multiplicity of factors 
driving smoking behaviours, is consistent, in our view, with the proposition underlying 
the design and structure of TPP  measures that relevant behaviours may be influenced 
by a reduction in the appeal of tobacco products or an improved awareness and 
understanding of health risks of smoking, or both.1028  
6.361.   Likewise, as reflected in section  6.1.2.3.3.2   above, we are not persuaded by any of the 
appellants ' challenges to the Panel's analysis of the post -implementation evidence relating to 
proximal and distal outcomes. Accordingly, the Panel's f indings in Appendices A and B to its Report, 
summarized in paragraphs  7.958 and 7.963 of the Panel  Report, stand. As discussed above, we 
consider that the Panel, having examined properly all the relevant evidence before it, was well within 
the bounds of it s discretion as trier of fact to accord greater probative weight to the evidence of the 
anticipated effects of the TPP  measures than to the evidence of the actual effects of the 
TPP measures. Accordingly, in our view, the Panel's findings on the anticipate d effects, together with 
its findings on the actual impact of the TPP  measures on proximal and distal outcomes support the 
Panel's overall conclusion that "the TPP  measures, in combination with other tobacco -control 
measures maintained by Australia (includ ing the enlarged GHWs introduced simultaneously with 
TPP), are apt to, and do in fact, contribute to Australia's objective of reducing the use of, and 
exposure to, tobacco products."1029 
6.362.   Moreover, in section  6.1.2.3.3.1    above, we have rejected the vast majority of the 
appellants'  challenges to  the Panel's analysis of smoking behaviour. That said, we have found two 
errors in the Panel's assessment of the p ost-implementation evidence on smoking prevalence and 
consumption. First, we have found that the Panel erred in its reliance on non -stationarity and 
multicollinearity.1030 However, as discussed above, we consider that this error by the Panel has no 
impact on the Panel's ultimate conclusion that "there is econometric evidence suggesting that [the 
TPP measures] contributed to the reduction in overall smoking prevalence in Australia ."1031 Second, 
with respect to the Panel 's reliance on the impact of tobacco costline ss to critique the parties' 
evidence, we find that the Panel erred by failing to address the Dominican  Republic's arguments 
 
1027 See Dominican  Republic's appellant's submission, para.  593. 
1028 Panel  Report, paras.  7.929 -7.931. (emphasis original)  
1029 Panel  Report, para.  7.1025.  
1030 See para.  6.257.   above.  
1031 Panel  Report, Appendix  C, para.  122. (fn  omitted)  
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  regarding Australia's consumption model. We consider that this error fatally undermines the Panel's 
determination that Australia's e vidence was more credible than the complainants' evidence, on which 
the Panel based its conclusion that "there is some econometric evidence suggesting that the 
TPP measures … contributed to the reduction in wholesale cigarette sales, and therefore cigarett e 
consumption ."1032 In our view, the Panel's error vitiates this factual finding.   
6.363.   Having found these errors in the Panel's analysis, we take note of Australia's contention that 
even if the appellants could establish that the Panel exceeded the bounds of its discretion as the 
trier of facts, they would still need to demonstrate that the Panel's errors undermined the objectivity 
of the Panel's assessment.1033 For Australia, in order for the appellants to prevail on their claims of 
error under Article  11, they must  show that the Panel exceeded the bounds of its discretion and  that 
the consequences for the Panel's findings are material. In Australia's view, "none of the appellants' 
alleged errors, individually or cumulatively, materially undermine the Panel's ultimat e legal 
conclusion that the complainants failed to meet their burden of proving that the TPP  measures are 
not apt to make a contribution to Australia's legitimate objective."1034 
6.364.   The Appellate  Body has said that not every error in the appreciation of evidence, or error of 
law, constitutes a failure on the part of the panel to make an objective assessment of the matter 
before it.1035 Rather, "[t]o succeed in its challenge under Article  11, an appellant must show that the 
statement was material  to the panel 's legal conclusion."1036 Hence, in order to reverse a panel's 
finding on the basis of Article  11, the Appellate  Body has said that it must "be satisfied that the 
[p]anel's errors, taken together or singly, undermine the objectivity of the [p]anel's assessmen t", 
such that the panel's factual finding "no longer ha[s] a sufficient evidentiary and objective basis".1037  
6.365.   Turning back to the facts of this case, we recall our finding that the Panel's errors vitiate 
only the Panel's factual findings with respect to step  3 of its cigarette consumption analysis in 
Appendix  D to its Report. However, the question remains whether vitiating this factual finding 
undermines the Panel's overall conclusion that the TPP  measures are apt to, and do, contribute to 
Australia's objecti ve. In this respect, we recall that the Panel's ultimate conclusion on the degree of 
contribution took into account the evidence of the anticipated ef fects of the TPP  measures (i.e.  the 
pre-implementation evidence regarding the design, structure , and inten ded operation of the 
measures).1038 The Panel considered that, on the basis of this evidence, the appellants had failed to 
demonstrate that the TPP  measures are incapable of contributing to Australia's objective. Moreover, 
the Panel considered it reasonable t o hypothesize that the TPP  measures will contribute to Australia's 
objective by reducing the appeal of tobacco products.1039 The Panel also took into account the 
 
1032 Panel  Report, Appendix  D, para.  137.c.  
1033 Australia's appellee's submission, para.  448 (referring to Appellate  Body Reports, EC and certain 
member States  – Large Civil Aircraft (Article  21.5 – US), para.  5.157; China – Rare Earths , para.  5.178;  
EC ‒ Fasteners (China) , para.  442).  
1034 Australia's appellee's submission, para.  449. 
1035 Appellate  Body Reports, US – Steel Safeguards , para.  497; Japan – Apples , para.  222. In  
EC – Hormones , the Appellate  Body stated that, "not every error i n the appreciation of the evidence (although 
it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the 
facts." (Appellate  Body Report, EC – Hormones , para.  133) 
1036 Appellate  Body Report, US – Large Civil  Aircraft (2nd complaint) , para.  722. (emphasis added)  
1037 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  1318. Likewise, in 
EC – Fasteners (China) , the Appellate  Body stated that:  
An attempt to make every error of a panel a violation of Article  11 of the DSU is an approach 
that is inconsistent with the scope of this provision. In particular, when alleging that a panel 
ignored a piece of evidence, the mere fact that a panel did not explicitly refer to that evidence in 
its reasoning is insufficient to support a claim of violation under Article  11. Rather, a participant 
must explain why such evidence is so material to its case that the panel's failure explicitly to 
address and rely upon the evidence has a bearing on the objecti vity of the panel's factual 
assessment.  
(Appellate  Body Report, EC – Fasteners (China) , para.  442) 
1038 Panel  Report, paras.  7.1026 -7.1034.  
1039 The Panel stated that:  
[I]n a regulatory context where tobacco packaging would otherwise be the only opportunity to  
convey a positive perception of the product through branding, as is the case in Australia, it 
appears to us reasonable to hypothesize some correlation between the removal of such design 
features and the appeal of the product, and between such reduced prod uct appeal and consumer 
behaviours. It also does not appear unreasonable, in such a context, in light of the evidence 
before us, to anticipate that the removal of these features would also prevent them from creating 
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  post-implementation evidence of the actual effects of the TPP  measures. The Panel considered it 
relevant that the TPP  measures have reduced the appeal of tobacco products and contributed to 
reducing smoking prevalence and consumption of tobacco products.1040 Specifically, the Panel 
considered such evidence to be "consistent with" the view that the TPP  measures contributed to 
Australia's objective.1041  
6.366.   We note that, in forming its conclusion that the evidence of smoking prevalence and 
consumption was consistent with the hypothesized impact of the TPP  measures, the Panel 
highlighted "[t]he fact that pre -existing downward trends in smoking prevalence and overall sales 
and consumption of tobacco products have not only continued but accelerated since the 
implementation of the TPP  measures, and that the TPP  measures and enlarged GHWs had a negative 
and statistical ly significant impact on smoking prevalence and cigarette wholesale sales" .1042 The 
Panel's reasoning with respect to smoking prevalence and consumption was therefore formed on the 
basis of the Panel's conclusions in steps  2 and 3 of its smoking prevalence an alysis (in Appendix  C) 
and steps  2 and 3 of its cigarette consumption analysis (in Appendix  D). As indicated, the Panel also 
considered it relevant that the evidence indicated that the TPP  measures had reduced the appeal of 
tobacco products.1043 Of these five  different aspects of its analysis that the Panel relied on in forming 
its conclusion that the post -implementation evidence was consistent with the hypothesized impact 
of the TPP  measures, the appellants have demonstrated that the Panel erred with respect to 
one aspect only, namely , step 3 of the Panel's cigarette consumption analysis.  
6.367.   Furthermore, we recall that smoking prevalence and consumption were merely two metrics  
through which the Panel assessed whether the TPP  measures had had an actual effect on smoking 
behaviours  (initiation, cessation , and relapse). In our view, the appellants have not demonstrated 
how any errors by the Panel in its assessment of consumption would also demonstrate that the Panel 
erred in its assessment of smoking prevalence. We also highlight, in this respect, that alth ough the 
Panel considered that the evidence on cigar consumption was mixed, the Panel relied exclusively on 
the cigar smoking prevalence evidence in concluding that the "econometric evidence … suggesting 
that the TPP  measures … contributed to a reduction i n cigar smoking prevalence is also consistent 
with a conclusion that the measures have an impact on relevant smoking behaviours with respect 
to cigars ."1044 To our minds, it follows that the Panel did not require evidence of an affirmative impact 
of the TPP  measures on tobacco product consumption in order to conclude that the 
post-implementation evidence was "consistent with" the hypothesized contribution of the 
TPP measures to Australia's objective.  
6.368.   Finally, we take note of Honduras' claim that "the Panel's o wn limited findings"1045 relating 
to the TPP  measures' actual effects on smoking behaviour do  not support its overall conclusion that 
the measures actually "do" make a meaningful contribution to Australia's objective.1046 Honduras 
pointed out, that in its approa ch to the evidence on contribution, the Panel highlighted the need to 
examine "actual behaviour" and "emphasi se[d] the importance of empirical evidence on the use of 
tobacco products in order to reach a conclusion on the actual contribution of the measures  to their 
objective" .1047 However, Honduras asserts that the Panel's findings in the Appendices to its Report 
are "cautiously worded and suggest uncertainty about the general conclusions to draw from the 
evidence" .1048 For Honduras, even taking the Panel's findi ngs as a given, these "limited" findings do 
not support the Panel's overall conclusion on the "actual contribution" of the TPP  measures to 
Australia's objective.1049 
 
a conflicting signal that would undermin e other messages that seek to raise the awareness of 
consumers about the harmfulness of smoking that are part of Australia's tobacco control 
strategy, including those arising from GHWs.  
(Panel  Report, para.  7.1034 (emphasis original))  
1040 Panel  Report, paras.  7.1036 -7.1037  
1041 Panel  Report, paras.  7.1036 -7.7037.  
1042 Panel  Report, para.  7.986.  
1043 Panel  Report, para.  7.1036.  
1044 Panel  Report, para.  7.1039. (fn  omitted)  
1045 Honduras' appellant's submission, para.  726. 
1046 Honduras' appellant's submis sion, paras.  735-737. See also ibid., paras.  724 and 726.  
1047 Honduras' appellant's submission, para.  735. 
1048 Honduras' appellant's submission, para.  738. 
1049 Honduras' appellant's submission, paras.  739-745. 
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  6.369.   We recall that, before the Panel, "the complainants consider[ed] that the TPP  measures 
cannot  contribute to their objective through the mechanisms identified in the TPP  Act, and that 
post-implementation evidence shows that smoking prevalence has not in fact been reduced as a 
result of the TPP  measures."1050 The Panel sought to determine the degree to  which the 
TPP measures, "as written and applied, contribute, if at all, to Australia's legitimate objective of 
improving public health by reducing the use of, and exposure to, tobacco products".1051 In its overall 
conclusion, the Panel answered this question  as follows:  
7.1025. Overall, we find that the complainants have not demonstrated that the 
TPP measures are not apt to make a contribution to Australia's objective of improving 
public health by reducing the use of, and exposure to, tobacco products. Rather , we 
find that the evidence before us, taken in its totality, supports the view that the 
TPP measures, in combination with other tobacco -control measures maintained by 
Australia (including the enlarged GHWs introduced simultaneously with TPP), are apt 
to, and do in fact, contribute to Australia's objective of reducing the use of, and exposure 
to, tobacco products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports 
the view that, as applied in combination with the compreh ensive range of other tobacco 
control measures maintained by Australia and not challenged in these proceedings, 
including a prohibition on the use of other means through which branding could 
otherwise contribute to the appeal of tobacco products and to mis leading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, and do, make a 
meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products.1052 
6.370.   We observe that paragraph  7.1025 contains two s entences. In the first sentence, the Panel 
concluded that "the complainants have not demonstrated that the TPP  measures are not apt to make 
a contribution to Australia's objective of improving public health by reducing the use of, and exposure 
to, tobacco products."1053 In the second sentence, the Panel continued to state that the evidence 
before it supported the view that "the TPP  measures, in combination with other tobacco -control 
measures maintained by Australia (including the enlarged GHWs introduced simul taneously with 
TPP), are apt to, and do in fact, contribute to Australia's objective of reducing the use of, and 
exposure to, tobacco products."1054 None of the appellants' submissions expressly referred to the 
first sentence of paragraph  7.1025. However, in response to questioning at the second hearing, the 
appellants as well as Australia all seemed to share the view that the two sentences of 
paragraph  7.1025 were not to be read in isolation from each other. Rather, in their view, both 
sentences, read togethe r, reflected the Panel's rejection of the complainants' proposition that the 
TPP measures are not apt to, nor do they, make a contribution to Australia's objective of reducing 
the use of, and exposure to, tobacco products. Honduras went on to add that para graph  7.1043 
confirmed the Panel's main finding, as reflected in the second sentence of paragraph  7.1025.  
6.371.   We agree with the participants that both sentences of paragraph  7.1025, read together, are 
a rejection of the complainants' proposition that the TPP  measures are not apt to, nor do they make 
a contribution to Australia's objective of reducing the use of, and exposure to, tobacco products. 
However, we do not share Honduras' view that the content of paragraph  7.1043 is the same as that 
of the second sente nce of paragraph  7.1025. As we read it, there is an additional nuance to the 
Panel's finding in paragraph  7.1043. Between paragraphs  7.1025 and 7.1043, the Panel summarized 
the key points1055 that justify its conclusion that "the TPP  measures are apt to, and do, make a 
meaningful  contribution to Australia's objective of reducing the use of, and exposure to, tobacco 
 
1050 Panel  Report, para.  7.485. We note that the Panel' s characterization of the parties' arguments is not 
challenged on appeal.  
1051 Panel  Report, para.  7.424. See also ibid., para.  7.483.  
1052 Panel  Report, paras.  7.1025 and 7.1043.  
1053 Panel  Report, para.  7.1025. (emphasis added)  
1054 Panel  Report, para.  7.1025.  
1055 We observe that, in these paragraphs, the Panel emphasized the robust nature of the 
pre-implementation evidence before it, while highlighting the limitations of the evidence relating to the actual 
impact of the TPP  measures f ollowing their entry into force.  
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  products."1056 We do not consider the Panel's addition of the word "meaningful" to be happenstance. 
While paragraph  7.1025 addressed and rejected the proposition by the complainants that "the 
TPP measures are not apt to make a contribution to Australia's objective"1057, the Panel's conclusion 
in paragraph  7.1043 goes further by speaking to the question of the "degree" of the contribution 
that the TPP  measu res, in concert with Australia's other tobacco -control measures, make to 
Australia's objective. In this regard, and as discussed in paragraph  6.40.   above, we understand 
the Panel to have concluded that "the TPP  measures are apt to, and do, make a meaningful 
contribution to Australia's objective of reducing the use of, and exposure to, tobacco products"1058 
as a gateway to addressing the complainants' al ternative proposition. We recall that the 
complainants argued, in the alternative, that even if the Panel were to conclude that the 
TPP measures make a contribution to Australia's objective, the TPP  measures would still be "more 
trade-restrictive than nece ssary" because various alternative measures would be available to 
Australia that are less trade -restrictive and could achieve an equivalent degree of contribution1059 to 
Australia's objective. Indeed, the Panel highlighted this conclusion about the measures' "meaningful 
contribution to Australia's objective" in its assessment of the complainants' proposed alternative 
measures.1060  
6.372.   Hence, given the specific circumstances of this case and the manner in which the 
complainants put forward their claims before the Panel, it is our view that the degree  of the 
contribution of the TPP  measures (i.e.  whether the contribution is "meaningful") is pertinent only to 
the Panel's comparison of the trade restrictiveness of, and the degree of achievement of Australia's 
objective by, the TPP  measures, with that of the proposed possible alternative measures that may 
be reasonably available and that are less trade -restrictive than the TPP  measures  – taking account 
of the risks non -fulfilment would create.1061 Accordingly, in the specific circumstances of this case, 
the Panel's overall conclusion on the contribution of the TPP  measures to Australia's objectiv e is not 
affected by the qualification of "meaningful".  
6.373.   In light of the foregoing, we find that the appellants have not demonstrated that the Panel 
erred in finding, in paragraphs  7.1025 and 7.1043 of the Panel Report, that:  
7.1025. Overall … the complaina nts have not demonstrated that the TPP  measures are 
not apt to make a contribution to Australia's objective of improving public health by 
reducing the use of, and exposure to, tobacco products. Rather, we find that the 
evidence before us, taken in its tota lity, supports the view that the TPP  measures, in 
combination with other tobacco -control measures maintained by Australia (including the 
enlarged GHWs introduced simultaneously with TPP), are apt to, and do in fact, 
contribute to Australia's objective of r educing the use of, and exposure to, tobacco 
products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports 
the view that, as applied in combination with the comprehensive range of other tobacco 
control measures maintaine d by Australia and not challenged in these proceedings, 
including a prohibition on the use of other means through which branding could 
otherwise contribute to the appeal of tobacco products and to misleading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, and do, make a 
meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products.1062 
 
1056 Panel  Report, paras.  7.1024 -7.1025 and 7.1043. (emphasis added)  
1057 Panel  Report, para.  7.1025.  
1058 Panel  Report, para.  7.1043.  
1059 Honduras' first written submission to the Panel, para.  911; Dominican  Republic's first  written 
submission to the Panel, paras.  1019 and 1021 (referring to para.  736 et seq ., in particular para.  737).  
1060 Panel  Report, para.  7.1386.  
1061 Appellate  Body Reports, US – COOL , para.  376 (referring to Appellate  Body Report, US – Tuna II 
(Mexico) , paras.  320-322). 
1062 Panel  Report, paras.  7.1025 and 7.1043.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.1.3   The trade restrictiveness of the TPP  measures  
6.374.   We address, in turn, whether the Panel: (i)  erred in its interpretation of Article  2.2 as it 
pertains to the element of "trade restrictiveness"; (ii)  erred in applying Article  2.2 in its 
determination of the trade restrictiveness of the TPP  measures; and (iii)  acted inconsistently with 
Article  11 of the DSU.  
6.1.3.1   Whether the Panel erred in its interpretation of Article  2.2 of the TBT  Agreement  
6.375.   Before assessing the degree of trade restrictiveness of the TPP  measures, the Panel defined 
the standard by which to assess trade restrictiveness, within the meaning of Article  2.2. The Panel 
emphasized that "a technical regulation is 'trade -restrictive' within the meaning of Article  2.2 when 
it has a limiting effect on international trade".1063 The Panel further observed that "past panels, and 
the Appellate  Body, have assessed the  trade-restrictiveness of specific technical regulations with 
reference to their limiting effect on the 'competitive opportunities' available to imported products" 
in disputes where "a separate assessment [was made ] of whether the technical regulation accorded 
less favourable treatment to imported products under Article  2.1 of the TBT  Agreement ."1064 
However, the Panel considered that "[t]he manner in which an assertion of trade -restrictiveness is 
substantiated may vary  from case to case" and "an assertion that a technical regulation is 
trade-restrictive might be substantiated on the basis of whether the technical regulation has a 
limiting effect on competitive opportunities 'in qualitative terms … in the particular circ umstances of 
a given case' ."1065 
6.376.   The Panel further noted that, "in certain cases, 'a detrimental modification of competitive 
opportunities may be self -evident with respect to certain de jure  discriminatory measures, whereas 
supporting evidence and argumentati on of actual trade effects might be required to demonstrate 
the existence and extent of trade -restrictiveness in respect of non -discriminatory internal measures 
that address a legitimate objective' ."1066 Consequently, "[w]hile the existence of discrimination may 
contribute to the establishment of 'trade-restrictiveness ' within the meaning of Article  2.2, a 
determination of 'trade -restrictiveness' is not dependent on the existence of discriminatory 
treatment of imported products ."1067 The Panel considered, therefo re, that "[h]ow the existence and 
extent of trade -restrictiveness is to be demonstrated in respect of technical regulations that are not 
alleged to be discriminatory will depend … on the circumstances of a given case" and "in the absence 
of any allegation of de jure  restriction on the opportunity for imports to compete on the market or 
of any alleged discrimination in this respect (between imports or between imported and domestic 
products), a sufficient demonstration will be required to establish the existe nce and extent of any 
'limiting effect' on international trade ."1068 The Panel added that a demonstration of trade 
restrictiveness "could be based on qualitative or quantitative arguments and evidence, or both, 
including evidence relating to the characteristi cs of the challenged measure as revealed by its design 
and operation" .1069 
6.377.   Honduras argues that the Panel erred in its interpretation of Article  2.2 of the TBT  Agreement 
by failing to rely on a legal standard based on the conditions of competition and competi tive 
opportunities.1070 According to Honduras, the Panel "bas[ed] its analysis … on whether the 
[TPP]  measures are discriminatory" and "favoured a 'trade effects' test based on the extent to which 
the measures actually reduced the volume of sales and thus of imports".1071 In Honduras' view, the 
 
1063 Panel  Report, para.  7.1072. (fn  omitted)  
1064 Panel  Report, para.  7.1073 (referring to Panel  Reports, US – COOL (Article  21.5 – Canada and 
Mexico) , paras.  7.367 -7.370; US – COOL , para.  7.572; Appellate  Body Repor ts, US – COOL 
(Article  21.5 – Canada and Mexico) , para.  5.208 and fn  643 thereto; US – COOL , para.  477; EC – Seal 
Products , para.  5.205 and fn  1269 thereto).  
1065 Panel  Report, para.  7.1074 (quoting Appellate  Body Reports,  US – COOL (Article  21.5 – Canada and  
Mexico) , para.  5.208).  
1066 Panel  Report, para.  7.1074 (quoting Appellate  Body Reports,  US – COOL (Article  21.5 – Canada and 
Mexico) , fn 643 to para.  5.208).  
1067 Panel  Report, para.  7.1074.  
1068 Panel  Report, para.  7.1075 (referring to Appellate  Body Reports, US – COOL (Article  21.5 – Canada 
and Mexico) , para.  5.208).  
1069 Panel  Report, para.  7.1076.  
1070 Honduras' appellant's submission, paras.  465-529. 
1071 Honduras' appellant's submission, para.  466. See also ibid., paras.  465, 484, and 506 -529.  
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  Panel's "'trade effects' test is inconsistent with established WTO jurisprudence and constitutes an 
error of law".1072 For Honduras, "by holding non -discriminatory technical regulations to a different 
and higher standard, eff ectively requiring a demonstration of actual trade effects in the period 
following the implementation of the TPP  measures, the Panel erred in its interpretation of Article  2.2 
of the TBT  Agreement."1073  
6.378.   The Dominican  Republic, for its part, argues that the P anel correctly "articulated the proper 
interpretation of 'trade -restrictive' at the outset of its analysis of Article  2.2".1074 The 
Dominican  Republic considers that "the Panel explained that prior assessments [of trade 
restrictiveness] were focused on whethe r a technical regulation had a 'limiting effect on the 
"competitive opportunities " available to imported products' ."1075 The Dominican  Republic highlights 
the Panel's findings that "the TPP  measures limit the opportunity for producers to differentiate their 
product", that such "differentiation engenders consumer loyalty and increases consumers' 
willingness to pay", and that "the TPP  measures limit the opportunity for tobacco manufacturers to 
compete on the basis of such brand differentiation ."1076 In the Dominican  Republic's view, by 
concluding that it was unpersuaded that "this modification of the competitive environment for all 
tobacco products on the entire market (which may in principle increase competition on the market) 
constitutes, in itself , a restriction on 'competitive opportunities' for imported tobacco products that 
must be assumed to have a 'limiting effect' on international trade", the Panel effectively concluded 
that the "evidence that the TPP  measures, by their very design, limit com petitive opportunities for 
imported tobacco products was not sufficient to demonstrate trade -restrictiveness."1077 According to 
the Dominican  Republic, "had the Panel properly applied the legal standard of trade restrictiveness, 
it would have found that the l oss of competitive opportunities for tobacco products arising from the 
design, structure and intended operation of the TPP  measures constitutes trade restrictiveness, 
within the meaning of Article  2.2 of the TBT  Agreement ."1078  
6.379.   Australia argues that the Pane l correctly interpreted Article  2.2 as reflecting a legal standard 
of a limiting effect on international trade and not a standard related to conditions of competition. 
Australia considers that the Panel's interpretation is consistent with the ordinary mean ing and 
context of Article  2.2, the object and purpose of the TBT  Agreement, and the Appellate  Body's prior 
statements on the legal standard under Article  2.2.1079 In Australia's view, the appellants' focus on 
a "competitive opportunities" standard of trade r estrictiveness "would read the terms 
'trade -restrictive' and 'obstacles to international trade' out of the text of Article  2.2".1080 In 
Australia's view, "the Panel correctly held that it was incumbent upon the complainants to 
demonstrate ' how such effects on  the conditions of competition on the market give rise to a limiting 
effect on international trade in tobacco products.'"1081 Australia also argues that, in interpreting 
Article  2.2, the Panel did not find that only discriminatory measures can be inconsistent  with 
Article  2.2, nor did the Panel find that evidence of actual trade effects is required in order to 
demonstrate that a non -discriminatory technical regulation has a limiting effect on international 
trade.1082 
6.380.   We understand from the appellants' responses t o questioning at the first hearing that the 
Panel's basic articulation  of the legal standard, as set forth above1083, is not contested by either 
Honduras or the Dominican  Republic.1084 In particular, neither Honduras nor the Dominican  Republic 
 
1072 Honduras' appellant's submission, para.  467.  
1073 Honduras' appellant's submission, para.  467.  
1074 Dominican  Republic's appellant's submission, para.  1245.  
1075 Dominican  Republic's appellant's submission, para.  1267 (quoting Panel  Report, para.  7.1073, in 
turn quoting Appellate  Body Reports, US – COOL , para.  477).  
1076 Dominican  Republic's appellant's submission, para.  1270 (quoting Panel  Report, para.  7.1167). 
(emphasis omitted)  
1077 Dominican  Republic's appellant's submission, para.  1272 (quoting Panel  Report, para.  7.1167). 
(emphasis omitted)  
1078 Dominican  Republic's appellant's submission, para.  1246.  
1079 Australia's appellee's submission, paras.  289-296. 
1080 Australia's appellee's submission, para.  303.  
1081 Australia's appellee's submission, para.  304 (quoting Panel  Report, para.  7.1168).  (emphasis 
original)  
1082 Australia's appellee's submission, paras.  308-309 and 319 -320. 
1083 See para.  6.375.    above.  
1084 See also Honduras' appellant's submission, para.  469; Dominican  Republic's appellant's submission, 
para. 1281.  
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  contest s the Panel 's explanation that the legal standard under Article  2.2 requires a demonstration 
of "a limiting effect on international trade".1085 Having said that, we observe that, as explained 
below, several fundamental aspects of the Panel's interpretation of Article  2.2 are indeed contested 
by the appellants.   
6.381.   First, we note Honduras' statements that the Panel "agree[d] that 'a detrimental modification 
of competitive opportunities' is at the heart of the concept of trade restrictiveness", and that "[t]he 
Panel reiterate [d] the general rule that a limiting effect on competitive opportunities is what 
characterises a trade restriction ."1086 In Honduras' view, the Panel's determination that the 
TPP measures had modified the conditions of competition in the Australian market "sh ould have been 
the end of matter".1087 For its part, the Dominican  Republic considers that the Panel erred by 
applying Article  2.2 "such that demonstrating limitations on competitive opportunities is not 
sufficient for demonstrating that a measure is 'trade -restrictive'".1088 Like Honduras, the 
Dominican  Republic's argument that the Panel erred in its application of Article  2.2 appears to be 
premised on its view that, under the legal standard of Article  2.2, any limitation on so -called 
"competitive opportunities"  is sufficient to demonstrate trade restrictiveness.1089  
6.382.   We therefore understand that both appellants consider that a demonstration of a 
"modification of the conditions of competition" in a particular market (in Honduras' words)1090 or of 
a "limitation on compe titive opportunities" of products (in the Dominican  Republic's words)1091 
suffice s to demonstrate that a measure is trade -restrictive.1092 While the Dominican  Republic 
considers that this is reflected in the Panel's interpretation of Article  2.2, Honduras considers that 
the Panel erred in its interpretation of Article  2.2 in this respect.1093 
6.383.   In our view, the Panel plainly did not consider that  a determination of the trade 
restrictiveness of a technical regulation is "focused on"1094 assessing the conditions of competition 
or competitive opportunities of products. Rather, the Panel explained that prior claims of 
inconsistency with Article  2.2 of th e TBT  Agreement had been raised in circumstances where a claim 
had also been raised with respect to whether the measures accorded to imported products treatment 
less favourable than that accorded to like domestic products within the meaning of Article  2.1 of the 
TBT Agreement, and that, in those disputes, the determination of trade restrictiveness was focused 
on the limiting effect of the measures on the competitive opportunities of imported products.1095 The 
Panel thereafter stated that, depending on the spec ific circumstances of the dispute, a n assertion  of 
trade restrictiveness " might be substantiated on the basis of whether the technical regulation has a 
 
1085 Panel  Report, para.  7.1072 (referring to Appellate  Body Report, US – Tuna II (Mexico) , para.  319); 
Honduras' and the Dominican  Republic's responses to questioning at the first hearing. We also observe that 
this definition accords with the Dominican  Republic's description of the term "trade restriction" as referring to a 
"limiting condition", as well as the dictionary definitions of restriction as "[a] thing which restricts someone or 
something, a limitation on action, a limiting condition or regulation" and "restrict" as "limit, bound, confine". 
(Dominican  Republic's appella nt's submission, para.  1281; Shorter Oxford English Dictionary , 5th edn., 
W.R. Trumble and A. Stevenson (eds.) (Oxford University Press, 2002), Vol.  2, p. 2554) The first sentence of 
Article  2.2 also refers to "unnecessary obstacles to international trade" , and the word "obstacle" is defined as a 
"thing that stands in the way and obstructs progression; a hindrance, an obstruction". ( Shorter Oxford English 
Dictionary  5th edn, W.R.  Trumble and A.  Stevenson (eds.) (Oxford University Press, 2002), Vol. 2, p.  1970) 
1086 Honduras' appellant's submission, para.  472 (quoting Panel  Report, para.  7.1074).  
1087 Honduras' appellant's submission, para.  520.  
1088 Dominican  Republic's appellant's submission, para.  1286.  
1089 See, for example, Dominican  Republic's appellant's submis sion, para.  1288 ("the 
Dominican  Republic showed that the design and structure of the TPP  measures, in and of themselves, impose a 
limitation on competitive opportunities, thereby demonstrating the trade -restrictiveness of those measures").  
1090 Honduras' app ellant's submission, para.  526. 
1091 Dominican  Republic's appellant's submission, para.  1288. (fn  omitted)  
1092 To the extent that Honduras (or the Dominican  Republic) considers that the legal standard under 
Article  2.2 does not require a demonstration of a limi ting effect on international trade, such an interpretation 
would directly contradict the Appellate  Body's prior interpretation that "the word 'restriction' refers generally to 
something that has a limiting effect" and "[a]s used in Article  2.2 in conjuncti on with the word 'trade', the term 
means something having a limiting effect on trade." (Appellate  Body Report, US – Tuna II (Mexico) , para.  319 
(fn omitted)) Neither Honduras nor the Dominican  Republic has raised any arguments demonstrating that the 
Appell ate Body's interpretation in that dispute was in error.  
1093 See paras.  6.377.   6.378.    above.  
1094 Dominican  Republic's appellant's submission, para.  1267.  
1095 Panel  Report, para.  7.1073.  
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  limiting effect on competitive opportunities".1096 It is therefore incorrect to assert, as Honduras does, 
that the Panel "agree[d] that 'a detrimental modification of competitive opportunities' is at the heart 
of the concept of trade restrictiveness".1097  
6.384.   As to whether we agree with this aspect of the Panel's interpretation, we recall that the legal 
standard unde r Article  2.2 entails demonstrating that the technical regulation at issue imposes a 
limiting effect on international trade.1098 The question therefore arises as to whether a demonstration 
of a modification in the conditions of competition (or a limitation on  the competitive opportunities of 
certain products) suffices to demonstrate a limiting effect on international trade. We see a significant 
difference between, on the one  hand, panels and the Appellate  Body's reliance on the concept of 
conditions of competi tion in the context of Article  2.2 in prior disputes and, on the other hand, the 
appellants' reliance on that concept in th ese dispute s.  
6.385.   We recall the Appellate  Body's prior statement that in "assessing the trade -restrictiveness 
of a technical regulation under Article  2.2 … [a] demonstration of a limiting effect on competitive 
opportunities in qualitative terms  might suffice in the particular circumstances of a given case ".1099 
The Appellate  Body has generally relied on the term "competitive opportunities" to  refer to the 
conditions of competition of imported products vis -à-vis domestic products (i.e.  national 
treatment)1100 or as between imported products from one Member and imported products from 
another Member (i.e.  most-favoured -nation treatment).1101 In the spe cific context of Article  2.2, the 
Appellate  Body has indicated that a panel's determination that a measure modifies the conditions of 
competition for imported products as a group vis -à-vis domestic products as a group (for instance, 
in the context of asses sing a claim under Article  2.1 of the TBT  Agreement) would suffice to indicate 
that the technical regulation is trade -restrictive within the meaning of Article  2.2.1102 However, 
"evidence of actual trade effects may also be probative" to a panel's determinati on of trade 
restrictiveness and, while "a detrimental modification of competitive opportunities may be 
self-evident in respect of certain de jure discriminatory measures, … supporting evidence and 
argumentation of actual trade effects might be required to demonstrate the existence and extent of 
trade-restrictiveness in respect of non-discriminatory  internal measures".1103 
 
1096 Panel  Report, para.  7.1074. (emphasis added)  
1097 Honduras' appellant's submission, para.  472 (quoting Panel  Report, para.  7.1074).  
1098 See para.  6.380.    above.  
1099 Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208. (fn  omitted; 
emphasis added) According to Honduras, "in US – COOL , the Appel late Body recalled that 'trade restrictiveness' 
focuses on the competitive opportunities available to imported products" and, "in US – COOL 
(Article  21.5 – Canada and Mexico) , the Appellate  Body reiterated that the issue of trade restrictiveness 
requires a  demonstration of a limiting effect on competitive opportunities." (Honduras' appellant's submission, 
para. 491 (referring to Appellate  Body Reports, US – COOL , para.  477; US – COOL (Article  21.5 – Canada and 
Mexico) , para.  5.208)) We disagree. The Appella te Body's statement in US – COOL  that the panel's "findings 
suggest it considered the measure to have a considerable degree of trade -restrictiveness insofar as it has a 
limiting effect on the competitive opportunities for imported livestock as compared to the situation prior to the 
enactment of the COOL measure" does not imply, as asserted by Honduras, that "'trade restrictiveness' focuses 
on the competitive opportunities available to imported products." (Appellate  Body Reports, US – COOL , 
para. 477; Hondur as' appellant's submission, para.  491) 
1100 See, for example, Appellate  Body Reports, EC – Seal Products , 5.101, 5.105, and 5.108;  
Thailand – Cigarettes (Philippines) , para.  134; US – Clove Cigarettes , para.  179 and fn  372 thereto; 
US – COOL , para.  270; US – Tuna II (Mexico) , para.  214 and fn  457 thereto; Korea  – Various Measures on 
Beef, para.  137. 
1101 See, for example, Appellate  Body Reports, EC – Seal Products , paras.  5.82, 5.84, 5.87 -5.88, and 
5.90. 
1102 For instance, in US – COOL , the Appellate  Body referred to the panel's finding that "'by imposing 
higher segregation costs on imported livestock' the COOL measure negatively affects the conditions of 
competition of imported livestock vis -à-vis like domestic livestock in the US market." (Appellate  Body Reports, 
US – COOL , para.  477 (quoting Panel  Reports, US – COOL , para.  7.574))  The Appellate  Body relied on this 
finding to conclude that the measure in that dispute had a "considerable degree of trade -restrictiveness". 
(Ibid., para.  479) Thus, the Appellate  Body was concerned with the competitive opportunities of imported 
products vis -à-vis like domestic products . Subsequently, in US – COOL (Article  21.5 – Canada and Mexico) , the 
Appellate  Body also referred to the competitive opportunitie s of imported products vis -à-vis like domestic 
products . (Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208 and fn  643 
thereto (referring to the Appellate  Body Reports, US – COOL , para.  477))  
1103 Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , fn 643 to para.  5.208 
(referring to Appellate  Body Report, EC – Poultry , paras.  126-127). (emphasis added)  
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  6.386.   Thus, a showing of a reduction in the competitive opportunities of imported products is only 
relevant to the assessment of trade restrictiveness to the extent that it reveals a limiting effect on 
international trade. For instance, where a measure is shown to reduce the competitive opportunities 
of imported products as a group, from a Member1104, vis-à-vis competing  domestic products , that 
would suffice for a panel to conclude that the measure is indeed trade -restrictive.1105 In our view, 
the Panel's articulation of the legal standard under Article  2.2 reflects this understanding.1106 
6.387.   We further understand that the appellants seek to import a new and different notion of 
"competitive opportunities" and "conditions of competition" into the test of a measure's trade 
restrictiveness. The appellants appear to consider that a showing of a reduction in the competitive 
opportunities of some imported products vis -à-vis all other products in the market, including other 
imported products from the same Member , suffices to demonstr ate trade restrictiveness. Both 
appellants insist that the measure reduced competitive opportunities for imported products, that this 
sufficed to demonstrate trade restrictiveness, and that the fact that the TPP  measures were not 
shown to discriminate  against imported products is irrelevant.1107 In their view, a reduction in the 
competitive opportunities of products associated with individual brands suffices to show trade 
restrictiveness.1108 Thus, under the appellants' approach, it is not the competitive opportu nities of 
imported products as a group that must be shown to suffer, but rather the competitive opportunities 
of any imported product vis -à-vis other products (including other imported products from the same 
Member), in order for a panel to find that a mea sure is trade -restrictive.  
6.388.   We note that the Panel did not explicitly address this aspect of the complainants' arguments 
as a question of interpretation. As we understand it, however, the Panel's finding in 
paragraph  7.1167 of its Report (which is appealed)  reveals the Panel's interpretative view on this 
issue. Specifically, the Panel stated that "the TPP  measures limit the opportunity for producers to 
differentiate their products" and that "by restricting the opportunity for brands to differentiate 
themselv es, the TPP  measures limit the opportunity for tobacco manufacturers to compete".1109 The 
Panel concluded, however, that this merely amounted to a "modification of the competitive 
environment for all tobacco products on the entire market", which did not const itute, "in itself, a 
 
1104 We note the Panel's finding that trade -restrictiveness need not be assessed "only on the basis of the 
of the effect of the measure on trade of all WTO Members, in all products that are the subject of the technical 
regulation". (Panel  Report, para.  7.1078. See also ibid., para.  7.1088) This finding is not appealed.  
1105 Consistently with this understanding, the Ap pellate  Body, in referring to Article  2.2 as context to 
interpret Article  2.1, implied that discriminatory measures could be considered an obstacle to trade within the 
meaning of Article  2.2. (Appellate  Body Report, US – Clove Cigarettes , para.  171) 
1106 See paras.  6.375.   6.376.    above.  
1107 Honduras' appel lant's submission, paras.  508-511; Dominican  Republic's appellant's submission, 
paras.  1310-1315.  
1108 Both appellants consider that the Panel erred by failing to find that a reduction in the opportunity for 
manufacturers to differentiate their products on th e basis of brands was sufficient to demonstrate trade 
restrictiveness. (Honduras' appellant's submission, para.  476; Dominican  Republic's appellant's submission, 
paras.  1286-1287) Honduras states that, "as the Panel had accepted … that the TPP  measures aff ected the 
conditions of competition on the Australian market (e.g.  through reduced opportunities to differentiate 
products ), that should have been the end of the matter."  (Honduras' appellant's submission, para.  520 
(emphasis added))  Honduras also states t hat "the TPP  measures had an obvious limiting effect on competitive 
opportunities for, among others, imported tobacco products … The fact that this limiting effect on trade equally 
applied to all tobacco products on the Australian market is irrelevant to a  determination of trade 
restrictiveness ." (Honduras' appellant's submission, para.  511 (emphasis added)) Since Honduras does not 
consider that discrimination is relevant to the analysis, the reduced competitive opportunities to which 
Honduras is referring appear to be changes in the conditions of competition for (the products of) individual 
producers in the market. The Dominican  Republic explains that the Panel erred in considering that an 
evaluation of competition in international trade "should be focused on the ability of producers to compete  
based on lower prices , rather than on other factors, such as quality, reputation, etc." (Dominican  Republic's 
appellant's submission, para.  1294 (italics original; underlining added)) The Dominican  Republic also states 
that "[m]easures like the TPP  measures – which fundamentally erode  the opportunities for foreign producers to 
win loyal consumers willing to pay for their preferred products – place a commercially significant limitation on 
the competitive opportunities that are the lifeblood of international trade." (Dominican  Republic's appellant's 
submission, para.  1289 (emphasis added)) We also note that, before the Panel, the Dominican  Republic was 
clear that the relevant competitive oppor tunities at issue are the "competitive opportunities for producers  of 
tobacco products". (Dominican  Republic's first written submission to the Panel, para.  1022 (emphasis added)) 
The Dominican  Republic also stated that, "Australia's [TPP]  measures are desi gned, structured, and 
implemented to eliminate the opportunity for producers  to differentiate their products." (Dominican  Republic's 
second written submission to the Panel, para.  933 (emphasis added))  
1109 Panel  Report, para.  7.1167.  
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  restriction on 'competitive opportunities' for imported tobacco products".1110 The Panel considered 
that "it need[ed] to be shown how such effects on the conditions of competition on the market give 
rise to a limiting effect on internatio nal trade".1111 We therefore understand that the Panel 
distinguished between a reduction in the competitive opportunities of brand -owners/producers and 
a reduction in the competitive opportunities of imported products vis -à-vis domestic products. The 
Panel co nsidered that the latter would suffice to demonstrate trade restrictiveness, but that the 
former, by itself, would be insufficient.  
6.389.   We agree with the Panel that the mere fact of a modification of the conditions of competition 
in a market would not necessa rily suffice for a panel to conclude on the degree of trade 
restrictiveness, if any, of a particular technical regulation. We recall that a determination of the 
degree of trade restrictiveness requires a panel to assess the degree to which the measure caus es 
a limiting effect on international trade . We note the Panel's interpretative finding that, "when 
considering the effects of a technical regulation (including whether the technical regulation has a 
limiting  effect on trade), consideration might be given to … 'both import -enhancing and 
import -reducing effects on the trade of other Members'."1112 None of the participants has appealed 
this finding, and, in response to questioning at the first hearing, all participants agreed with this 
finding.1113 In our view, a non -discriminatory modification of conditions of competition in a market 
may have both tra de-enhancing and trade -reducing effects on trade, such that it could plausibly 
have a net positive effect on trade between Members. In a situation where a measure merely 
modifies the conditions of competition of individual producers within a market, and a panel is unable 
to anticipate the impact of the measure on the conditions of competition for imported products , as 
a group, from a Member,  we do not see how the panel could conclude that the measure will 
necessarily have a limiting effect on international trade, much less determine the overall degree of 
trade restrictiveness of the measure in question, which could in turn inform the panel's assessment 
of whether there is a possible alternative measure that is less  trade-restrictive than that 
measure.1114 We th erefore consider that the Panel did not err in considering that a demonstration of 
a reduction in the competitive opportunities of certain imported products vis -à-vis all other products 
in the market (including other imported products) would not necessaril y suffice to demonstrate the 
degree of trade restrictiveness of a measure.  
6.390.   The appellants' arguments regarding conditions of competition and competitive opportunities 
might also be understood as suggesting that, in a situation where all imported products suffer the 
same detrimental impact (for instance, as alleged in these dispute s, a reduction in the opportunity 
to differentiate), such a "general limitation" that is equally applicable to all products in the market 
would suffice to demonstrate trade restri ctiveness.1115 Under this understanding of their arguments, 
the appellants' simultaneous argument s that the "conditions of competition" in the market have 
been altered and that all products have suffered the same detrimental impact  are misleading, if not 
contradictory. Notions of conditions of competition necessarily concern competition between goods 
in the market rather than a generic detrimental impact applicable to an equal extent to all goods in 
 
1110 Panel  Report, para.  7.1167.  
1111 Panel  Report, para.  7.1168. (emphasis original)  
1112 Panel  Report, para.  7.1088. (emphasis original)   
1113 We recognize that the Panel's use of the word "might" could be read as indicating that panels have 
discretion as to whether to take into account i mport -enhancing effects when determining the trade 
restrictiveness of a technical regulation. This would seem to imply that different panels could potentially apply 
different legal standards when applying Article  2.2. In our view, panels are not at liberty  to arbitrarily apply 
distinct legal standards of the same provision. However, we note that the word "might" could also be read as 
indicating that a panel should take into account both trade -enhancing and trade -reducing aspects of a technical 
regulation when both such effects are present . This appears to be the meaning attributed by the participants to 
the Panel's finding on this issue, and we also consider this to be the appropriate standard under Article  2.2. We 
note that the Panel itself applied this sta ndard when assessing the degree of trade restrictiveness of the 
TPP measures in th ese dispute s. (See Panel  Report, para.  7.1235)  
1114 The essential question is whether the panel is able to determine, or anticipate, the limiting effect of 
the measure on intern ational trade.  
1115 We note, for example, Honduras' reference to a "general limitation on the opportunity to compete" 
and its statement that "[t]he fact that this limiting effect on trade equally applied to all tobacco products … is 
irrelevant to a determinat ion of trade restrictiveness", as well as the Dominican  Republic's statement that it is 
"the high -end products that suffer from the greatest loss of competitive opportunity", thereby implying 
simultaneously that low -end products also suffer some detrimenta l impact but that such detrimental impact is 
less severe for low -end products than it is for high -end products. (Honduras' appellant's submission, 
paras.  507 and 511; Dominican  Republic's appellant's submission, para.  1308)  
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  the market. In any event, the burden of demonstrating the exi stence of such a general limitation as 
well as its limiting effect on international trade rests on the complainant. We return to this issue 
when addressing the appellants' claims that the Panel erred in its application of Article  2.2.1116 
6.391.   We recall that both appellants consider that the Panel erred by effectively requiring that, in 
situations where a non-discriminatory  measure is challenged under Article  2.2, it is necessary for a 
complainant to provide evidence of actual trade effects in order to demonstrate the trade 
restrictiveness of the measure.1117 The Panel found that, "[h]ow the existence and extent of 
trade-restrictiveness is to be demonstrated in respect of technical regulations that are not alleged 
to be discriminatory will depend, as is the case for ot her technical regulations, on the circumstances 
of a given case ."1118 The Panel elaborated that a demonstration of trade restrictiveness "could be 
based on qualitative or quantitative arguments and evidence, or both, including evidence relating to 
the charact eristics of the challenged measure as revealed by its design and operation" .1119 In our 
view, these statements by the Panel are accurate in describing the legal standard under Article  2.2, 
as articulated by the Appellate  Body in US – COOL (Article  21.5 – Canada and Mexico) .1120 Indeed, 
there is little disagreement amongst the participants that how to demonstrate trade restrictiveness 
depends on the circumstances of each case.1121 We therefore consider that the Panel did not interpret 
Article  2.2 such that evidence of "actual trade effects" is always required for a complainant to 
demonstrate the trade restrictiveness of a non -discriminatory measure.1122 We also return to this 
issue in addressing whether the Panel erred in its application of Article  2.2 in the particular 
circumstances of  these dispute s.1123  
6.392.   We note further that certain statements by Honduras might be read as suggesting that there 
is no circumstance in which any evidence other than the design and structure of a measure is 
necessary  for a complainant to demonstrate the trade restrictiveness of the measure within the 
meaning of Article  2.2.1124 We disagree. In certain circumstances, a measure 's design and structure 
 
1116 See para.  6.408.    below.  
1117 Honduras' appellant's submission, paras.  514-527; Dominican  Republic's appellant's submission, 
paras.  1247 and 1310 -1316. Honduras also argues that, "ac cording to the Panel, there is only a 'limiting effect' 
or 'restriction' on international trade when a restriction is imposed at the border (i.e.  de jure  limits competitive 
opportunities of imported products) or when it affects imported products more than domestic products, or 
certain imported products more than others (i.e.  it limits competitive opportunities in a discriminatory 
manner)."  (Honduras' appellant's submission, para.  507) 
1118 Panel  Report, para.  7.1075.  
1119 Panel  Report, para.  7.1076. The Panel al so highlighted that "it will not always be possible to quantify 
a particular factor analysed under Article  2.2, or to do so with precision." (Panel  Report, para.  7.1076 
(referring to Appellate  Body Reports,  US – COOL (Article  21.5 – Canada and Mexico) , para. 5.208))  
1120 Specifically, the Appellate  Body explained that "the demonstration of a limiting effect on competitive 
opportunities in qualitative terms might suffice in the particular circumstances of a given case ." 
(Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208 (referring to 
Appellate  Body Reports, US – COOL , para.  477) (emphasis added)) The Appellate  Body also stated that:  
At the same time, evidence of actual trade effects may also be probative in making this 
assessment. … For instance, a detrimental modification of competitive opportunities may be 
self-evident in respect of certain de jure discriminatory measures, whereas supporting evidence 
and argumentation of actual trade effects might be required to demonstrate the existenc e and 
extent of trade -restrictiveness in respect of non -discriminatory internal measures that address a 
legitimate objective .  
(Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , fn 643 to para.  5.208 (referring to 
Appellate  Body Report,  EC – Poultry , paras.  126-127)) (emphasis added)  
1121 See, for example, Honduras' appellant's submission, paras.  496-497; Dominican  Republic's 
appellant's submission, para.  1288.  
1122 Honduras' appellant's submission, para.  507; Dominican  Republic's appellant's  submission, 
para. 1310. We also disagree with Honduras that the Panel considered that a limiting effect on international 
trade can only consist of a restriction imposed at the border or a discriminatory measure. (Honduras' 
appellant's submission, para.  507) 
1123 See para.  6.409.    below.  
1124 According to Honduras, "there is nothing in the Appellate  Body's report in US – COOL (Article  21.5 – 
Canada and Mexico ) that suggests that a demonstration of actual trade effects would ever be required." 
(Honduras' appellant's submission, para.  523) Honduras states, also in reference to the Appellate  Body's 
findings in US – COOL (Article  21.5 – Canada and Mexico)  that "[n ]owhere in footnote 643 … did the 
Appellate  Body state that actual trade effects are 'necessary', 'required' or 'dispositive' to ascertain a technical 
regulation's trade restrictiveness." (Ibid., para.  497) In Honduras' view, "established WTO jurisprudence  
underscores that a demonstration of a 'limiting effect' need not be based on quantitative evidence but can 
sufficiently be based on qualitative evidence such as the measure's design and architecture." (Ibid., para.  494 
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  may be insufficient for a panel to anticipate whether and to what extent the measure will have a 
limiting effect on international trade.1125 If a panel is unable to anticipate whether and to what extent 
a measure is trade -restrictive b ased exclusively on its examination of the design and structure of 
the measure (for instance, because the measure's design and structure leads the panel to conclude 
that the measure could have both trade -enhancing and trade -reducing effects), then the pane l must 
take into account the additional evidence and arguments adduced by the parties.1126 Such additional 
evidence might include evidence of actual trade effects or evidence of a qualitative or quantitative 
nature that may inform the panel's determination of  the anticipated effects of the measure.  
6.393.   In any event, there is no obligation on a panel to cease its analysis of the trade 
restrictiveness of a measure after examining only a subset of the evidence (such as the design and 
structure of the measure, or mor e generally the evidence related to the anticipated effects of the 
measure).  Indeed, it is appropriate for panels to take into account all relevant evidence adduced by 
the parties before concluding on the degree of trade restrictiveness. For instance, in US – COOL , the 
Appellate  Body considered the Panel's examination of the actual trade effects to be relevant to the 
determination of the degree of trade restrictiveness, notwithstanding that the design and structure 
of the measure revealed that it was trade -restrictive.1127 In short, there is no obligation on a panel 
to exclude any evidence in assessing the trade restrictiveness of the measure and an examination 
of additional available evidence (such as evidence of actual trade effects) may be necessary  in order  
for the panel to determine the trade restrictiveness of the measure.  
6.394.   On the basis of the foregoing, we conclude that the appellants have not demonstrated that 
the Panel erred in its interpretation of Article  2.2 of the TBT  Agreement.  
6.1.3.2   Whether the Panel er red in its application of Article  2.2 
6.1.3.2.1   Overview  
6.395.   In order to determine the degree of trade restrictiveness of the TPP  measures, the Panel 
began by addressing the complainants' argument that the TPP  measures were trade -restrictive on 
the basis that it was "ev ident from the design, structure, and expected operation of the measures 
that [they] severely limit[] competitive opportunities to differentiate tobacco products".1128 The 
Panel agreed with the complainants that the TPP  measures would limit the opportunity fo r producers 
to differentiate their products. However, the Panel considered that it was unclear how this 
modification of the conditions of competition in the entire tobacco product market amounted to a 
limiting effect on international trade. The Panel also observed that this alteration in the competitive 
environment might, in fact, increase competition in the market.1129 In the Panel's view, it needed to 
be shown how such effects on the conditions of competition in the market amount to a limiting effect 
on inte rnational trade.1130 
6.396.   The Panel proceeded with its analysis by addressing separately the complainants' arguments 
relating to: (i)  the effects of the TPP  measures on barriers to entry into the Australian market1131; 
(ii) the effects of the TPP  measures on the volu me and value of trade in tobacco products1132; 
 
(referring to Panel  Report, Indonesi a – Import Licensing Regimes , para.  7.50))  For its part, and 
notwithstanding its incorporation by reference of Honduras' claims and arguments, the Dominican  Republic 
considers that "the Panel correctly pointed out that evidence of the actual trade effects may sometimes be 
necessary to show a limitation on competitive opportunities." (Dominican  Republic's appellant's submission, 
para. 1288 (emphasis original; fn  omitted))  
1125 This is exactly what the Appellate  Body stated in US – COOL (Article  21.5 – Canada an d Mexico) . 
(See fn  1120 to para.  6.391.   above)  
1126 A failure by the panel to do so would not only prejudice a complainant, rather than a respondent, 
but would be inconsistent with the panel's duty under Article  11 of the DSU to make a n objective assessment 
of the matter before it.  
1127 Appellate  Body Reports, US – COOL , para.  477. 
1128 Panel  Report, para.  7.1164 (quoting Dominican  Republic's response to Panel question No.  117, 
para. 233).  
1129 Panel  Report, para.  7.1167.  
1130 Panel  Report, para.  7.1168.  
1131 Panel  Report, paras.  7.1172 -7.1187.  
1132 Panel  Report, paras.  7.1188 -7.1225.  
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  (iii) compliance costs arising from the TPP  measures1133; and (iv)  penalties under the 
TPP measures.1134  
6.397.   Regarding the argument that the TPP  measures raise barriers to entry into the Australian 
market , the complainants had argued that the "communication effect " of plain packaging (whereby 
"successful entry for potential entrants becomes significantly more difficult without the possibility to 
create brand awareness") and the "competitive effect " (whereby "producers need to reduce prices 
to address consumers' reduced willingness to pay") increase barriers to entry.1135 The Panel rejected 
these arguments, noting that, in addition to the communication and competitive effects of the 
TPP measures, there is also a "contestability effect " that will have a positive effect on entry to the 
market.1136 The Panel considered there to be "significant uncertainty about the strength and the 
relative weight of each of the three  effects on entry", and was unpersuaded that "the TPP  measures 
have raised or will significantly raise the barriers to entry into the Australian market ."1137 The Panel 
concluded that the complainants had not demonstrated that the TPP  measures would have "an 
adverse impact on the opportunity for imported product s to gain access to and compete on the 
Australian market for tobacco products".1138  
6.398.   The Panel proceeded to consider the impact of the TPP  measures  on the volume and value 
of trade in tobacco products. Regarding the volume of trade, the Panel found that the T PP measures 
resulted in a reduction in the volume of imports of premium tobacco products both in relative and 
absolute terms.1139 The Panel did not consider that the decrease in the consumption and imports of 
premium tobacco products was exclusively the resul t of "downtrading".1140 The Panel rejected the 
argument that decreased demand for imported tobacco products, in and of itself, amounts to a 
limiting effect on trade.1141 The Panel considered that, "in order to demonstrate that TPP  measures 
are trade -restrictive,  a demonstration of alleged effects of the TPP  measures on demand  would not 
be sufficient. Instead, a demonstration of effects on consumption  would be needed."1142 The Panel 
found, however, that the TPP  measures did indeed contribute to the reduction of cigar ette 
consumption1143, noted that "the Australian market is in fact supplied entirely through imported 
tobacco products"1144, and concluded that, "by reducing the use of tobacco products, [the 
TPP measures] reduce the volume of imported tobacco products on the Au stralian market, and 
thereby have a 'limiting effect' on trade ."1145  
6.399.   The Panel then addressed the parties' arguments regarding the value of trade in tobacco 
products, namely , that a "reduction in brand differentiation possibilities caused by the TPP  measures  
will lead to an increase in price competition and a fall in prices, and consequently to a decrease in 
the sales value of tobacco products and the total value of imports".1146 The Panel found that the 
"evidence suggests that the measures have led to an increa se in the price of cigarettes which has 
more than offset the decrease in the quantity of cigarettes consumed and has thereby contributed 
 
1133 Panel  Report, paras.  7.1226 -7.1246.  
1134 Panel  Report, paras.  7.1247 -7.1254.  
1135 Panel  Report, para.  7.1173.  Indonesia also argued that the TPP  measures make it "more diffi cult for 
imported products to establish an identity with consumers who are already familiar with domestic brands". 
(Panel  Report, para.  7.1175)  
1136 Panel  Report, para.  7.1179.  
1137 Panel  Report, para.  7.1183.  
1138 Panel  Report, para.  7.1187.  
1139 Panel  Report, par a. 7.1196.  
1140 Panel  Report, paras.  7.1197 -7.1198. Regarding whether the TPP  measures had caused 
"downtrading", whereby "consumers buy a cheaper brand than the brand that they bought before the 
TPP measures were introduced", the Panel concluded that the "re duction in the ratio of higher - to low -priced 
cigarette wholesale sales observed since the entry into force of the TPP  measures results at least in part from 
the intended operation of the TPP  measures and their effect on the consumption of tobacco products  more 
generally." (Ibid., paras.  7.1109 and  7.1196) The Panel also defined downtrading as "consumers shift[ing] 
from the more expensive brands to the less expensive brands because they have a higher willingness to switch 
brands and a lower willingness to p ay". (Ibid., para.  7.1123 (referring to Indonesia's response to Panel 
question No.  117))  
1141 Panel  Report, paras.  7.1199 -7.1201.  
1142 Panel  Report, para.  7.1201. (emphasis added)  
1143 Panel  Report, para.  7.1205.  
1144 Panel  Report, para.  7.1207.  
1145 Panel  Report, para.  7.1208. See also ibid., para.  7.1219.  
1146 Panel  Report, para.  7.1209.  
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  to an increase in the value of the market ."1147 The Panel rejected the Dominican  Republic's argument 
that the TPP  measures  had already resulted in switching from higher - to lower -priced cigarettes (and 
consequently a reduction in the value of trade), on the basis that "brands in the higher priced 
segments generally maintained or increased their pricing premiums over brands in  the lower -priced 
segments in the first year following the implementation of plain packaging, and have not exhibited 
a marked drop ."1148 The Panel also considered whether prices will "ultimately decline" over time.1149 
The Panel noted the difficulties of predicting "the evolution of competitive interactions", but 
highlighted that cigarette prices have increased since the introduction of the T PP measures and 
brands in higher  priced market segments have maintained or increased their pricing premiums over 
lower -priced brands, suggesting that price competition has not increased.1150 The Panel nevertheless 
considered that the evidence did not allow it  "to exclude the possibility that the TPP  measures may 
have reinforced price competition, which does not seem unreasonable, nor … that they may reinforce 
it in the future".1151 The Panel therefore concluded that, "while the complainants have not 
demonstrated that the TPP  measures have reduced the value of imported tobacco products on the 
Australian market, it cannot be excluded that this may happen in the future, either as a result of the 
effect of the measures on consumption only or as a result of this effect  combined with a fall in 
prices ."1152 
6.400.    Regarding the argument that the TPP  measures are trade -restrictive because they entail  
compliance costs, the Panel considered that, while some compliance costs may be of such a 
magnitude or nature as to be trade -restrict ive, technical regulations might also create a regulatory 
environment in which "operating costs are reduced , thereby enhancing  competitive opportunities 
and facilitating  trade."1153 The Panel considered that the complainants had done little to substantiate 
their general assertions concerning the compliance costs of the TPP  measures.1154 Overall, the Panel 
considered that the complainants failed to identify how the costs of complying with the TPP  measures 
are of such a nature or magnitude as to have a limiting eff ect on trade.1155 
6.401.   Finally, regarding the argument that "a penalty itself may operate as a restriction on 
international trade" and that, in this case,  the penalties  imposed under the TPP  measures are 
trade-restrictive1156, the Panel did not exclude the possibilit y "that a technical regulation imposing 
costly penalties on importation may, in the circumstances of a given case, have a limiting effect on 
trade and, as a result, be 'trade -restrictive' within the meaning of Article  2.2".1157 However, in the 
circumstances o f this case, the Panel did not consider that "the imposition of penalties to ensure 
compliance with the requirements of the TPP  measures results, in itself, in an 'additional' limiting 
effect on imports beyond what would be induced by full compliance with the TPP requirements 
themselves ."1158  
6.402.   Overall, the Panel concluded that the TPP  measures are trade -restrictive insofar as they 
reduce the volume of imported tobacco products on the Australian market, thereby having a "limiting 
effect" on trade.1159 The Panel co nsidered it plausible that the measures could, over time, affect the 
overall value of tobacco imports, but did not consider that the evidence demonstrate d that to have 
occurred to date.1160 The Panel further concluded that the complainants had not demonstrate d that 
"the TPP  measures impose conditions on the sale of tobacco products in Australia or compliance 
costs of such magnitude that they would amount to a limiting effect on trade ."1161  
 
1147 Panel  Report, para.  7.1218.  
1148 Panel  Report, para.  7.1221.  
1149 Panel  Report, para.  7.1222.  
1150 Panel  Report, para.  7.1224.  
1151 Panel  Report, para.  7.1224.  
1152 Panel  Report, para.  7.1225.  
1153 Panel  Report, para.  7.1235. (emphasis original; fn  omitted)  
1154 Panel  Report, paras.  7.1241 -7.1246.  
1155 Panel  Report, para.  7.1242.  
1156 Panel  Report, paras.  7.1247 -7.1254.  
1157 Panel  Report, para.  7.1248.  
1158 Panel  Report, para.  7.1254. The Panel was therefore not persuaded that "the existence of these 
penalties, or their level, lead[s] to a greater degree of trade -restrictiveness than that arising from compliance 
with the relevant requirements of the TPP  measures." (Ibid.)  
1159 Panel  Report, para.  7.1255.  
1160 Panel  Report, para.  7.1255.  
1161 Panel  Report, para.  7.1255.   
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  6.403.   On appeal, both appellants claim that the Panel erred in its application of Article  2.2 of the 
TBT Agreement by failing to find that a reduction in the opportunity for products to differentiate on 
the basis of brands sufficed to demonstrate the trade restrictiveness of the TPP  measures.1162 The 
appellants also claim that the Panel erred in its application of Article  2.2 in determining the effect of 
the TPP  measures on the value of imported tobacco products.1163 We proceed by addressing each 
set of arguments in turn.  
6.1.3.2.2   The reduced opportunity for  products to differentiate on the basis of brands  
6.404.   The appellants argue that the Panel erred in its application of Article  2.2 of the 
TBT Agreement by finding that, although the TPP  measures reduced the opportunity for products to 
differentiate on the basis  of brands, this did not demonstrate the trade restrictiveness of the 
TPP measures.1164 Both appellants consider that the Panel found that the reduction in the opportunity 
to differentiate products on the basis of brands did not demonstrate trade restrictiven ess because 
the TPP  measures were not shown to discriminate against imported products.1165 In their view, this 
is an incorrect application of Article  2.2, and instead the Panel's finding that the TPP  measures 
reduced the opportunity for products to compete on  the basis of brands should have sufficed for the 
Panel to determine the trade restrictiveness of the TPP  measures.1166 Both appellants also consider 
that the Panel incorrectly required the complainants to adduce evidence of "actual trade effects" in 
order to  find that the TPP  measures are trade -restrictive.1167 Additionally, the Dominican  Republic 
argues that the Panel's reason for rejecting the complainants' argument based on the design and 
structure of the TPP  measures (namely , that the reduced opportunity to differentiate "may in 
principle increase competition on the market"1168) "wrongly implies that an evaluation of 
'competition' and 'competitive opportunity' in international trade should be focused on the ability of 
producers to compete based on lower prices , rather than on other factors, such as quality, 
reputation, etc." .1169 
6.405.   Australia submits that, in its application of Article  2.2, the Panel "neither required that the 
TPP measures were discriminatory, nor applied a 'heightened' evidentiary standard of actual t rade 
effects for non -discriminatory measures".1170 Australia considers that if the Panel had imposed a 
"discrimination requirement" under Article  2.2, "it would have concluded that the absence of any 
discrimination between imported and domestic tobacco produc ts under the TPP  measures was 
dispositive of 'trade -restrictiveness' ."1171 However, in Australia's view, the Panel did not do that, but 
rather examined "the three  distinct bases upon which the complainants argued that the 
TPP measures were trade -restrictive" .1172 Australia further argues that the Panel did not require 
evidence of "actual trade effects" and rather examined the qualitative evidence on its own terms, 
concluding that such evidence was insufficiently persuasive.1173 
6.406.   We recall that the legal standard unde r Article  2.2 requires a panel to determine the extent 
to which a technical regulation has a limiting effect on international trade. Where a measure modifies 
the conditions of competition in the market, a panel must be satisfied that such modification will  
have a limiting effect on trade in order to conclude that the measure is trade -restrictive. Such a 
 
1162 Honduras' appellant's submission, paras.  511 and 517 -518; Dominican  Republic's appellant's 
submission, paras.  1290 and 1308 -1309.  
1163 Dominican  Republic's appellant's submi ssion, paras.  1317-1338; Honduras' and the 
Dominican  Republic's responses to questioning at the first hearing. Neither appellant has challenged the Panel's 
findings regarding barriers to entry  into the Australian tobacco market, compliance costs, or penalt ies. 
1164 Honduras' appellant's submission, paras.  511 and 517 -518; Dominican  Republic's appellant's 
submission, paras.  1290 and 1308 -1309.  
1165 Honduras' appellant's submission, paras.  507-513; Dominican  Republic's appellant's submission, 
paras.  1310-1316.  
1166 Honduras' appellant's submission, paras.  476 and 485 -486; Dominican  Republic's appellant's 
submission, paras.  1308 and 1315.  
1167 Honduras' appellant's submission, paras.  514-527; Dominican  Republic's appellant's submission, 
paras.  1247 and 1312 -1315.  
1168 Panel  Report, para.  7.1167. (emphasis original)  
1169 Dominican  Republic's appellant's submission, para.  1294. (emphasis original) See also ibid., 
paras.  1290-1309.  
1170 Australia's appellee's submission, para.  305.  
1171 Australia's appellee's submission, para.  310.  
1172 Australia's appellee's submission, para.  310.  
1173 Australia's appellee's submission, paras.  321-330.  
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  limiting effect on trade may be self -evident in cases of de jure discriminatory measures. However, 
a non -discriminatory modification of conditions of compet ition in a market may have both 
trade-enhancing and trade -reducing effects on trade, such that a panel could not necessarily 
anticipate whether the measure will have a limiting effect on trade based exclusively on its design 
and structure. If a panel's exa mination of a subset of the evidence (such as the design and structure 
of the measure) leaves it unable to determine whether the measure will have a limiting effect on 
trade, the panel must proceed to examine all additional arguments and evidence. In any e vent, even 
if a panel considers a subset of the evidence (such as the design and structure of the measure) 
sufficient to determine the trade restrictiveness of the measure, the panel is not precluded from 
examining additional arguments and evidence for pur poses of defining the degree of trade 
restrictiveness.1174  
6.407.   In these dispute s, the Panel considered that it was not able to determine, exclusively on the 
basis of its examination of the design and structure of the TPP  measures, whether the TPP  measures 
are tr ade-restrictive. The Panel agreed with the complainants that "the TPP measures limit the 
opportunity for producers to differentiate their products" and that, "by restricting the opportunity 
for brands to differentiate themselves, the TPP  measures limit the  opportunity for tobacco 
manufacturers to compete on the basis of such brand differentiation ."1175 The Panel stated, however, 
that it was not persuaded that "this modification of the competitive environment for all tobacco 
products on the entire market (which may in principle increase  competition on the market) 
constitutes, in itself, a restriction on 'competitive opportunities ' for imported tobacco products th at 
must be assumed to have a 'limiting effect ' on international trade ."1176  
6.408.   We note that, in forming this conclusion, the Panel highlighted that brand differentiation is 
valuable in international trade because "differentiation engenders consumer loyalty and increases 
consumers' willingness to pay ."1177 This indicates that the impact of the reduction in the opportunity 
to differentiate will be different  for different producers depending on the specific degree of customer 
loyalty associated with different producer s' brands.1178 Thus, while a reduction in the opportunity to 
differentiate might harm the competitive opportunities of some products, it would  necessarily  seem 
to improve the competitive opportunities of other  competing products. These findings by the Panel 
indicate that, to the extent that the competitive opportunities of some imported products might be 
adversely affected by a reduction in the opportunity to brand -differentiate, the competitive 
opportunities of other imported products (including other importe d products from the same Member) 
that compete with such products would simultaneously benefit.1179 We therefore do not consider 
that, on appeal, the appellants have demonstrated that the Panel erred by failing to find that the 
reduction in the opportunity to differentiate between different products caused by the TPP  measures 
necessarily amounts to a limiting effect on international trade.  
6.409.   Having upheld the Panel's determination that it was unable to conclude on the degree of 
trade restrictiveness on the basis  of its examination of the design and structure of the TPP  measures, 
we also disagree with the appellants that the Panel required evidence of "actual trade effects" or 
applied a " higher evidentiary burden" on the basis that the TPP  measures were not shown to be 
 
1174 See para.  6.393.   above.  
1175 Panel  Report, para.  7.1167.  
1176 Panel  Report, para.  7.1167. (fn  omitted)  
1177 Panel  Report, para.  7.1167.  
1178 We note that, although aspects of the appellants' arguments might be understood as focusing on 
the detrimental impact of the measure on producers , the Panel did indeed find that the TPP  measures impact 
producers' products , when it stated that  "the TPP  measures limit the opportunity for producers to differentiate 
their products ." (Panel  Report, para.  7.1167 (emphasis added))  
1179 Indeed, this precise effect of the measure was asserted by the complainants in the context of their 
downtrading arguments. Honduras, for example, argued that the TPP  measures "caused a downward 
substitution effect, whereby 'consumers purchase relatively fewer higher -quality and higher -priced products, 
and instead purchase relatively more lower -quality and lower -priced products'." (Panel  Report, para.  7.1189 
(quoting Honduras' first written submissi on to the Panel, paras.  372-379)) (See also Panel  Report, 
paras.  7.1190 -7.1192 (referring to Dominican  Republic's first written submission to the Panel, para.  978; 
second written submission to the Panel, para.  938; response to Panel question Nos.  117, 125 -126, and 151; 
comments on Australia's response to Panel question No.  151; Cuba's comments on Australia's response to 
Panel question No.  165, para.  26; Indonesia's first written submission to the Panel, paras.  397-399; 
second  written submission to the Panel , para.  270; response to Panel question Nos.  117 and 165))  
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  discriminatory.1180 There is no indication that the Panel's conclusions with respect to brand 
differentiation were exclusively based on the fact that the TPP  measures were non -discriminatory. 
To the contrary, the Panel's rejection of the argument that t he reduction in the opportunity to 
brand -differentiate demonstrated trade restrictiveness was on the basis that this fact alone was 
insufficient for it to anticipate whether the net effect of the TPP  measures would be 
trade-restrictive.1181 For this reason, t he Panel proceeded to examine the additional evidence and 
arguments adduced by the parties. Furthermore, the Panel did not require such additional evidence 
or argumentation to be in the form of "actual trade effects" (by which we understand the parties to 
refer to evidence of "actual" effects to date, as opposed to evidence of an "anticipated" effect in the 
future). To the contrary, having rejected the parties' arguments based exclusively on the design and 
structure of the measure, the Panel examined all ev idence regarding both the actual effects to date 
as well as  evidence informing the expected operation of the measure (i.e.  the anticipated effects of 
the measure).1182 This included both quantitative and qualitative evidence regarding the anticipated  
impact o f the measures.1183 The Panel therefore did not  require evidence of actual trade effects or 
apply a different legal standard to non -discriminatory measures than that applicable to 
discriminatory measures. Rather, the Panel correctly sought to determine the extent to which the 
TPP measures have a limiting effect on international trade.  
6.410.   Finally, we note that the Dominican  Republic considers that the Panel's reasoning "focused 
on the ability of producers to compete based on lower prices , rather th an on other factors, such as 
quality, reputation, etc." .1184 We understand that this aspect of the Dominican  Republic's arguments 
focuses on the parenthetical in the Panel's rejection of the complainants' brand -differentiation 
argument, where it stated that i t was not persuaded that the "modification of the competitive 
environment for all tobacco products on the entire market ( which may in principle increase  
competition on the market ) constitutes, in itself, a restriction on 'competitive opportunities' for 
imported tobacco products that must be assumed to have a 'limiting effect' on international 
trade."1185 In our view, the Panel's parenthetical reference to the TPP  measures potentially increasing 
competition in the market simply reflects the Panel's view that it s examination of only the design 
and structure of the TPP  measures was insufficient for it to anticipate the effect of the measure on 
international trade. Neither the Dominican  Republic nor Honduras ha s explained, on appeal, how the 
fact of a reduction in brand differentiation was sufficient for the Panel to have anticipated the effect 
of the measure on trade. We therefore do not consider that the appellants have demonstrated that 
the Panel failed to apply Article  2.2 correctly in forming its conclusion tha t the reduction in the 
opportunity to differentiate was insufficient for it to determine the degree of trade restrictiveness of 
the TPP  measures.  
6.411.   In sum, we can see no reason to question the Panel's conclusion that it was unable to 
anticipate, solely on t he basis of the design and structure of the measures, whether the anticipated 
reduction in the opportunity to differentiate would have an overall negative impact on trade, as 
 
1180 See, for example, Honduras' appellant's submission, para.  490; Dominican  Republic's appellant's 
submission, para.  1310.  
1181 Specifically, the Panel stated that, the limitation on "the opportunity for tobacco manufacturers to 
compete on the basis of such brand differentiation" amounted to a "modification of the competitive 
environment for all tobacco products on the entire market". (Panel  Report, para.  7.1167 (fn  omitted)) The 
Panel was not convince d that such a modification of the competitive environment in the market "constitutes, in 
itself, a restriction on 'competitive opportunities' for imported tobacco products that must be assumed to have 
a 'limiting effect' on international trade". (Ibid.)  
1182 Panel  Report, paras.  7.1172 -7.1254. See also paras.  6.397.   6.401.    above.  
1183 In our view, the complainants' arguments regarding alleged barriers to entry, the expected effect of 
the TPP  measures on the value of imported products, and the compliance costs and penalties associated with 
the TPP  measures all relate to the anticipated effects of the TPP  measures. We note Honduras' argument that 
the Panel dismissed some of the qualitative evidence on the basis that it was unsupported by "evidence 
showing the actual effects of the TPP  measures". (Honduras' ap pellant's submission, para.  519 (referring to 
Panel  Report, para.  7.1181)) A review of the Panel's findings reveals that Honduras' concern pertains to a 
single aspect of the complainants' qualitative evidence and concerns the Panel's conclusion that such 
qualitative evidence was simply not conclusive in light of contradictory empirical evidence. In short, Honduras 
appears to consider that, by concluding that the complainants' qualitative evidence was not persuasive, the 
Panel somehow misapplied the legal st andard under Article  2.2. We cannot see how the Panel's determination 
of the persuasiveness of certain evidence in the face of contradictory evidence implies that the Panel somehow 
misapplied the legal standard under Article  2.2.  
1184 Dominican  Republic's ap pellant's submission, para.  1294. (emphasis original)  
1185 Panel  Report, para.  7.1167. (italics original; fn  omitted; underlining added)  
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  claimed by the complainants. We therefore reject the appellants' argument that th e Panel erred in 
its application of Article 2.2 by concluding that it was unable to anticipate the impact of the 
TPP measures on trade based exclusively on the fact that the TPP  measures reduce the opportunity 
for producers to differentiate their products on the basis of brands.  
6.1.3.2.3   The effect of the TPP  measures on the value of imported tobacco products  
6.412.   The appellants argue that the Panel erred in applying Article  2.2, in its assessment of the 
impact of the TPP  measures on the value of imported tobacco products. Many of the arguments 
raised by the appellants in this respect relate to the Panel's findings with respect to so -called 
"downtrading". The concept of "downtrading" refers to "[d]ownward substitution from higher - to 
low-priced brands"1186, and, in the context of the TPP  measures, downtrading caused by the 
TPP measures refers to "consumers buy[ing] a cheaper brand than the brand that they bought before 
the TPP  measures were introduced".1187 We also note that, in its appellant's submission, the 
Dominican  Republic refers to the extent to which the shift in the ratio of high -end to low -end 
cigarette sales was "caused" by downtrading.1188 Since downtrading, per the Panel's definition, is 
the non -attributable shift in the ratio of high -end to low -end cigar ette sales, we understand that the 
Dominican  Republic's use of the term "downtrading" refers specifically to the shift that is attributable 
to the TPP  measures. For the sake of simplicity, we use the term "downtrading" to refer generically 
to the phenomeno n of consumers shifting from high -end to low -end cigarettes, without specifically 
attributing such downtrading effect to the TPP  measures. Where we refer to this downtrading effect 
as being caused by the TPP  measures, we do so explicitly.  
6.413.   We observe that the Panel's findings regarding the impact of the TPP  measure s on value 
appear in the subsection of its Report titled "Whether the TPP  measure s have a limiting effect on the 
volume and value of trade in tobacco products".  At the first hearing, the participa nts extensively 
discussed the correct way to understand the structure and content of the Panel's findings in this 
subsection. We observe, in particular, the Dominican  Republic's view that the Panel's analysis was 
in four  parts, consisting of: (i)  "downtrad ing" in paragraphs  7.1189 -7.1198; (ii)  "demand" in 
paragraphs  7.1199 -7.1201; (iii)  "volume" in paragraphs  7.1202 -7.1208; and (iv)  "price 
competition" in paragraphs  7.1209 -7.1225. For the reasons explained below, we consider that the 
plain language of the Panel  Report indicates that the Panel's analysis of the impact of the 
TPP measure s on volume and value was, in fact, in three  parts: (i)  whether the TPP  measures caused 
downtrading to occur; (ii)  the impact of the TPP  measures on the volume of imported  tobacco 
products; and (iii)  the impact of the TPP  measures on the value of imported tobacco products.  
6.414.   Before the Panel, the complainants presented several different arguments regarding the 
impact of the TPP  measures on the volume and value  of imported to bacco products. Several of these 
arguments relied on the notion that the TPP  measures had caused downtrading to occur. In order to 
address these arguments, the Panel first assessed the parties' econometric evidence regarding 
whether the TPP  measures had ca used downtrading in the Australian cigarette market . The Panel's 
findings in this respect are contained in Appendix  E to the Panel  Report. The Panel concluded that 
the TPP  measures contributed  to the shift in ratio of higher - to low -priced cigarette sales.1189 The 
Panel further stated that it was "unclear to what extent this reduction in the quantity ratio 
attributable to the TPP  measures represents only downward substitution" and "at least part of the 
reduction in the quantity ratio is due to the overall redu ction in the total wholesale sales volume" 
attributable to the TPP  measures.1190 In other words, the Panel concluded that the TPP  measures 
contributed to a shift in the ratio of high -end to low -end cigarette sales, and found that the 
 
1186 Panel  Report, para.  7.1109.  
1187 Panel  Report, para.  7.1109 (referring to Dominican  Republic's response to Panel question Nos. 117, 
125-126, and 151). Alternatively, "[a]s consumers shift from the more expensive brands to the less expensive 
brands because they have a higher willingness to switch brands and a lower willingness to pay, downtrading 
occurs." (Ibid., para.  7.1123 (referring to Indonesia's response to Panel question No.  117))  
1188 See, for example, Dominican  Republic's appellant's submission, paras.  1323 and 1329.  
1189 This is reflected in the Panel's statements that "the TPP  measures appear to have had a negative 
impact on the ratio of higher - to low -priced cigarette wholesale sales", and "there is some econometric 
evidence suggesting that the TPP  measures contributed to the reduction in the ratio of higher - to low -priced 
cigarette wholesale sales." (Panel  Report, para.  7.1196 (fn  omitted); ibid., Appendix  E, para.  56.c)  
1190 Panel  Report, Appendix  E, para.  56.c. See also ibid., Appendix  E, para.  55.  
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  mechanisms  by which the T PP measures contributed to this shift were both downward substitution  
(i.e. downtrading)  and a general decline in tobacco product sales .1191  
6.415.   In the main body of the Panel  Report, the Panel addressed the complainants' arguments that 
the TPP  measures are trade -restrictive by reducing the volume  and value  of imported tobacco 
products. The complainants' arguments included, inter alia , arguments that downtrading caused by 
the TPP  measures: (i)  led to a decline in the volume  of premium tobacco product sales in 
Australia1192; and (ii)  led to, or would lead to, a decline in the overall value of tobacco product sales 
in Australia.1193 In our view, the Panel did not assess the "volume" and "value" aspects of the 
complainants' downtrading arguments together, but rather assessed them separately. Specifically, 
we understand that the Panel conducted its analysis by first considering all arg uments regarding the 
impact of the TPP  measures on the volume  of imported tobacco products , and then turning to 
address the impact of the TPP  measures on  the value  of imported tobacco products.1194  
6.416.   First, regarding the impact of the TPP  measures on volume, t he Panel stated that the 
complainants "demonstrated that the TPP  measures have contributed to a reduction of the volume 
of imports of premium tobacco products both in relative and in absolute terms".1195 The Panel 
elaborated that "there is some evidence, albe it limited, that together with the enlarged GHWs 
introduced on the same date, the TPP  measures appear to have had a negative impact on the ratio 
of higher - to low -priced cigarette wholesale sales ."1196 The Panel considered it "reasonable to expect" 
that the r eduction in ratio of higher - to low -priced cigarette sales observed since the entry in to force 
of the TPP  measures resulted "at least in part" from the TPP  measures.1197 The Panel also noted that 
"overall consumption of tobacco products" has diminished, that "this is at least partly attributable" 
to the TPP  measures, and that, since the Australian market is "supplied entirely through imported 
products", there will be a reduction in imports of such premium products.1198 The Panel highlighted, 
however, that this de crease in consumption and imports of premium tobacco products was not 
exclusively caused by downtrading, since (i)  the overall consumption of tobacco products has 
decreased (meaning that "at least some part of the decrease in the consumption of premium tob acco 
products has not been substituted"), and (ii)  "the higher - and lower -priced segments of the market 
 
1191 We address in section 6  6.1.3.3    below the Dominican  Republic's claims that this factual finding by 
the Panel was inconsistent with Article  11 of the DSU.  
1192 Before the Panel, Cuba argued that downtrading caused by the TPP  measures would impact the 
volume of Cuba's trade in cigars. (Panel  Report, para.  7.1191) The Panel also appeared to consider that other 
arguments raised by the Dominican  Republic, Honduras, and Indonesia also implicated the effects of 
downtrading on the volume of premium imported tobacco products. (Panel  Report, paras.  7.1189 -7.1195)  
1193 Panel  Report, para.  7.1209.  
1194 We note that the entirety of the Panel's analysis in paragraphs  7.1196 to 7.1208 concerns the 
impact of the TPP  measures on volume. Furthermore, paragraph  7.1208 contains a general conclusion on  the 
trade restrictiveness of the TPP  measures with respect to their impact on volume. Almost the entirety of the 
remainder of the Panel's analysis in that subsection, from paragraphs  7.1209 to 7.1225, relates to the Panel's 
analysis of the impact of the T PP measures on the value of imported tobacco products, and similarly culminates 
in a general conclusion regarding the trade restrictiveness of the TPP  measures in terms of their impact on 
value. The only exception to this is paragraph  7.1219, which concern s "overall imports of cigars and cigarillos", 
"the impact of the TPP  measures on cigar imports", and "the reduction in cigar smoking prevalence in 
Australia". Paragraph  7.1219 concludes that "the TPP  measures are trade -restrictive also vis-à-vis cigars." 
While we acknowledge that this paragraph does not relate to the impact of the TPP  measures on value , but 
rather on  volume , we note that under the Dominican  Republic's understanding of the structure of this section, 
paragraph  7.1219 would fall within the Pan el's analysis of "price competition". Given that this paragraph plainly 
refers to the impact of the TPP  measures on the volume of cigar imports, and does not refer to price 
competition at all, the location of paragraph  7.1219 is as anomalous under the Domi nican  Republic's 
understanding of the Panel's structure as it is under our own understanding. Essentially, no matter how one 
views the structure of the Panel's analysis, paragraph  7.1219 appears to be misplaced. We can see no other 
way to reconcile the Pan el's conclusion in paragraph  7.1208 on the volume of imported tobacco products 
generally with its subsequent, yet apparently preliminary, discussion in paragraph  7.1219 of the impact of the 
TPP measures on the volume of cigar products . 
1195 Panel  Report, para . 7.1196.  
1196 Panel  Report, para.  7.1196. The Panel based this finding on its analysis in Appendix  E to the 
Panel  Report. Specifically, in Appendix  E, the Panel examined whether the TPP  measures had caused 
consumers to shift from high -end (i.e.  more expensive, premium)  cigarettes to low -end (i.e.  less expensive, 
non-premium) cigarettes, and concluded that "there is some econometric evidence suggesting that the 
TPP measures contributed to the reduction in the ratio of higher - to low -priced cigarette wholesale sales." 
(Panel Report, Appendix  E, para.  56.c) 
1197 Panel  Report, para.  7.1196.  
1198 Panel  Report, para.  7.1196.  
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  have evolved on the basis of distinct trends … even before the implementation of the 
TPP measures ."1199 The Panel also concluded that there was no evidence  of cigar downtrading, or 
any causal link between cigar downtrading and the TPP  measures.1200  
6.417.   The Panel proceeded to address the argument that, as consumers downtrade, demand for 
imported tobacco products will decline, and this decline in demand amounts to a  limiting effect on 
trade (i.e.  a "disincentive to export tobacco products to Australia").1201 The Panel noted that the 
TPP measures can indeed contribute to reducing demand for tobacco products, but considered that, 
because the TPP  measures will have supply -side implications, with consequences for overall 
consumption, a demonstration of effects on demand  alone are not sufficient to demonstrate that the 
TPP measures are trade -restrictive.1202 The Panel next recalled its finding that "the TPP  measures 
are apt to, and do in fact, reduce the appeal of tobacco products to the consumer, and that this may 
in turn have an impact on smoking behaviours ."1203 The Panel noted that "it is undisputed that the 
Australian market is in fact supplied entirely through imported tobacco  products"1204, and, on that 
basis, concluded that "the TPP  measures are trade -restrictive, insofar as, by reducing the use of 
tobacco products, they reduce the volume of imported tobacco products on the Australian market, 
and thereby have a 'limiting effect' on trade ."1205  
6.418.   The Panel then assessed the impact of the TPP  measures on the value of imports.1206 The 
Panel agreed with the complainants that , "to the extent that they restrict the use of branding features 
on tobacco products and their retail  packaging, the TPP  measures reduce opportunities for producers 
to differentiate their products on the basis of these features ."1207 The Panel proceeded to consider 
whether "such reduced opportunity for brand differentiation has led to an increase in price 
competition and a fall in prices and consequently to a decrease in the sales value of tobacco products 
and the total value of imports."1208 The Panel concluded that "the empirical evidence … does not 
validate the complainants' argument that the TPP  measures wil l lead to an increase in price 
competition and a fall in prices, and consequently to a decrease in the sales value of tobacco products 
and the total value of imports."1209 In that context, the Panel also concluded that the "evidence 
suggests that the measures  have led to an increase in the price of cigarettes which has more than 
offset the decrease in the quantity of cigarette [s] consumed and has thereby contributed to an 
increase in the value of the market ."1210  
6.419.   Thereafter, the Panel addressed the Dominican  Republic's argument that, "by reducing brand 
differentiation, the TPP  measures have already led to switching from higher - to lower -priced 
cigarettes and, hence, to a reduction in the value of the trade, without reducing smoking prevalence 
or consumption ."1211 The Panel considered that the Dominican  Republic's argument was "based on 
the assumption that the TPP  measures would either keep the price of cigarettes constant or reduce 
it".1212 The Panel noted that "evidence shows that brands in the higher priced segments g enerally 
maintained or increased their pricing premiums over brands in the low er-priced segments in the 
first year following the implementation of plain packaging, and have not exhibited a marked drop, 
in line with the observation that the average price of  cigarettes had increased sufficiently to offset 
the decrease in consumption."1213 The Panel concluded that the facts before it did not support the 
Dominican  Republic's argument.1214 Before concluding with respect to the impact on value, the Panel 
 
1199 Panel  Report, para.  7.1197.  
1200 Panel  Report, para.  7.1198.  
1201 Panel  Report, paras.  7.1199 -7.1201 (referring to Honduras' first written submission to the Panel , 
paras.  875-876; response to Panel question No.  117).  
1202 Panel  Report, paras.  7.1199 -7.1201.  
1203 Panel  Report, para.  7.1206.  
1204 Panel  Report, para.  7.1207. (fn  omitted)  
1205 Panel  Report, para.  7.1208.  
1206 Panel  Report, paras.  7.1209 -7.1218 and 7.1220 -7.1225. Regarding paragraph  7.1219 of the 
Panel  Report, see fn  1192 to para.  6.415.    above.  
1207 Panel  Report, para.  7.1214.  
1208 Panel  Report, para.  7.1214.  
1209 Panel  Report, para.  7.1218.  
1210 Panel  Report, para.  7.1218.  
1211 Panel  Report, para.  7.1221.  
1212 Panel  Report, para.  7.1221.  
1213 Panel  Report, para.  7.1221 (referring to  M. Katz, An Economic Assessment of the Effects of Tobacco 
Plain Packaging  (9 March 2015) ( Katz Report) (Panel Exhibit AUS -18), para.  66).  
1214 Panel  Report, para.  7.1221.  
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  also addressed  the argument that, over time, prices will ultimately decline as a consequence of the 
TPP measures.1215 The Panel noted that, "at least in the period of observation covered, price 
competition has not increased ."1216 However at the same time, the evidence did not  allow the Panel 
"to exclude the possibility that the TPP  measures may have reinforced price competition, which does 
not seem unreasonable, nor, if this hasn't happened yet, that they may reinforce it in the future" .1217 
The Panel ultimately concluded that, " while the complainants have not demonstrated that the 
TPP measures have reduced the value of imported tobacco products on the Australian market, it 
cannot be excluded that this may happen in the future ."1218 
6.420.   The appellants, and predominantly the Dominican  Republic, make several sets of arguments 
asserting that the Panel erred in determining the trade restrictiveness of the TPP  measures based 
on their impact on the value of imported tobacco products. Before turning to address these 
arguments, we observe that th ey all relate to the complainants' reliance on the notion of downtrading 
to demonstrate, before the Panel, that the value of imported tobacco products declined. Although 
the Panel also made findings regarding the impact of downtrading on volume , the appell ants' 
arguments on appeal relate exclusively to the impact of downtrading on value .1219  
6.421.   We understand that the complainants' primary argument before the Panel was that the 
TPP measure s were trade -restrictive on the basis that they reduced the opportunity for 
manufacturers to differentiate on the basis of brands. The Panel accepted that the TPP  measure s 
reduce the opportunity for brand differentiation but considered that this was insufficient to 
demonstrate a limiting effect on international trade. We understand that the complainants' 
arguments in relation to downtrading sought to demonstrate that the TPP  measure s' effects on brand 
differentiation would indeed have a limiting effect on international trade, including by reducing the 
value of impor ted tobacco products.  
6.422.   Value is a function of price and quantity. In order to demonstrate that the TPP  measure s 
reduced the value of imported tobacco products, it would have sufficed for the complainants to 
adduce quantitative evidence of the average price and aggregate  quantity of their imported tobacco 
products before and after the implementation of the TPP  measure s, and explain causation. The 
complainants' reliance on the notion of downtrading, however, hypothesized that the TPP  measure s 
would necessaril y lead to a decline in value, as a consequence of consumers shifting from premium 
to non -premium products in response to the TPP  measure s. We understand that the Panel based its 
ultimate assessment of the effect of the TPP  measure s on value on all the evid ence provided to it, 
including both qualitative and quantitative evidence.  
6.423.   In this respect, we consider it useful to briefly address, at the outset, the appellants' 
argument that the Panel erred in its application of Article  2.2 by concluding that the TPP  measures 
will not lead to a reduction in the value of imported products, even though (in the appellants' view) 
the qualitative evidence indicated that such an effect would occur in the future.1220 We note that the 
Panel did indeed take into account the future  impact of the TPP  measures on value.1221 The Panel 
did not consider, however, that the evidence was sufficient to conclude that the TPP  measures did, 
or necessarily would , lead to a reduction in value. We recall that there is no obligation on a panel to 
base its assessment of the degree of trade restrictiveness on a subset of the relevant evidence.1222 
Bearing in mind that the weighing and balancing of the evidence is the province of the Panel in its 
 
1215 Panel  Report, paras.  7.1222 -7.1225  
1216 Panel  Report, para.  7.1224.  
1217 Panel  Report, para.  7.1224.  
1218 Panel  Report, para.  7.1225.  
1219 See paras.  6.416.   6.417.    above. In response to questioning at the first hearing, the 
Dominican  Republic clarified that its arguments regarding the Panel's findings on downtrading relate exclusively 
to the im pact of downtrading on the value of imported tobacco products.  
1220 Honduras' and the Dominican  Republic's responses to questioning at the first hearing.  
1221 The Panel concluded that, "while the complainants have not demonstrated that the TPP  measures 
have red uced the value of imported tobacco products on the Australian market, it cannot be excluded that this 
may happen in the future." (Panel  Report, para.  7.1225)  
1222 See para.  6.393.    above. We similarly see no reason that a panel's determination of the anticipated 
effects of a measure (i.e.  the "expected operation" of the measure) should not be based on all evidence before 
it, including empirical evidence of t he effects of the measure to date.  
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  role as factfinder1223, we do not consider that this aspect of th e appellants' arguments demonstrates 
that the Panel erred in applying Article  2.2.1224 
6.424.   Having addressed this aspect of the appellants' arguments, we note that the 
Dominican  Republic  has raised three  additional sets of arguments alleging that the Panel erred i n its 
application of Article  2.2, with respect to its determination that the TPP  measure s have not reduced 
the value of imported tobacco products. The Dominican  Republic argues, first, that the Panel erred 
in assessing the complainants' downtrading argumen t by rejecting that argument on the basis that 
the TPP  measures were not the exclusive cause of downward substitution by consumers.1225 Second, 
the Dominican  Republic submits that any separate reasons that the Panel had for rejecting the 
complainants' downtra ding argument were also in error.1226 Third,  the Dominican  Republic posits 
that the Panel erred by taking into account the reaction of producers to the TPP  measures.1227 
We address each set of arguments in turn.  
6.1.3.2.3.1   The causation standard applied by the Panel  
6.425.   The D ominican  Republic argues that the Panel erred by requiring that downtrading (caused 
by the TPP  measures) be the sole cause of the downward shift in the ratio of high -end to low -end 
cigarette sales.1228 In the Dominican  Republic's view, paragraphs  7.1196 and 7.1197 of the 
Panel  Report indicate that the Panel rejected the complainants' argument that downtrading (caused 
by the TPP measures) led to a reduction in value on the basis that the shift in the ratio was not 
exclusively caused by downtrading ( caused by the TPP  measures).1229 In the Dominican  Republic's 
view, the fact that the Panel considered that the shift in ratio was at least partially attributable to 
downtrading caused by the TPP  measures should have been sufficient, and the Panel applied an 
inappropriately rigid standard of causation.1230  
6.426.   Australia disagrees with the Dominican  Republic's interpretation of the Panel  Report. 
Australia considers that the Panel did not find that the TPP  measures caused downtrading to 
occur.1231 Australia also argues th at, in any event, the Panel rejected the Dominican  Republic's 
downtrading argument because the argument was based on the assumption that the TPP  measures 
would keep the price of cigarettes constant or reduce it, and, "contrary to this assumption, the Panel  
found that average tobacco prices net of taxes increased  in the period following the implementation 
of the TPP  measures ."1232 Australia does not consider that the Panel applied a "rigid 'exclusive cause' 
standard in its analysis of trade -restrictiveness".1233 
6.427.   We recall that, with respect to the complainants' argument that downtrading would lead to 
a decline in the value  of imported tobacco products, the Panel rejected the argument that such effect 
had occurred.1234 However, the Panel did not preclude the possibilit y that such an effect could occur 
in the future.1235  
6.428.   In our view, the Dominican  Republic's arguments are based on an incorrect understanding 
of the Panel's findings on downtrading. We understand that the Dominican  Republic's argument on 
appeal is essentially  premised on its view that the Panel, in paragraphs  7.1196 and 7.1197 of the 
 
1223 We also recall that, in the context of claiming that the Panel erred in determining the degree of 
contribution of the TPP  measures to Australia's objective, the appellants argue the opposite (namely, that the 
Panel err ed by according too much weight to the evidence of anticipated effects, and insufficient weight to the 
evidence of actual effects). (See paras.  6.346.   6.347.    above).  
1224 Neither appellant has raised this argument in the context of challenging the Panel's findings under 
Article  11 of the DSU and, in any event, it is not the role of the Appellate  Body to second -guess the Panel's 
appreciation of the evidence.  
1225 Dominican  Republic's appellant's submission, paras.  1317-1330.  
1226 Dominican  Republic's responses to questioning at the first hearing.  
1227 Dominican  Republic's appellant's submission, paras.  1331-1338.  
1228 Dominican  Republic's appellant's submission, paras.  1317-1330.  
1229 Dominican  Republic's appellant's submission, paras.  1322, 1329 and fn  1256 thereto, and 1330.  
1230 Dominican  Republic's appellant's submission, paras.  1323-1330.  
1231 Australia's responses to questioning at the first hearing.  
1232 Australia's opening statement at the first hearing, para.  49 (referring to Panel  Report, paras.  7.1215 
and 7.1221). (emphasis original)  
1233 Australia's appellee's submission, para.  332.  
1234 See pa ras 6.418.   6.419.    above.  
1235 See para.  6.419.    above.  
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  Panel  Report, rejected the complainants' argument that downtrading reduced the value  of imported 
tobacco products. The Dominican  Republic considers that the Panel rejected this ar gument on the 
basis that the reduction in the ratio of high -end to low -end cigarette sales was not exclusively caused 
by downward substitution by consumers in response to the TPP  measures, but was at least in part 
caused by the overall reduction in consump tion, also caused by the TPP  measures.1236 As described 
above, however, paragraphs  7.1196 and 7.1197 of the Panel  Report refer to the impact of the 
TPP measures on the volume of imported tobacco products, and not the impact on value .1237  
6.429.   Part of the Dominican  Republic's confusion may relate to the fact that paragraphs  7.1196 
and 7.1197 of the Panel  Report refer to the decline in the volume of imported premium tobacco 
products being partially attributable to downtrading and partially attributable  to the overall d ecline 
in consumption caused by the TPP  measures.1238 These findings are very similar, yet different, to 
certain findings made by the Panel in its analysis of whether the TPP  measures caused downtrading, 
in Appendix  E to the Panel  Report.1239 We address below certain issues arising in relation to the 
Panel's findings in Appendix  E.1240 It suffices for the moment, however, to note that the Panel's 
findings in paragraphs  7.1196 and 7.1197 concern the impact of downtrading on volume and do not 
refer to the impact of downtrading on value . 
6.430.   Furthermore, paragraph  7.1221 of the Panel  Report does address the "effects of 
downtrading on value" argument. The first sentence of paragraph  7.1221 specifically refers to this 
argument, stating that "[i]n the Domin ican Republic's view, the complainants['] argument is 
that… the TPP  measures have already led to switching from higher - to lower -priced cigarettes and, 
hence, to a reduction in the value of … trade ."1241 The Panel reasoned that this argument was "based 
on the  assumption that the TPP  measures would either keep the price of cigarettes constant or 
reduce it".1242 According to the Panel, "evidence shows that brands in the higher priced segments 
generally maintained or increased their pricing premiums over brands in t he lower -priced segments 
in the first  year following the implementation of plain packaging, and have not exhibited a marked 
drop, in line with the observation that the average price of cigarettes had increased sufficiently to 
offset the decrease in consump tion."1243 Consequently, in the Panel's view, "the facts … do not 
support the Dominican  Republic's argument."1244  
6.431.   In short, the relevant paragraph that directly addresses the argument that downtrading led 
to a reduction in the value of imported cigarette produc ts, is neither paragraph  7.1196 nor 7.1 197, 
but rather paragraph  7.1221. Critically, for the purposes of addressing the Dominican  Republic's 
claim on appeal, paragraph  7.1221 does not reject the "downtrading led to a decrease in value" 
 
1236 Dominican  Republic's appellant's submission, para.  1319.  
1237 See para.  6.416.   above.  We emphasize that paragraphs  7.1196 and 7.1197 refer to the decline in 
consumption  and imports  of premium tobacco products, and neither paragraph, at any point, refers to the 
impact of either downtrading or t he TPP  measures on value.  
1238 The last sentence of paragraph  7.1196 states that "consumption of premium tobacco products has … 
decreased in absolute terms , which may be expected to lead, in turn, to a reduction in imports of premium 
products." (Panel  Report, para.  7.1196 (emphasis added)) The following sentence, the first sentence of 
paragraph  7.1197, plainly refers to this decrease in consumption of premiu m tobacco products in absolute 
terms, when it states that the Panel is "not persuaded … that this decrease  in the consumption and imports of 
premium tobacco products  is exclusively the result of 'downtrading' as the complainants describe it". 
(Panel  Report , para.  7.1197 (emphasis added)) The second sentence of paragraph  7.1197 explains that "given 
that the overall consumption of tobacco products has decreased, at least some part of the decrease in the 
consumption of premium tobacco products  has not been sub stituted with the consumption of non -premium 
products." (Panel  Report, para.  7.1197 (emphasis added))  
1239 In paragraphs  55 and 56.c of Appendix  E to the Panel  Report, the Panel stated that the shift in ratio 
of high -end to low -end sales was partially attrib utable to the TPP  measures, and, to the extent that shift is 
attributable to the TPP  measures, it resulted from both downward substitution and an overall decline in 
wholesale sales. Thus, in Appendix  E, the Panel was referring to the impact of the TPP  meas ures on the ratio of 
sales. By contrast, in paragraphs  7.1196 and 7.1197 of its Report, the Panel found that, to the extent that the 
TPP measures reduced the volume of imported premium tobacco products , they did so through downward 
substitution caused by t he TPP  measures, as well as a more general decline in wholesale sales volume, also 
caused by the TPP  measures. We note that a decline in the ratio of high -end to low -end sales is not the same 
thing as a decline in the absolute volume of high -end sales.  
1240 See section 6  6.1.3.3    below.  
1241 Panel  Report, para.  7.1221.  
1242 Panel  Report, para.  7.1221.  
1243 Panel  Report, para.  7.1221 (referring to Katz Report (Pane l Exhibit AUS -18), para.  66).  
1244 Panel  Report, para.  7.1221.  
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  argument on the basi s of the extent to which downward substitution by the TPP  measures caused 
the shift in ratio of cigarette sales. We also note that the Panel's ultimate conclusion in 
paragraph  7.1225 on the impact of the TPP  measures on the value of imported tobacco produc ts 
took into account the possible future impact of downtrading on value. Specifically, the Panel stated 
that, "while the complainants have not demonstrated that the TPP  measures have reduced the value 
of imported tobacco products on the Australian market, it cannot be excluded that this may happen 
in the future, either as a result of the effect of the measures on consumption only or as a result of 
this effect combined with a fall in prices ."1245 In our view, these findings fully capture the Panel's 
conclusions  on the impact of downtrading on the value of imported tobacco products.  
6.432.   We are aware of the Dominican  Republic's argument, raised at the first hearing, that 
paragraphs  7.2572 and 7.2573 of the Panel  Report demonstrate that the Panel addressed the 
"downtra ding led to a decrease in value" argument in paragraphs  7.1196 and 7.1197. 
Paragraphs  7.2572 and 7.2573, appearing in the context of the Panel's analysis under  Article  20 of 
the TRIPS  Agreement, summarize the Panel's earlier findings on, respectively, "price competition" 
and "downward substitution", in its assessment of trade restrictiveness.1246 In neither 
paragraph  7.2572 nor 7.2573 does the Panel refer to its fi ndings in paragraph  7.1221. This is 
particularly significant given that paragraph  7.2573, which contains the Panel's own summary of its 
findings on "downward substitution", does describe almost word for word the Panel's findings in 
paragraphs  7.1196 and 7. 1197 regarding the impact of downtrading on the volume of imported 
tobacco products, and also describes the Panel's statement in paragraph  7.1225 regarding the 
possible future impact of the TPP  measures on value. In other words, paragraphs  7.1196 and 7.119 7 
contain the Panel's findings on the impact of downtrading on volume, paragraphs  7.1221 and 7.1225 
contain the Panel's findings on the impact of downtrading on value, and paragraphs  7.2572 and 
7.2573 claim to summarize the Panel's findings on downtrading,  but omit any mention of its findings 
contained in paragraph  7.1221.  
6.433.   We agree with the Dominican  Republic that it is concerning that the Panel's own summary 
of its findings on downtrading omits any mention of paragraph  7.1221.  Indeed, the 
Dominican  Republ ic has identified a tension between the plain text of the Panel's findings and its 
subsequent summary of those findings.1247 In our view, however, the Panel's subsequent summary 
of its earlier findings is not a sufficient basis to simply disregard the plain t ext of those earlier 
findings.1248 We note that not only does the Dominican  Republic's interpretation of the Panel  Report 
ignore the plain text of paragraphs  7.1196 , 7.1197 , and 7.1221, but it also would render 
paragraph  7.1221 entirely redundant. We disagree  with this understanding of the Panel  Report.  
6.434.   As indicated, the text of paragraph s 7.1221 and 7.1225 reveals that the Panel did not  reject 
the Dominican  Republic's downtrading argument on the basis that the TPP  measures were not the 
sole cause of the downw ard substitution. Such reasoning is absent from paragraph  7.1221, and 
indeed paragraph  7.1225 allows for the possibility that the TPP  measures may, in fact, lead to a 
 
1245 Panel  Report, para.  7.1225.  
1246 We note that the Panel made this summary of its findings in the context of assessing the 
complainants' arguments that the TPP  measures affect the ability of trade mark owners to "extract economic 
value from those trademarks". (Panel  Report, para.  7.2571)  
1247 On the one hand, under the Dominican  Republic's interpretation of the Panel  Report, 
paragraphs  7.1196 and 7.1197 contain the Panel's operative reasoning for reje cting the argument that 
downtrading led to a decline in value, which is plainly contradicted by the plain text of those paragraphs as well 
as the fact that paragraph  7.1221 on its face appears to be the operative paragraph addressing this argument. 
On the other hand, to the extent that paragraph  7.1221 is indeed the operative paragraph in which the Panel 
rejected the argument that downtrading led to a decline in value, then paragraph  7.2573 is a confusing 
summary by the Panel of its own findings, and is inc omplete to the extent that it does not refer to 
paragraph  7.1221.  
1248 We find further support for our understanding of the Panel  Report when we take into account the 
Panel's distinct findings on the impact of downtrading on cigars, rather than cigarettes. In  paragraph  7.1198, 
the Panel concluded that there was no evidence that the TPP  measures had caused downtrading to occur in the 
cigar market. That paragraph, like paragraphs  7.1196 -7.1197, does not refer to any impact of downtrading on 
value, but only to th e impact of downtrading on "imports" and "sales". Having indicated in paragraph  7.1198 
that there is no evidence that downtrading of cigars is occurring, the Panel at no point returns to examine 
whether downtrading has had any impact on the value of import ed cigars. This approach to the impact of 
downtrading on trade in cigars stands in stark contrast to the Panel's findings with respect to the impact of 
downtrading on trade in cigarettes. Indeed, in paragraph  7.1196, the Panel explicitly finds that the 
TPP measures have caused some downtrading in the cigarette market, and subsequently in paragraph  7.1221 
the Panel concludes that downtrading has not led to a reduction in the value of the cigarette market.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  reduction in value in the future. A close reading of the Panel  Report shows that the Pane l 
first concluded in Appendix  E (and restated in paragraph  7.1196 ) that the TPP  measures were at 
least partially responsible for downtrading in Australia. On that basis, the Panel proceeded to 
examine whether downtrading did, or would, lead to a reduction in either  the volume or value of 
imported tobacco products . The P anel rejected the argument that downtrading caused by the 
TPP measures reduced the value of imported tobacco products for reasons unconnected from the 
extent to which downward substitution caused the decrease in ratio of cigarette sales. The Panel 
was also  sufficiently persuaded by the downtrading argument to conclude that value might be 
reduced in the future.  
6.435.   We therefore understand that the Panel applied the exact standard of causation that the 
Dominican  Republic considers appropriate under Article  2.2, simply requiring that the TPP  measures 
be at least partially responsible for downtrading in order to assess whether that downtrading  effect 
caused by the TPP measures  led, or would lead in the future, to a reduction in value. Consequently, 
the Dominican  Republic has not demonstrated that the Panel erred by relying on an inappropriate 
standard of causation in app lying Article  2.2.  
6.1.3.2.3.2   The Panel's reasoning in paragraph  7.1221 of the Panel  Report  
6.436.   As explained above, paragraph  7.1221 of the Panel  Report contains the Panel's operative 
findings regarding the impact of downtrading (caused by the TPP measures) to date on t he value of 
imported tobacco products. That paragraph states the following:  
In the Dominican  Republic's view, the complainants['] argument is that, by reducing 
brand differentiation, the TPP  measures have already led to switching from higher - to 
lower -priced cigarettes and, hence, to a reduction in the value of the trade, without 
reducing smoking prevalence or consumption. However, at the same time the 
Dominican  Republic adds that "[t]his disagreement on the actual trade effects resulting 
from the [TPP] mea sures is not material to the Panel's finding of trade -restrictiveness 
under Article  2.2, because it is evident from the design, structure, and expected 
operation of the measures that it severely limits competitive opportunities to 
differentiate tobacco pro ducts". The Dominican  Republic's argument is based on the 
assumption that the TPP  measures would either keep the price of cigarettes constant or 
reduce it. However, evidence shows that brands in the higher priced segments generally 
maintained or increased their pricing premiums over brands in the lower -priced 
segments in the first year following the implementation of plain packaging, and have 
not exhibited a marked drop, in line with the observation that the average price of 
cigarettes had increased suffici ently to offset the decrease in consumption. In other 
words, the facts before us do not support the Dominican  Republic's argument.1249 
6.437.   At the first hearing, the Dominican  Republic argued that, in the event that the Appellate  Body 
considered paragraph  7.1221 t o contain the Panel's findings on the complainants' "downtrading has 
reduced value" argument, the Panel in any event erred in applying Article  2.2. The 
Dominican  Republic argued, first, that its downtrading argument did not rely on the Panel's 
assumption t hat prices would remain constant or fall. According to the Dominican  Republic, 
downtrading could still lead to a reduction in value even if prices increased. Second, the 
Dominican  Republic argued that the Panel's references to high -end products maintaining  or 
increasing their pricing premiums is insufficient to reject the downtrading argument, because an 
increasing price differential between high -end and low -end cigarettes only enhances the negative 
impact of the TPP  measures on the value of imported produc ts, since for every unit that shifts down 
there is a bigger loss of value on the sale. Third, according to the Dominican  Republic, the Panel 
used an effect that was not attributable to the TPP  measures (specifically the increase in the average 
price of cig arettes) to offset an effect that is attributable to the TPP  measures ( i.e. downtrading 
itself).1250  
6.438.   Australia considers that the Panel's findings in paragraph  7.1221 are not appealed, and 
therefore are not within the scope of this appeal. In any event, Aust ralia submits that the Panel 
 
1249 Panel  Report, para.  7.1221 (quoting Dominican  Republic's response to Panel question No.  117, 
para. 233; referring to Katz Report (Panel Exhibit AUS -18), para.  66). (fns  omitted)  
1250 Dominican  Republic's responses to questioning at the first hearing.  
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  correctly considered that it could not simply defer to the Dominican  Republic's key price assumption, 
and the Panel correctly found that the empirical evidence indicated that the TPP  measures led to an 
increase in the price of cigarettes.1251  
6.439.   Regarding the Dominican  Republic's first argument on appeal, we note that the "assumption" 
that the Panel ascribed to the Dominican  Republic's argument – that "the TPP  measures would either 
keep the price of cigarettes constant or reduce it"1252 – was not an assumption that the 
Dominican  Republic necessarily acknowledged in making its downtrading argument. Rather, we 
understand that this assumption was a necessary implication of its arguments. Specifically, we 
understand the Dominican  Republic's argument before the Panel to have been that, because the 
TPP measures cause consumers to shift from more expensive to less expensive cigarettes, the 
overall value of cigarette sales will necessarily go down. The Panel's reference to the "assumption" 
underl ying this argument is based on the fact that the TPP  measures could theoretically lead to an 
increase in prices such that any downward shift in consumption is offset by the price increase, 
resulting in no reduction in the total value of imported products. In other words, the only way in 
which downtrading in and of itself could suffice for the Panel to conclude that the TPP  measures have 
reduced the value of imported tobacco products is if prices were to remain constant or decline.  
6.440.   We do not read the Panel' s findings as disagreeing with the Dominican  Republic that it is 
possible that an increase in prices, accompanied by downtrading, could result in a reduction of overall 
value. Rather, the Panel's point was that, if prices increase, then it is not necessari ly the case that 
the predicted reduction in overall value will occur. In other words, as a matter of logic, the Panel 
was not stating that downtrading will not lead to a reduction in value – rather, by rejecting a 
necessary premise of the Dominican  Republi c's argument, the Panel was refuting the argument that 
downtrading must necessarily lead to a reduction in value. We see no error in the Panel's reasoning.  
6.441.   With respect to the Dominican  Republic's second argument  – that increases in the 
price differential  between high -end and low -end products aggravate the loss in value  – we consider 
that this argument ignores the fact that for each lost sale by a high -end producer, the loss in value 
of that particular sale may be offset by the increase in price paid by other consumers who continue 
to purchase  the high -end product. In other words, while the total quantity of high -end sales may go 
down as a result of down trading, the simultaneous increase in price means that total value 
(i.e. quantity multiplied by price) could plausibly remain constant , or even increase. It therefore 
does not follow that an increase in price necessarily reduces value.1253  
6.442.   As to the Dominica n Republic's third argument, that the Panel relied on an effect that was 
not caused by the TPP  measures (price increase) to offset an effect that was caused by the 
TPP measures (downtrading), we consider this argument to be contradicted by the Panel 's expl icit 
finding  that the price increase was caused by the TPP  measures themselves.1254 To the extent that 
the Dominican  Republic's arguments at the first hearing contest the correctness of the Panel's finding 
of causation, we note that the Dominican  Republic did  not appeal this factual finding under Article  11 
of the DSU, and it therefore falls outside the scope of this appeal.1255  
 
1251 Australia's responses to questioning at the first heari ng.  
1252 Panel  Report, para.  7.1221.  
1253 Importantly, neither we nor the Panel considers that price increases will necessarily lead to an 
increase in value. Rather, the Panel's findings merely indicate that downtrading could plausibly lead to no 
change (or an  increase) in value, if prices increased. The fact that prices increased was sufficient for the Panel 
to reject the argument that downtrading necessarily reduced the value of imported tobacco products.  
1254 Specifically, the Panel found that the "evidence sug gests that the measures have led to an increase 
in the price of cigarettes which has more than offset the decrease in the quantity of cigarette[s] consumed and 
has thereby contributed to an increase in the value of the market." (Panel  Report, para.  7.1218)  We therefore 
disagree with the Dominican  Republic's assertion that the Panel simply found that there was an upward trend 
in the value of tobacco products following the implementation of the TPP  measures, without assessing whether 
the TPP  measures caused t hat upward trend.  
1255 At the first hearing, the Dominican  Republic compared the Panel's analysis of causation in attributing 
the price increases to the TPP  measures to the Panel's analysis of the extent to which downtrading occurred 
(i.e. the extent to whic h the shift in ratio of cigarette sales was caused by the TPP  measures). The 
Dominican  Republic pointed out that, in assessing the causes of the shift in ratio, the Panel assessed not only 
whether that downward shift occurred and increased following the im plementation of the TPP  measures, but 
whether the TPP  measures had caused that increase. By contrast, in the context of assessing the impact of the 
TPP measures on prices, the Dominican  Republic asserts that the Panel merely found that prices had increased , 
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  6.443.   For these reasons, w e consider that, even if the Dominican  Republic's first two  arguments 
regarding paragraph  7.1221 of the Panel  Repor t are properly within the scope of this appeal, the 
Dominican  Republic has failed to demonstrate that the Panel's reasoning in that paragraph  
constituted a misapplication of the legal standard under Article  2.2.  
6.1.3.2.3.3   The reaction of private actors to the TPP  measures  
6.444.   The Dominican  Republic argues that, as a general matter (i.e.  without reference to 
paragraph  7.1221 in particular), the Panel erred by taking into account price increases.1256 The 
Dominican  Republic submits that "[a] measure does not cease to be trade -restrictive just because 
private actors may be able to adapt their commercial strategy in the face of the measure."1257 The 
Dominican  Republic refers to certain Appellate  Body and panel jurisprudence standing for the 
proposition that actions by private actor s to mitigate the harmful effects of a measure will not 
preclude a finding of WTO -inconsistency.1258 In the Dominican  Republic's view, the Panel erred "by 
allowing for the conduct of private actors to be a means for undoing, or mitigating, the 
trade-restricti ve effects of a measure".1259 
6.445.   Australia argues that the Panel did not consider that the trade restrictiveness of the 
TPP measures could be cured or mitigated, but rather "relied on the complainants' expert evidence 
of the effects of the TPP  measures  on the ma rket to inform its assessment of the measures' trade 
restrictiveness".1260 Australia sees "no reason why the Panel should have excluded consumption data 
from its analysis", given that the assessment of trade restrictiveness entails assessing whether there 
is a limiting effect on international trade.1261 Australia considers that it was appropriate for the Panel 
"to ascertain the effects of the TPP  measures in the marketplace, where the forces of supply and 
demand interact" .1262 Australia also notes that, previously, in the context of Article  2.1 of the 
TBT Agreement, the Appellate  Body found it appropriate "to review both supply and demand 
side evidence in determining how a technical regulation affects the conditions of competition in the 
marketplace".1263  
6.446.   In our view, the jurisprudence cited by the Dominican  Republic stands for the principle that 
a determination of a measure's consistency must be based on all relevant facts, such that the fact 
that private actors may adapt their behaviour in order to mitigate negative c onsequences does not 
alter a finding of inconsistency when the facts indicate that a measure is WTO -inconsistent.1264 In 
 
without verifying whether this price increase accelerated after the implementation of the TPP  measures or 
whether the TPP  measures caused that shift.  
1256 Dominican  Republic's appellant's submission, paras.  1331-1338.  
1257 Dominican  Republic's appellant's sub mission, para.  1333.  
1258 Dominican  Republic's appellant's submission, paras.  1334-1336 (referring to Appellate  Body 
Reports, Thailand – Cigarettes (Philippines) , para.  117; Korea – Various Measures on Beef , para.  14; US – FSC 
(Article  21.5 – EC), para.  220; Panel  Reports, Indonesia – Import Licensing Regimes , para.  7.11; India – Solar 
Cells, para.  7.95; US – FSC (Article  21.5 – EC), para.  8.157).  
1259 Dominican  Republic's appellant's submission, para.  1333. According to the Dominican  Republic, "the 
Panel found that the possibility of suppliers/producers counteracting the distortions on demand for high -end 
tobacco products (resulting from the TPP  measures) by adjusting prices[] can immunize a measure against any 
finding of trade restrictiveness eviden t from the design, nature and anticipated operation of the measure." 
(Ibid., para.  1337)  
1260 Australia's appellee's submission, para.  339. (emphasis original)  
1261 Australia's appellee's submission, para.  340.  
1262 Australia's appellee's submission, para.  340. 
1263 Australia's appellee's submission, para.  340 (referring to Appellate  Body Reports, US – COOL , 
para. 349).  
1264 In Korea – Various Measures on Beef , the Appellate  Body stated that the "central consequence" of 
the dual retail system on imported products was a "drastic reduction of commercial opportunity to reach, and 
hence to generate sales to, the same consumers served by the traditional retail channels for domestic beef", 
and that, "[i]n these circumstances, the  intervention of some element of private choice does not relieve Korea 
of responsibility under the GATT  1994 for the resulting establishment of competitive conditions less favourable 
for the imported product than for the domestic product." (Appellate  Body Report, Korea – Various Measures on 
Beef, paras.  145-146) In US – FSC (Article  21.5 – EC), the Appellate  Body found that "the fair market value 
rule provide[d] a considerable impetus, and, in some circumstances, in effect, a requirement, for 
manufacturers to use domestic input products, rather than like imported ones. As such, the fair market value 
rule treats imported products less favourably than like domestic products." (Appellate  Body Report, US – FSC 
(Article  21.5 – EC), para.  220) The Appellate  Body e laborated that this conclusion was "not nullified by the fact 
that the fair market value rule will not give rise to less favourable treatment for like imported products in each 
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  other words, the application of any provision of a covered agreement should be based on the facts 
of the case, and, where the application of the relevant legal standard reveals that its constituent 
elements have been satisfied, other factors (such as p ossible actions by private actors) do not trump, 
mitigate, or offset the ensuing finding of inconsistency.  
6.447.   In the present dispute, in light of the complainants' own arguments that the value  of trade 
had decreased as a result of the measure, the Panel cons idered it relevant to examine the impact of 
the measure on prices. This followed from the fact that import value is a function of the quantity of 
imported products multiplied by the average price of those products. Thus, it is inescapable that 
price is a r elevant consideration in assessing value. Price, for its part, is a function of market 
dynamics, including the maximum price that consumers are willing to pay and the minimum price 
that producers are willing to accept. It seems clear that a measure can hav e a causal impact on 
price by affecting various actors in the market. Consequently, in our view, by looking at the impact 
of the TPP  measures on price s, the Panel was effectively examining the relevant facts in order to 
conclude on the degree of trade rest rictiveness of the TPP  measures, based on the complainants' 
own arguments that the TPP  measures led to a decrease in value.  
6.448.   With this in mind, the jurisprudence cited by the Dominican  Republic regarding the possible 
actions of private entities to mitigate  a finding of WTO -inconsistency does not appear to be relevant. 
Rather, the Panel simply examined the facts of the case in order to determine whether and to what 
extent the TPP  measures are trade -restrictive, for the purpose of assessing whether the 
TPP measures are inconsistent with Article  2.2. Indeed, the Dominican  Republic's arguments imply 
that the Panel should have ignored the actual dynamics of the marketplace and formed a factual 
conclusion regarding either prices in the marketplace or value (which itself represents price 
multiplied by quantity) without examining the actual effect of the TPP  measures on prices. We 
disagree. We also note that, if the Panel had found that prices had remained constant or declined , 
then it seems that the Panel would inde ed have found that the measure reduced the value of trade 
and was trade -restrictive in this way. Thus, far from "immunizing" the measure from a finding of 
trade restrictiveness (or inconsistency with Article  2.2), the Panel, in examining the impact of the 
TPP measures on prices, simply examined whether the evidence and facts supported the assertions 
made by the complainants that the TPP  measures had reduced the value of trade.1265  
 
and every case". (Ibid., para.  221) In India – Solar Cells , the panel noted tha t "[t]he fact that all [Solar Power 
Developers] participating in the National Solar Mission could use (and the fact that some in fact are using) 
certain types  of foreign cells and modules (e.g.  thin film solar modules under Phase I) does not negate the fac t 
that the [domestic contest requirements] under the challenged measures accord less favourable treatment to 
the other  types of foreign cells  and modules whose use is prohibited by the requirements in question." 
(Panel  Report, India – Solar Cells , para.  7.94 (emphasis original))  In Thailand – Cigarettes (Philippines) , in 
considering a claim under Article  III:2 of the GATT  1994, the Appellate  Body considered that, as a factual 
matter, "Thailand's measure provides for circumstances in which resellers of impor ted cigarettes will be subject 
to VAT liability, to which resellers of domestic cigarettes will never be subject." (Appellate  Body Report, 
Thailand – Cigarettes (Philippines) , para.  117) Thus, the possibility for private actors to "take action to avoid 
the imposition of VAT liability" did not alter the assessment of whether, as a factual matter, "imported 
cigarettes are subject to internal taxes or other internal charges in excess of those applied to domestic 
cigarettes." (Ibid.) In Indonesia  – Import Licen sing Regimes , the respondent argued that the "the challenged 
measures [were] the result of private actions and not measures instituted or maintained by a Member." 
(Panel  Report, Indonesia – Import Licensing Regimes , para.  7.4) The panel considered that "th e fact that 
private actors are able to make decisions about their import needs does not immunize Indonesia's measures 
from challenge", and that "the intervention of some element of private choice does not necessarily relieve a 
Member of responsibility." (P anel Report, Indonesia – Import Licensing Regimes , para.  7.11 (fn  omitted)) The 
panel concluded that all challenged measures were measures "taken by" Indonesia. (Ibid.,  paras.  7.11-7.12, 
7.16-7.17, 7.20 -7.21, and 7.24 -7.25)  
1265 As the European  Union states i n its third participant's submission, "the Panel appropriately 
considered both demand and supply effects, since the question here is not whether producers of some 
negatively affected products may avoid the impact of the measure, but rather how the impact o n the 
competitive opportunities in the market in general will be, and how, as a consequence, this would impact trade 
volumes" and value. (European  Union's third participant's submission, para.  42) 
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  6.449.   We therefore do not consider that the Panel erred by taking into account the im pact of the 
TPP measures on prices, notwithstanding that such effect was a consequence of market dynamics 
involving consumers as well as producers/suppliers.1266  
6.1.3.2.4    Conclusion on the Panel's application of Article  2.2 
6.450.   On the basis of the foregoing, we conclude  that the appellants have not demonstrated that 
the Panel erred in its application of Article  2.2 of the TBT  Agreement in assessing the trade 
restrictiveness of the TPP  measure s.  
6.1.3.3   Claims under Article  11 of the DSU  
6.451.   The Dominican  Republic argues that the Pa nel failed to make an objective assessment of the 
matter as required under Article  11 of the DSU in finding that "the complainants had not shown that 
the decrease in sales of high -end cigarettes relative to low -end cigarettes reveals 'only' or 
'exclusively ' consumer downtrading, as opposed to the results of other market phenomena ."1267 The 
Dominican  Republic refers specifically to the Panel's finding that part of the reduction in the ratio of 
sales was due to "the overall reduction in the total wholesale sales  volume following and due to the 
introduction of the TPP  measures".1268 According to the Dominican  Republic, the Panel failed to make 
an objective assessment of the matter, by: (i)  failing to provide a reasoned and adequate 
explanation for this finding; (ii)  compromising the Dominican  Republic's due process rights; and 
(iii) making the case for Australia.1269  
6.452.   Australia considers that the Panel acted within the bounds of its discretion, consistently with 
Article  11 of the DSU. In Australia's view, the Panel took the complainants' downtrading evidence 
into account, but attributed to it a different weight and significance than the complainants would 
have preferred.1270 
6.453.   All three  of the Dominican  Republic's claims under Article  11 concern alleged substantive 
and procedu ral errors underlying the Panel's factual finding, contained in paragraphs  55 and 56.c of 
Appendix  E of the Panel Report , that the TPP  measures contributed to the decrease in the ratio of 
high-end to low -end cigarette sales through both downtrading and the reduction in overall wholesale 
sales caused by the TPP  measures.1271 In the main body of the Panel  Report, the Panel made a 
similar (but different) finding, stating that the decline in volume of premium cigarette sales was 
attributable to the TPP  measures through both downtrading and the reduction in overall wholesale 
sales caused by the TPP  measures.1272 The similarity between these findings may be responsible for 
much of the confusion amongst the participants regarding the correct understand ing of the Panel's 
findings.1273 However, the ratio of high -end to low -end sales and the absolute volume  of high -end 
sales are  plainly  two different things.  
 
1266 We note that this approach accords with the Appellate  Body's finding in US – COOL that the trade 
restrictiveness of a particular measure may depend on whether producers incur the costs of the measure, or 
whether those costs are passed on to consumers. ( Appellate  Body Reports, US – COOL , para.  483) 
1267 Dominican  Republic's appellant's submission, para.  1340.  
1268 Panel  Report, Appendix  E, para.  55. See also ibid., Appendix  E, para.  56.c.  
1269 Dominican  Republic's appellant's submission, paras.  1356-1357. According to the 
Dominican  Republic, the Panel relied on a graph, Figure  E.6 in Appendix  E to the Panel  Report, in order to 
conclude that part of the shift in cigarette sales was attributable to a decline in overall wholesale sales caused 
by the TPP  measures. (Dominican  Republic's appellant's submission, paras.  1348-1354) The 
Dominican  Republic does not appear to challenge the accuracy of this graph per se , but rather asserts that the 
Panel erred both procedurally and substantively by relying on this graph to conclude that at least part of the 
reduction in the ratio of hi gher to low -priced cigarette sales was due to the overall reduction in consumption 
resulting from the TPP  measures. (Dominican  Republic's appellant's submission, paras.  1366-1382; responses 
to questioning at the first hearing)  
1270 Australia's appellee's subm ission, para.  343.  
1271 Panel  Report, Appendix  E, paras.  55 and 56.c. We disagree with Australia's reading of Appendix  E, 
and consider that the Panel did find that the TPP  measures contributed to the shift in ratio of high -end to 
low-end sales and that the T PP measures caused this shift through both downtrading and a more general 
reduction in wholesale sales. (Australia's responses to questioning at the first hearing; Panel  Report, 
Appendix  E, paras.  55 and 56.c)  
1272 Panel  Report, para.  7.1197.  
1273 See paras.  6.428.   6.429.    above.  
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  6.454.   The Dominican  Republic's challenge under Article  11 of the DSU relates to the Panel's finding 
that at  least some part of the TPP  measures' impact on the ratio is attributable to the overall 
reduction in cigarette wholesale sales caused by the TPP  measures.1274 We note that the 
Dominican  Republic considers this to be a material error by the Panel because, in its view, the Panel 
rejected the value aspect of their downtrading argument on the ground that "the complainants had 
not shown that the decrease in sales of high -end cigarettes relative to low -end cigarettes reveals 
'only' or 'exclusively' consumer downtra ding, as opposed to the results of other market 
phenomena."1275 As we have explained above, this is an incorrect understanding of the 
Panel  Report.1276 The only aspect of the Panel's findings in Appendix  E that was relevant to the 
Panel's analysis of the impact of downtrading on the value of imported tobacco products was the 
finding that the TPP  measures at least contributed to the shift in ratio of cigarette sales, including 
through downtrading.1277 We therefore disagree with the Dominican  Republic that the Panel's  finding 
concerning the different mechanisms by which the TPP  measures caused the shift in ratio was 
relevant to the Panel's analysis of trade restrictiveness. Indeed, the Panel's finding in Appendix  E 
that the reduction in the ratio of higher - to low -priced cigarette wholesale sales represents both 
"downward substitution" caused by the TPP  measures as well as "the overall reduction in the total 
wholesale sales volume following and due to the introduction of the TPP  measures and 
enlarged  GHWs"1278 is essential ly an unnecessary finding of fact by the Panel.1279  
6.455.   We have reservations regarding this unnecessary finding by the Panel. The Panel's finding 
that part of the shift in ratio is attributable to the decline in overall wholesale sales means that, if 
downtrading had not occurred, then there still would have bee n a decline in the ratio of high -end to 
low-end sales. In our view, the Panel failed to indicate any basis for this factual finding.  
6.456.   We note that the Panel's sole reason for stating that part of the ratio decline is attributable 
to a general decline in wh olesale sales is that "the reduction in high er-priced segment wholesale 
sales has decreased at a much faster rate than the sales of low -priced cigarettes ."1280 Although this 
statement is not footnoted, it appears to be based on the Panel's findings in paragraph  14 of 
Appendix  E, that: (i)  "the share of smokers preferring higher -priced brands has decreased, while the 
share of smokers preferring low -priced brands has experienced a small but positive increase"; and 
(ii) "the share of smokers preferring higher -priced brands has, on average, decreased at a much 
faster rate than the share of smokers preferring low -priced brands has increased, confirming the 
decrease in  smoking prevalence."1281 The Panel elaborated in that paragraph that this explained why 
 
1274 See para.  6.451.    above. We also take note of the Dominican  Republic's argument that the Panel 
erred by relying on its analysis in Appendix  E to conclude that t he TPP  measures led to a reduction in overall 
wholesale sales. (See, for example, Dominican  Republic's appellant's submission, paras.  1372-1374 and 1379) 
We disagree. In our view, the Panel's factual finding that the TPP  measures led to a reduction in whol esale 
cigarette sales is based entirely on its analysis in Appendix  D, which concludes that: "the TPP  measures … 
contributed to the reduction in wholesale cigarette sales." (See Panel  Report, Appendix  D, para.  137.c)  
1275 Dominican  Republic's appellant's subm ission, para.  1340. (fn  omitted)  
1276 See paras.  6.428.   6.434.    above.  
1277 See para.  6.434.    above. We recall, in particular, the Panel's findings that the complainants 
"demonstrated that the TPP  measu res … contributed to a reduction of the volume of imports of premium 
tobacco products both in relative and in absolute terms", and that, "as explained in more detail in Appendix  E, 
a detailed analysis of the econometric results submitted by the complainant s has led us to conclude that there 
is some evidence, albeit limited, that together with the enlarged GHWs introduced on the same date, the 
TPP measures appear to have had a negative impact on the ratio of higher - to low -priced cigarette wholesale 
sales." (Panel  Report, para.  7.1196 (fn  omitted)) This was sufficient for the Panel to proceed to examine the 
extent to which downtrading caused by the TPP  measures had resulted in a decrease in the volume and value 
of imported tobacco products. (Ibid., paras.  7.1196-7.1197 and 7.1221)  
1278 Panel  Report, Appendix  E, para.  56.c. See also ibid., Appendix  E, para.  55.  
1279 At the first hearing, the Dominican  Republic clarified that, in its view, even if the Panel did not rely 
on an "exclusive cause" standard, the Panel's f indings in Appendix  E are nevertheless inconsistent with 
Article  11 of the DSU because the Panel misattributed some part of the shift in ratio to an overall reduction in 
wholesale sales caused by the TPP  measures, and such an error remains relevant to the correct determination 
of the precise degree of trade restrictiveness of the TPP  measures. We note that the Panel attributed the 
reduction in the ratio of sales to downtrading as well as a reduction in total wholesale sales volume , and 
further attributed bo th of these effects to the TPP  measures. Thus, the Panel's dichotomy between the precise 
mechanisms by which the TPP  measures affected the shift in ratio would not appear to be relevant to the 
degree of trade restrictiveness of the TPP  measures.  
1280 Panel  Report, Appendix  E, para.  55. See also ibid., Appendix  E, para.  56.c.  
1281 Panel  Report, Appendix  E, para.  14. (fn  omitted)  
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  "the difference between the shares of smokers preferring higher -priced brands and low -priced 
brands has, on average, continued to decrease after the introduction of the T PP measures ."1282 
6.457.   We observe, however, that these findings in paragraph  14 of Appendix  E refer to the share 
of smokers in the population, measured as a percentage of the total population.1283 Those findings 
explain that, since the TPP  measures caused the overall  volume of cigarette sales to decline, it makes 
sense that the percentage of the population smoking high -end cigarettes (as well as the percentage 
of the population smoking low -end cigarettes) would decline. Thus, the combined effect of 
downtrading and the  decline in overall wholesale sales was a more pronounced decrease in the share 
of high -end smokers than in the share of low -end smokers. These findings formed the basis for the 
Panel's conclusion, in paragraph  7.1197 of the Panel  Report , that the decline in the volume of 
premium  tobacco product sales could be attributed to the TPP  measures through both downtrading 
and the overall decline in wholesale sales.1284 However, these findings do not, in any way, reveal 
how or why the Panel considered that the decline  in wholesale sales contributed to the shift in the 
ratio of high -end sales to low -end sales.1285 Indeed, in light of the Panel's findings in 
paragraphs  7.1196 and 7.1197 of the Panel  Report, as well as in paragraph  14 of Appendix  E, it 
seems likely that para graphs  55 and 56.c of Appendix  E should have referred to the reduction in the 
quantity of high -end cigarette wholesale sales  being partially due to downtrading and partially due 
to the overall reduction in the total wholesale sales volume, rather than to the decrease in the 
quantity ratio being attributable to these causes.  
6.458.   Given that (i)  the Panel's unnecessary factual findin g that part of the shift in ratio was caused 
by a decline in overall wholesale sales was not material to the Panel's conclusions with respect to 
trade restrictiveness, and (ii)  this factual finding lacks any basis in the Panel  Report, we moot the 
Panel's f inding in paragraphs  55 and 56.c of Appendix  E that the decrease in the ratio of high -end 
to low -end cigarette sales was partially caused by the decrease in overall wholesale cigarette sales 
volumes attributable to the TPP  measures. Having mooted the relev ant finding upon which the 
Dominican  Republic's claims under Article  11 are based, we do not need to address these claims.  
6.1.3.4   Conclusion  
6.459.   For the reasons explained above, we find that the appellants have not demonstrated that 
the Panel erred in finding, in par agraph  7.1255 of the Panel Report, that:  
[T]he TPP  measures are trade -restrictive, insofar as, by reducing the use of tobacco 
products, they reduce the volume of imported tobacco products on the Australian 
market, and thereby have a "limiting effect" on t rade. We also conclude that, while it is 
plausible that the measures may also, over time, affect the overall value of tobacco 
imports, the evidence before us does not show this to have been the case to date. We 
are also not persuaded that the complainants have demonstrated that the TPP  measures 
impose conditions on the sale of tobacco products in Australia or compliance costs of 
such magnitude that they would amount to a limiting effect on trade.1286 
 
1282 Panel  Report, Appendix  E, para.  14.  
1283 See Panel  Report, Appendix  E, para.  14 and Figure  E.6.  
1284 Specifically, the Panel stated that the decrease in consumption of premium  tobacco products could 
not have been exclusively caused by downtrading, because "given that the overall consumption of tobacco 
products has decreased, at least some part of the decrease in the consumption of premium tobacco products 
has not been substitut ed with the consumption of non -premium products." (Panel  Report, para.  7.1197)  
1285 It stands to reason that, in the absence of downtrading, in a market where overall consumption is 
declining, the ratio of high -end to low -end sales could remain perfectly cons tant. In this respect, we do not 
preclude the possibility, as a factual matter, that a reduction in wholesale sales volume can, in and of itself, 
lead to changes in consumption patterns with respect to high -end and low -end products, whether by some 
quirk o f a market or even as a more general phenomenon. However, the Panel's findings do not reveal why 
such an outcome would occur, nor does such an outcome appear to us to be intuitive or necessary such that 
the Panel's factual finding is self -substantiating.  
1286 Panel  Report, para.  7.1255.  
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  6.1.4   Alternative measures  
6.1.4.1   Overview  
6.460.   The appellants request us to r everse the Panel's findings that two of the alternative measures 
that the complainants proposed – namely, an increase in the MLPA for tobacco products and an 
increase in taxation of tobacco products in Australia – were not reasonably available alternative 
measures that would be l ess trade -restrictive than the TPP  measures while making an equivalent 
contribution to Australia's legitimate objective.1287 As a consequence, the appellants request us to 
reverse the Panel's overall conclusion under Article  2.2 of the TBT  Agreement1288 that the 
complainants failed to demonstrate that the TPP  measures are more trade -restrictive than necessary 
to fulfil a legitimat e objective, within the meaning of that provision.1289 
6.461.   The Appellate  Body has said that a comparison of the challenged technical regulation with 
possible alternative measures is a conceptual tool used to ascertain whether  the challenged measure 
is more trade -restrictive than necessary.1290 In particular, as part of its prima  facie case that a 
technical regulation is more trade -restrictive than necessary, a complainant1291 may seek to identify 
a possible alternative measure that: (i)  is less trade -restrictive than th e challenged technical 
regulation; (ii)  makes a contribution to the legitimate objective equivalent to that of the challenged 
technical regulation; and (iii)  is reasonably available to the responding Member.1292  
6.462.   With respect to the two alternative measures a t issue in these appellate proceedings, the 
Panel noted that Honduras and the Dominican  Republic described the first proposed measure as an 
increase in Australia's MLPA for tobacco products from 18  years to 21  years1293, and the 
second  proposed measure as an increase in excise taxes on tobacco products calibrated to achieve 
the degree of reduction in tobacco use achieved by the TPP  measures.1294 Australia argued that 
these measures are "precise replicas" of measures that Australia had already implemented as part 
of its comprehensive tobacco control policy (for an increase in taxation), or only "slight variations" 
of such measures (for an increase in the MLPA).1295 On that basis, Australia submitted that neither 
 
1287 Before the Panel, the complainants proposed four  alternative measures that they considered as 
being less trade -restrictive than the TPP  measures while also being capable of making an equivalent 
contribution to Australia's ob jective: (i)  an increase in the MLPA for tobacco products in Australia; (ii)  an 
increase in taxation of tobacco products in Australia; (iii)  "improvements to", or "effective", social marketing 
campaigns in Australia; and (iv)  a pre-vetting mechanism for to bacco packaging. (Panel  Report, paras.  7.1392, 
7.1472, 7.1546, and 7.1625 -7.1627) Only measures (i)  and (ii)  are at issue in these appellate  proceedings.  
1288 Panel  Report (DS435), paras.  7.1732 and 8.1.a; Panel Report (DS441), paras.  7.1732 and 8.1.b.i.  
1289 Honduras' Notice of Appeal, p.  5 (referring to Panel  Report (DS435), paras.  7.1468 -7.1471, 
7.1542 -7.1545, and 7.1724 -7.1732 ); Dominican  Republic's Notice of Appeal, paras.  4 and 12 -13 (referring to 
Panel  Report (DS441), paras.  7.1362 -7.1391, 7.1398 -7.1402, 7 .1411 -7.1418, 7.1432 -7.1464, 7.1468 -7.1471, 
7.1476 -7.1480, 7.1490 -7.1496, 7.1506 -7.1531, 7.1542 -7.1545, 7.1717 -7.1723, 7.1732, and 8.1.b.i).  
1290 Appellate  Body Report, US – Tuna II (Mexico) , para.  320. 
1291 We recall that the burden of demonstrating that a tec hnical regulation is inconsistent with Article  2.2 
rests with the complainant. (Appellate  Body Report, US – Tuna II (Mexico) , para.  323) 
1292 Appellate  Body Reports, US – Tuna II (Mexico) , para.  323; US – COOL , para.  379; US – COOL 
(Article  21.5 – Canada and Mexico) , para.  5.213.  
1293 Panel  Report, para.  7.1395. The Panel also noted the Dominican  Republic's argument that, should 
the Panel consider that a greater reduction in smoking achieved by an increase in the MLPA from 18 to 
21 years, on its own, necessarily means greater trade restrictiveness, the Dominican  Republic offers a 
"calibrated" approach by which the MLPA could be raised to 19 or 20, instead of 21, so  that the contribution to 
reducing smoking made by increasing the MLPA would remain equivalent to any  contribution that the 
TPP measures might make. (Panel  Report, para.  7.1396 (referring to Dominican  Republic's response to Panel 
question No.  157, para.  133))  
1294 Panel  Report, para.  7.1474. The Panel noted that, instead of prescribing a precise level of tax ation 
or manner of implementation, Honduras and the Dominican  Republic contended that the increase in taxation 
could be set at the level needed to make the desired contribution to Australia's objective. (Ibid.) As such, the 
Panel stated that it would proce ed on the basis that the alternative measure proposed by the complainants is 
"an increase of the excise tax levied on tobacco products, with flexibility as to the exact magnitude and manner 
of such tax increase depending on the degree of contribution found  to be achieved by the TPP  measures". 
(Ibid., para.  7.1475)  
1295 Panel  Report, paras.  7.1353, 7.1355, and 7.1377.  
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  of the two proposed measures can be considered a "true" alternative for purposes of the legal 
assessment under Article  2.2.1296 
6.463.   The Panel found that, although the two alternative measures in question are variations  of 
measures that already exist in Australia (i.e.  the existing MLPA of 18  years and the past and pla nned 
increases in taxation on tobacco products in Australia), they still qualify as "alternatives" to the 
TPP measures1297, in that they "do not yet exist in the Member in question, or at least not in the 
particular form proposed by the complainant ".1298 The Pan el also found that both measures are 
reasonably available to Australia.1299 These findings are not challenged on appeal.  
6.464.   By contrast, the Panel found that the complainants had failed to demonstrate that: (i)  each 
of the two alternative measures would be less trade-restrictive  than the TPP  measures1300; and 
(ii) each alternative measure would make a contribution to Australia's objective equivalent  to that 
of the TPP  measures.1301 
6.465.   The appellants claim that the Panel erred in law under Article  2.2 in reaching these 
conclusions. In addition, the Dominican  Republic raises separate claims under Article  11 of the DSU, 
challenging certain aspects of the Panel's assessment of the relative trade restrictiveness and 
contribution of the alternative measures. Australia requests us to dismiss the appellants' claims in 
their entirety.1302  
6.466.   We address each of the appellants' claims in turn.  
6.1.4.2   Whether the Panel erred under Article  2.2 in its assessment of the relative trade 
restrictiveness of the alternative measures  
6.467.   The appellants claim t hat the Panel erred in law1303 under Article  2.2 in finding that the 
complainants had not demonstrated that the two alternative measures at issue would be less 
trade-restrictive  than the TPP  measures, because those conclusions were based on the Panel's 
erroneous findings, made earlier in its Report, regarding the degree of trade restrictiveness of the 
TPP measures. According to the appellants, in its assessment of the trade restr ictiveness of the 
TPP measures, the Panel adopted too narrow an understanding of the concept of 
"trade  restrictiveness", and, rather than focusing on the measures' impact on the competitive 
opportunities for tobacco products based on their design, structur e, and intended operation, it 
required empirical evidence of the TPP  measures' actual trade effects.1304 The appellants consider 
that, had the Panel properly found that the TPP  measures are trade -restrictive in that they, by 
design, reduce the competitive opp ortunities arising from brand differentiation, it would have 
reached a different conclusion, namely, that the TPP  measures are more trade -restrictive than the 
alternative measures because the latter measures do not similarly limit competitive opportunities  
for tobacco products.1305 
6.468.   Australia observes that the appellants' claims of error in relation to the Panel's analysis of 
the trade restrictiveness of the proposed alternative measures are "entirely consequential"  to their 
 
1296 Panel  Report, para.  7.1377.  
1297 Panel  Report, paras.  7.1400 -7.1402 (for an increase in the MLPA) and 7.1468 (for an increase in 
taxation).  
1298 Panel Report, para.  7.1385 (quoting Appellate  Body Reports, US – COOL (Article  21.5 – Canada and 
Mexico) , para.  5.328). (emphasis added by the Panel)  
1299 Panel  Report, paras.  7.1467 (for an increase in the MLPA) and 7.1541 (for an increase in taxation).  
1300 Panel  Report, paras.  7.1417 (for an increase in the MLPA) and 7.1495 (for an increase in taxation).  
1301 Panel  Report, paras.  7.1464 (for an increase in the MLPA) and 7.1531 (for an increase in taxation).  
1302 Australia's appellee's submission, para.  423. 
1303 Honduras c laims that the Panel erred in its interpretation and application of Article  2.2 of the 
TBT Agreement in its assessment of the relative trade restrictiveness of the two alternative measures. 
(Honduras' Notice of Appeal, pp.  4-5; appellant's submission, sect ion VII) The Dominican  Republic claims that 
the Panel erred in its application of Article  2.2. (Dominican  Republic's Notice of Appeal, para.  12; appellant's 
submission, para.  1394)  
1304 Honduras' appellant's submission, paras.  562-564; Dominican  Republic's ap pellant's submission, 
paras.  1395 and 1418 -1420.  
1305 Honduras' appellant's submission, paras.  560, 565, and 574; Dominican  Republic's appellant's 
submission, paras.  1390 and 1419.  
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  claim that the Panel applied an erro neous legal standard in ascertaining the trade restrictiveness of 
the TPP  measures.1306 Accordingly , Australia argues that, if we were to  uphold the Panel's finding 
that the TPP  measures are trade -restrictive only insofar as they have a limiting effect on the  volume 
of imported tobacco products , we would  necessarily conclude that the proposed alternative measures 
are at least as trade -restrictive as the TPP  measures.1307 This is because, given that the Australian 
market is supplied entirely through imported tobac co products1308, any equivalent contribution to 
Australia's objective of reducing the use of, and exposure to, tobacco products would necessarily 
entail an equivalent limiting effect on international trade in terms of the volume of imported tobacco 
products.1309 
6.469.   The Appellate  Body has said that an assessment  of the degree of trade restrictiveness of a 
measure can be done either in quantitative or qualitative terms, as appropriate in the particular 
circumstances of a given case.1310 The Panel in these proceedings assessed and compared the 
respective degrees of trade restrictiveness of the TPP  measures and each alternative measure in 
qualitative terms.  
6.470.   We recall that, with respect to the trade  restrictiveness of the TPP  measures , the 
complainants argued before the Pane l that the reduced opportunities for tobacco manufacturers to 
compete on the basis of brand differentiation, resulting from the TPP  measures, amount to a limiting 
effect on international trade (i.e.  trade restrictiveness) within the meaning of Article  2.2.1311 The 
complainants also argued that the TPP  measures are trade -restrictive because: (i)  they raise barriers 
to entry into the Australian market1312; (ii) they have a limiting effect on the volume and value of 
trade in tobacco products1313; (iii) they entail comp liance costs1314; and (iv)  the penalties under the 
TPP measures amount to a restriction on international trade.1315 The Panel disagreed with the 
proposition that the modification of the competitive environment by the TPP  measures, affecting all 
tobacco products on the entire market, in and of itself , suffices to establish the trade restrictiveness 
of the TPP  measures.1316 Rather, the Panel considered that "it needs to be shown how such effects 
on the conditions of competition on the market give rise to a limiting effect on international trade in 
tobacco products."1317 On that basis, the Panel proceeded to examine the complain ants' individual 
arguments set out under items  (i) through (iv)  above.1318 
6.471.   The Panel rejected the complainants' assertions that the TPP  measures are trade -restrictive 
as set out under items (i), (iii), and (iv)  above .1319 These findings have not been appealed. W ith 
respect to item  (ii), the Panel found that, to the extent that the TPP  measures contribute to 
Australia's objective of reducing the use of, and exposure to, tobacco products, they reduce the 
volume  of imported tobacco products on the Australian market,  and therefore are trade -restrictive 
in that respect.1320 With respect to the measures' impact on the value  of imported tobacco products , 
the Panel found that the complainants did not demonstrate that the TPP  measures had reduced the 
value of those imports on  the Australian market.1321 On the contrary, the Panel noted that the 
evidence indicated that the measures have so far led to an increase in the price of cigarettes, which 
has more than offset the decrease in the quantity of cigarettes consumed and has thereb y 
 
1306 Australia's appellee's submission, para.  369. (emphasis omitted)  
1307 Australia's appellee's submission, para.  372. 
1308 Panel  Repor t, para.  7.1207.  
1309 Australia's appellee's submission, paras.  372-373. Australia further submits that there would be no 
need for us to examine the Panel's findings regarding the contribution of the alternative measures if we upheld 
the Panel's findings rega rding the trade restrictiveness of the TPP  measures. (Ibid.,  para. 374) 
1310 See Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.208 (referring 
to Appellate  Body Reports, Brazil – Retreaded Tyres , para.  145; US – COOL , para.  477; EC – Poultry , 
paras.  126-127).  
1311 See, for example,  Panel  Report, paras.  7.1090 and 7.1105.  
1312 Panel  Report, para.  7.1172.  
1313 Panel  Report, paras.  7.1189 -7.1190.  
1314 Panel  Report, para.  7.1228.  
1315 Cuba is the only complainant that made this argument before the Panel. (Panel  Report, 
para. 7.1247)  
1316 Panel  Report, para.  7.1167.  
1317 Panel  Report, para.  7.1168. (emphasis original)  
1318 Panel  Report, paras.  7.1172 -7.1254.  
1319 Panel  Report, paras.  7.1187, 7.1246 , and 7.1254.  
1320 Panel  Report, para.  7.1208.  
1321 Panel  Report, paras.  7.1225 and 7.1255.  
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  contributed to an increase in the overall value of the market.1322 At the same time, though, the Panel 
did not "exclude[]" that the TPP  measures may, over time, affect the overall value of tobacco imports 
as a result of a fall in prices through downtrading.1323 
6.472.   Turning to the trade  restrictiveness of the two alternative measures  in question, the Panel 
considered whether each of these measures would be less trade -restrictive than the TPP  measures, 
by examining each measure's impact on the volume of imported toba cco products, as well as certain 
other considerations.  
6.473.   With respect to an increase in the MLPA, the Panel noted that this alternative measure would 
"eliminate the ability of tobacco companies to sell their products to people under the age of 21  years, 
and any competitive opportunities associated with such sales, including for imported tobacco 
products".1324 The Panel noted in this context "the importance of younger smokers to the tobacco 
industry".1325 The Panel further stated that, to the extent that an increase  in the MLPA would make 
a contribution to Australia's objective of improving public health by reducing the use of, and exposure 
to, tobacco products equivalent to that of the TPP  measures by reducing overall consumption of 
tobacco products, it would affect  the overall volume of imports of tobacco products to an extent 
commensurate with that of the TPP  measures.1326 In addition, the Panel stated that, given that the 
evidence provided "only a very limited basis" upon which to assess "with any degree of precision " 
the potential impact of an increase in the MLPA, the Panel had  no reason to assume that the impact 
of this measure on the total value of imports would be less than that observed in relation to the 
TPP measures.1327 In light of these elements, the Panel conc luded that the complainants had not 
demonstrated that an increase in the MLPA to 21  years would necessarily be less trade -restrictive 
than the TPP  measures.1328 
6.474.   Regarding an  increase in taxation, the Panel stated that, to the extent that a taxation 
increase would be calibrated to have the same degree of contribution as the TPP  measures in 
reducing the use of, and exposure to, tobacco products1329, and would therefore have an equ al 
impact on overall consumption of such products, it would be as trade -restrictive as the TPP  measures 
in terms of its impact on the volume  of trade in tobacco products.1330 The Panel further stated that 
certain types of taxation measures may give rise to the same type of downtrading as the 
complainants had argued would arise from the TPP  measures.1331 The Panel also stated that the 
elevation of prices resulting from taxation ma y entail other effects on product and brand competition, 
such as greater market share of low -cost brands, altering the relative competitive positions of 
cigarette suppliers, and a consumer shift to roll -your-own tobacco.1332 In light of these elements, it 
was "not clear  to [the Panel]  how an increase in taxation levels would address or avoid the concerns 
about 'downtrading'/downward substitution that the complainants ha[d] expressed in connection 
with the TPP  measures, or any resulting  impact on the total valu e of trade in tobacco products" .1333 
Accordingly, "[o]verall", the Panel concluded that the complainants had not demonstrated that an 
increase in tobacco taxation would be less trade -restrictive than the TPP  measures.1334 
6.475.   As we have noted above1335, the appellants link their claims of error regarding the relative 
trade restrictiveness of the alternative measures to their claims of error regarding the trade 
restrictiveness of the TPP  measures. In particular, we understand the appellants' key contention to 
 
1322 Panel  Report, paras.  7.1218, 7.1221, and 7.1224. With respect to cigars and cigarillos, the Panel 
noted that evidence before it was "somewhat less clear" and that none of the parties had provided econometric 
evidence assessing the impact of the TPP  measures on cigar imports. (Panel  Report, para.  7.1219)  
1323 Panel  Report, para.  7.1225. See also ibid., para.  7.1255.  
1324 Panel  Report, para.  7.1413.  
1325 Panel  Report, para.  7.1413.  
1326 Panel  Report, para.  7.1414.  
1327 Panel  Report, para.  7.1416.  
1328 Panel  Report, para.  7.1417.  
1329 As noted in paragraph  6.462.   above and footnote  1294 thereto, the complainants characterized the 
proposed increase in taxation as an excise tax increase calibrated to achieve any reduction in tobacco use 
resulting from the TPP  measures. (Panel  Report, para.  7.1474)  
1330 Panel  Report, paras.  7.1490 -7.1491.  
1331 Panel  Report, para.  7.1492.  
1332 Panel  Report, para.  7.1493.  
1333 Panel  Report, para.  7.1494.  
1334 Panel  Report, para.  7.1495.  
1335 See para.  6.467.    above.  
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  be that, be cause the TPP  measures reduce the competitive opportunities arising from 
brand  differentiation, these measures are, by design, trade -restrictive.1336 The Dominican  Republic 
also considers that the Panel erred by finding that empirical evidence did not show co nsumer 
downtrading due to the TPP  measures, which the Dominican  Republic argued confirmed the lost 
competitive opportunities.1337 
6.476.   We have already found, in section  6.1.3  of these Report s, that the appellants have not 
demonstrated that the Panel erred in its interpretation or application of Article  2.2 by rejecting, in 
the particular circumstances of th ese dispute s, the complainants' propositions that: (i)  the reduction 
in brand differentiation (i.e.  a modification of the competitive environment in the tobacco product 
market), in and of itself, sufficed to establish the requisite limiting effect on international trade; and 
(ii) the TPP  measures are trade -restrictive due to their impact on the overall value of imported 
tobacco products.1338 
6.477.   Under these circumstances, we do not see a sufficient basis to find that the Panel erred in 
concluding that neither measure was demonstrated to be less trade -restrictive than the 
TPP measures. We highlight, in particular, the Panel's finding that the TPP  measures are 
trade-restrictive insofar as they affect the volume of imported tobacco products. We note in this 
regard that the Panel found that the Austr alian market is supplied entirely by imported tobacco 
products.1339 The Panel thus considered that an alternative measure that is capable of making a 
degree of contribution to the objective of reducing the use of, and exposure to, tobacco products 
equivalent to that of the TPP  measures would be as trade -restrictive as the TPP  measures , as far as 
the import volume  is concerned. In these appellate proceedings, the appellants have not explained 
specifically why this is not the case with respect to the two alterna tive measures in question.  
6.478.   In addition, even if the TPP  measures could be considered trade -restrictive because they 
modify the competitive environment in the Australian tobacco product market and/or affect the 
overall value/price of the tobacco products1340, as argued by the appellants, we note that the Panel 
address ed considerations pertinent to whether, and to what extent, each alternative measure would 
also impact the competitive environment and/or the overall value and price of imported tobacco 
products, a nd found that such impacts were, overall, not demonstrated to be less significant than 
the impacts of the TPP  measures.1341 We note in this regard that, in their appellant's submissions, 
the appellants have presented little argumentation as to precisely how t he Panel erred in law in 
making these findings, or why it should have found that the complainants had demonstrated that 
the TPP  measures are more trade -restrictive than the two alternative measures in these additional 
aspects.  
6.479.   In light of these considerati ons, we find that the appellants have not demonstrated that the 
Panel erred in its interpretation or application of Article  2.2 in rejecting the complainants' proposition 
that the two alternative measures in question are less trade -restrictive than the TPP  measures.  
6.1.4.3   Whether the Panel erred under Article  2.2 in its assessment of the relative 
contribution of the alternative measures  
6.480.   The appellants claim that the Panel erred in law1342 under Article  2.2 of the TBT  Agreement 
in finding  that the complainants had failed to demonstrate that each of the two alternative measures 
 
1336 Honduras' appellant's submission, paras.  563-565 and 573 -574; Dominican  Republic's appellant's 
submission, paras.  1390 and 1418 -1419.  
1337 Dominican  Republic's appellant's submission, para.  1418.  
1338 See para.  6.459.    above.  
1339 Panel  Report, para.  7.1207.  
1340 As noted, the Panel acknowledged that the TPP  measures limit the opportunity for tobacco 
manufacturers to compete on the basis of brand differentiation. (Panel  Report, para.  7.1167) The Panel also 
did not "exclude[]" that such modification of the competitive environment might, over time, affect the overall 
value and/or price of imported tobacco products, although it found that the evidence did not show this to be 
the case "to date". (Panel  Report, paras.  7.1225 and 7.1255)  
1341 See paras.  6.473.   6.474.    above.  
1342 In its Notice of Appeal, Honduras claims that the Panel erred in both the i nterpretation and 
application of Article  2.2 of the TBT  Agreement. (Honduras' Notice of Appeal, pp.  4-5) The Dominican  Republic 
claims that the Panel erred in its application of Article  2.2. (Dominican  Republic's Notice of Appeal, para.  13) 
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  would make a contribution to Australia's objective equivalent to the contribution of the 
TPP measures.  
6.481.   The appellants observe that the Panel found that the objective of the TPP  measures relevan t 
for its analysis under Article  2.2 is "a reduction in the use of, and exposure to, tobacco products"1343, 
or "reducing smoking".1344 The appellants underscore that, in relation to that objective, the Panel 
found that the TPP  measures and the two alternative me asures are similarly apt to make a 
"meaningful" contribution.1345 Nonetheless, the Panel concluded that the contribution of each 
alternative measure would not be equivalent to the contribution of the TPP  measures. As the 
appellants see it, the Panel's conclus ions were reached in error because: (i)  the Panel rejected 
equivalence on the basis of the fact that the alternative measures contribute to Australia's objective 
through mechanisms different from the TPP  measures1346; and (ii)  the Panel failed to make a prope r 
comparison between the contributions of the challenged and alternative measures, by taking into 
account the "synergies" purportedly created between the TPP  measures and Australia's other 
existing tobacco control measures, while neglecting to consider any  synergies that each of the 
alternative measures could newly create with the same existing measures.1347 
6.482.   Australia disputes the appellants' contention that, by using the same word, "meaningful", 
the Panel found that the proposed alternative measures would mak e equivalent degrees of 
contribution to Australia's objective as that of the TPP  measures .1348 Australia highlights in this 
regard that the Panel stated that an increase in the MLPA to 21 years "would in principle be apt to 
make a meaningful contribution  to Australia's objective", and that an increase in excise taxes " could, 
in principle, make a meaningful contribution  to Australia's objective", but did not find that these 
alternative measures would achieve a degree of contribution equivalent to that made by t he 
TPP measures.1349 In any event, Australia observes that the Panel did not reject equivalence because 
of the different mechanisms by which the alternative measures operate . On the contrary, the Panel 
explicitly stated that it sought to ascertain the extent to which the alternative measures could 
contribute to Australia's objective of "improving public health by reducing the use of, and exposure 
to, tobacco products" or "reducing the use of tobacco products"1350, and that "a proposed alternative 
measure may achi eve an equivalent degree of contribution in ways different from the technical 
regulation at issue."1351 Furthermore, Australia considers it correct for the Panel to have found  that 
an alternative measure that merely substitutes an existing  element of a comprehensive strategy for 
 
1343 Honduras' appellant's submission, para.  612. 
1344 Dominican  Republic's appellant's submission, para.  1435.  
1345 Honduras' appellant's submission, para.  616; Dominican  Republic's appellant's submission, 
para. 1495 (referring to Panel  Report, paras.  7.1453 (for a n increase in the MLPA) and 7.1523 (for an increase 
in taxation)).  
1346 More specifically, Honduras argues that:  (i) the Panel erroneously considered the alternative 
measures' contribution not in the light of the legitimate objective determined by the Panel, but in light of the 
specific mechanisms by which the plain packaging measures were assumed to operate to meet this objective; 
and (ii)  by using the term "substitute" throughout its analysis of equivalence, the Panel erroneously examined 
whether the alterna tive measure provides an identical contribution through the same mechanism  as the 
challenged measure. (Honduras' appellant's submission, paras.  620 and 632 -634) The Dominican  Republic 
argues that the Panel erred in rejecting the proposed alternatives on th e basis that they contributed to 
Australia's objective of reducing smoking through different means than the TPP  measures. 
(Dominican  Republic's appellant's submission, para.  1492)  
1347 More specifically, Honduras argues that  the Panel erred because: (i)  it failed to compare the degree 
of contribution of the alternative measure in isolation  with the contribution of the TPP  measures in combination  
with Australia's other tobacco control measures; and (ii)  it erroneously introduced a "different and more 
demanding standard" for assessing equivalence for measures that are part of a "comprehensive strategy" or 
"suite of measures". (Honduras' appellant's submission, paras.  645-646, 658, and 662) The 
Dominican  Republic argues that the Panel erred by assessing "synergies " on an "entirely one -sided basis" 
because it considered the synergies allegedly arising from interactions between the TPP  measures and other 
Australian tobacco control measures, but neglected to consider synergies that could result from the enactment 
of the proposed alternatives measures. (Dominican  Republic's appellant's submission, paras.  1526-1527)  
1348 Australia's appellee's submission, para.  392. 
1349 Australia's appellee's submission, para.  392 (quoting Panel  Report, paras.  7.1453 and 7.1523). 
(emphasis added by Australia ) 
1350 Australia's appellee's submission, para.  379 (quoting Panel  Report, paras.  7.1432 and 7.1511). 
(emphasis omitted)  
1351 Australia's appellee's submission, para.  379 (quoting Panel  Report, para.  7.1454, in turn referring to 
Appellate  Body Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  5.215).  
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  the TPP  measures may weaken the policy by reducing the synergies between its components, as 
well as its total effect, as the Appellate  Body stated in Brazil – Retreaded Tyres .1352 
6.483.    We first note that all participants ag ree1353 with the Panel's formulation of the legal standard, 
applicable to an assessment of "equivalence", that what is relevant for such an assessment is "the 
overall degree of contribution that the technical regulation makes to the objective pursued … rather  
than any individual isolated aspect or component of contribution"1354, and that "a proposed 
alternative measure may achieve an equivalent degree of contribution in ways different  from the 
technical regulation at issue and there is a margin of appreciation in  this assessment."1355 The 
participants also agree  that the standard by which to assess equivalence remains the same where 
the challenged measure is implemented as part of a responding Member's comprehensive policy to 
address a "multifaceted"1356 problem, such a s smoking.1357 
6.484.   We further recall that the Panel determined that the objective of the TPP  measures relevant 
for its analysis under Article  2.2 in th ese dispute s is "to improve public health by reducing the use 
of, and exposure to, tobacco products".1358 As we und erstand it, the Panel's qualification of the 
phrase "to improve public health" by the phrase "by reducing the use of, and exposure to, tobacco 
products" suggests that the focus of an assessment of the degree of contribution that a measure 
makes to that obj ective is the extent to which the measure contributes to "reducing the use of, and 
exposure to, tobacco products", rather than to improving public health generally. We further note 
that the Panel observed that the objective of reducing "exposure" to tobacc o products is "directly 
linked to, and consequential to", the achievement of the objective of reducing "use" of tobacco 
products.1359 In this sense, the degree to which a measure reduces the use of tobacco products – 
or, in other words, reduces smoking – can be considered the core element of the objective of the 
TPP measures, for purposes of an assessment of equivalence. We thus consider that Honduras and 
the Dominican  Republic are not incorrect in explaining that the Panel found that the objective of the 
TPP measures is "a reduction in the use of, and exposure to, tobacco products"1360, or "reducing 
smoking".1361 Australia does not contest this view.1362 
6.485.   In addition, with respect to the scope of the objective of the TPP  measures, we take note of 
the Panel's rejection o f Australia's proposition that the relevant objective also encompasses what 
Australia referred to as the three  "specific objectives" or "mechanisms" of the measures, namely : 
(i) reducing the appeal of tobacco products; (ii)  increasing the effectiveness of GHWs; and 
(iii) reducing the ability of packages to mislead consumers about the harms of smoking. According 
to the Panel, "these 'specific objectives' are more properly described as the means, or 'mechanisms', 
as Australia itself describes them, by which t he measures are intended to achieve Australia's 
objective of improving public health."1363 
6.486.   We recall that the Panel assessed the degree of contribution that the TPP  measures and each 
of the alternative measures make to the above objective. As the appellants h ighlight, the Panel 
 
1352 Australia's appellee's submission, paras.  381-383 (referring to Ap pellate Body Report, 
Brazil  – Retreaded Tyres , para.  172) and 387 -389. 
1353 Honduras' appellant's submission, para.  585; Dominican  Republic's appellant's submission, 
para. 1494; Australia's appellee's submission, para.  379. 
1354 Panel  Report, para.  7.1368 (quoti ng Appellate  Body Reports, US – COOL (Article  21.5 – Canada and 
Mexico) , paras.  5.216 and 5.255 (emphasis omitted by the Panel)).  
1355 Panel  Report, para.  7.1369 (referring to Appellate  Body Reports, US – COOL , para.  373; US – COOL 
(Article  21.5 – Canada and Mexico) , paras.  5.215 and 5.254). (emphasis added)  
1356 See, for example,  Panel  Report, para.  7.1528.  
1357 See, for example,  Honduras' appellant's submission, para.  658; Dominican  Republic's appellant's 
submission, para.  1509; Australia's appellee's submission, para. 396. 
1358 Panel  Report, para.  7.232.  
1359 Panel  Report, para.  7.1045. This is because "a reduced use of tobacco products by those who 
consume them will lead to a reduction in the exposure to these products for non -users." (Ibid.)  
1360 Honduras' appellant's su bmission, para.  612. 
1361 Dominican  Republic's appellant's submission, para.  1435.  
1362 See, for example,  Australia's appellee's submission, paras.  379, 383, and 392.  
1363 Panel  Report, para.  7.227. The Panel added that "the means should not be confused with the en ds 
in this context." (Ibid. (referring to European  Union's third -party submission to the Panel, para.  68; 
Panel  Reports, US – COOL (Article  21.5 – Canada and Mexico) , para.  7.326))  
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  qualified in each instance the measure's contribution by using the same adjective "meaningful".1364 
Specifically, with respect to the contribution of the TPP measures , the Panel found that:  
Taken as a whole, therefore, we consider that the  evidence before us supports the view 
that, as applied in combination with the comprehensive range of other tobacco control 
measures maintained by Australia and not challenged in these proceedings, including a 
prohibition on the use of other means through which branding could otherwise 
contribute to the appeal of tobacco products and to misleading consumers about the 
harmful effects of smoking, the TPP  measures are apt to, and do, make a meaningful 
contribution  to Australia's objective of reducing the use o f, and exposure to, tobacco 
products.1365 
6.487.   With respect to an increase in the MLPA , the Panel found that:  
Overall, in light of the above, we find that the evidence before us suggests that, 
notwithstanding the difficulty associated with making precise projections on the basis 
of the evidence before us from other jurisdictions, an increase in the MLPA to 21 year s 
would in principle be apt to make a meaningful contribution  to Australia's objective of 
improving public health by reducing the use of, and exposure to, tobacco products.1366 
6.488.   With respect to an increase in taxation , the Panel found that:  
Taking these consid erations into account, we agree that an increase in tobacco excise 
taxes in Australia could, in principle, make a meaningful contribution  to Australia's 
objective of improving public health by reducing the use of, and exposure to, tobacco 
products.1367 
6.489.   Howeve r, the Panel ultimately concluded that the complainants failed to demonstrate that 
the contribution of each alternative measure would be equivalent  to that of the TPP  measures.  
6.490.   While the specific reasoning for rejecting equivalence differs slightly for the  two measures, 
we generally share the appellants' view that the Panel referred to the following two points in each 
instance: (i)  the alternative measures do not address the design features of tobacco packaging that 
the TPP  measures seek to address1368; and (i i) this would leave one  aspect of Australia's 
comprehensive approach to tobacco control unaddressed, and reduce the "synergies" between the 
different components of that policy.1369 At the same time, we note that the Panel's drafting of its 
reasoning is somewh at complicated, and there is some ambiguity as to precisely how, in the Panel's 
view, the contribution of each alternative measure (which the Panel described as "meaningful") 
cannot be considered equivalent  to that of the TPP  measures (which the Panel also  described as 
"meaningful"). In this regard, the appellants observe that the Panel found that each alternative 
measure would be apt to make the same  or a similar degree  of "meaningful" contribution to the 
relevant objective of reducing the use of, and expo sure to, tobacco products as the TPP  measures, 
and yet such contribution still could not be considered equivalent because of the two considerations 
mentioned above.  
6.491.   We recall that, in the specific circumstances of these proceedings, the Panel decided to 
assess the respective degrees of contribution of the challenged and alternative measures in 
qualitative, rather than quantitative, terms.1370 With respect to the contribution of the TPP  measures, 
 
1364 Panel  Report, paras.  7.1043 (for the TPP  measures), 7.1453 (for an increa se in the MLPA), 
and 7.1523 (for an increase in taxation).  
1365 Panel  Report, para.  7.1043. (emphasis added)  
1366 Panel  Report, para.  7.1453. (emphasis added)  
1367 Panel  Report, para.  7.1523. (emphasis added)  
1368 Panel  Report, paras.  7.1459 (for an increase in the ML PA) and 7.1526 (for an increase in taxation).  
1369 Panel  Report, paras.  7.1461 (for an increase in the MLPA) and 7.1526 -7.1528 (for an increase in 
taxation). The Panel relied on the Appellate  Body's statement in Brazil – Retreaded Tyres  that "[s]ubstituting 
one element of [Brazil's] comprehensive policy for another would weaken the policy by reducing the synergies 
between its components, as well as its total effect." (Ibid., para.  7.1461 and fn  3502 thereto, and para.  7.1528 
and fn  3633 thereto (referring to A ppellate  Body Report, Brazil – Retreaded Tyres , para.  172))  
1370 See, for example,  Panel  Report, paras.  7.1040 (for the TPP  measures), 7.1452 (for an increase in 
the MLPA), and 7.1518 -7.1522 (for an increase in taxation).  
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  the Panel made the finding of a "meaningful" contribution in the context of setting out its "[o]verall 
conclusion on the degree of contribution of the TPP  measures to Australia's objective".1371 Similarly, 
the Panel used the adjective "meaningful" to describe the contribution of each alternative measure, 
despite Australia' s request in the interim review not to do so.1372 In this context, the Panel explained 
that its use of this adjective "reflects the Panel's assessment of the degree of contribution that [each] 
alternative is apt to make to Australia's objective".1373 Under these  circumstances, it seems 
reasonable  to interpret the Panel to suggest that the  ("meaningful")  degree to which each alternative 
measure would be apt to contribute to Australia's objective of reducing the use of, and exposure to, 
tobacco products is similar or comparable to the ("meaningful") degree to which the TPP  measures 
contribute to the same objective.1374 
6.492.   This view is also confirmed by a closer examination of how the Panel arrived at its findings 
of "meaningful" contribution for the TPP  measures and each of the two alternative measures. 
Specifically, with respect to the TPP measures , we recall that, in reaching its overall finding of a 
"meaningful" contribution for these measures, the Panel examined: (i)  the evidence relating to their 
design, structure, and intended operation; and (ii)  the evidence relating to their application since 
their entry into force.1375 With respect to item  (i), the Panel found that the evidence supported the 
proposition that plain packaging of tobacco products has the capacity to have an impact on the 
three  "proximal" outcomes mentioned above1376 (i.e. reducing the appeal of tobacco products, 
increasing the effectivenes s of GHWs, and reducing the ability of the pack to mislead consumers).1377 
The Panel then assessed the extent to which these "proximal" outcomes will in turn have an impact 
on smoking behaviour, and found that, while the relationship between perceptions, atti tudes, and 
behaviour is complex, "it is reasonable to expect that reducing the appeal of tobacco products and 
enhancing clarity about their harmful effects  will influence at least some  consumers in their smoking 
behaviours."1378 With respect to item  (ii), the  Panel assessed the voluminous body of available 
empirical evidence1379 and found that this evidence largely "is consistent with a finding that the 
TPP measures contribute to a reduction in the use of tobacco products, to the extent that it suggests 
that, tog ether with the enlarged GHWs introduced at the same time, plain packaging has resulted in 
a reduction in smoking prevalence and in consumption of tobacco products".1380 
6.493.   To us, these intermediate findings by the Panel appear to suggest that, by using the phras e 
"meaningful contribution" for the TPP  measures, the Panel did not consider that the measures 
necessarily make a particularly large contribution to the objective of reducing the use of, and 
exposure to, tobacco products. Rather, the Panel's statements, su ch as that the TPP  measures are 
expected to "influence at least some  consumers" and that the available empirical evidence is 
"consistent" with a finding that the TPP  measures, together with the enlarged GHWs, contribute to 
 
1371 Panel  Report, title of  section  7.2.5.3.8. (emphasis added)  
1372 Panel  Report, paras.  6.58 and 6.62.  
1373 Panel  Report, para.  6.58. (emphasis added) See also ibid., para.  6.62.  
1374 In this connection, Australia seems to suggest that the Panel's use of language suggesting 
possibility – such as "would in principle be apt to" and "could, in principle" – for the two alternative measures 
indicates that their contributions would be less than "meaningful". (Australia's appellee's submission, para.  392 
(referring to Panel  Report, paras.  7.1453 and 7.1523) (emphasis omitted)) We do not take such a view, 
because the Panel's use of the language suggesting possibility could also be understood to  reflect the fact that 
these alternative measures are "a conceptual tool for the purpose of ascertaining whether a challenged 
measure is more trade restrictive than necessary" and are "of a hypothetical nature" in the sense that "they do 
not yet exist in t he Member in question, or at least not in the particular form proposed by the complainant." 
(Appellate  Body Reports, US – Tuna II (Mexico) , para.  320; US – COOL (Article  21.5 – Canada and Mexico) , 
para. 5.328)  
1375 See Panel  Report, para.  7.1024.  
1376 See para.  6.485.    above.  
1377 Panel  Report, para.  7.1026.  
1378 Panel  Report, para.  7.1031. (emphasis original)  See also ib id., paras.  7.697, 7.756, 7.776, 7.849, 
7.854, and 7.927.  
The Panel also stated that, in a regulatory context where tobacco packaging would otherwise be the 
only opportunity to convey a positive perception of the product through branding, as is the case i n Australia, "it 
appears  … reasonable  … to hypothesize some correlation  between the removal of such design features and the 
appeal of the product, and between such reduced product appeal and consumer behaviours." (Panel  Report, 
para. 7.1034 (emphasis added )) 
1379 Panel  Report, Appendices  A-C. 
1380 Panel  Report, para.  7.1037. See also ibid.,  paras.  7.972 and 7.986.  
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  "a reduction" in the use of tobac co products, suggest that the Panel considered that the contribution 
of the TPP  measures is rather modest, while it could still be considered "meaningful".  
6.494.   Turning to the two alternative measures in question, we note that the Panel reached its 
finding of a  "meaningful" contribution for an increase in the MLPA by considering, inter alia, certain 
studies that estimated the impact of an increase in the MLPA from 18 to 21  years on smoking 
initiation rates for adolescents and adult smoking prevalence in the Unit ed States, which indicated 
considerable long -term decreases in both parameters.1381 While the Panel stated that it was reluctant 
to assume that these results can be "transposed directly" to provide "an exact measure" of the 
degree  of contribution that this me asure would be apt to make in the Australian market1382, the 
Panel did not mention any consideration suggesting that an increase in the MLPA to 21  years would 
be significantly less effective in Australia than in the United  States. With respect to an increase in 
taxation, we note that the Panel's finding of a "meaningful" contribution was made by considering, 
inter alia, the price elasticity of demand for tobacco products, which the parties agreed to converge 
at around -0.4, and which the Panel considered "indi cative of the potential contribution of increased 
taxation to Australia's objective".1383 In addition, in the context of examining whether the proposed 
tax increase is reasonably available to Australia, the Panel observed that this relatively low price 
elasti city (less than -1.0) "is indicative that there may be room to increase excises in a manner that 
would increase revenues while still reducing tobacco consumption".1384 
6.495.   In light of these observations regarding how the Panel reached its finding of a "meaningful " 
contribution in each instance, we see no clear indication in the Panel's analysis that the overall 
degree of reduction in the use of, and exposure to, tobacco products achieved by each alternative 
measure (in addition to any reduction attributable to Aus tralia's other existing tobacco control 
measures) would be materially smaller than that achieved by the TPP  measures, such that the level 
of protection pursued by the TPP  measures and Australia's other tobacco control measures1385 
necessarily goes beyond what  could reasonably be achieved with one  of the alternative measures 
used as a substitute for the TPP  measures.  
6.496.   For these reasons, we agree with the appellants that the Panel  Report can be read as 
indicating that, while each alternative measure may be considered apt to achieve a ("meaningful") 
degree of reduction in the use of, and exposure to, tobacco products similar or comparable to the 
("meaningful") degree of reduction achieved by the TPP  measures, the alternative measures' 
contributions would still fall short of being "equivalent" because such alternative measures: (i)  do 
not address the design features of tobacco packaging; and (ii)  undermine the comprehensive nature 
of Australia's policy by leaving unaddressed the particular aspect of the multifaceted problem that 
the TPP  measures seek to  address. This understanding of the Panel's  reasoning is supported by the 
Panel's statement, made in the context of addressing the contribution of an increase in taxation, 
that, "even assuming that the exact reduction in overall consumption  caused by the T PP measures 
could be isolated and quantified, an increase in taxation designed to achieve the same overall 
reduction "1386 in consumption would still fail to achieve an equivalent contribution because it "would 
necessarily leave in place those aspects of tobac co product and retail packaging that the 
 
1381 See Panel  Report, paras.  7.1448 -7.1451.  
1382 Panel  Report, para.  7.1452.  
1383 Panel  Report, paras.  7.1515 -7.1518.  
1384 Panel  Report, para.  7.1538.  
1385 We note t hat the Panel did not identify the specific level of protection Australia seeks to achieve in 
its assessment of equivalence. At the same time, we note that, in the context of its determination of the 
relevant objective of the TPP  measures, the Panel took n ote of Cuba's and Indonesia's contention that the 
TPP Bill Explanatory Memorandum referred to the "performance benchmarks" of "reducing the national 
smoking rates to 10  per cent of the population by 2018 and halving the Aboriginal and Torres Strait Islande r 
smoking rate". (Panel  Report, para.  7.231, quoting TPP Bill Explanatory Memorandum (Panel Exhibits AUS -2, 
JE-7), p.  1) The Panel disagreed with Cuba and Indonesia that these "benchmarks" form a component of the 
TPP measures' objective itself, but accepte d that they "constitute general targets set in relation to the 
reduction of smoking rates in Australia, through the TPP  measures and other tobacco control measures" and 
"thus identify a certain targeted level of achievement of the objective". (Panel  Report , para.  7.231 (emphasis 
original; fn  omitted))  
1386 Panel  Report, para.  7.1526. (emphasis added) At the same time, we note that, in the specific 
circumstances of th ese dispute s, the Panel found that the impact of the TPP  measures is difficult to "quantify in 
terms of the magnitude of changes in smoking behaviours attributable to the measures" or "isolate 
empirically  … from other factors that also affect the evolution of smoking behaviours, including other tobacco 
control measures applied simultaneously with th e TPP  measures". (Panel  Report, para.  7.1040)  
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  TPP measures address as 'part of a more complex suite of measures directed at the same objective' 
of tobacco control".1387 
6.497.   Based on our understanding of the Panel's reasons for concluding that the contribution of 
each alternative measure would not be equivalent to that of the TPP  measures, we agree with the 
appellants that the two points mentioned by the Panel in rejecting equivalence do not reflect the 
correct legal standard under Article  2.2. 
6.498.   Specifically, with respec t to the first point mentioned by the Panel (i.e.  that the alternative 
measures do not address the design features of tobacco packaging), we recall that what is relevant 
to an assessment of equivalence is "the overall degree of contribution that the techni cal regulation 
makes to the objective pursued"1388 and that "a proposed alternative measure may achieve an 
equivalent degree of contribution in  ways different  from the technical regulation at issue."1389 We 
have also noted that the Panel identified the relevant objective of the TPP  measures to be "to 
improve public health by reducing the use of, and exposure to, tobacco products".1390 In this regard, 
as noted, the Panel expressly rejected the proposition that the relevant objective encompasses the 
three  specific "me chanisms" of the TPP  measures, which relate to addressing the design features of 
tobacco packaging.1391 Under these circumstances, we see no reason why, despite the uncontested 
finding that these mechanisms are not part of the objective pursued by the TPP  measures, the 
proposed alternative measures would not make an equivalent contribution because they do not 
address the design features of tobacco packaging.1392 
6.499.   Turning to the second point referred to in the Panel's reasoning (i.e.  that substituting one  of 
the al ternative measures for the TPP  measures would undermine the comprehensiveness of 
Australia's policy and reduce the synergies), we have noted the participants' general agreement 
that, even in the context of a comprehensive policy, what is relevant for asses sing equivalence 
remains the overall  degrees of contribution that the challenged and alternative measures make to 
the relevant objective.1393 This objective was identified by the Panel to be "to improve public health 
by reducing the use of, and exposure to, t obacco products"1394 or, put more simply, reducing 
smoking.1395 Therefore, if the alternative measure in question is found apt to achieve, in addition to 
any reduction in smoking attributable to Australia's other existing tobacco control measures, a 
degree of re duction in smoking similar or comparable to the degree of reduction achieved by the 
TPP measures, then whether the TPP  measures form part of Australia's broader policy and whether 
 
1387 Panel  Report, para.  7.1526 (quoting Appellate  Body Reports, US – COOL (Article  21.5 – Canada and 
Mexico) , fn 660 to para.  5.216).  
1388 Panel  Report, para.  7.1368 (quoting Appellate  Body Reports, US – COOL (Artic le 21.5 – Canada and 
Mexico) , paras.  5.216 and 5.254 -5.255 (emphasis omitted by the Panel)).  
1389 Panel  Report, para.  7.1369 (referring to Appellate  Body Reports, US – COOL , para.  373; US – COOL 
(Article  21.5 – Canada and Mexico) , paras.  5.215 and 5.254). (e mphasis added)  
1390 Panel  Report, para.  7.232.  
1391 Panel  Report, para.  7.227.  
1392 In this connection, we take note of Australia's observation that, with specific respect to an increase 
in the MLPA, the Panel offered an additional reason why the contribution of th is measure could not be 
considered "equivalent". (Australia's appellee's submission, para.  380 (referring to Panel  Report, 
para. 7.1459)) Specifically, the Panel noted that an increase in the MLPA would "address only the availability of 
tobacco products to  individuals below 21 years of age" and "not address initiation, cessation or relapse in any 
age group over 21". By contrast, the Panel stated that "the TPP  measures, in addition to making a contribution 
to discouraging initiation by adolescents and young adults, are apt to contribute to encouraging cessation and 
preventing relapse by smokers not falling within this age group." (Panel  Report, para.  7.1459 (emphasis 
original))  
As we see it, however, the above statements by the Panel seem essentially no diffe rent from the 
statement that an increase in the MLPA operates in ways different from the TPP  measures, rather than qualifies 
as an additional reason to reject equivalence. Indeed, it seems self -evident to us that an increase in the MLPA 
from 18 to 21  years  of age, by definition, aims to reduce smoking by eliminating legal access to tobacco 
products by people between 18 and 20 years of age, whereas the TPP  measures are designed to achieve the 
same objective by nudging people of all age groups, while leaving intact legal access to tobacco products by 
young people of 18 to 20  years of age. However, merely pointing to the different age groups targeted by the 
challenged and alternative measures would not dispose of the core question of whether these measures are apt 
to achieve equivalent degrees of overall reduction in the use of, and exposure to, tobacco products.  
1393 See para.  6.483.    above.  
1394 Panel  Report, para.  7.232.  
1395 See para.  6.484.    above.  
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  their contribution arises partly from synergistic effects with the other com ponents of that policy 
should not have been a decisive consideration in determining equivalence.  
6.500.   In this context, we consider highly relevant the Panel's qualification of its finding of 
"meaningful" contribution for the TPP  measures, namely, that these mea sures are apt to, and do, 
make a meaningful contribution "as applied in combination  with the comprehensive range of other 
tobacco control measures maintained by Australia".1396 As we see it, this indicates that the 
"meaningful" contribution found with respect  to the TPP  measures already reflects, and captures, 
any synergistic effects arising from their interactions with Australia's other measures.1397 This is 
contrasted with the Panel's findings of "meaningful" contribution for the alternative measures, 
which  – as the appellants correctly observe  – were reached without  referring to any potential 
interactions of these measures with Australia's other existing measures.1398 In this regard, we do 
not see any indication in the Panel's analysis that the effectiveness of ea ch alternative measure 
would somehow be undermined (or become less than "meaningful") if it were to operate in the 
presence of Australia's other existing measures.1399 Under these circumstances, we find it difficult 
to understand, from the Panel's reasoning, how the overall degree of contribution of the 
TPP measures, which the Panel found to be "meaningful" by taking into account their synergies with 
Australia's other existing measures, is necessarily greater than that of each alternative measure, 
which the Pa nel found "meaningful" without referring to any potential interaction with the same 
existing measures.  
6.501.   We also do not consider that the Appellate  Body's statement in Brazil – Retreaded Tyres , on 
which the Panel relied1400, offer s conclusive guidance for assessing equivalence in these proceedings . 
To recall, the Appellate  Body stated that "[s]ubstituting one  element of [Brazil's] comprehensive 
policy for another would weaken the policy by reducing the synergies between its componen ts, as 
well as its total effect."1401 At the same time, we note that this statement was offered with respect 
to certain measures1402, proposed by the European  Communities, that the Appellate  Body observed 
"already figure[d] as elements of a comprehensive strateg y designed by Brazil to deal with waste 
tyres".1403 Moreover, the Appellate  Body's statement was offered in the context of upholding the 
panel's finding that these measures, as existing elements of Brazil's policy, did not constitute valid 
"alternatives" to t he challenged import ban.1404 By contrast, in the present dispute s, the Panel found 
that both an increase in the MLPA and an increase in taxation, as strengthened variations of 
Australia's existing measures, qualify as "alternatives" in that they "do not yet exist in the Member 
in question, or at least not in the particular form proposed by the complainant".1405 These findings 
 
1396 Panel  Report, para.  7.1043. (emphasis added)  
1397 See Panel  Report, paras.  7.1041 -7.1042.  
1398 See Panel  Report, paras.  7.1432 -7.1453 (for an increase in the MLPA) and 7.1506 -7.1523 (for an 
increase in taxation).  
1399 As noted in para.  6.494.   above , the Panel's finding of a "meaningful" contribution for an increase in 
the MLPA was reached by considering, for example, studies that estimated the impact of an increase in the 
MLPA from 18 to 21  years of age on smoking initiation rates for adolescents an d adult smoking prevalence in 
the United  States, which indicated considerable long -term decreases in both parameters. Although the Panel 
was "reluctant" to "transpose[] directly" these studies to ascertain the exact degree of the contribution of an 
MLPA in crease in the Australian market, it did not mention any reason why the proposed increase in the MLPA 
would be materially less effective in Australia than in the United  States. (Panel  Report, paras.  7.1448 -7.1452) 
With respect to an increase in taxation, th e Panel's finding of a "meaningful" contribution was made by 
considering the price elasticity of demand for tobacco products at around -0.4. (Panel  Report, 
paras.  7.1515 -7.1518) The Panel further stated that this relatively low price elasticity (less than -1.0) suggests 
that there may be room to increase excises without diminishing the measures' effectiveness in further reducing 
tobacco consumption. (Panel  Report, para.  7.1538)  
1400 See fn  1369 above.  
1401 Appellate  Body Report, Brazil – Retreaded Tyres , para.  172. 
1402 These measures comprised: (i)  measures to encourage domestic retreading or improve the 
retreadability of used tyres; and (ii)  a better enforcem ent of the import ban on used tyres and of existing 
collection and disposal schemes. (Appellate  Body Report, Brazil – Retreaded Tyres , paras.  158 and  172) 
1403 Appellate  Body Report, Brazil – Retreaded Tyres , para.  172. See also Panel  Report, 
Brazil  – Retread ed Tyres , para.  7.172.  
1404 Appellate  Body Report, Brazil – Retreaded Tyres , para.  172. See also Panel  Report,  
Brazil – Retreaded Tyres , paras.  7.172.  
1405 Panel  Report, para.  7.1385 (quoting Appellate  Body Reports, US – COOL (Article  21.5 – Canada and 
Mexico) , para. 5.328). (emphasis omitted)  
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  are not contested on appeal. Under these circumstances, we consider that the Panel's reliance on 
the Appellate  Body's statement in Brazil – Retreaded Tyres  is inapposite . 
6.502.   Moreover, while the above statement by the Appellate  Body can be read to suggest that 
whether a measure operates in such a manner as to create synergies with other measures in the 
context of a Member's broader policy is a relevant  consideration in a panel's assessment of the 
overall effectiveness of that measure, we do not consider it to be a decisive  consideration in such 
an assessment, or in a panel's determination of equivalence. Rather, in our view, whether and to 
what e xtent a measure creates synergies with other measures is one of the factors informing the 
overall degree of contribution that a measure makes to a legitimate objective, which all participants 
agree is the central question in determining equivalence. Thus, even where the challenged measure 
is implemented as part of a Member's comprehensive policy, a panel assessing equivalence will not 
be relieved from its duty to objectively ascertain, and compare, the overall  degrees of contribution 
that the challenged and  alternative measures make to the legitimate objective by taking into account 
all pertinent factors. Depending on the case, such factors may include the relevant objective pursued 
by a Member's policy, the overall level of protection that the Member seeks to achieve through that 
policy1406, the respective degrees of contribution that the challenged and alternative measures are 
apt make to the relevant objective, and whether and to what extent the contribution of each measure 
would be enhanced (or diminished) i n the presence of the other existing measures, including due to 
the synergies created between different measures.  
6.503.   In this context, we consider it appropriate that the Panel in th ese dispute s took into account 
the synergies between the TPP  measures and Aust ralia's other control measures in reaching its 
finding of a "meaningful" contribution for the TPP  measures.1407 At the same time, this could possibly 
suggest that the TPP  measures' contribution might be less than "meaningful" absent the measures' 
interaction with Australia's other measures. Under these circumstances, we consider it illogical for 
the Panel to have found that the TPP  measures are necessarily more effective than the alternative 
measures (that the Panel found to be apt to make a "meaningful" contr ibution on their own) because 
of the very synergies that make the TPP  measures' contribution "meaningful".  
6.504.   For all of these reasons, to the extent that the Panel suggested that each alternative measure 
may be considered apt to achieve a similar or comparab le degree of "meaningful" overall reduction 
in smoking in Australia to that of the TPP  measures, and yet its contribution would not be equivalent 
because of its failure to address the design features of tobacco packaging that the TPP  measures 
seek to addre ss in the context of Australia's broader tobacco control policy, we find that the Panel 
erred in its application of the legal standard under Article  2.2 of the TBT  Agreement.  
6.505.   We caution, however, that our conclusion is made in the particular circumstances of these 
dispute s. It should not be extrapolated that an increased MLPA or taxation on tobacco products will 
necessarily qualify as a reasonably available alternative measure capable of making a contribution 
equivalent to that of a plain packaging measure in another case or in another jurisdiction. Rather, 
our conclusion is reached on the basis of the uncontested Panel finding in these proceedings that 
the relevant objective pursued by the TPP  measures is "to improve public health by reducing the use 
of, an d exposure to, tobacco products"1408 without encompassing the "specific objectives" of 
addressing design features of tobacco packaging1409, and the fact that Australia has not appealed 
the Panel's findings that both alternative measures are reasonably available  to Australia.1410 
 
1406 We recall that, in Brazil – Retreaded Tyres , the Appellate  Body considered it relevant that the 
objective of the challenged import ban was the reduction of "'exposure to the risks to human, animal or plant 
life or health  … to the maximum extent possible '". The Appellate Body added that "a measure or practice will 
not be viewed as an alternative unless it 'preserve[s] for the responding Member its right to achieve its desired 
level of protection with respect to the objecti ve pursued'." (Appellate  Body Report, Brazil – Retreaded Tyres , 
para. 170 (fns  omitted; emphasis added))  
1407 See para.  6.500.    above.  
1408 Panel  Report, para.  7.232.  
1409 Panel  Report, para.  7.227.  
1410 Panel  Report, paras.  7.1467 (for an increase in the MLPA) and 7.1541 (for an increase in taxation).  
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  6.1.4.4   Claims under Article  11 of the DSU  
6.506.   The Dominican  Republic raises two sets of claims under Article  11 of the DSU with respect 
to the Panel's analyses of the relative trade restrictiveness and contribution of the two proposed 
alternative measu res (i.e.  an increase in the MLPA and an increase in taxation).  
6.507.   First, with respect to the Panel's analysis of whether each of the two alternative measures 
would make an equivalent contribution to Australia's objective, the Dominican  Republic claims that 
the Panel failed to make an objective assessment of the matter under Article  11 in finding that the 
design features of tobacco packaging that convey messages would not be addressed "at all"1411 in 
the absence of the TPP  measures. For the Dominican  Republic, this finding: (i)  is not reasoned and 
adequate because it is "factually wrong"; (ii)  is incoherent because it contradicts the Panel's own 
finding elsewhere in the Panel  Report1412; and (iii)  was reached without considering the 
Dominican  Republic's evidence and arguments demonstrating the opposite.1413 
6.508.   In section  6.1.4.3   above, we have addressed the Dominican  Republic's overlapping claim of 
error under Article  2.2 of the TBT  Agreement that similarly challenged the Panel's reference to the 
failure of the alternative measures to address the design features of tobacco packaging. In this 
regard, it is  our view that the Panel used the phrase "at all" simply to emphasize its view that the 
proposed alternative measures would not be as effective as the TPP  measures because of their failure 
to address the design features of tobacco packaging, rather than to  make a factual  finding that there 
are no other measures in Australia that affect tobacco packaging.1414 Under these circumstances, 
we do not consider it necessary or appropriate for us to address this aspect of the 
Dominican  Republic's challenge under Articl e 11 of the DSU.  
6.509.   Second, the Dominican  Republic appeals the Panel's findings regarding the trade 
restrictiveness and contribution of an increase in the MLPA. Specifically, the Dominican  Republic 
observes that the Panel took into account the potential "futu re effects" of an increased MLPA in the 
context of its analysis of this measure's trade  restrictiveness when it noted "the importance of 
younger smokers to the tobacco industry" who "determine the future trends" of the tobacco 
industry.1415 The Dominican  Republic submits that this reasoning was incoherent with the Panel's 
observation, in the context of its analysis of the contribution of the same alternative measure, that 
this measure does not address smoking behaviour "in any age group over 21".1416 The 
Dominica n Republic also considers this latter observation by the Panel to be incoherent with the 
Panel's assessment of the contribution of the TPP  measures, with respect to which the Panel stated 
that it "must take due account of the possibility that the effects o f certain measures may manifest 
themselves over a longer period of time and into the future".1417 
6.510.   We agree with the Dominican  Republic's view that the Panel referred to certain "future 
effects" in its analysis of the trade restrictiveness of the proposed MLPA  increase from 18 to 
21 years.1418 We disagree, however, that the Panel neglected or denied such "future effects" in its 
analysis of the contribution of an increase in the MLPA. On the contrary, when reaching its finding 
that this alternative measure would be  apt to make a "meaningful" contribution to Australia's 
 
1411 Panel  Report, para.  7.1459. (emphasis omitted)  
1412 Dominican  Republic's appellant's submission, p ara. 1456.  
1413 Dominican  Republic's appellant's submission, para.  1472.  
1414 Indeed, as the Dominican  Republic itself highlights, the Panel recognized throughout its Report that 
there are other measures in Australia that address tobacco packaging as a means of communication. (See 
Dominican  Republic's appellant's submission, para.  1457) We note in particular that, in section  2 of its  Report 
(titled "Factual aspects"), the Panel acknowledged the existence of such other measures, including the GHWs 
requirements and  the regulatory regime addressing misleading aspects of tobacco packaging.  
1415 Dominican  Republic's appellant's submission, paras.  1422-1423 and 1487 -1488 (quoting 
Panel  Report, para.  7.1413). (emphasis omitted)  
1416 Dominican  Republic's appellant's submission,  para. 1489 (quoting Panel  Report, para.  7.1459). 
(emphasis omitted)  
1417 Dominican  Republic's appellant's submission, paras.  1485-1486 (quoting Panel  Report, para.  7.938). 
(emphasis omitted)  
1418 For example, the Panel stated that, although 18 - to 21-year-olds make up only a segment of the 
market of people who may, or do, use tobacco products, younger smokers are important to the tobacco 
industry in that "[t]he future success of any cigarette brand is driven by its ability to attract younger adult 
smokers, betwe en the age of 18 and 24 years old", and that "smokers aged 18 -24 determine the future trends 
of the tobacco industry." (Panel  Report, para.  7.1413 (fn  omitted))  
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  objective, the Panel took account of evidence indicating that raising the MLPA will not only likely 
immediately improve the health of people within the targeted age group, but also reduce 
intermediate  and long -term adverse health effects as the initial birth cohorts affected by the policy 
change grow into adulthood.1419 Moreover, while the Panel stated that the proposed MLPA increase 
would not address smoking behaviour "in any age group over 21"1420, it refe rred to the age group 
targeted by this measure as being "important".1421 This seems comparable to the Panel's reference, 
in the context of addressing the trade restrictiveness of this alternative measure, to "the importance 
of younger smokers to the tobacco i ndustry" in determining the future trends of the industry.1422 
Therefore, we see no inconsistency in the Panel's treatment of future effects in its assessment of the 
trade restrictiveness, on the one hand, and contribution, on the other hand, of an increase i n the 
MLPA.  
6.511.   In addition, with respect to the contribution of the TPP  measures, we note that the Panel 
explicitly stated that its finding of a "meaningful" contribution was based on the evidence available 
to it "at the time of [its] assessment".1423 In this re gard, we note that the Dominican  Republic itself 
observes that the Panel's conclusion on this issue was reached " without  taking potential future 
effects into account".1424 As such, while the Panel stated that the impact of the TPP  measures may 
evolve over time1425, it is evident that such reference to the future effects was  only ancillary to the 
Panel's main reasoning.  We thus do not see any basis for the Dominican  Republic to  argue that the 
Panel offered "incoherent" reasoning by relying on the "future effects" in its analysis of the 
contribution of the TPP  measures, while neglecting or denying such future effects in its analysis of 
the contribution of an increase in the MLPA.  
6.512.   Accordingly, we find that the Dominican  Republic has not demonstrated that the Panel failed 
to make an objective assessment of the matter before it, in accordance with Article  11 of the DSU.  
6.1.4.5   Conclusion regarding the Panel's assessment of the alternative m easures  
6.513.   With respect to the appellants' claims of error under Article  2.2 of the TBT  Agreement 
regarding the Panel's analysis of the trade restrictiveness  of the two alternative measures at issue 
on appeal (i.e.  an increase in the MLPA and an increase in t axation) compared to that of the 
TPP measures, we have found that the appellants have not demonstrated that the Panel erred in 
rejecting the complainants' proposition that their alternative measures are less trade -restrictive than 
the TPP  measures. Rather,  we consider that the Panel's conclusion was properly reached by 
addressing relevant considerations, such as the respective measures' impacts on the volume, value, 
and price of imported tobacco products.  
6.514.   With respect to the claims under Article  2.2 regardi ng the Panel's analysis of the contribution  
of the alternative measures compared to that of the TPP  measures, we have found that, to the extent 
that the Panel suggested that each alternative measure may be considered apt to achieve a similar 
or comparable degree of "meaningful" overall reduction in smoking in Australia to that of the 
TPP measures, and yet its contribution would not be equivalent because of its failure to address the 
design features of tobacco packaging that the TPP  measures seek to address in the context of 
Australia's broader tobacco control policy, the Panel erred in its application of Article  2.2. 
6.515.   In addition, with respect to the Dominican  Republic's separate claims under Article  11 of the 
DSU challenging certain aspects of the Panel's an alyses of the relative trade restrictiveness and 
contribution of the alternative measures, we have found that the Dominican  Republic has not 
demonstrated that the Panel failed to make an objective assessment of the matter before it, although 
 
1419 Panel  Report, para.  7.1439 (referring to R. Bonnie, K. Stratton, and L. Kwan (eds.), Public Health 
Implications of Raising the Minimum Age of Legal Access to Tobacco Products , US Institute of Medicine (The 
National Academies Press, 2015) (Pre -publication copy: uncorrected proofs) (Panel  Exhibit DOM -232), pp.  S-6 
and 8-20). 
1420 Panel  Report, para.  7.1459.  
1421 Panel  Report, para.  7.1460.  
1422 Panel  Report, para.  7.1413.  
1423 Panel  Report, para.  7.1044.  
1424 Dominican  Republic's appellant's submission, para.  1485. (emphasis original)  
1425 Panel  Report, para.  7.1044.  
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  certain aspect s of its arguments are pertinent to considering its claim under Article  2.2 of the 
TBT Agreement.  
6.516.   In light of the foregoing, we conclude that the Panel erred in finding that the complainants 
failed to demonstrate that each of the two alternative measures w ould be apt to make a contribution 
equivalent to that of the TPP  measures.1426 At the same time, we have concluded that the Panel did 
not err in finding that the complainants failed to demonstrate that these two alternative measures 
are less trade -restrictive  than the TPP  measures.1427 Consequently, although we have concluded that 
the Panel erred in its application of Article  2.2 with respect to the equivalence of the contribution of 
each alternative measure, the Panel's findings,  in paragraphs  7.1471 and 7.1545 of the 
Panel  Report, that the complainants did not demonstrate that an increase in the MLPA and an 
increase in taxation would each be a less trade -restrictive alternative to the TPP  measures that would 
make an equivalent contribution to Australia's objecti ve, stand.  
6.1.5   Overall conclusion under Article  2.2 of the TBT  Agreement  
6.517.   For purposes of establishing that a measure is inconsistent with Article  2.2 of the 
TBT Agreement, a complainant must demonstrate that a technical regulation is "more 
trade-restrictive th an necessary to fulfil a legitimate objective, taking account of the risks 
non-fulfilment would create". The assessment of "necessity", in the context of Article  2.2, involves 
a relational analysis of the following factors: (i)  the trade  restrictiveness of  the technical regulation; 
(ii) the degree of contribution that it makes to the achievement of a legitimate objective; and (iii)  the 
risks non -fulfilment would create. Moreover, establishing whether a technical regulation is "more 
trade-restrictive than ne cessary" may involve a comparison between: (i)  the trade restrictiveness 
and the degree of contribution of the measure at issue to the legitimate objective; and (ii)  the trade 
restrictiveness and the degree of contribution of possible alternative measures that are reasonably 
available to the legitimate objective, taking account of the risks non -fulfilment would create.  
6.518.   In its assessment of whether the complainants had demonstrated that the TPP  measures are 
inconsistent with Article  2.2, the Panel in th ese dispute s examined, inter alia: (i) the contribution of 
the TPP  measures to Australia's objective; (ii)  the trade  restrictiveness of the TPP  measures; and 
(iii) whether the alternative measures proposed by the complainants are less trade -restrictive than 
the TPP  measures  while making an equivalent contribution to Australia 's objective . We have 
addressed the appellants' claims of error regarding each of these three  aspects of the Panel's 
analysis.  
6.519.   With respect to the contribution of the TPP  measures to Australia's objective, we have found 
that the appellants have not demonstrated that the Panel erred in finding, in paragraphs  7.1025 and 
7.1043 of the Panel  Report, that:  
7.1025. Overall … the complainants have not demonstrated that the TPP  measures are 
not apt to make a contribution to Australia's objective of improving public health by 
reducing the use of, and exposure to, tobacco products. Rather, we find that the 
evidence before us, taken in its totality, supports the view that the TPP  meas ures, in 
combination with other tobacco -control measures maintained by Australia (including the 
enlarged GHWs introduced simultaneously with TPP), are apt to, and do in fact, 
contribute to Australia's objective of reducing the use of, and exposure to, toba cco 
products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports 
the view that, as applied in combination with the comprehensive range of other tobacco 
control measures maintained by Australia and not challenged in thes e proceedings, 
including a prohibition on the use of other means through which branding could 
otherwise contribute to the appeal of tobacco products and to misleading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, and do, make  a 
 
1426 Panel  Report, paras.  7.1464 and 7.1531.  
1427 Panel  Report, paras.  7.1417 and 7.1495.  
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  meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products.1428 
6.520.   With respect to the trade restrictiveness of the TPP  measures, we find that the appellants 
have not demonstrated that the Panel erred in finding , in paragraph  7.1255 of the Panel  Report, 
that:  
[T]he TPP  measures are trade -restrictive, insofar as, by reducing the use of tobacco 
products, they reduce the volume of imported tobacco products on the Australian 
market, and thereby have a "limiting effe ct" on trade. We also conclude that, while it is 
plausible that the measures may also, over time, affect the overall value of tobacco 
imports, the evidence before us does not show this to have been the case to date. We 
are also not persuaded that the compl ainants have demonstrated that the TPP  measures 
impose conditions on the sale of tobacco products in Australia or compliance costs of 
such magnitude that they would amount to a limiting effect on trade.1429 
6.521.   Finally, with respect to the alternative measures, w e recall that the appellants challenged 
only the Panel's findings  concerning two of the four  proposed alternative measures that were 
examined and rejected by the Panel: (i)  an increase in the MLPA for tobacco products from 18 to 
21 years  of age ; and (ii)  an increase in the taxation of tobacco products in Australia. We have found 
that the Panel erred in finding that the complainants failed to demonstrate that each of the 
two alternative measures would be apt to make a contribution equivalent to that of the 
TPP measures.1430 Specifically, to the extent that the Panel suggested that each alternative measure 
may be considered apt to achieve a similar or comparable degree of "meaningful" overall reduction 
in smoking in Australia to that of the TPP  measures, and yet its contribution would not be equivalent 
because of its failure to address the design features of tobacco packaging that the TPP  measures 
seek to address in the context of Australia's broader tobacco control policy, we have found that the 
Panel erred in it s application of Article  2.2. At the same time, we have found that the Panel did not 
err in finding that the complainants failed to demonstrate that these two alternative measures are 
less trade -restrictive than the TPP  measures.1431 Consequently, although we  have found that the 
Panel erred in its application of Article  2.2 with respect to the equivalence of the contribution of each 
alternative measure, the Panel's findings, in paragraphs  7.1471 and 7.1545 of the Panel  Report, that 
the complainants had not dem onstrated that the increase in the MLPA and the increase in taxation 
would each be a less trade -restrictive alternative to the TPP  measures that would make an equivalent 
contribution to Australia's objective, stand.  
6.522.   For these reasons, we uphold  the Panel's  conclusion, in paragraph  7.1732 of the 
Panel  Report, that:   
[T]he complainants have not demonstrated that the TPP  measures are more 
trade-restrictive than necessary to fulfil a legitimate objective, within the meaning of 
Article  2.2 of the TBT Agreement.1432 
6.2  Separate opinion of one Division Member regarding Article  2.2 of the TBT  Agreement  
6.2.1   Introduction  
6.523.   It is well settled that not every error by a panel rises to the level of a breach of Article  11 of 
the DSU. Under the DSU, panels enjoy consider able discretion with respect to fact -finding and the 
evaluation of facts. This is underscored  by the language of Article  11 that "a panel should make an 
objective assessment of the matter before it, including an objective assessment of the facts of the 
case", read in conjunction with Article  17.6 of the DSU, which says that "[a]n appeal shall be limited 
to issues of law covered in the panel report and legal interpretations developed by the panel." In 
 
1428 Panel  Report, paras.  7.1025 and 7.1043.  
1429 Panel  Report, para.  7.1255.  
1430 Panel  Report, paras.  7.1464 and 7.1531.  
1431 Panel  Report, paras.  7.1417 and 7.1495.  
1432 See also Panel  Report (DS435), para.  8.1.a; Panel  Report (DS441), para.  8.1.b.i.  
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  other words, Article  11 claims on appeal should be reserv ed – and entertained – only for rare 
instances of "egregious" errors by panels, which call into question the good faith of the panel.1433  
6.524.   With respect to the appellants' claims regarding the Panel's analysis under Article  2.2 of the 
TBT Agreement, I concur w ith the majority's ultimate findings and conclusions. However, I disagree 
on two points: (i) that it was necessary to examine in detail the appellants' claims that the Panel 
erred in determining the degree of contribution of the TPP  measure s to Australia's  objective; and 
(ii) that the Panel's treatment of and reliance on multicollinearity and non -stationarity constituted 
an error under Article  11 of the DSU.  
6.2.2   Addressing the appellants' claims regarding the contribution of the TPP  measure s 
was not necessary t o resolve the dispute  
6.525.   The complainants' main argument before the Panel was that the TPP  measure s are more 
trade-restrictive than necessary because: (i)  they are trade -restrictive; and (ii)  they are not apt to, 
and do not, contribute to Australia's legitima te public health objective.1434 In the alternative, the 
complainants argued that, even assuming that the TPP  measure s contribute to Australia's legitimate 
public health objective, they are still "more trade -restrictive than necessary" because there are 
altern ative measures that are reasonably available to Australia and that would be less 
trade-restrictive while making an equivalent contribution to the objective.1435 
6.526.   The Panel rejected those arguments by the complainants, while noting that the 
TPP measures are nec essarily trade -restrictive because all tobacco products are imported into 
Australia, and that the TPP  measures contribute to Australia's public health objective by reducing 
consumption of tobacco products. The appellants challenge the Panel's rejection of their arguments. 
My discussion of that challenge centres on the two  sentences in paragraph  7.1025 of the 
Panel  Report . 
6.527.   In the first of these sentences, the Panel found that the complainants failed to demonstrate 
that the TPP  measure s "are not apt to make a contribution to Australia's objective".1436 In the second 
sentence, the Panel found that, "[r]ather, … the evidence …  , taken in its totality, supports the view 
that the TPP  measure s … are apt to, and do in fact, contribute to Australia's objective ."1437  
6.528.   The appellants' appeals were silent regarding the first sentence. They addressed only the 
second sentence. In doing that, the appellants have not explained how any errors undermining the 
Panel's finding in the second sentence of paragraph  7.1025 would suf fice to demonstrate that the 
Panel erred in forming the conclusion in the first sentence of that paragraph.  
6.529.   In response to questioning at the second hearing, the appellants stated that it was 
unnecessary to raise any independent appeal or challenge of the Panel's finding in the first sentence, 
because the Panel's finding in that sentence is integrally linked to the Panel's finding in the 
second  sentence. The appellants underscored that the Panel conducted an integrated analysis of the 
degree of contribution  based on the evidence as a whole.1438 
6.530.   I read these two sentences as saying different things. The first sentence says that the 
appellants failed to demonstrate  that the TPP  measure s are not  apt to make a contribution; the 
second sentence says that the totalit y of evidence supports the view that the TPP  measure s are apt 
to, and do in fact , make a contribution.  
 
1433 Appellate  Body Report,  EC – Hormones , para.  133. See also Appellate  Body Reports,  
Japan – Agricultural Products II , para.  141; Korea – Alcoholic Beverages , para.  164;  
EC – Bed Linen (Article  21.5 – India) , para.  177. 
1434 See Panel  Report, paras.  7.426, 7.437, 7.485 and 7.520; Honduras' and the Dominican Republic's 
responses to questioning at the second hearing.  
1435 See Honduras' first written submission to the Panel, paras.  853 and 911; Dominican  Republic's 
first written submission to the Panel, paras.  737-739, 980, and 1019.  
1436 Panel  Report, para.  7.1025.  
1437 Panel  Report, para.  7.1025.  
1438 Honduras' and the Dominican  Republic's responses to questioning at the second hearing (refer ring 
to Panel  Report, paras.  7.495 -7.497).  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.531.   Even assuming, arguendo , that the appellants are correct that the Panel relied on the totality 
of the evidence in forming both conclusions in these two sentences of paragraph  7.1025, I do not 
see how the errors alleged by the appellants pertaining to the Panel's second -sentence  finding would 
vitiate the Panel's finding in the first sentence . The mere fact that the Panel may have relied on the 
same evidenc e for both findings does not mean that any errors in the Panel's 
second  determination  – that the evidence supports the view that the TPP  measure s "are apt to, and 
do in fact" make a contribution – also would undermine the Panel's conclusion that the compla inants 
failed to substantiate their burden  of demonstrating that the TPP  measure s are not apt to contribut e. 
Those are two different conclusions.  
6.532.   Consequently, in order for us to overturn the Panel's conclusion that the complainants failed 
to demonstrate t hat the TPP  measure s are not apt to contribute to Australia's objective – expressed 
in the first sentence of paragraph  7.1025 – the appellants were required to demonstrate that the 
Panel's errors in its examination of the evidence vitiated that conclusion, and did so in  a manner so 
egregious as to constitute a violation of Article  11 of the DSU.   
6.533.   As noted, the appellants did not appeal the Panel's finding in the first sentence of 
paragraph  7.1025. They also did not otherwise address the question of whether any errors in the 
Panel's evaluation of the second sentence in that paragraph would vitiate the first sentence, except 
to argue that the two sentences "are linked" and that the Panel's evaluation of them was based on 
the same evidence.  
6.534.   As a res ult, I consider that the Panel's determination that the complainants failed to 
demonstrate that the TPP  measure s are not apt to contribut e to Australia's objective is undisturbed 
on appeal. Since measures are presumed to be WTO -consistent until shown other wise, it follows 
that the TPP  measures are presumed to be at least capable of making a contribution to Australia's 
objective1439, whether or not the Panel might have erred in determining that the totality of evidence 
supports the view that the TPP  measure s are apt to, and do in fact, make a contribution to Australia's 
objective.  
6.535.   It follows that the Panel's finding , in the first sentence of paragraph  7.1025 of the 
Panel  Report , stands. Since the TPP  measure s are therefore presumed to be capable of contributing 
to Australia's objective, it further follows that: (i)  the appellants have failed to demonstrate that the 
Panel erred in rejecting their principal argument; and (ii)  with respect to their alternative argument, 
whether or not the proposed alter natives make an equivalent contribution to the TPP  measure s, the 
appellants did not present an alternative that is less  trade-restrictive than the TPP  measure s1440, 
and consequently there is no basis for us to overturn the Panel's overall conclusion that the 
appellants failed to demonstrate that the TPP  measure s are inconsistent with Article  2.2.  
6.536.   Thus, I believe it was unnecessary, for purposes of resolving th ese dispute s, for the majority 
to consider in detail the appellants' claims regarding the Panel's assessment of the TPP  measure s' 
contribution to Australia's objective. For that reason, I also believe that it was inadvisable for the 
majority to consider in detail the appellants' contribution claims. This could have been a much 
shorter report, I  believe, based on the findings that the first sentence of paragraph  7.1025, regarding 
aptness, stands, that the appellants' proposed alternatives would not be less trade -restrictive than 
the TPP  measure s, and therefore that the appellants failed to demons trate that the TPP  measure s 
are inconsistent with Article  2.2. 
 
1439 Where a panel finds that the parties' evidence reveals that a measure is capable of contributing, or 
the evidence is unclear or mixed as to whether the measure is capable of contributing, a panel should find tha t 
the complainant has failed to demonstrate that the measure is incapable of contributing to the objective. This 
would at the same time mean that, to the extent that the complainant also argues that the measure is 
inconsistent with Article  2.2 on the basis  that there are reasonably available less trade -restrictive alternative 
measures capable of making an equivalent contribution, the presumption of WTO -consistency requires that a 
panel presume that the measure is at least capable of making some contribution  to the legitimate objective 
and, on that basis, proceed to examine the remaining factors for determining "necessity", such as the degree 
of the measure's trade restrictiveness and the availability of less trade -restrictive alternative measures.  
1440 For the reasons set forth in sections  6.1.3-6.1.4 we have upheld the Panel's findings that the 
alternative measures proposed by the complainants would not be less trade -restrictive than the TPP  measures.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  6.2.3   Due process and Article  11 of the DSU  
6.537.   I disagree with the majority's intermediate finding that, by introducing in its Interim Report 
econometric analyses that had not been tested with the parti es, the Panel failed to observe due 
process in a way that constitutes a violation of Article  11 of the DSU.  
6.538.   In my view, the Panel's reliance on multicollinearity and non -stationarity to test the 
robustness of the parties' evidence was part of the Panel's r easoning, with respect to which a panel 
enjoys considerable discretion. The parties to this case submitted to the Panel a large amount of 
econometric evidence. It was appropriate for the Panel to assess the probative value of that 
evidence. The Panel teste d the robustness of the econom etric studies submitted by the parties by 
taking into account, inter alia , whether the models suffered from multicollinearity and 
non-stationarity. The mere fact that these two so -called "criteria" were not specifically mentio ned 
by the parties is not sufficient to warrant a different scrutiny of the Panel's reliance on them, as 
compared to the Panel's reliance on other econometric concepts (e.g.  overfitting and endogeneity) 
that the parties had identified. I therefore consider  that the Panel acted within the bounds of its 
discretion as a trier of facts by not only examining the parameters used by each party, but also by 
going further in its evaluation and testing the robustness of the parties' econometric evidence for 
multicoll inearity and non -stationarity.  
6.539.   With regard to the issue of due process, Australia argues that the complainants could have 
used the interim review stage to request the Panel to review the relevant parts of the Panel  Report  
pursuant to Article  15 of the DSU but chose not to do so.1441 The appellants submit that interim 
review would not have provided them with a "meaningful opportunity" to comment on the Panel's 
concerns regarding multicollinearity and non -stationarity.1442 
6.540.   Article  15.2 of the DSU says, in relevant part, that:  
Within a period of time set by the panel, a party may submit a written request for the 
panel to review precise aspects of the interim report prior to circulation of the final 
report to the Members. At the request of a party, the panel shall hol d a further meeting 
with the parties on the issues identified in the written comments. If no comments are 
received from any party within the comment period, the interim report shall be 
considered the final panel report and circulated promptly to the Member s. 
6.541.   The complainants became aware of the Panel's analysis of multicollinearity and 
non-stationarity when they received the Panel's Interim Report on 2  May 2017. However, the 
complainants did not raise any substantive concerns with respect to these aspects o f the Panel's 
analysis in their comments on the Interim Report, nor did they request an interim review meeting. 
It is reasonable to read Article  15.2 as placing responsibility on the complainants to have raised the 
Panel's reliance on multicollinearity and  non-stationarity at the interim review stage, especially given 
the importance that the appellants attribute to th ese issues on appeal. In my view, the complainants' 
failure to raise th ese issues at the interim review stage undermines the appellants' claim regarding 
due process.  
6.542.   Thus, since the complainants had an opportunity to raise th ese issues and did not do so, 
I do not agree with their claim that the Panel denied them due process by not "giv ing the parties 
any opportunity whatsoever to comment".1443 Since the complainants did not attempt to raise their 
concerns regarding the Panel's reliance on multicollinearity and non -stationarity at the interim review 
stage, it is unnecessary to speculate abo ut whether the alleged limited nature of the interim review 
process , which I do not find to be expressed in the text of Article  15.2, would have been sufficient. 
Consequently, I disagree with the majority's interim conclusion on this point.  
6.543.   In light of the  above, I consider that the appellants have not demonstrated that the Panel 
failed to make an objective assessment of the facts of the case as required under Article  11 of the 
 
1441 Australia's appellee's submission, para.  464. 
1442 Honduras' responses to questioning at the second hearing. In addition, the Dominican  Republic 
noted that, at the interim review stage, it could pose only "rhetorical questions" to the Panel. 
(Dominican  Republic's responses to questioning at the second hearing)  
1443 Dominican  Republic's appellant's submission, para.  42. (emphasis omitted)  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  DSU by denying the parties an opportunity to comment on the Panel's reliance on multicollinearity 
and non -stationarity.  
6.3  Claims under the TRIPS  Agreement  
6.544.   On appeal, Honduras challenges the Panel findings under Articles  16.1 and 20 of the 
TRIPS  Agreement only.1444 The Dominican  Republic appeals the Panel findings under Article  20 of 
the TR IPS Agreement.1445 
6.3.1   Article  16.1 of the TRIPS  Agreement  
6.545.   Article  16.1 provides that:  
The owner of a registered trademark shall have the exclusive right to prevent all 
third parties not having the owner's consent from using in the course of trade identical 
or similar signs for goods or services which are identical or similar to those in respect 
of which the trademark is registered where such use would result in a likelihood of 
confusion. In case of the use of an identical sign for identical goods or services, a 
likelihood of confusion shall be presumed. The rights described above shall not prejudice 
any existing prior rights, nor shall they affect the possibility of Members making rights 
available on the basis of use.  
6.546.   Honduras requests us to reverse the Panel's fi nding that Honduras did not demonstrate that 
the TPP  measures are inconsistent with Article  16.1 of the TRIPS  Agreement1446, on the grounds 
that: (i)  the Panel's interpretation of the "rights conferred" under Article  16.1 was in error; (ii)  the 
Panel erred in  its application of Article  16.1 to the TPP  measures; and (iii)  the Panel failed to comply 
with its obligation under Article  11 of the DSU to make an objective assessment of the matter.1447 
6.547.   Australia contests each of Honduras' claims.1448 Australia asserts that if we uphold the 
Panel's interpretative analysis, we "should reject Honduras' s argument that the Panel erred in its 
application of Article  16.1, as well as Honduras' s argument that the Panel's decision not to address 
the complainants' factual allegations w as inconsistent with the Panel's obligation to make an 
objective assessment of the matter under Article  11 of the DSU".1449 
6.548.   We begin with a summary of the Panel's findings. Thereafter, we address the claims of error 
raised by Honduras.  
6.3.1.1   Summary of the Panel's findings  
6.549.   The Panel understood the complainants to argue that, by prohibiting the use of certain 
tobacco -related trademarks on tobacco packaging and tobacco products, the TPP  measures erode 
their distinctiveness, thereby "constraining trademark owners' abil ity to exercise their rights under 
Article  16.1".1450 For the Panel, this argument by the complainants hinged on whether a reduction 
in the distinctiveness of a registered trademark affects the rights that Members must provide to the 
 
1444 Honduras' Notice of Appeal, pp.  1-3. Before the Panel, Honduras and the Dominican  Republic 
claimed that the TPP  measures are inconsistent with Articles  6quinquies  and 10 bis of the Par is Convention 
(1967) (read in conjunction with Article  2.1 of the TRIPS  Agreement) and Articles 15.4, 16.1, 20, 22.2(b), and 
24.3 of the TRIPS  Agreement. The Panel found that the complainants had not demonstrated that the 
TPP measures are inconsistent with  any of the cited provisions. (Panel  Report (DS435), para.  8.1.b-h; 
Panel  Report (DS441), para.  8.1.b) Two of the other complainants in the Panel proceedings, Cuba and 
Indonesia, also raised a claim under Article  16.3 of the TRIPS  Agreement. (Panel  Report (DS458), 
para. 8.1.b.v; Panel  Report (DS441), para.  8.1.b.iv) Other than the Panel's findings under Articles  16.1 and 20 
of the TRIPS  Agreement, none of the other Panel findings under the TRIPS  Agreement have been appealed.  
1445 Dominican  Republic's Notice of  Appeal, paras.  14-15. 
1446 Honduras' Notice of Appeal pp.  2-3 (referring to Panel  Report (DS435), paras.  7.2051 and 8.1.d).  
1447 Honduras' Notice of Appeal, pp.  2-3. 
1448 Australia's appellee's submission, para.  80. 
1449 Australia's appellee's submission, para.  145. 
1450 Panel  Report, para.  7.1971.  
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  trademark owner under Art icle 16.1. The Panel therefore began by determining the content of the 
rights under Article  16.1.1451 
6.550.   Taking note of the definition of the word "prevent", the Panel considered that Article  16.1 
formulates an obligation on Members to provide to the owner of a registered trademark the right to 
"stop [] or hinder" all those not having the owner's consent from using certain signs on certain goods 
or services, where such use would result in a likelihood of confusion.1452 In the Panel's view, the text 
of Article  16.1 d oes not formulate any other right of the trademark owner, nor does it mention the 
use of the registered trademark by its owner.1453 In light of the ordinary meaning of the text and, in 
its view, consistently with prior rulings1454, the Panel agreed with the parties that Article  16.1 does 
not establish a trademark owner's right to use its registered trademark. Rather, Article  16.1 provides 
only for a registered trademark owner's right to prevent certain activities by unauthorized 
third parties under the condit ions set out in the first sentence of Article  16.1.1455 
6.551.   With respect to the scope of the right that WTO Members are obliged to confer on owners of 
registered trademarks under Article  16.1, the Panel noted that the trademark owner must have the 
exclusive right  to prevent: (i)  all third parties not having the owner's consent; (ii)  from using in the 
course of trade, identical or similar signs for goods or services that are identical or similar to those 
with respect to which the trademark is registered; (iii)  such use where it would result in a likelihood 
of confusion.1456 The Panel considered that, by setting out the conditions under which the trademark 
owner must be able to prevent third parties' activities, Article  16.1 simultaneously defines what 
must, at a minimu m, constitute an infringement of a registered trademark.1457 
6.552.   The Panel recalled that , pursuant to Article  1.1 of the TRIPS  Agreement, Members have the 
obligation to "give effect to the provisions of this Agreement". According to the Panel, if the activities 
of an unauthorized third party meet the conditions set out in the first sentence of Article  16.1, then 
the trademark owner must have the right under a Member's domestic law to prevent such activities. 
Therefore, the Panel found that the essence of the Artic le 16.1 obligation is to ensure that rights are 
available to obtain relief against such infringing acts. In the Panel's view, it follows that, in order to 
show that the TPP  measures are inconsistent with Article  16.1, the complainants would have to 
demonst rate that, under Australia's domestic law, the trademark owner does not have the right to 
prevent third -party activities that meet the conditions set out in that provision.1458 
6.553.   The Panel then turned to the complainants' argument that, by prohibiting the use of 
non-word trademarks on tobacco products, the TPP  measures would reduce the distinctiveness of 
registered non -word trademarks because consumers would no longer associate these trademarks 
with the products for which they were registere d. The Panel understood the complainants to argue 
that this reduction of distinctiveness would reduce the ability of the trademark owner to demonstrate 
a "likelihood of confusion", a "condition precedent"1459 for exercising rights under Article  16.1, and 
thus to prevent unauthorized use of similar or identical signs on similar products in the market. The 
complainants focused their claim on the purported effect that the TPP  measures would have on the 
ability to demonstrate confusion in cases where identical or similar signs were used on similar 
products, which the complainants identified as "tobacco accessories like lighters, matches, cigarette 
cases, or humidors".1460  
 
1451 Panel  Report, para.  7.1972.  
1452 Panel  Report, paras.  7.1973 -7.1974.  
1453 Panel  Report, para.  7.1974.  
1454 Panel  Report, para.  7.1978 (referring to Appellate  Body Report, US – Section 211 Appropriations 
Act, para.  186; Panel  Report, EC – Trademarks and Geographical Indications (Australia) , para.  7.611 and 
fn 564 thereto).  
1455 Panel  Report, para.  7.1978.  
1456 Panel  Report, para.  7.1979. See also ibid., paras.  7.1996 -7.1998.  
1457 Panel  Report, para.  7.1980.  
1458 Panel  Report, para.  7.1980 and fn  4447 thereto.  
1459 Panel Report, para.  7.1982.  
1460 Panel  Report, para.  7.1983 and fn  4450 thereto (referring to Indonesia's response to Panel question 
No. 29, para.  32 and fn  28 thereto; Honduras' first written submission to the Panel, paras.  235-236 and 249; 
Dominican  Republic's first written submission to the Panel, para.  311; Dominican  Republic's response to Panel 
question No.  32, para.  148).  
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  6.554.   The Panel noted that the complainants were not challenging how the criteria for trademark 
infringement are defined in Australia's domestic legislation. Nor were the complainants arguing that 
the TPP  measures have affected how the Australian legal system assesses whether a "likelihood of 
confusion" exists. The Panel further noted that the complainants  had not claimed that the 
TPP measures affect the procedural or evidentiary means available to right holders in infringement 
procedures to demonstrate that the infringement criteria are indeed fulfilled. To the Panel, the 
complainants also appeared to acce pt that, when  these infringement criteria are fulfilled, a 
trademark owner is entitled to take legal action in Australia. Therefore, it was the Panel's 
understanding that the situation that the complainants described as the basis for their claim was not 
so much a reduction in the trademark owners' ability to demonstrate a "likelihood of confusion". 
Instead, it was a reduction of the instances in which "likelihood of confusion" would arise in the 
market with respect to tobacco -related trademarks whose use is  affected by the TPP  measures.1461 
6.555.   For the Panel, this argument consisted of two parts: (i)  the factual allegation that the 
TPP measures' prohibition of use of certain registered trademarks will result in a situation where 
these marks will lose their distinct iveness and thus reduce the occurrence of situations in which 
trademark owners can show a "likelihood of confusion" between the registered trademarks and 
similar or identical signs on similar products; and (ii)  the assertion that this factual consequence o f 
the TPP  measures reduces or eliminates the exclusive rights that the trademark owner is to enjoy 
under Australia's domestic law pursuant to Article  16.1.1462 
6.556.   With respect to what the Panel identified as "the factual allegation"1463 regarding the loss of 
distin ctiveness, the Panel observed that the "use" of a trademark, which is in principle relevant for 
the acquisition and maintenance of distinctiveness, is not limited to use on packaging of a product, 
but rather extends to a wider range of commercial, advertis ing, and promotion al activities. The 
TPP measures constrain or prohibit the use of certain registered trademarks as applied to tobacco 
retail packaging and products, but do not constrain other uses of trademarks, such as advertising 
and promotion, also rel evant for acquiring and maintaining distinctiveness.1464 The Panel recalled 
that, in the Australian context, other measures, not at issue in these proceedings, limit or prohibit 
advertising and promotion of tobacco products. According to the Panel, any assess ment of the impact 
of the regulation of packaging on a reduced likelihood of confusion would need to take place against 
this factual context.1465 
6.557.   In addition, the Panel noted that Article  16.1 provides protection against the unauthorized 
use of "similar or id entical signs" on similar or identical products, which would result in a "likelihood 
of confusion". The Panel considered that , while the "similarity of signs" describes the single 
dimension of comparison between two signs, the criterion of "likelihood of c onfusion" is more 
multi-faceted, depending, in addition, on the "similarity of goods and services" and on the specific 
nature of the use.1466 Thus, for the Panel, an assessment of the "likelihood of confusion" with respect 
to a given trademark in a given situ ation is a factual assessment that will involve a consideration of 
the specific circumstances at issue, including the manner in which the potential for confusion arises 
in the specific market at issue. The Panel was therefore not persuaded that the operati on of the 
TPP measures would necessarily have the impact that the complainants alleged on the existence of 
a "likelihood of confusion", or how this would be assessed in relation to a specific trademark.1467 In 
any event, the Panel considered that it would nee d to make a determination with respect to this 
factual allegation only if it concluded that reducing the instances in which a trademark owner would 
be able to prevent the unauthorized use of similar or identical trademarks in the market, because 
such use i s no longer likely to cause a "likelihood of confusion", leads to a violation of Article  16.1.1468 
6.558.   In this regard, the Panel highlighted that there is nothing in the text of the first  sentence of 
Article  16.1 to suggest – as the complainants had implied – an obligation by Members not only to 
provide protection where likelihood of confusion does arise , but also to maintain market conditions 
 
1461 Panel  Report, paras.  7.1985 -7.1987.  
1462 Panel  Report, para.  7.1988.  
1463 Panel Report, para.  7.1988.  
1464 Panel  Report, para.  7.1989 (referring to WIPO, WIPO Intellectua l Property Handbook , 2nd edn 
(Geneva, 2004; reprinted 2008) (Panel Exhibit DOM -65), paras.  2.339 -2.351).  
1465 Panel  Report, para.  7.1989.  
1466 Panel  Report, para.  7.1991.  
1467 Panel  Report, paras.  7.1992 -7.1993.  
1468 Panel  Report, para.  7.1993.  
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  that would enable the circumstances set out in this provision, including a likelihood of confusion, to 
actually occur in a ny particular situation. Rather, Members must ensure that , in the event that these 
circumstances do arise, a right to prevent such use is provided. According to the Panel, whether 
unauthorized third parties actually use similar or identical signs on simila r goods or services in the 
market, and whether such use actually does or does not result in a "likelihood of confusion" among 
consumers, is immaterial to the assessment of whether a Member ensures that a trademark owner 
has, at its disposal, the right to p revent such acts by third parties, in compliance with Article  16.1.1469 
6.559.   Rather, the Panel found that Members comply with the obligation under Article  16.1 if their 
domestic legislation provides owners of registered trademarks with the exclusive right to preve nt 
the activities by third parties proscribed in that provision.1470 The Panel considered this 
understanding to be consistent with the purpose of the exclusive rights conferred by Article  16.1, 
which is to protect the right owner against infringements of its registered trademarks.1471 The Panel 
cautioned that "[t]o conclude otherwise would effectively broaden the scope of Article  16.1 to 
encompass an additional right to protect against reduction of distinctiveness of a trademark, or even 
a right to protect agains t lesser awareness of a trademark among consumers."1472 
6.560.   Next, the Panel addressed the issue of whether the TPP  measures are inconsistent with 
Article  16.1 by impairing the distinctiveness of tobacco -related registered trademarks. The Panel 
noted that Cuba, th e Dominican  Republic, and Indonesia had claimed that Article  16.1 imposes a 
general obligation on Members to refrain from adopting measures that would undermine or eliminate 
the distinctiveness of trademarks and thus impair or eliminate the possibility to exercise the right to 
exclude guaranteed under Article  16.1.1473 
6.561.   The Panel recalled its finding that Article  16.1 does not contain a right to use a trademark. 
Rather, the Panel considered that WTO Members comply with the obligation under Article  16.1, 
first sentence, by providing to the owner of a registered trademark the exclusive right to prevent 
trademark infringements as described by the criter ia set out therein. Against this background, the 
Panel found no indication in the text of Article  16.1, first sentence, of an obligation on Members to 
maintain the distinctiveness of registered trademarks, or to refrain from regulatory conduct that 
might n egatively affect the distinctiveness of such trademarks through use.1474 
6.562.   In this regard, the Panel took note of the finding by the panel in EC – Trademarks and 
Geographical  Indications (Australia)  cited by the Dominican  Republic and Indonesia. The panel in 
EC – Trademarks and Geographical Indications (Australia)  stated that "[e]very trademark owner has 
a legitimate interest in preserving the distinctiveness … of its trademark so that it can perform that 
function. This includes its interest in using its own tra demark in connection with the relevant goods 
and services of its own and authorized undertakings."1475 The Panel recalled that the panel in 
EC – Trademarks and Geographical Indications (Australia)  had made this finding in the context of 
Article  17 of the TRIP S Agreement when examining what constitutes "legitimate interests" that need 
to be taken into account to justify a limited exception under that provision.1476 
6.563.   The Panel understood the finding of the panel in EC – Trademarks and Geographical 
Indications (Austr alia) as simply confirming that the trademark owner's interest in preserving the 
distinctiveness of its trademark includes its interest in using its trademark in relation to the relevant 
goods or services, and that "these interests need to be taken into ac count – not protected  as a 
right – when considering whether an exception in a Member's domestic law to the exclusive right to 
prevent  conferred by Article  16.1 meets the criteria for permissible exceptions as contained in 
Article  17."1477 The Panel therefore reasoned that the panel finding in EC – Trademarks and 
Geographical Indications (Australia)  does not support the argument that the trademark owner's 
 
1469 Panel  Report, para.  7.2000.  
1470 Panel  Report, paras.  7.1999 -7.2000.  
1471 Panel  Report, para.  7.2001 (referring to Appellate  Body Report, US – Section 211 Appropriations 
Act, para.  186).  
1472 Panel  Report, para.  7.2002.  
1473 Panel  Report, para.  7.2003.  
1474 Panel  Report, para.  7.2005.  
1475 Panel Report, para.  7.2003 (quoting Panel  Report, EC – Trademarks and Geographical Indications 
(Australia) , para.  7.664).  
1476 Panel  Report, para.  7.2006.  
1477 Panel  Report, para.  7.2008. (emphasis original)  
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  interest in preserving the distinctiveness of a registered trademark, and its interest in using the 
tradema rk to that end, creates a general obligation under Article  16.1 for Members to refrain from 
adopting measures that would undermine or eliminate the distinctiveness of trademarks.1478 
6.564.   The Panel emphasized that the focus of the trademark owner's right conferred  by Article  16.1 
is on preventing use by third parties that results in a "likelihood of confusion" in the market. For the 
Panel, Article  16.1 is not intended to protect against waning distinctiveness due to other reasons, 
such as changing market conditions , inaction of the trademark owner, or changing consumer 
perception. Likewise, the Panel considered that Article  16.1 does not imply that Members have a 
general obligation not to undermine the distinctiveness of registered trademarks through regulatory 
meas ures.1479  
6.565.   In this regard, the Panel took note of another finding by the panel in EC – Trademarks and 
Geographical Indications (Australia)  to the effect that, because the TRIPS  Agreement "provides for 
the grant of negative rights to prevent certain acts" rath er than "positive rights to exploit or use", 
"many measures to attain … public policy objectives lie outside the scope of intellectual property 
rights and do not require an exception under the TRIPS  Agreement."1480 The Panel considered that 
this finding confi rmed its view that, in the absence of a positive right to use a trademark, regulatory 
measures that do not affect the negative right to prevent infringing uses are not prohibited by 
Article  16. The Panel opined that its view was further confirmed by the co ntext of Article  16.1. The 
Panel referred to Article  19, which expressly contemplates government measures that can constitute 
an obstacle to trademark use. The Panel also noted that Article  20 permits certain encumbrances on 
trademark use by special requir ements.1481 
6.566.   Accordingly, the Panel disagreed with the claim that Article  16.1 contains a general obligation 
on Members to refrain from regulatory measures that can negatively affect distinctiveness of 
individual registered trademarks, whether such measures af fect trademarks incidentally or directly. 
The Panel highlighted that, since the TPP  measures had not been found to be in violation of 
Article  16.1, the question raised by Honduras and Indonesia of whether the TPP  measures are 
permissible as "limited except ions" under Article  17 did not arise.1482 
6.567.   The Panel also addressed an argument raised by Cuba, which Honduras reiterates on 
appeal.1483 Before the Panel, Cuba, relying on the principle of effective treaty interpretation, argued 
that Article  16.1 obliges Members to provide registered trademark owners with a "minimum 
opportunity" to use their trademarks, because otherwise the minimum rights required by Article  16.1 
are not guaranteed.1484 
6.568.   The Panel posited that, while the TRIPS  Agreement recognizes the trademark owner 's 
legitimate interest in using the registered trademark, the legal operation of the "right to prevent" in 
Article  16.1 does not per se require use of the registered trademark itself.1485 For the Panel, adopting 
an interpretation of Article  16 that would requ ire Members to safeguard a minimum opportunity to 
use the registered trademark is not only without basis in the text of the provision itself, but would 
also create disharmony with those provisions of the trademark section that: (i)  expressly provide 
for co nditions under which use can be encumbered (Article  20); and (ii)  address the consequences 
of obstacles to use (Article  19). According to the Panel, these provisions clearly foresee potential 
regulatory prevention of use. For these reasons, the Panel found  that the obligation to give a legally 
operative meaning to all the provisions in Section  2 of Part  II of the TRIPS  Agreement harmoniously, 
without reducing any of them to redundancy, does not support an interpretation of the minimum 
 
1478 Panel  Report, para.  7.2008.  
1479 Panel  Report, paras.  7.201 1 and 7.2014.  
1480 Panel  Report, para.  7.2015 (quoting Panel  Report, EC – Trademarks and Geographical Indications 
(Australia) , para.  7.246).  
1481 Panel  Report, paras.  7.2015 -7.2016.  
1482 Panel  Report, para.  7.2018 (referring to Honduras' first written submission to the Panel, para.  252; 
Indonesia's second written submission to the Panel, para.  72). 
1483 See, for example, Honduras' appellant's submission, paras.  153, 327 -333, and 353.  
1484 Panel  Report, para.  7.2019.  
1485 Panel  Report, para.  7.2025 and fn  4516 thereto, and para.  7.2026.  
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  rights in Article  16 as requiring Members to provide a minimum opportunity to use a registered 
trademark.1486 
6.569.   The Panel concluded that the possibility of a reduced occurrence of a "likelihood of confusion" 
in the market does not, in and of itself, constitute a violation of Article  16.1, because Members' 
compliance with the obligation to provide the right to prevent trademark infringements under 
Article  16.1 is independent of whether such infringements actually occur in the market. For the 
Panel, Article  16.1 does not require Member s to refrain from regulatory measures that may affect 
the ability to maintain distinctiveness of individual trademarks or to provide a "minimum 
opportunity" to use a trademark to protect such distinctiveness.1487 
6.570.   The Panel also found that, in order to demonst rate that the TPP  measures are inconsistent 
with Article  16.1, the complainants would have to demonstrate that, under Australian national law, 
the trademark owner does not have the right to prevent third -party activities that meet the 
conditions set out in  that provision.1488 The Panel concluded that the complainants had not 
demonstrated that the TPP  measures are inconsistent with Article  16.1 of the TRIPS  Agreement.1489 
6.3.1.2   Whether the Panel erred in its interpretation of Article  16.1 
6.571.   Honduras claims that the Panel erred in its interpretation of Article  16.1.1490 Honduras' 
appeal calls for us to identify the right that is protected under Article  16.1, the scope of that right, 
and the corresponding obligation  imposed on WTO  Members with respect to that right.  
6.572.   As a preliminary matter, we observe that there appears to be a degree of internal tension in 
Honduras' arguments on appeal. On the one hand, Honduras contends that "the dispute was never 
about whether there exists an undefined 'positive right to use' a trademar k."1491 On the other hand, 
Honduras maintains that "the use of the trademark determines the mark's strength and thus directly 
affects the scope of protection conferred by Article  16."1492 In the same vein, Honduras argues that 
the Panel 's findings on Article  16.1 divorce the means of protection from the end that the means 
should serve (the ability to use the trademark and expand the trademark's distinctiveness, notoriety, 
and goodwill). Honduras submits that, pursuant to Article  16.1, a trademark owner can sue in  order 
to protect its trademark, "so that the trademark can be used"  to perform its important function in 
the course of trade.1493 
6.573.   At the first hearing, we asked Honduras several questions aimed at eliciting a better 
understanding of Honduras' position on app eal regarding the rights conferred under Article  16.1, 
and its challenge to the Panel's interpretation of this provision. In response to our questions, 
Honduras explained that it considers use to be "essential to all of the rights conferred to trademark 
owners".1494 In Honduras' view, the rights conferred are a means to an end. Honduras emphasized 
that the purpose of the right in Article  16.1 is "to protect the distinctiveness of the mark".1495 
Honduras added that use is essential in the maintenance of the distin ctiveness of a trademark in the 
marketplace. Honduras asserted that, by imposing a prohibition on use, thereby reducing the 
 
1486 Panel  Report, paras.  7.2028 -7.2030.  
1487 Panel  Report, para.  7.2031. The Panel made two further findings that are not the subject of these 
appellate proceedings: (i)  that Cuba had not explained how the cancellation of a registered trademark that 
consists of non -inherently distinctive non -word signs and that may have lost distinctiveness due to the 
application of the TPP  measures "constitutes a violation of Article  16.1" (Panel  Report, para.  7.2040); and 
(ii) that Indonesia, and Cuba, by reference, had not made a prima  facie case that the TPP  measures erode a 
trademark owner's right under Article  16.1 by requiring the use of deceptively similar marks on identical 
product s and at the same time depriving owners of the remedy to prevent uses of similar signs that create a 
"likelihood of confusion". (Panel  Report, para.  7.2050)  
1488 Panel  Report, para.  7.2050.  
1489 Panel  Report, para.  7.2051.  
1490 Honduras' Notice of Appeal, pp.  2-3. 
1491 Honduras' appellant's submission, para.  349.  
1492 Honduras' appellant's submission, para.  431. 
1493 Honduras' appellant's submission, para.  325. (emphasis omitted)  
1494 Honduras' response to questioning at the first hearing.  
1495 Honduras' response to questioning a t the first hearing.  
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  distinctiveness of the trademarks at issue, the TPP  measures have effectively "shrunk the scope of 
protection".1496 
6.574.   Based on Honduras' Notice of Appeal, appellant's submission, and responses to questioning 
at the first hearing, we understand the reasoning underpinning each of Honduras' arguments as 
focusing on three  central and interconnected themes : (i) Article  16.1 of the TRIPS  Agreemen t (read 
together with Articles  15, 17, 19, and 20 of the TRIPS  Agreement) confers upon the owner of a 
registered trademark the right to use its trademark; (ii)  the distinctiveness of a trademark and the 
"likelihood of confusion" in Article  16.1 are closely  related concepts that impose a requirement on 
Members to protect the distinctiveness of a trademark through use; and (iii)  pursuant to Article  16.1, 
Members must guarantee a minimum level of protection relating to the distinctiveness and use of 
trademarks , which then "guarantee [s] particular outcomes".1497 Accordingly, in addressing 
Honduras' arguments, we also address, inter alia, these three  recurring themes.  
6.575.   We begin with Honduras' contention that the Panel findings on Article  16.1 divorce the means 
of pro tection from the end that the means should serve (the ability to use the trademark and expand 
the trademark's distinctiveness, notoriety, and goodwill). Honduras submits that pursuant to 
Article  16.1, a trademark owner can sue in order to protect its trade mark, "so that the trademark 
can be used"  to perform its important function in the course of trade.1498 Honduras argues that the 
Panel ignored the importance of "use" to the enforcement of trademarks and read Article  16 without 
considering the context of, in particular, Articles  15, 19, and 20, which, according to Honduras, put 
the functional use of trademarks at the heart of the trademark rights protected by the 
TRIPS  Agreement.1499 
6.576.   For Australia, the necessary implication of Honduras' argument is that a tradema rk owner 
has a right to use a trademark, so as to maintain the distinctiveness of that trademark, and therefore 
maintain the owner's ability to demonstrate a "likelihood of confusion".1500 In Australia's view, 
Article  16.1 does not require Members to confer u pon the owner of a registered trademark a right 
to use that trademark.1501 
6.577.   The starting point of our analysis is the text of the TRIPS  Agreement. Given the unique 
structure of the TRIPS  Agreement as compared to the other covered agreements1502, in order to 
estab lish properly the right that is protected under Article  16.1 and the corresponding obligation on 
WTO Members, we consider it useful to place Article  16.1 in its proper context in the 
TRIPS  Agreement.1503 
 
1496 Honduras' response to questioning at the first hearing.  
1497 Honduras' appellant's submission, para.  375. 
1498 Honduras' appellant's submission, para.  325. (emphasis omitted)  
1499 Honduras' appellant's submission, para.  366. 
1500 Australia's app ellee's submission, para.  123 and fn  135 thereto (referring to Honduras' appellant's 
submission, para.  359).  
1501 Australia's appellee's submission, para.  87. 
1502 The TRIPS  Agreement addresses intellectual property rights, which are private rights  held by natur al 
or legal persons. (TRIPS Agreement, fourth recital of the Preamble) For purposes of the TRIPS  Agreement, the 
natural or legal persons that are the right holders must be nationals of WTO  Members. (TRIPS  Agreement, fn  1 
to para.  3) In addition, the TRIPS  Agreement derives a significant proportion of its content from pre -existing 
international intellectual property agreements or conventions that were negotiated outside the 
GATT  1947/WTO framework. Moreover, the TRIPS  Agreement, as an agreement addressing in tellectual 
property rights, is principally concerned with the creation and protection of exclusive  private rights. By 
definition, these exclusive rights act to restrict commercial activity and require an active intervention of 
government to enforce these r estrictions. As the panels in EC – Trademarks and Geographical Indications 
(Australia)  and EC – Trademarks and Geographical Indications (US ) stated, the TRIPS  Agreement "does not 
generally provide for the grant of positive rights to exploit or use certain subject matter, but rather provides 
for the grant of negative rights to prevent certain acts".  (Panel  Reports, EC – Trademarks and Geographical 
Indications (Australia) , para.  7.246; EC – Trademarks and Geographical Indications (US) , para.  7.210)  
1503 As the Appellate  Body has said, "a treaty interpreter must read all applicable provisions of a treaty 
in a way that gives meaning to all of them, harmoniously." (Appellate  Body Report, Argentina – Footwear (EC) , 
para. 81 (referring to Appellate  Body Reports, Korea – Dairy , para.  81; India – Patents (US) , fn 25 to para.  45; 
US – Gasoline , p. 3, DSR  1996:I, p.  23; Japan – Alcoholic Beverages  II, p. 97, DSR 1996:I, p.  106) (emphasis 
original))  
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  6.578.   Article  1.1 imposes an obligation on Members to "give e ffect to the provisions of" the 
TRIPS  Agreement. Specifically, as regards trademarks, Members have an obligation to give effect to 
the provisions of Articles  15-21 of the TRIPS  Agreement.  
6.579.   Article  15.1 defines the subject matter that is protectable as a trademark.1504 According to 
Article  15.1, any sign, or any combination of signs, capable of distinguishing the goods or services 
of one  undertaking from those of other undertakings, shall be capable of constituting a trademark. 
Thus, a tradem ark serves to distinguish the goods or services of one undertaking from those of other 
undertakings. Article  15.1 also states that "[w]here signs are not inherently capable of distinguishing 
the relevant goods or services, Members may make registrability d epend on distinctiveness acquired 
through use." Hence, Article  15.1 suggests that, in terms of eligibility for registration, the norm is 
the presentation of signs that are "inherently" distinctive. It is only in situations when a sign is not 
inherently dis tinctive that the "distinctiveness acquired through use" become s relevant. We observe 
that the "distinctiveness" of a sign, discussed in Article  15.1, relates to the eligibility for registration 
of a sign as a trademark, and not to the rights  conferred to the trademark owner once its trademark 
is registered. We recall that the question whether a sign is eligible for registration as a trademark is 
not at issue in these proceedings.  
6.580.   While Article  15 defines the subject matter that may be protected as a trademark and the 
rules governing the eligibility for registration of a sign as a trademark, Article  16 addresses the rights 
conferred on a trademark owner following such registration.1505 Article  16.1 states:  
The owner of a registered trademark shall have the exclusive right to prevent all third 
parties not having the owner's consent from using in the course of trade identical or 
similar signs for goods or services which are identical or similar to those in respect of 
which the trademark is registered where such use would result in a likelihood of 
confusion. In case of the use of an identical sign for identical goods or services, a 
likelihood of confusion shall be presumed. The rights described above shall not prejudice 
any existing prior rights, nor shall they affect the possibility of Members making rights 
available on the bas is of use.1506 
6.581.   The first sentence of Article  16.1 identifies the holder of the exclusive right conferred under 
this provision as the "owner of a registered trademark". The trademark owner can exercise its 
exclusive right as against "all third parties not havi ng the owner's consent" (unauthorized third 
parties). Thus, the owner of a registered trademark can exercise its exclusive right under Article  16.1 
as against an unauthorized third party, but not against the WTO  Member in whose territory the 
trademark is p rotected. Rather, in accordance with Article  1.1, WTO  Members are required to "give 
effect" to Article  16.1 by ensuring that, in the Members' domestic legal regimes, the owner of a 
registered trademark can exercise its exclusive right as against unauthoriz ed third parties.1507 
6.582.   Pursuant to Article  16.1, the owner of a registered trademark has the exclusive right to 
"prevent" all unauthorized third parties from behaving in a certain manner in the course of trade. 
Hence, the exclusive right conferred under Articl e 16.1 is one that grants a trademark owner the 
authority to "prevent" certain behaviour, which may be understood as the authority to "preclude, 
 
1504 Panel  Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.600. Article  15.1 of 
the TRIPS  Agreement provides that:  
Any sign, or any combination of signs, capable of distinguishing the goods or services of one 
undertaking from those of other undertakings, shall be capable of constituting a trademark. Such 
signs, in particular words including personal names, letters, numerals, figurative elements and 
combinations of colours as well as any combination of such signs, shall be eligible for registration 
as trademarks. Where signs are not inherently capable of dis tinguishing the relevant goods or 
services, Members may make registrability depend on distinctiveness acquired through use. 
Members may require, as a condition of registration, that signs be visually perceptible.  
1505 Articles  16.2 and 16.3, which are not at issue in these appellate proceedings, concern the protection 
of well -known marks pursuant to Article  6bis of the Paris Convention (1967).  
1506 We note that the Paris Convention (1967) contains no analogous provision to Article  16.1 of the 
TRIPS  Agreement.  
1507 As the Appellate  Body stated in US – Section  211 Appropriations Act , "Article  16 confers on the 
owner  of a registered trademark an internationally agreed minimum level of 'exclusive rights' that all 
WTO Members must guarantee in their domestic legislation ." (Appellate  Body Report, US – Section 211 
Appropriations Act , para.  186) (emphasis original)  
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  stop, or hinder"1508 such behaviour. As the panel in EC – Trademarks and Geographical Indications 
(Australia)  said, the TRIPS  Agreement "does not generally provide for the grant of positive rights to 
exploit or use certain subject matter, but rather provides for the grant of negative rights to prevent 
certain acts" .1509 Specifically, Article  16.1 grants a trademark owner  the exclusive right to preclude 
unauthorized third parties from using, in the course of trade, identical or similar signs for goods or 
services that are identical or similar to those with respect to which the trademark is registered.1510 
6.583.   However, a trademark  owner may only exercise its exclusive right under Article  16.1 against 
an unauthorized third party once certain cumulative conditions are met: (i)  the unauthorized third 
party must be using the identical or similar signs for goods or services "in the cour se of trade"; 
(ii) the goods or services, with respect to which the unauthorized third party is using the identical 
or similar signs, must be identical or similar to the goods or services with respect to which the 
trademark is registered; and (iii)  the una uthorized third party's use of the identical or similar signs 
"would result in a likelihood of confusion".  
6.584.   With respect to this third condition, we recall that , pursuant to Article  15.1, for a sign to be 
"eligible for registration" as a trademark, it must be "capable of distinguishing the goods or services 
of one  undertaking from those of other undertakings". In our view, the likelihood of confusion, which 
may result from the conduct of unauthorized third parties identified in Article  16.1, relates to the 
distinguishing function of the trademark in question. This view is supported by the second sentence 
of Article  16.1, which clarifies that in the case of the use of an identical sign for identical goods or 
services, a likelihood of confusion shall be presume d. Indeed, the use of identical signs would 
effectively do away with the capability of a trademark to "distinguish[] the goods or services of 
one undertaking from those of other undertakings", as reflected in Article  15.1.  
6.585.   Nonetheless, while we agree with  Honduras that the risk of a "likelihood of confusion" in 
Article  16.1 relates to the distinguishing function of a trademark, we caution against extrapolating 
too broadly from this relationshi p. In this regard, we note Honduras' contention that the protect ion 
of the distinctiveness through the use of a trademark is implied from the purpose of Article  16.1. 
According to Honduras:  
Article  16.1 provides private parties with a means to an end: the "rights conferred" are 
to be guaranteed in order to allow the t rademark owner to protect the distinctiveness 
of the trademark by taking legal action against unauthorised use of similar signs. But 
the ability to take this legal action is not an end in itself; rather, it is ultimately only a 
means that serves a particul ar purpose. The owner can sue in order to protect his or 
her trademark, so that the trademark can be used to perform its important function in 
the course of trade. This, in turn, will allow the trademark owner to further develop 
goodwill based on that trad emark.  
The Panel's findings on Article  16.1 divorce the means of protection from the end that 
the means should serve (the ability to use the trademark and expand the trademark's 
distinctiveness, notoriety and goodwill). The result is a formalistic and exce edingly 
narrow view of these means, viewed in near -total isolation, leading to minimal 
protection that is devoid of meaning.1511 
6.586.   We note that, in putting forward this argument, Honduras makes no reference to the text of 
Article  16 or indeed any other provisio n of the TRIPS  Agreement. We too have not come across any 
 
1508 Oxford English Dictionary online, definition of "prevent", 
https://www.oed.com/view/Entry/151073?rskey=rO5lqh&result=2&isAdvanced=false#eid , accessed 
24 February 2020.  
1509 Panel  Report, EC – Trademarks and Geographical Indications (Australia) , para.  7.246; see also Panel 
Report, EC – Trademarks and Geographical Indi cations (US) , para.  7.210.  
1510 We observe that the third sentence of Article  16.1 qualifies the right conferred by the first sentence. 
(Panel  Reports, EC – Trademarks and Geographical Indications (Australia) , para.  7.602; EC – Trademarks and 
Geographical Ind ications (US) , para.  7.602) The third sentence notes that the exclusive rights described in the 
first sentence "shall not prejudice any existing prior rights, nor shall they affect the possibility of Members 
making rights available on the basis of use". Th is third sentence reflects the reality that, depending on a 
Member's domestic legal regime, ownership of a trademark may be acquired through registration, or through 
use. (Appellate  Body Report, US – Section  211 Appropriations Act , para.  199) 
1511 Honduras' a ppellant's submission, paras.  325-326. (emphasis omitted)  
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  language in the TRIPS  Agreement that endorses the position that the purpose  of the exclusive right 
articulated in Article  16.1 is to allow a trademark owner to protect the distinctiveness of the 
trademark through the trademark owner's continued use of that trademark. In this vein, we recall 
that Article  2.1 of the TRIPS  Agreement provides that, "[i]n respect of Parts  II, III and IV of this 
Agreement, Members shall comply with Articles  1 through 12, a nd Article  19, of the 
Paris Convention  (1967)." None of these referenced provisions of the Paris Convention (1967) grant 
a trademark owner a positive right to use its trademark, or a right to protect the distinctiveness of 
that trademark through use.1512 Hence, neither the TRIPS  Agreement nor the provisions of the Paris 
Convention (1967) that are incorporated by reference into the TRIPS  Agreement confer upon a 
trademark owner a positive right to use its trademark or a right to protect the distinctiveness of th at 
trademark through use. Accordingly, there is no corresponding obligation on Members to "give 
effect"1513 to such "rights". Rather, in accordance with Article  1.1 of the TRIPS  Agreement, Members 
are required to give effect to Article  16.1 by ensuring that, in the Members' domestic legal regimes, 
the owner of a registered trademark can exercise its "exclusive right to prevent" the infringement 
of its trademark by unauthorized third parties.  
6.587.   As the panel in EC – Trademarks and Geographical Indications (Austral ia) observed, the 
TRIPS  Agreement "does not generally provide for the grant of positive rights to exploit or use certain 
subject matter, but rather provides for the grant of negative rights to prevent certain acts" .1514 
Specifically, Article  16.1 grants a trademark owner the exclusive right to preclude unauthorized third 
parties from using, in the course of trade, identical or similar signs for goods or services that are 
identical or similar to those with respect to whic h the trademark is registered. The owner of a 
registered trademark can exercise its "exclusive right" as against an unauthorized third party but 
not against the WTO  Member in whose territory the trademark is protected. Instead, in accordance 
with Article  1.1, Members are required to give effect to Article  16.1 by ensuring that, in the Members' 
domestic legal regimes, the owner of a registered trademark can exercise its "exclusive right to 
prevent" the infringement of its trademark by unauthorized third part ies. Hence, for purposes of 
WTO dispute settlement, in order to establish that a WTO Member has acted inconsistently with 
Article  16.1, the complaining Member must demonstrate that, under the responding Member's 
domestic legal regime, the owner of a regist ered trademark cannot exercise its "exclusive right to 
prevent" the infringement of its trademark by unauthorized third parties.  
6.588.   For these reasons, we find that the Panel was correct in finding that:  
Article  16.1 does not establish a trademark owner's righ t to use its registered 
trademark. Rather, Article  16.1 only provides for a registered trademark owner's right 
to prevent certain activities by unauthorized third parties under the conditions set out 
in the first sentence of Article  16.1.1515 
6.589.   Honduras also ch allenges the Panel's finding that there is "no indication in the text of 
Article  16.1, first sentence, of an obligation on Members to maintain the distinctiveness of registered 
trademarks, or to refrain from regulatory conduct that might negatively affect the distinctiveness of 
such trademarks through use" .1516 Honduras submits that this dispute was never about whether 
there exists an undefined "positive right to use" a trademark, nor was the dispute about the 
"entitlement to maintain or extend the distinctive ness of an individual trademark" in light of market 
conditions.1517 According to Honduras, the question put before the Panel was whether measures that 
 
1512 In this respect, we note that Australia submitted to the Panel a response by WIPO in 1994 to 
enquiries from law firms as to whether the Paris Convention (1967) requires countries to permit the use  of 
trademarks. WIPO stated that the Paris Convention (1967) contains a number of provisions setting standards 
for the registration and protection of trademarks. However, WIPO indicated that "[t]he Paris Convention does 
not contain any obligation to the ef fect that the use of a registered trademark must be permitted." (Australia's 
first written submission to the Panel, para.  246 (quoting Letter dated 6 July 1994 from D. Latham of Lovell, 
White, Durrant to J. Smithson, Public Affairs Manager, Rothmans Intern ational Services Limited, attaching 
letter dated 5  July 1994 from L.  Baeumer, Director, Industrial Property Law Department, WIPO, to D.  Latham 
of Lovell, White, Durrant, Bates Nos. 502592535 -502592536  (Panel Exhibit AUS -234)))  
1513 Article  1.1 of the TRIPS  Agreement.  
1514 Panel  Report, EC – Trademarks and Geographical Indications (Australia) , para.  7.246; see also Panel 
Report, EC – Trademarks and Geographical Indications (US) , para.  7.210.  
1515 Panel  Report, para.  7.1978.  
1516 Honduras' appellant's submission, para.  342 (quoting Panel  Report, para.  7.2005).  
1517 Honduras' appellant's submission, paras.  348-349 (quoting Panel  Report, para.  7.2015).  
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  reduce the scope of the rights conferred by Article  16.1 in a direct and deliberate manner are 
consistent wi th the obligation under Article  16.1 of guaranteeing minimum protection. Honduras 
contends that the Panel "never addressed that question and made general findings that are 
inapposite to the case at hand".1518 In this regard, Honduras refers to the Appellate  Body's reasoning 
in US – Section  211 Appropriations Act  that "Article  16 confers on the owner of a registered 
trademark an internationally agreed minimum level of 'exclusive rights' that all WTO  Members must 
guarantee  in their domestic legislation" to asser t that Article  16 imposes an obligation on 
WTO Members to guarantee particular outcomes.1519 
6.590.   Australia responds by asserting that an interpretation based on an implied "right of use", 
"right of distinctiveness", or "right of confusion" has no foundation in th e text. According to Australia, 
a proper interpretative analysis under Article  31 of the Vienna  Convention1520 establishes that none 
of these "rights" is protected by Article  16.1, and Honduras' argument that the Panel erred by not 
reading any of these non -existent "rights" into the text of that provision is without merit.1521 
6.591.   We note Honduras' reference to the Appellate  Body's reasoning in US – Section  211 
Appropriations Act .1522 The Appellate  Body stated that:  
As we read it, Article  16 confers on the owner of a re gistered trademark an 
internationally agreed minimum level of "exclusive rights" that all WTO Members must 
guarantee in their domestic legislation. These exclusive rights protect the owner against 
infringement of the registered trademark by unauthorized th ird parties.1523 
6.592.   When referring to the "exclusive rights" that Members must guarantee in their domestic 
legislation, the Appellate  Body was careful to underline that these "exclusive rights" protect the 
owner against infringement of the registered trademark b y unauthorized third parties.1524 Indeed, 
with respect to Article  16.1, Members must guarantee that, in their domestic legislation, the owner 
of a registered trademark has the "exclusive right to prevent" unauthorized third parties from 
infringing its tradema rk. Contrary to what Honduras suggests, Article  16.1 does not require Members 
to "guarantee particular outcomes"1525, beyond what is expressly articulated in the provision. Thus, 
we consider that the Panel was correct in finding that:  
7.1980 . … The essence of  the Article  16.1 obligation is to ensure that rights are available 
to obtain relief against such infringing acts. It follows that, in order to show that the 
TPP measures violate Australia's obligation under Article  16.1, the complainants would 
have to dem onstrate that, under Australia's domestic law [*], the trademark owner does 
not have the right to prevent third -party activities that meet the conditions set out in 
that provision.  
… 
[*fn original]  4447 Under Article  1.1 of the TRIPS  Agreement, Members have the obligation to 
"give effect to the provisions of this Agreement".  
7.2005 . We recall our finding above that Article  16.1 does not contain a right to use a 
trademark, and that Members comply with th e obligation in Article  16.1, first sentence, 
 
1518 Honduras' appellant's submission, para.  349. 
1519 Honduras' appellant's submission, para.  375 (quoting Appellate  Body Report,  US – Section  211 
Appropriations Act , para.  186 (emphasis added by Honduras)).  
1520 Vienna  Convention on the Law of Treaties, done at Vienna, 23 May 1969, UN Treaty Series, 
Vol. 1155, p.  331 (Vienna Convention).  
1521 Australia's appellee's submission, para.  140. 
1522 Honduras' appellant's submission, para.  375 (quoting Appellate  Body Report,  US – Section  211 
Appropriations Act , para.  186 (emphasis added by Honduras)). We note that despite several exchanges at the 
first hearing in these appellate proceedings, Honduras provided no specific response to what it considered to be 
the "minimum rights that Members must protect under the TRIPS  Agreement". (Honduras' appellant's 
submission, para.  420) 
1523 Appellate  Body Report, US – Section  211 Appropriations Act , para.  186. (fn  omitted; emphasis 
omitted)  
1524 Appellate  Body Report, US – Section  211 Appropriations Act , para.  186. 
1525 Honduras' appellant's submission, para.  375. 
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  by providing to the owner of a registered trademark the exclusive right to prevent 
trademark infringements as described by the criteria set out therein. …  [C]ompliance 
with this obligation is independent of whe ther trademark infringements actually occur 
in the market, or whether the right owners actually choose to exercise the right to 
prevent available to them. Against this background, we find no indication in the text of 
Article  16.1, first sentence, of an obl igation on Members to maintain the distinctiveness 
of registered trademarks, or to refrain from regulatory conduct that might negatively 
affect the distinctiveness of such trademarks through use.1526 
6.593.   Still in connection with the text of Article  16.1, we take note of Honduras' argument 
concerning the words "exclusive right to prevent" in this provision. Honduras refers to the panel 
report in EC – Trademarks and Geographical Indications (Australia) . That panel noted that the 
"exclusive right" referred to in Arti cle 16.1 indicates that "this right belongs to the owner of the 
registered trademark alone, who may exercise it to prevent certain uses by 'all third parties' not 
having the owner's consent."1527 Honduras suggests that the panel report in EC – Trademarks and 
Geographical Indications (Australia) , along with Sections  20 and 26 of Australia's Trade Marks Act 
1995 (Cth) (TM  Act), illustrate s that "saying that the owner has the exclusive right to prevent use 
by others is in fact no different from saying that the ow ner is the only one who is able to use the 
mark."1528 
6.594.   Honduras' argument conflates the rights conferred to trademark owners in Australia under 
Articles  20 and 26 of Australia's TM  Act, with the rights conferred to trademark owners under 
Article  16.1 of the TR IPS Agreement. On the one hand, pursuant to Article  16.1, the owner of a 
registered trademark shall have the "exclusive right to prevent" all unauthorized third parties from 
using in the course of trade identical or similar signs for goods or services that  are identical or similar 
to those with respect to which the trademark is registered where such use would result in a likelihood 
of confusion. On the other hand, Section  20 of Australia's TM  Act – which is not challenged in th ese 
dispute s – provides that " [i]f a trade mark is registered, the registered owner of the trade  mark has, 
subject to this Part, the exclusive rights:  (a) to use the trade mark … in relation to the goods and/or 
services in respect of which the trade mark is registered."1529 Similarly, Sec tion 26 of the TM  Act 
states that:  
Subject to any agreement between the registered owner of a registered trade mark and 
an authorised user of the trade mark, the authorised user may do any of the following:  
(a) the authorised user may use the trade mark in relation to the goods and/or services 
in respect of which the trade mark is registered, subject to any condition or limitation 
subject to which the trade mark is registered [.]1530 
6.595.   The TM  Act expressly refers to the right of the trademark owner, or its  authorized user, to 
"use" the trademark. No such language exists in Article  16.1 of the TRIPS  Agreement . Moreover, 
any allegation concerning the infringement of Australia's domestic laws is subject to adjudication 
and enforcement under Australia's domesti c legal regime. As stated in paragraph  6.587.   above , in 
accordance with Article  1.1, Members are required to give effect to Article  16.1 by ensuring that, in 
the Members' domestic legal regimes, the owner of a registered trademark can exer cise its "exclusive 
right to prevent" the infringement of its trademark by unauthorized third parties. Hence, for purposes 
of WTO dispute settlement, in order to establish that a WTO Member has acted inconsistently with 
Article  16.1, the complaining Member  must demonstrate that under the responding Member's 
domestic legal regime, the owner of a registered trademark cannot  exercise its "exclusive right to 
prevent" the infringement of its trademark by unauthorized third parties. Thus, Honduras' reliance 
on Au stralia's TM  Act1531, which is not a measure at issue in th ese dispute s, has no bearing on the 
 
1526 Panel  Report, paras.  7.1980 and 7.2005.  
1527 Honduras' appellant's submission, para.  408 (quoting Panel  Report, EC – Trademarks and 
Geographical Indications (Australia) , para.  7.602). (emphasis added by Honduras omitted)  
1528 Honduras' appellant's submission, para.  411 and fns  190-191 thereto (referrin g to the TM  Act (Panel 
Exhibit JE -6), Sections 20 and 26).  
1529 TM Act (Panel Exhibit JE -6), Section  20(1).  
1530 TM Act (Panel Exhibit JE -6), Section 26(1)(a).  
1531 Honduras' appellant's submission, para.  411 and fns  190-191 thereto (referring to the TM  Act (Panel 
Exhibit JE -6), Sections 20 and 26).  
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  right conferred under Article  16.1. Nor does Australia's TM  Act introduce a general obligation under 
Article  16.1 for Members to protect a trademark owner's right t o use its trademark.  
6.596.   Rather, we understand Australia, through its TM  Act, to have provided for the "more 
extensive protection" contemplated in the second sentence of Article  1.1 of the TRIPS  Agreement. 
The second sentence states that "Members may, but shal l not be obliged to, implement in their law 
more extensive protection than is required by this Agreement, provided that such protection does 
not contravene the provisions of this Agreement."1532 Thus, when a Member individually provides for 
"more extensive pr otection", this does not imply additional obligations under the TRIPS  Agreement. 
Rather, the "more extensive protection" becomes a matter for domestic adjudication and 
enforcement. For these reasons, we reject Honduras' assertion that "saying that the owne r has the 
exclusive right to prevent use by others is in fact no different from saying that the owner is the only 
one who is able to use the mark."1533 
6.597.   Honduras also refers to the phrase "likelihood of confusion" in Article  16.1 to argue that the 
use of the t rademark determines the trademark's strength and thus directly affects the scope of 
protection conferred by Article  16.1. Honduras maintains that an action against the infringement of 
even an inherently distinctive mark is likely to fail because of an abse nce of a likelihood of confusion 
as a result of the weak marketplace strength of the trademark. Rather, Honduras considers that 
distinctiveness of a trademark, its use, and likelihood of confusion "are closely related concepts".1534 
Thus, Honduras contends th at "[t]reating 'likelihood of confusion' as a separate triggering condition 
ignores this feature of trademark law."1535 In Honduras' view, a Member that directly and deliberately 
seeks to reduce the strength of the mark, thereby making it impossible, over tim e, to demonstrate 
a likelihood of confusion other than in the context of the use of identical signs on identical products 
(when such a likelihood is presumed), acts inconsistently with Article  16.1.1536 
6.598.   In its appellant's submission, Honduras did not identify  the aspects of the Panel's 
interpretation that it was challenging under this rubric of "likelihood of confusion". In response to 
questioning at the first hearing, Honduras indicated that the Panel conflated the notion of "likelihood 
of confusion" in Artic le 16.1 of the TRIPS  Agreement with the actual confusion that is prohibited 
under Article  10bis of the Paris  Convention  (1967)1537, which is incorporated into the 
TRIPS  Agreement through Article  2.1. Specifically, Honduras pointed to the following statements by 
the Panel:  
There is nothing in the text of the first sentence of Article  16.1 to suggest – as the 
complainants imply – an obligation by Members not only to provide protection where 
likelihood of confusion does arise but also to maintain market condition s that would 
enable the circumstances set out in this provision, including a likelihood of confusion, 
to actually occur in any particular situation. Rather, Members must ensure that in the 
event that these circumstances do arise, a right to prevent such us e is provided.1538 
6.599.   First, contrary to Honduras' assertion , it is apparent from the quote above that the Panel did 
not conflate the notions of "actual confusion" and "likelihood of confusion". Rather, in its own words, 
the Panel was referring to the "market co nditions that would enable the circumstances set out in 
this provision, including a likelihood of confusion, to actually  occur".1539 Second, as discussed above, 
a trademark owner may exercise its exclusive right under Article  16.1 only once certain cumulative  
conditions are met.1540 In accordance with Article  1.1, Members are required to give effect to 
 
1532 See also Panel  Report, China – Intellectual Property Rights , para.  7.513.  
1533 Honduras' appellant's submission, para.  411 and fns  190-191 thereto (referring to the TM  Act (Panel 
Exhibit JE -6), Sections 20 and 26).  
1534 Honduras' appellant's submission, para.  428. 
1535 Honduras' appellant's submission, para.  429. 
1536 Honduras' appellant's submission, paras.  429-435. 
1537 Article  10bis (3)1 of the Paris  Convention  (1967) provides that "all acts of such a nature as to create 
confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, 
of a competitor" shall be prohibited.  
1538 Panel  Report, para. 7.2000. (emphasis original)  
1539 Panel  Report, para.  7.2000. (emphasis added)  
1540 As noted in paragraph  6.583.   , these cumulative conditions are  that: (i)  the unauthorized third 
party must be using the identical or similar signs for goods or services "in the course of trade"; (ii)  the goods 
or services, with respect to which the unauthorized third party is using the identical or similar signs must  be 
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  Article  16.1 by ensuring that, in the Members' domestic legal regimes, the owner of a registered 
trademark can exercise its "exclusive right to prevent" the infrin gement of its trademark by 
unauthorized third parties in the event of the occurrence of these three  cumulative conditions. For 
this reason, we agree with the Panel's statement that "Members must ensure that in the event that 
these circumstances do arise, a right to prevent such use is provided."1541 
6.600.   More substantively, based on our understanding of Honduras' appellant's submission and 
responses to questioning at the first hearing, Honduras' position is that, if the owner of a registered 
trademark is n ot permitted to use its trademark, then the factual situation leading to a "likelihood 
of confusion" would be less likely to occur. Thus, Honduras posits that the reduction in the occurrence 
of the factual scenario contemplated in Article  16.1 undermines t he right conferred on the owner of 
a registered trademark under Article  16.1. This understanding of Honduras' argument comports with 
the Panel's explanation that "the complainants contend[ed] that under the TPP  measures, the factual 
situation of trademark infringement set forth in the first  sentence of Article  16.1, will occur less 
frequently and with respect to fewer signs than before, and that this constitutes a reduction of the 
trademark owner's right in violation of Article  16.1."1542 
6.601.   We recall that the "l ikelihood of confusion", which may result from the conduct of 
unauthorized third parties identified in Article  16.1, relates to the distinguishing function of the 
trademark in question, described in Article  15.1. However, as the Panel observed, "Members ha ve 
not taken on a general responsibility for safeguarding the distinctiveness of signs, either before or 
after such signs have been registered as trademarks."1543 Moreover, except for the situation 
described in its second sentence, Article  16.1 does not delin eate the criteria for the examination of 
whether an unauthorized third party's use of similar signs "would result in a likelihood of confusion". 
Thus, contrary to what Honduras suggests, Article  16.1 does not: (i)  require Members to provide a 
"minimum oppo rtunity" for a trademark owner to use its trademark in order to preserve or 
strengthen the distinctiveness of the trademark; (ii)  provide the criteria for assessing whether the 
unauthorized use by third parties of similar signs has "result[ed] in a likelih ood of confusion" with 
the registered trademark; or (iii)  require Members to ensure that the factual scenario contemplated 
by the cumulative conditions in Article  16.1 occurs.  
6.602.   For these reasons, we consider that the Panel did not err in finding that:  
[T]he possibility of a reduced occurrence of a "likelihood of confusion" in the market 
does not, in and of itself, constitute a violation of Article  16.1, because Members' 
compliance with the obligation to provide the right to prevent trademark infringements 
under Article  16.1 is independent of whether such infringements actually occur in the 
market. Article  16.1 does not require Members to refrain from regulatory measures that 
may affect the ability to maintain distinctiveness of individual trademarks or to pr ovide 
a "minimum opportunity" to use a trademark to protect such distinctiveness.1544 
6.603.   As regards the relevant context of Article  16.1, Honduras refers to Article  20 of the 
TRIPS  Agreement to assert that, when interpreting this provision, the Panel confirmed t hat "use is 
protected by the TRIPS  Agreement."1545 For Honduras, the "exclusive rights" under Article  16.1 are 
conferred against the background of a presumption of unencumbered use, which finds reflection in 
Article  20.1546 Thus, according to Honduras, the Panel  found that any requirements that directly 
affect the use and distinctiveness of trademarks are subject to a demonstration of "good reasons 
sufficient to justify" the encumbrance. In Honduras' view, this "confirms that the object and purpose 
of the TRIPS  Agreement is the protection of intellectual property rights in general and the orderly 
use of trademarks in commerce in particular".1547 Honduras posits that "Article  20 is important 
context for Article  16.1 and imposes the exact obligation on Members that the  Panel refuses to read 
 
identical or similar to the goods or services with respect to which the trademark is registered; and (iii)  the 
unauthorized third party's use of the identical or similar signs "would result in a likelihood of confusion".  
1541 Panel  Report, para.  7.2000. ( emphasis original)  
1542 Panel  Report, para.  7.1986. (fn  omitted)  
1543 Panel  Report, para.  7.2028.  
1544 Panel  Report, para.  7.2031.  
1545 Honduras' appellant's submission, para.  415. 
1546 Honduras' appellant's submission, para.  415. 
1547 Honduras' appellant's submission, para . 415. 
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  into Article  16.1 or to incorporate as part of the context of this provision."1548 Honduras considers 
that the Panel's interpretation of Article  16.1 denied this important context "which confirms the 
importance of use for purposes of un derstanding the nature and scope of the rights conferred by 
Article  16.1".1549 Honduras emphasizes that a Member's encumbrances on the use of a trademark 
"may affect also the private rights conferred to trademark owners per Article  16.1".1550 Honduras 
contends t hat the relevant questions that the Panel should have asked were whether the 
encumbrance is such as to reduce the level of protection below the minimum guarantee of 
Article  16.1 and, if so, whether it could be justified as a limited exception under Article  17 of the 
TRIPS  Agreement. However, Honduras argues that the Panel did not even consider this possibility 
based on its isolated reading of Article  16.1.1551 
6.604.   Australia disagrees with Honduras' argument that the Panel "ignores the importance of 'use' 
to the en forcement of trademarks and reads Article  16 without considering the context of, in 
particular, Articles  15, 19, and 20 which put the functional use of trademarks at the heart of the 
trademark rights protected by the TRIPS  Agreement ".1552 Australia highlights  that the Panel 
"carefully considered" the context of the other relevant provisions in Part  II, Section 2, of the 
TRIPS  Agreement  and determined that each of those provisions supported its conclusion that 
"regulatory measures that do not affect the negativ e right to prevent infringing uses are not 
prohibited by Article  16."1553 Australia also agrees with the Panel finding that adopting an 
interpretation of Article  16 that would require Members to " 'safeguard a minimum opportunity to 
use the registered trademar k' would be inconsistent with [Articles  19 and 20 ] that 'clearly foresee 
potential regulatory prevention of use '".1554 
6.605.   Contrary to Honduras' contention, we do not read the Panel's interpretation as being "based 
on its isolated reading of Article  16.1".1555 Nor d oes the Panel's interpretation "den[y]  this important 
context"1556 provided by the other provisions of Section  2 of Part  II of the TRIPS  Agreement . Instead, 
in arriving at its interpretation of Article  16.1, the Panel provided the following explanation:  
7.2027. Other provisions in Section  2 of Part  II address the use of registered 
trademarks. Among those is Article  19, which expressly contemplates that obstacles to 
the use of trademarks may arise independently of the will of the trademark owner, 
including on t he basis of government requirements. Article  20 prohibits special 
requirements that unjustifiably encumber use of a trademark in the course of trade, 
which – inversely  – permits the encumbrance of use of a trademark in certain 
circumstances. We further note that the trademark owners' interest in using its 
trademark in relation to the relevant goods or services has been recognised as part of 
its legitimate interest in preserving the distinctiveness of its trademark in the context 
of Article  17, an d which thus needs to be taken into account when assessing the 
legitimacy of exceptions to the exclusive rights provided by Article  16.1. 
7.2028. … The importance of use of a trademark is recognized in the TRIPS  Agreement  
by conditioning measures that encu mber such use in the context of Article  20, and by 
recognizing the right owner's interest in using the trademark to maintain distinctiveness 
as a factor in determining permissible exceptions in the context of Article  17. At the 
same time, it is clear that obstacles to trademark use can and do legitimately exist, and 
that Members retain the authority to encumber the use of trademarks under certain 
conditions.  
7.2029. Adopting an interpretation of Article  16 that would require Members to 
safeguard a minimum o pportunity to use the registered trademark is therefore not only 
without basis in the text of the provision itself, but would also create disharmony with 
those provisions of the trademark section that (a)  expressly provide for conditions under 
 
1548 Honduras' appellant's submission, para.  347. 
1549 Honduras' appellant's submission, para.  416. 
1550 Honduras' appellant's submission, para.  416. 
1551 Honduras' appellant's submission, para.  416. 
1552 Australia's appellee's submission, para.  127 (quoting Hondu ras' appellant's submission, para.  366).  
1553 Australia's appellee's submission, para.  129 (quoting Panel  Report, para.  7.2015).  
1554 Australia's appellee's submission, para.  129 (quoting Panel  Report, para.  7.2029).  
1555 Honduras' appellant's submission, para.  416. 
1556 Honduras' appellant's submission, para.  416. 
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  which use ca n be encumbered (Article  20); and (b)  address the consequences of 
obstacles to use (Article  19). These provisions clearly foresee potential regulatory 
prevention of use. Further, to read Article  16 as imposing upon Members limitations on 
regulations regard ing trademark use could potentially render Article  20 itself, which 
addresses this point directly, inutile .1557 
6.606.   Article  19 of the TRIPS Agreement , titled "Requirement of Use", provides , in relevant part : 
1. If use is required to maintain a registration, the r egistration may be cancelled only 
after an uninterrupted period of at least three  years of non -use, unless valid reasons 
based on the existence of obstacles to such use are shown by the trademark owner. 
Circumstances arising independently of the will of th e owner of the trademark which 
constitute an obstacle to the use of the trademark, such as import restrictions on or 
other government requirements for goods or services protected by the trademark, shall 
be recognized as valid reasons for non -use.1558 
6.607.   The firs t sentence of Article  19.1 begins with the word "if" when identifying a particular 
requirement in domestic legal regimes. This provision recognizes that, while some domestic legal 
regimes may require "use" of a trademark to maintain its registration, not a ll do. Thus, the 
conditional "if" confirms that the use of a registered trademark by its owner is not a requirement 
imposed by the TRIPS  Agreement . Importantly, even in domestic legal regimes where Article  19.1 
applies, this provision notes that there may be obstacles to the use of a trademark that may provide 
its owner with justification against cancellation of the registration of its trademark. The 
second  sentence of Article  19.1 provides examples of such obstacles, stating that "[c]ircumstances 
arising i ndependently of the will of the owner of the trademark which constitute an obstacle to the 
use of the trademark, such as import restrictions on or other government requirements for goods or 
services protected by the trademark, shall be recognized as valid reasons for non -use." Hence, far 
from providing for the right of a trademark owner to use its trademark, as the Panel observed, 
"Article  19 expressly contemplates government measures that can constitute an obstacle to 
trademark use."1559 
6.608.   Article  20, titled "O ther Requirements", provides that:  
The use of a trademark in the course of trade shall not be unjustifiably encumbered by 
special requirements, such as use with another trademark, use in a special form or use 
in a manner detrimental to its capability to di stinguish the goods or services of one 
undertaking from those of other undertakings. This will not preclude a requirement 
prescribing the use of the trademark identifying the undertaking producing the goods 
or services along with, but without linking it to , the trademark distinguishing the specific 
goods or services in question of that undertaking.1560 
6.609.   We begin by addressing Honduras' assertion that "Article  20 is important context for 
Article  16.1 and imposes the exact obligation on Members that the Panel ref uses to read into 
Article  16.1 or to incorporate as part of the context of this provision."1561 Article  20, like Article  16.1, 
concerns trademarks and forms part of Section  2 of Part  II of the TRIPS  Agreement . Hence, we 
agree with Honduras that Article  20 ser ves as relevant context for the purpose of understanding the 
right conferred under Article  16.1. Having said that, we disagree with Honduras' assertion that 
Article  20 "imposes the exact obligation on Members  that the Panel refuses to read into 
Article  16.1".1562 As highlighted above, in accordance with Article  1.1, Members are required to give 
 
1557 Panel  Report, paras.  7.2027 -7.2029. (fns  omitted)  
1558 Article  19 of the TRIPS  Agreement is similar in content to Article  5(C)(1) of the Paris Convention 
(1967), which states that, "[i]f, in any country, use of the registered mark is compulsory, the registration may 
be cancelled only after a reasonable period, and then only if the person concerned does not justify his 
inaction."  
1559 Panel  Report, para.  7.2016.  
1560 We observe that the remaining sections of Part  II of the TRIPS  Agreement, which address the other 
categories of intellectual property, do not include a provision that is equivalent to Article  20. This may be due 
to the fact that only trademarks can be the subject of "special requirements" like "use with a nother trademark" 
or "use in a special form".  
1561 Honduras' appellant's submission, para.  347. 
1562 Honduras' appellant's submission, para.  347. 
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  effect to Article  16.1 by ensuring that, in the Members' domestic legal regimes, the owner of a 
registered trademark can exercise its "exclusive right to prevent" the infri ngement of its trademark 
by unauthorized third parties.  Article  20, for its part, imposes a positive obligation on Members to 
refrain from unjustifiably encumbering, by special requirements, "the use of a trademark in the 
course of trade".  
6.610.   Furthermore, it is significant that unlike Article  171563, Article  20 is not identified as an 
"exception" to the "rights conferred" on a trademark owner. Rather, Article  20 imposes a positive 
obligation limiting the regulatory autonomy that Members otherwise enjoy. As noted above, 
Article  20 imposes an obligation on Members to refrain from unjustifiably encumbering, by special 
requirements, "the use of a trademark in the course of trade". Significantly, Article  20 does not state 
that "the use of a trademark in the course of t rade" is a  right conferred on a trademark owner. 
Instead, this provision regulates the imposition of special requirements when a trademark owner is 
using its trademark in the course of trade. In the factual scenario where a trademark is being used 
in the c ourse of trade, Article  20 protects such use from being unjustifiably encumbered by special 
requirements. Moreover, the words "unjustifiably encumbered" in Article  20 suggest that justifiable 
encumbrance by special requirements is compatible with that prov ision. Leaving aside the question 
of the standard against which an adjudicator should test whether an encumbrance is 
justifiable  – which is at issue in these appellate proceedings1564 – the fact that Members should 
refrain from unjustifiable encumbrances does  not suggest that Article  20 confers a right to use a 
trademark when special requirements are not involved. On the contrary, the provision allows, 
inversely, Members to justifiably encumber, by special requirements, the use of a trademark in the 
course of trade. Moreover, the second sentence of Article  20 "expressly provide[s] for conditions 
under which use can be encumbered"1565 by indicating that the obligation outlined in the 
first sentence of Article  20 does "not preclude a requirement prescribing the use of the trademark" 
alongside another trademark. These reasons undermine Honduras' argument that "the 'exclusive 
rights' conferred by Article  16.1 are conferred against the background of a presumption of 
unencumbered use."1566 
6.611.   With respect to Article  17, we take note of Honduras' assertion that the Panel arrived at its 
conclusion that "a Member may deny the 'rights conferred' on trademark owners by Article  16 … 
without even examining whether such a derogation from the minimum ri ghts of the mark owner can 
be justified under Article  17 of the TRIPS  Agreement ."1567 Honduras argues that whether the 
"deliberate weakening of the 'rights conferred' reduces the level of protection below the minimum 
guaranteed by Article  16"1568 could be justif ied as a limited exception under Article  17 was a relevant 
question that the Panel failed to engage with owing to "its isolated reading of Article  16.1".1569 
6.612.   Article  17 of the TRIPS  Agreement  identifies limited exceptions to the "rights conferred".1570 
Given the  situation of Article  17 in Section  2 of Part  II of the TRIPS  Agreement , which addresses 
trademarks, these "rights conferred" may be understood as being a reference to the rights 
articulated in Article  16, as this provision bears the heading "Rights Confer red". The "exclusive right 
to prevent" infringement of a trademark by unauthorized third parties in Article  16.1 is the only 
"right conferred" on trademark owners that is at issue in these appellate proceedings.  Furthermore, 
the status of Article  17 as a l imited exception to the right conferred under Article  16.1 implies that 
the need for a WTO  Member to rely on Article  17 to defend its measure would be triggered only if 
the Member failed to meet its obligation to give effect to Article  16.1 – by failing to  ensure that, in 
its domestic legal regime, the owner of a registered trademark can exercise its exclusive right to 
prevent the infringement of its trademark by unauthorized third parties.  
 
1563 Article  17 provides that "Members may provide limited exceptions to the rights conferred by a 
trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate 
interests of the owner of the trademark and of thi rd parties."  
1564 See section  6.3.2    below.  
1565 Panel  Report, para.  7.2029.  
1566 Honduras' appellant's submission, para.  415. 
1567 Honduras' appellant's submiss ion, para.  5.  
1568 Honduras' appellant's submission, para.  331. 
1569 Honduras' appellant's submission, para.  416. 
1570 Article  17 provides that "Members may provide limited exceptions to the rights conferred by a 
trademark, such as fair use of descriptive terms, p rovided that such exceptions take account of the legitimate 
interests of the owner of the trademark and of third parties."  
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  6.613.   As Honduras did not succeed in its claim before the Panel that Aust ralia had breached its 
obligation under Article  16.1, we agree with the Panel that "the question … of whether the[] 
[TPP measures] are permissible as 'limited exceptions' under Article  17 d[id] not arise."1571 
Accordingly, we see no merit in Honduras' asserti on that the Panel erred by arriving at its conclusion 
that "a Member may deny the 'rights conferred' on trademark owners by Article  16 … without even 
examining whether such a derogation from the minimum rights of the mark owner can be justified 
under Artic le 17 of the TRIPS  Agreement ."1572 Honduras' assertion warrants no further scrutiny.  
6.614.   For all of these reasons, we conclude that the Panel did not err in making the following 
findings:  
7.1978. In light of the ordinary meaning of the text and consistently with prior rulings, 
we agree with the parties that Article  16.1 does not establish a trademark owner's right 
to use its registered trademark. Rather, Article  16.1 only provides for a registered 
trademark owner's right to prevent certain activities by unauthoriz ed third parties under 
the conditions set out in the first sentence of Article  16.1. 
7.1980. … [I]n order to show that the TPP  measures violate Australia's obligation under 
Article  16.1, the complainants would have to demonstrate that, under Australia's 
domestic law, the trademark owner does not have the right to prevent third -party 
activities that meet the conditions set out in that provision.1573 
6.615.   We recall that the Panel considered that an assessment of the "likelihood of confusion" with 
respect to a given trademark in a given situation was a factual assessment that would involve a 
consideration of the specific circumstances at issue, including the manner in which the potential for 
confusion arises in the specific market at issue.1574 The Panel considered  that it would need to make 
a determination with respect to this factual allegation only if it found that, from an interpretative 
standpoint, reducing the instances in which a trademark owner would be able to prevent the 
unauthorized use of similar or iden tical trademarks in the market, because such use is no longer 
likely to cause a likelihood of confusion, "leads to a violation of Article  16.1" .1575 
6.616.   We recall our conclusion, in paragraph  6.602.   above, that the Panel did not err in finding 
that "the possibility of a reduced occurrence of a 'likelihood of confusion' in the market does not, in 
itself, constitute a violation of Article  16.1, because Members'  compliance with the obligation to 
provide the right to prevent trademark infringements under Article  16.1 is independent of whether 
such infringements actually occur in the market."1576 Consequently, we agree with the Panel that 
there was "no need to examine  further the complainants' factual allegation that the TPP  measures' 
prohibition on the use of certain tobacco -related trademarks will in fact reduce the distinctiveness 
of such trademarks, and lead to a situation where a 'likelihood of confusion' with res pect to these 
trademarks is less likely to arise in the market" .1577 
6.617.   In this regard, we take note of Honduras' claim that the Panel erred in its application of the 
law to the facts by allegedly failing to examine whether the TPP  measures reduce the distinctiv eness 
of trademarks and thus reduce the scope of protection of the trademarks, such that the level of 
protection falls below the minimum level guaranteed under Article  16.1578 Honduras adds that "[b]y 
failing to apply the law to the facts, the Panel errs in l aw and, as a result of this false exercise of 
judicial economy, it also fails to comply with its obligation under Article  11 of the DSU."1579 
6.618.   Having found no error in the Panel's interpretation, we agree with the Panel that there was 
"no need to examine furth er the complainants' factual allegation that the TPP  measures' prohibition 
on the use of certain tobacco -related trademarks will in fact reduce the distinctiveness of such 
 
1571 Panel  Report, para.  7.2018. (fn  omitted)  
1572 Honduras' appellant's submission, para.  5.  
1573 Panel  Report, paras.  7.1978 and 7.1980. (f ns omitted)  
1574 Panel  Report, para.  7.1992.  
1575 Panel  Report, para.  7.1993.  
1576 Panel  Report, para.  7.2031.  
1577 Panel  Report, para.  7.2032.  
1578 Honduras' appellant's submission, paras.  443-444 (referring to Panel  Report, para.  7.2032).  
1579 Honduras' appellant's submis sion, para.  333. 
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  trademarks, and lead to a situation where a 'likelihood of confusion' with respect t o these trademarks 
is less likely to arise in the market" .1580 Honduras' claims that the Panel erred in its application of 
Article  16.1 and failed to make an objective assessment of the matter as required by Article  11 of 
the DSU are conditioned on our revers al of the Panel's interpretation. The condition on which 
Honduras' appeal is predicated, i.e.  the reversal of the Panel's interpretation, has not been satisfied. 
Consequently, we need not address Honduras' remaining claims of error.  
6.619.   In light of the foregoi ng, we uphold  the Panel's conclusion that "the complainants have not 
demonstrated that the TPP  measures are inconsistent with Australia's obligations under Article  16.1 
of the TRIPS  Agreement ."1581 
6.3.2   Article  20 of the TRIPS  Agreement  
6.3.2.1   Introduction  
6.620.   Honduras chall enges the Panel's analysis under Article  20 of the TRIPS  Agreement  on 
two grounds. First, Honduras claims that the Panel erred in its interpretation of the term 
"unjustifiably" in Article  20.1582 Second, assuming that the Panel's interpretation of Article  20 was 
correct, Honduras submits an alternative claim that the Panel erred in applying the legal standard 
that it had developed to the facts of the present dispute.1583 In this respect, Honduras argues that 
the Panel erred by: (i)  focusing on the economic value of trademarks and in its assessment of the 
allegedly mitigating factors1584; (ii) finding that the TPP  measures contribute to the reduction in the 
use of tobacco1585; (iii) rejecting the alternative less trademark -encumbering measures proposed by 
the complainants1586; and (iv)  attributing undue legal weight to the FCTC  guidelines.1587 
6.621.   The Dominican  Republic argues that, by failing to address the Dominican  Republic's claim 
regarding individual cigarette sticks, the Panel acted inconsistently with Articles 7.1  and 11 of 
the DSU.1588 Moreover, the Dominican  Republic submits that, to the extent that we reverse the 
Panel's findings under Article  2.2 of the TBT  Agreement, upon which the Panel relied in its analysis 
under Article  20, we should also reverse the Panel's findings under Article  20 of the 
TRIPS  Agreement .1589  
6.622.   Australia responds that the Panel properly rejected Honduras' interpretation of the term 
"unjustifiably" because such interpretation "finds no support in the ordinary meaning of this term, 
properly interp reted in its context and in light of the object and purpose of the TRIPS  Agreement ".1590 
Australia further observes that Honduras' interpretation of the term "unjustifiably" "is based on an 
unfounded attempt to read a 'right of use'" into Part  II, Section  2, of the TRIPS  Agreement  and to 
 
1580 Panel  Report, para.  7.2032.  
1581 Panel  Report (DS435), paras.  7.2051 and 8.1.d; Panel  Report (DS441), paras.  7.2051 and 8.1.b.iii.  
1582 Honduras' appellant's submission, paras.  102-259. Honduras does not challenge other elements of 
the Panel's  interpretation of Article  20 of the TRIPS  Agreement.  
1583 Honduras' appellant's submission, para.  260. 
1584 Honduras' appellant's submission, paras.  264-276. 
1585 Honduras' appellant's submission, paras.  280-284. 
1586 Honduras' appellant's submission, paras.  285-298. 
1587 Honduras' appellant's submission, paras.  299-312. 
1588 Dominican  Republic's appellant's submission, paras.  1543-1545. We recall that, in its Notice of 
Appeal, the Dominican  Republic stated that it "incorporate[d] by reference into this appeal the claims on  appeal 
made by Honduras". (Dominican  Republic's Notice of Appeal, para.  16) In addition, in the "Introduction" 
section of its appellant's submission, in the context of summarizing its claim of error under Article  20 of the 
TRIPS  Agreement, the Dominican  Republic stated that "it incorporate[d] by reference into this appeal the 
claims on appeal, and arguments, made by Honduras." (Dominican  Republic's appellant submission, para.  30) 
In response to questioning at the first hearing, the Dominican  Republic confi rmed that it incorporated all of 
Honduras' claims and arguments on appeal. Accordingly, we understand that any reference to Honduras' claims 
and arguments under Article  20 of the TRIPS  Agreement also includes a reference to the claims and arguments 
of the Dominican  Republic.  
1589 Dominican  Republic's appellant's submission, paras.  1546-1548. Specifically, the 
Dominican  Republic refers to the Panel's findings that: (i)  the TPP  measures made a contribution to Australia's 
objective and (ii)  none of the Dominican  Republic's proposed alternatives would be apt to make an equivalent 
contribution to Australia's objective. (Ibid., para.  1547)  
1590 Australia's appellee's submission, para.  232. 
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  interpret Article  20 "as a 'limited' exception" to that right.1591 Australia further disagrees with 
Honduras' claim that the Panel erred in applying the legal standard to the facts.1592 With respect to 
the Dominican  Republic's claim  under Articles 7.1 and 11 of the DSU, Australia submits that it is 
clear from the Panel  Report that the Panel examined the Dominican  Republic's claim under Article  20 
of the TRIPS  Agreement  concerning cigarette sticks.1593 
6.3.2.2   Summary of the Panel's findings  
6.623.   In addressing the complainants' claims under Article  20 of the TRIPS  Agreement , the Panel 
examined whether: (i)  the TPP  measures involve "special requirements"; (ii)  the special 
requirements imposed by the TPP  measures "encumber" "[t]he use of a trademark in the course of 
trade"; and (iii)  the TPP  measures encumber the use of trademarks in the course of trade 
"unjustifiably".1594 In findings that are not appealed, the Panel concluded that "the trademark 
requirements of the TPP  measures amount to special requireme nts that encumber 'the use of a 
trademark in the course of trade' ."1595  
6.624.   The Panel started its analysis of whether the special requirements at issue "unjustifiably" 
encumber the use of a trademark in the course of trade by elucidating the ordinary meaning of the 
term "unjustifiably".1596 Having reviewed a number of definitions, the Panel concluded that the term 
"unjustifiably" "connotes a situation where the use of a trademark is encumbered by special 
requirements in a manner that lacks a justification or reason that is sufficient to support the resulting 
encumbrance".1597 To the Panel, this indicated that "there may be circumstances in which good 
reasons exist that sufficiently support the application of encumbrances on the use of a trademark in 
a reasonable manner. "1598 To determine what reasons may form the basis for "justifiability" of an 
encumbrance, the Panel turned to the context provided by other provisions of the TRIPS  Agreement . 
6.625.   The Panel examined, in particular, the contextual significance of the first recital  of the 
preamble to the TRIPS  Agreement1599, as well as Articles 7  ("Objectives")1600 and 8 ("Principles") of 
the TRIPS  Agreement . In particular, the Panel considered that Article  8 offers "useful contextual 
guidance for the interpretation of the term 'unjustifi ably' in Article  20".1601 The Panel noted that "the 
principles reflected in Article  8.1 express the intention of the drafters of the TRIPS  Agreement  to 
preserve the ability for WTO Members to pursue certain legitimate societal interests, at the same 
time as i t confirms their recognition that certain measures adopted by WTO  Members for such 
purposes may have an impact on IP  rights, and requires that such measures be 'consistent with the 
provisions of the [TRIPS]  Agreement'."1602 The Panel was of the view that, whi le the objectives 
expressly identified in Article  8.11603 do not necessarily exhaust the scope of what may constitute a 
 
1591 Australia's appellee's submission, para.  232. 
1592 Australia's appellee's submission, paras.  244-254. 
1593 Australia's appellee's submission, para.  256. 
1594 Panel  Report, para.  7.2156.  
1595 Panel  Report, para.  7.2292.  
1596 Panel  Report, para.  7.2392.  
1597 Panel  Report, pa ra. 7.2395.  
1598 Panel  Report, para.  7.2396.  
1599 As the Panel noted, the first recital of the preamble to the TRIPS  Agreement "expresses a key 
objective of the TRIPS  Agreement, namely to 'reduce distortions and impediments to international trade' and 
takes into  account the need, on the one hand, 'to promote effective and adequate protection of intellectual 
property rights' and, on the other, 'to ensure that measures and procedures to enforce intellectual property 
rights do not themselves become barriers to legit imate trade'". (Panel  Report, para.  7.2398)  
1600 Article  7 of the TRIPS  Agreement provides: "The protection and enforcement of intellectual property 
rights should contribute to the promotion of technological innovation and to the transfer and dissemination of  
technology, to the mutual advantage of producers and users of technological knowledge and in a manner 
conducive to social and economic welfare, and to a balance of rights and obligations."  
1601 Panel  Report, para.  7.2404.  
1602 Panel  Report, para.  7.2404.  
1603 Article  8.1 of the TRIPS  Agreement provides: "Members may, in formulating or amending their laws 
and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public 
interest in sectors of vital importance to their s ocio-economic and technological development, provided that 
such measures are consistent with the provisions of this Agreement."  
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  basis for "justifiability" of encumbrances under Article  20, public health is "unquestionably" among 
such interests.1604 
6.626.   The Panel then observed that paragraph  5(a) of the Declaration  on the TRIPS Agreement 
and Public Health (Doha Declaration)  "is formulated in general terms, inviting the interpreter of the 
TRIPS  Agreement  to read 'each provision of the TRIPS  Agreement ' in light of the obj ect and purpose 
of the Agreement, as expressed in particular in its objectives and principles" .1605 In the Panel's view, 
this provision "may … be considered to constitute a 'subsequent agreement' of WTO Members within 
the meaning of Article  31(3)(a) of the Vi enna Convention".1606 According to the Panel, "[t]his 
agreement, rather than reflecting a particular interpretation of a specific provision of the 
TRIPS  Agreement , confirms the manner in which 'each provision' of the Agreement must be 
interpreted, and thus 'b ears specifically' on the interpretation of each provision of the 
TRIPS  Agreement ."1607 According to the Panel, the fact that paragraph  5(a) of the Doha Declaration 
is consistent "with the applicable rules of interpretation, which require a treaty interpreter  to take 
account of the context and object and purpose of the treaty being interpreted" confirmed the Panel's 
view that Articles 7 and 8 of the TRIPS  Agreement  provide important context for the interpretation 
of Article  20.1608 
6.627.   The Panel noted that, while the  term "necessary" is used in a number of other provisions of 
the TRIPS  Agreement1609, the degree of connection between the societal interest and the measure 
under appraisal under Article  20 is expressed through the term "unjustifiably".1610 The Panel thus 
did no t consider that the term "unjustifiably" in Article  20 should be viewed as synonymous with the 
term "unnecessarily".1611 The Panel also did not consider that "the term 'unjustifiably' as used in 
Article  20 should be assumed to have exactly the same meaning as  the term 'unjustifiable' as used 
in the chapeau  of Article  XX of the GATT  1994."1612 The Panel considered that, "in the context of 
Article  20 of the TRIPS  Agreement , the term 'unjustifiably' should [not] be understood to require 
only the existence of some ra tional connection between encumbrances imposed on the use of a 
trademark and the reason for which they are imposed."1613 Rather, in the Panel's view, due account 
must also be taken of the action that is to be justified, i.e.  the encumbrance resulting from spe cial 
requirements.1614 The Panel further noted that the context provided by Article  17 of the 
TRIPS  Agreement , titled "Exceptions", confirms that, in assessing whether encumbrances are 
unjustifiable, account must be taken of the legitimate interest of the tra demark owner in using the 
trademark and the extent to which the relevant trademarks are prevented from performing their 
function in the marketplace.1615 
6.628.   The Panel thus concluded that a determination of whether a trademark is being 
"unjustifiably" encumbered i nvolves a consideration of the following factors:  
 
1604 Panel  Report, para.  7.2406.  
1605 Panel  Report, para.  7.2408. Paragraph  5(a) of the Doha Declaration provides: "In applying the 
customary rules of interpretation of public international law, each provision of the TRIPS  Agreement shall be 
read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and 
principles."  
1606 Panel  Report, para.  7.2409. The Panel recalled that the Doha Declaration was adopted by consensus 
at the Fourth Ministerial Conference of the WTO. (Ibid., para.  7.2410)  
1607 Panel  Report, para.  7.2410. (fn  omitted)  
1608 Panel  Report, para.  7.2411.  
1609 In particular, Articles  3.2, 8.1,  27.2, 39.3, 43.2, 50.5, and 73(b), as well as Article  11(3) of the 
Paris Convention (1967) and Article  17 of the Berne Convention. The Panel observed that the term "necessary" 
is also used in Article  31bis of the TRIPS  Agreement, as well as in paragraphs  1(a) and 2(b)(i) of the Annex to 
the TRIPS  Agreement. (Panel  Report, para.  7.2419)  
1610 Panel  Report, para.  7.2418 -7.2419.  
1611 Panel  Report, para.  7.2419.  
1612 Panel  Report, para.  7.2420.  
1613 Panel  Report, para.  7.2422. (emphasis original)  
1614 Panel  Report, para.  7.2423. 
1615 Panel  Report, para.  7.2427. The Panel recalled the statement of the panel in EC – Trademarks and 
Geographical Indications (Australia)  that "[e]very trademark owner has a legitimate interest in preserving the 
distinctiveness, or capacity to distinguis h, of its trademark so that it can perform that function. This includes its 
interest in using its own trademark in connection with the relevant goods and services of its own and 
authorized undertakings." (Ibid. (referring to Panel  Report, EC – Trademarks a nd Geographical Indications 
(Australia) , para.  7.664))  
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  a. the nature and extent of the encumbrance resulting from the special requirements, bearing 
in mind the legitimate interest of the trademark owner in using its trademark in the course 
of trade and thereby allowing the trademark to fulfil its intended functio n;  
b. the reasons for which the special requirements are applied, including any societal interests 
they are intended to safeguard; and  
c. whether these reasons provide sufficient support for the resulting encumbrance.1616  
6.629.   The Panel further rejected the complainants'  argument that the TPP  measures are per se  
inconsistent with Article  20 because they do not provide for an individual assessment of trademarks 
and their specific features. The Panel was of the view that "[t]he extent to which an assessment of 
the unjustifi ability of specific encumbrances will require an assessment on the basis of individual 
trademarks and their specific features will depend on the circumstances of the case."1617 In the 
Panel's view, "when a Member applies such requirements to a class of tradem arks or to some specific 
types of situations rather than to the specific features of particular trademarks, an assessment of 
unjustifiability of such requirements may need to focus on their overall rationale as it relates to the 
reason for adopting them."1618 
6.630.   The Panel then turned to examine the application of the legal interpretation it had developed 
under Article  20 to the measures at issue. With respect to the nature and extent of the encumbrance 
resulting from the TPP  measures, the Panel observed, in parti cular, that the TPP  measures "prevent 
any non -word components of the relevant trademarks, such as fonts, size, colours and placement 
of the trademark on the product, as well as all other distinctive visual content, from contributing to 
distinguishing the p roducts in the marketplace".1619 The Panel noted that "[t]he complainants have 
not sought to demonstrate that consumers have in fact been unable to distinguish the commercial 
source of tobacco products of one undertaking from those of other undertakings" as a  result of the 
TPP measures.1620 The Panel further observed that, while the TPP  measures prevent a trademark 
owner from extracting economic value from the design features of its trademark, the implications of 
such prohibitions are "partly mitigated" by the us e of word trademarks.1621 With regard to price 
competition, the Panel concluded that the evidence before it did not support the complainants' 
argument that the TPP  measures would lead to an increase in price competition, a fall in prices, and, 
consequently, a  decrease in the sales value of tobacco products and the total value of imports.1622 
With regard to downward substitution, the Panel was not persuaded that the decrease in 
consumption and imports of premium tobacco products was exclusively the result of downt rading 
(i.e. a transfer of consumption/imports from premium to non -premium products) caused by the 
TPP measure s. The Panel took this view because: (i)  due to  the overall decrease in consumption of 
tobacco products, at least some part of the decrease in con sumption of premium products was not 
substituted with consumption of non -premium products; and (ii)  it appeared to the Panel that the 
higher - and lower -priced segments of the market have evolved on the basis of distinct trends even 
before the implementatio n of the TPP  measures.1623 
6.631.   As regards the reasons for the adoption of the TPP  measures, for purposes of Article  20, the 
Panel found that "the reason for which Australia applies the trademark requirements, as an integral 
 
1616 Panel  Report, para.  7.2430.  
1617 Panel  Report, para.  7.2505.  
1618 Panel  Report, para.  7.2505.  
1619 Panel  Report, para.  7.2558.  
1620 Panel  Report, para.  7.2564. (emphasis omitted)  
1621 Panel  Report, paras.  7.2569 -7.2570.  
1622 Panel  Report, para.  7.2572. The Panel noted, however, that, "[w]hile the complainants have not 
demonstrated that the TPP  measures have reduced the value of imported tob acco products on the Australian 
market, it cannot be excluded that this may happen in the future, either as a result of the effect of the 
measure on consumption only or as a result of this effect combined with a fall in prices." (Ibid. (fn  omitted))  
1623 Panel Report, para.  7.2573.  We recall that, in its Article  20 analysis, the Panel did not refer to its 
finding in its assessment of the trade -restrictiveness of the TPP  measures, in the context of applying Article  2.2 
of the TBT  Agreement, that the facts did n ot support the Dominican  Republic's argument that downtrading led 
to a reduction in the value of trade, because the evidence showed that prices did not remain constant or 
decline. (See Panel  Report, para.  7.1221. See also para.  6.428.    above.)  
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  part of the TPP  measures, is to improve  public health by reducing the use of, and exposure to, 
tobacco products."1624 
6.632.   The Panel then turned to consider whether the reasons for trademark requirements provide 
sufficient support for the resulting encumbrances. The Panel noted that the fact that the s pecial 
requirements under the TPP  measures "are capable of contributing, and do in fact contribute, to 
Australia's objective of improving public health by reducing the use of, and exposure to, tobacco 
products [] suggests that the reasons for which these sp ecial requirements are applied provide 
sufficient support for the application of the resulting encumbrances on the use of trademarks".1625  
6.633.   Thereafter, the Panel addressed the complainants' argument that the legal standard under 
Article  20 requires assessing whether an alternative less trademark -encumbering measure that 
would make an equivalent contribution could have been deployed.1626 The Panel considered that "the 
term 'unjustifiably' in Article  20 provides a degree of latitude to a Member to choose an interve ntion 
to address a policy objective, which may have some impact on the use of trademarks in the course 
of trade, as long as the reasons sufficiently support any resulting encumbrance."1627 In the Panel's 
view, however, this did not mean that "the availability  of an alternative measure that involves a 
lesser or no encumbrance on the use of trademarks could not inform an assessment of whether the 
reasons for which the special requirements are applied sufficiently support the resulting 
encumbrance."1628 The Panel di d "not exclude the possibility that the availability of an alternative 
measure could, in the circumstances of a particular case, call into question the reasons a respondent 
would have given for the adoption of a measure challenged under Article  20".1629 The P anel 
considered that this could be possible in a case where "a readily available alternative would lead to 
at least equivalent outcomes in terms of the policy objective of the challenged measure, thus calling 
into question whether the stated reasons suffic iently support any encumbrances on the use of 
trademarks resulting from the measure."1630 In its examination of the available alternatives, the 
Panel referred to its previous analysis under Article  2.2 of the TBT  Agreement.1631 
6.634.   Overall, the Panel was "not persua ded that the complainants have demonstrated that 
Australia has acted beyond the bounds of the latitude available to it under Article 20 to choose an 
appropriate policy intervention to address its public health concerns".1632 The Panel thus concluded 
that the complainants have not demonstrated that the TPP  measure s are inconsistent with Australia's 
obligations under Article  20 of the TRIPS  Agreement .1633 
6.3.2.3   Whether the Panel erred in its interpretation of the term "unjustifiably" in  
Article  20 of the TRIPS  Agreement  
6.635.   We recall that in setting out, its interpretation of the term "unjustifiably" in Article  20, the 
Panel stated that:  
[A] determination of whether the use of a trademark in the course of trade is being 
"unjustifiably" encum bered by special requirements should involve a consideration of the 
following factors:  
a. the nature and extent of the encumbrance resulting from the special requirements, bearing 
in mind the legitimate interest of the trademark owner in using its trademark in the course 
of trade and thereby allowing the trademark to fulfil its intended function;  
 
1624 Panel  Report, para.  7.2586.  
1625 Panel  Report, para.  7.2592.  
1626 Panel  Report, para.  7.2597.  
1627 Panel  Report, para.  7.2598.  
1628 Panel  Report, para.  7.2598.  
1629 Panel  Report , para.  7.2598.  
1630 Panel  Report, para.  7.2598.  
1631 Panel  Report, para.  7.2600.  
1632 Panel  Report, para.  7.2604.  
1633 Panel  Report, paras.  7.2605 -7.2606.  
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  b. the reasons for which the special requirements are applied, including any societal interests 
they are intended to safeguard; and  
c. whether these reasons provide suff icient support for the resulting encumbrance.1634  
6.636.   Honduras challenges the Panel's interpretation of the term "unjustifiably" in Article  20 on 
two main grounds.1635 First, Honduras claims that the Panel erred in setting out its understanding, 
in paragraph  7.2430  of the Panel  Report , of the factors that should be considered in a determination 
of whether the use of a trademark in the course of trade is being unjustifiably encumbered by special 
requirements.1636 Second, assuming that the Panel's interpretation is corre ct, Honduras submits an 
alternative claim that the Panel erred by not considering it necessary for a Member to adopt less 
trademark -encumbering special requirements.1637 We address Honduras' arguments pertaining to 
these two challenges in turn.  
6.637.   As its first g round of appeal, Honduras claims that the Panel "failed to read the term 
'unjustifiably' in its proper trademark context and in the light of the object and purpose of the 
TRIPS  Agreement ".1638 Honduras observes that the Panel read the term "unjustifiably" as referring 
to an absence of "good reasons sufficient to support the measure".1639 In Honduras' view, by doing 
so, "the Panel introduced a broad policy exception in Article  20 which is entirely decoupled from 
trademark -specific concerns and which permits even the most far -reaching encumbrances 
irrespective of the concerns allegedly raised by the specific trademarks affected by the measure."1640 
For Honduras, "[t]he term 'unjustifiably' in Article  20 provides for a qualified exception to the general 
rule that no special requirements shall be encumbering the use of a mark in the course of trade."1641 
In Honduras' view, "the concerns that can permissibly trigger an encumbrance … are circumscribed 
to those concerns that are directly linked to the trademark, such as, among others, its potentially 
misleading nature."1642 In this connection, Honduras recalls that the non -exhaustive list of 
trademark -specific concerns that are contained in Article  6quinquies  B of t he 
Paris Convention(1967), as referred to in Article  15.2 of the TRIPS  Agreement , "form [s] the basis 
for a refusal to grant protection through registration, remove such protection or … prevent use of 
the trademark in the course of trade".1643 
6.638.   Australia respon ds that "the ordinary meaning of the term 'unjustifiably' suggests that an 
encumbrance upon the use of trademarks in the course of trade is 'unjustifiable' if there is no rational 
connection between the measure and its objective, such that the encumbrance is 'able to be shown 
to be just, reasonable, or correct' and 'within the limits of reason'."1644 Australia submits that, while 
the complainants have sought to interpret the term "unjustifiably" as being equivalent to the 
standard of necessity, the text of Art icle 20 does not use the term "unnecessarily", which connotes 
a more stringent nexus between a measure and its objective.1645 Australia considers that "the Panel 
interpreted and applied the term 'unjustifiably' in a manner that places this term much closer to  a 
standard of 'necessity' than Australia believes is warranted under a proper interpretation."1646 
Australia further observes that Honduras relied on contextual arguments to articulate the premise 
that Article  20 articulates a prohibition/exception relations hip.1647 According to Australia, "[t]he 
 
1634 Panel  Report, para.  7.2430.  
1635 Honduras' appellant's submission, para.  104. 
1636 Honduras' appellant's submission, para.  52. 
1637 Honduras' appellant's submission, para.  54. 
1638 Honduras' appellant's submission, para.  105.  
1639 Honduras' appellant's submission, para.  52. 
1640 Honduras' appellant's submission, para.  105. 
1641 Honduras' appellant's submission, para.  161. 
1642 Honduras' appellant's submission, para.  52. As examples of such misleading trademarks, Honduras 
refers to a colourful logo that suggests that a dangerous chemical is an innocent househ old detergent or 
trademarks that refer to tobacco products as "light" or "mild". (Ibid., para.  109) 
1643 Honduras' appellant's submission, para.  108. 
1644 Australia's appellee's submission, para.  162 (quoting Australia's first written submission to the 
Panel, pa ra. 369; response to Panel question No.  107).  
1645 Australia's appellee's submission, paras.  162 and 164.  
1646 Australia's appellee's submission, para.  177. Australia notes, however, that, while it has 
reservations with the Panel's interpretation of Article  20, the Panel's finding that the TPP  measures are not 
"unjustifiable" under Article  20 is correct, which is why Australia decided not to appeal the Panel's 
interpretation and application of Article  20. (Ibid., paras.  178-179) 
1647 Australia's appellee's submission, para.  195. 
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  notion that the 'use' of a trademark is a 'protected right' under Part  II of the TRIPS  Agreement  
suffuses Honduras' submission."1648 In Australia's view, contrary to what Honduras implies, the Panel 
did not find that Artic le 20 confers a right of use upon the owners of registered trademarks.1649 
Australia submits that, even if Honduras is correct in its contention that the term "special 
requirements" refers only to the requirements related to a trademark, it does not follow fr om this 
that any encumbrance resulting from such special requirements will be justifiable if it is limited in 
its effects and "based on the specific nature of the trademark".1650 
6.639.   Article  20 of the TRIPS  Agreement  provides:  
Other Requirements  
The use of a trademark in the course of trade shall not be unjustifiably encumbered by 
special requirements, such as use with another trademark, use in a special form or use 
in a manner detrimental to its capability to distinguish the goods or services of one 
undertaki ng from those of other undertakings. This will not preclude a requirement 
prescribing the use of the trademark identifying the undertaking producing the goods 
or services along with, but without linking it to, the trademark distinguishing the specific 
goods or services in question of that undertaking.  
6.640.   Article  20 contains two sentences that regulate the imposition of "special requirements" on 
the "use" of trademarks. The first sentence of Article  20 prohibits Members from imposing "special 
requirements" that "unjustifiably encumber[]" the use of a trademark in the course of trade. The 
first sentence also provides an illustrative list of special requirements, such as "use with another 
trademark, use in a special form or use in a manner detrim ental to its capability to distinguish the 
goods or services of one  undertaking from those of other undertakings". The second sentence of 
Article  20 qualifies the obligation enshrined in the first sentence by identifying the type of "special 
requirements" that a Member may impose, namely , "prescribing the use of the trademark identifying 
the undertaking producing the goods or services along with, but without linking it to, the trademark 
distinguishing the specific goods or services in question of that under taking".  
6.641.   Article  20 does not prohibit all measures that impose encumbrances on the use of a 
trademark in the course of trade. Rather, it proscribes only those special requirements that 
"unjustifiably encumber" the use of a trademark in the course of trade.  This implies that there may 
be circumstances in which an "encumbrance" on the use of a trademark will be "justifiable".1651 
Accordingly, we do not share Honduras' view that Article  20 imposes a "general prohibition … on 
governmental encumbrances on use" .1652 In this connection, we note that Article  19.1 of the 
TRIPS  Agreement , which concerns the requirement of use, provides that "[c]ircumstances arising 
independently of the will of the owner of the trademark which constitute an obstacle to the use of 
the tradema rk, such as import restrictions on or other government requirements for goods or 
services protected by the trademark, shall be recognized as valid reasons for non -use." Article  19.1 
thus contemplates that a Member may impose obstacles such as restrictions on goods or services 
protected by a trademark, which would result in the non -use of the trademark by its owner.  
6.642.   We take note of Australia's argument that "[t]he notion that the 'use' of a trademark is a 
'protected right' under Part  II of the TRIPS  Agreemen t suffuses Honduras' submission."1653 In 
Australia's view, contrary to what Honduras implies, the Panel did not find that Article  20 confers a 
right of use upon the owners of registered trademarks.1654 We share Australia's view that many of 
Honduras' arguments o n appeal appear to be premised on the idea that Article  20 of the 
TRIPS  Agreement  somehow reflects the trademark owner's right to use its trademark in the course 
of trade. Indeed, in its appellant 's submission, as well as in answering our questions at the first 
hearing, Honduras suggested that there is a presumption of an unencumbered use  of, or even a 
 
1648 Australia's appellee's submission, para.  204. 
1649 Australia's appellee's submission, para.  211. 
1650 Australia's appellee's submission, para.  200. (fn  omitted)  
1651 The second sentence of Article  20 expressly provides for conditions under which use can be 
encumbered by indicating that the obligation outlined in the first sentence of Article  20 does " not preclude a 
requirement prescribing the use of the trademark" alongside another trademark.  
1652 Honduras' appellant's submission, para.  141. 
1653 Australia's appellee's submission, para.  204. 
1654 Australia's appellee's submission, para.  211. 
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  right to use , a trademark under Article  20 of the TRIPS  Agreement .1655 In section  6.3.1  above, we 
have explained that Article  16.1 of the TRIPS  Agreement , which addresses the rights conferred on 
an owner of a trademark, does not confer upon the owner a positive right to use  its trademark, or a 
right to protect the distinctiveness of that trademark through use. Rather, Article  16.1 "provides for 
a negative  right to prevent all third parties from using signs in certain circumstances".1656 Likewise, 
nothing in the text of Article  20 indi cates that "the use of a trademark in the course of trade" is a 
positive right conferred on a trademark owner. Rather, the opening clause of Article  20 ("[t]he use 
of a trademark in the course of trade…") suggests that this provision regulates the impositi on of 
special requirements in the factual scenario when there is a use of a trademark in the course of 
trade. The fact that Article  20 presupposes that the use of a trademark may be encumbered 
"justifiably" further indicates that there is no positive right  of use of a trademark by its owner, nor 
is there an obligation on Members to protect such a positive right.  
6.643.   Unlike Article  17 of the TRIPS  Agreement , Article  20 is not identified as an "exception" to 
the "rights conferred" on a trademark owner under the TRIPS Agreement . Rather, this provision 
imposes a positive obligation on Members to refrain from unjustifiably encumbering the use of a 
trademark in the course of trade by encumbrances resulting from special requirements. The 
structure of the first sentence  of Article  20 suggests that it establishes a single obligation, rather 
than an obligation and exception thereto.1657 Accordingly, it is the complainant's burden to establish 
a prima facie  case of inconsistency with Article  20.1658 The text of Article  20 indicat es that, in order 
to establish an inconsistency with this provision, the following elements must be established: (i)  the 
existence of "special requirements"; (ii)  such requirements must "encumber" "[t]he use of a 
trademark in the course of trade"; and (iii ) they must do so "unjustifiably". Once the complainant 
has made its prima  facie case of inconsistency under Article  20, it is for the respondent to rebut the 
complainant's case.  
6.644.   Honduras' appeal calls upon us to interpret the term "unjustifiably" used in the first sentence 
of Article  20. In Article  20, the adverb "unjustifiably" qualifies the verb "encumbered".1659 What shall 
not be "unjustifiably encumbered" is "[t]he use of a trademark in the course of trade".1660 The term 
"unjustifiably" is also linked to the  "special requirements".1661 Thus, what should not be 
"unjustifiabl[e]" is the encumbrance on the use of a trademark in the course of trade that results 
from special requirements.  
6.645.   As regards the ordinary meaning, the term "unjustifiably" is an adverb that der ives from the 
adjective "unjustifiable", which has been defined as "not justifiable" or "indefensible".1662 Other 
definitions describe the term "unjustifiable" as "not able to be shown to be right or reasonable"1663 
or "unacceptable and wrong because there is no  good or fair reason for it".1664 The antonym of the 
 
1655 In particular, in  its appellant's submission, Honduras stated that, "[b]y rejecting Australia's 
arguments and findings that Article  20 covers prohibitions on use, the Panel is rightly confirming that 
trademark 'use' is protected by the TRIPS  Agreement." (Honduras' appellan t's submission, para.  69) In 
addition, Honduras observed that "[t]he term 'unjustifiably' in Article  20 provides for a qualified exception to 
the general rule that no special requirements shall be encumbering the use of a mark in the course of trade." 
(Ibid., para.  161) 
1656 Panel  Reports, EC – Trademarks and Geographical Indications (Australia) , fn 564 to para.  7.611;  
EC – Trademarks and Geographical Indications (US) , fn 558 to para.  7.611. (emphasis added)  
1657 The obligation under Article  20 is to not impose special requirements that "unjustifiably encumber" 
the use of a trademark in the course of trade.  
1658 See Appellate  Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p.  335. 
1659 The Panel provided its interpretation of the term "encumbered", which is not challenged on appeal, 
in paragraphs  7.2234 -7.2239 of the Panel  Report.  
1660 The Panel provided its interpretation of the what constitutes "use" of a trademark "in the course of 
trade", which is not challenged on appeal, in paragraphs  7.2260 -7.2264 and 7.2279 -7-2286 of the 
Panel  Report.  
1661 The Panel provided its interpretation of what constitutes "special requirements", which is not 
challenged on appeal, in paragraphs  7.2221 -7.2233 of the Panel  Report.  
1662 Shorter Oxford English Dictionary , 6th edn, L. Brow n and A. Stevenson (eds.) (Oxford University 
Press, 2007), Vol.  2, p. 3445.  
1663 Oxford English Dictionary online, definition of "unjustifiable": 
https://en.oxforddictionaries.com/defi nition/unjustifiable , accessed 24  February 2020.  
1664 Cambridge Dictionary online, definition of "unjustifiable": 
https://dictionary.cambridge.org/dictionary/english/unjustifiable , accessed 24  February 2020.  
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  term "unjustifiable" is "justifiable", a word that denotes the existence of a "good reason"1665 for 
something or refers to something that is "able to be shown to be right or reasonable; defensible".1666 
The vario us meanings attributed to the concept of justifiability thus indicate that it connotes 
something that is fair and capable of being reasonably explained. By contrast, something is 
"unjustifiable" when there is no fair reason for it and when it cannot be rea sonably explained.1667 
6.646.   The term "unjustifiably" suggests the degree of rationalization that needs to be provided for 
imposing encumbrances on the use of a trademark by special requirements under Article  20. By 
contrast, several other provisions of the TRIPS  Agreement  refer to different permutations of the 
concept of necessity.1668 This indicates that a different meaning is sought to be reflected through 
the use of the term "unjustifiably" as opposed to terms conveying the concept of necessity in the 
sense of Arti cle XX of the GATT  1994 or Article  2.2 of the TBT  Agreement. We recall, in this respect, 
that it is well established that different words in a treaty are generally intended to convey a different 
meaning.1669 At the same time, the use of a similar term ("unjustifiable") in the provisions of other 
covered agreements, such as the chapeau  of Article  XX of the GATT  1994, which refers to "arbitrary 
or unjustifiable discrimination", does not imply that the meaning im parted to this term in other 
contexts can be easily transplanted to the interpretation of Article  20 of the TRIPS  Agreement .1670 
6.647.   In our view, the term "unjustifiably" in Article  20 of the TRIPS  Agreement  reflects the degree 
of regulatory autonomy that Members  enjoy in imposing encumbrances on the use of trademarks 
through special requirements. The reference to the notion of justifiability rather than necessity in 
Article  20 suggests that the degree of connection between the encumbrance on the use of a 
trademar k imposed and the objective pursued reflected through the term "unjustifiably" is lower 
than it would have been had a term conveying the notion of "necessity" been used in this provision. 
Accordingly, a consideration of whether the use of a trademark has n ot been "unjustifiably" 
encumbered should not be equated with the necessity test  within the meaning of Article  XX of the 
GATT  1994 or Article  2.2 of the TBT  Agreement.  
6.648.   Honduras argues that only concerns that are directly linked to the trademark, such as it s 
potentially misleading nature, can permissibly trigger an encumbrance on the trademark's use.1671 
According to Honduras, by failing to read the term "unjustifiably" in its proper trademark context, 
 
1665 Cambridge Dictionary online, definition of "justifiable": 
https://dictionary.cam bridge.org/dictionary/english/justifiable , accessed 24  February 2020.   
1666 Oxford English dictionary online, definition of "justifiable": 
https://en.oxforddictionaries.com/definition/ju stifiable , accessed 24  February 2020.   
1667 The French version of the TRIPS  Agreement uses the term "de manière injustifiable", which likewise 
connotes something that has been done in a way that cannot be justified, defended, or shown to be right or 
reasonabl e. In a similar vein, the Spanish version of the TRIPS  Agreement uses the adverb 
"injustificablemente".  
1668 For example, Article  41.2 of the TRIPS  Agreement provides that procedures concerning the 
enforcement of intellectual property rights "shall not be unn ecessarily complicated or costly, or entail 
unreasonable time -limits or unwarranted delays". The term "necessary" is used in Articles 3.2 ("exceptions are 
necessary to secure compliance with laws and regulations"), 8.1 ("measures necessary to protect publi c health 
and nutrition"), 27.2  ("inventions, the prevention within their territory of the commercial exploitation of which 
is necessary to protect ordre public  or morality"), 39.3 ("except where necessary to protect the public"), 
43.2 ("a party to a procee ding voluntarily and without good reason refuses access to, or otherwise does not 
provide necessary information"), 50.5 ("[t]he applicant may be required to supply other information necessary 
for the identification of the goods"), and 73(b) ("[n]othing in this Agreement shall be construed … to prevent a 
Member from taking any action which it considers necessary for the protection of its essential security 
interests") of the TRIPS  Agreement.  
1669 Appellate  Body Report, EC – Hormones , para.  164. In examining the  operative terms of the different 
paragraphs of Article  XX of the GATT  1994 ("necessary", "relating to", "in pursuance of"), the Appellate  Body 
observed that "[i]t does not seem reasonable to suppose that the WTO Members intended to require, with 
respect t o each and every category, the same kind or degree of connection or relationship between the 
measure under appraisal and the state interest or policy sought to be promoted or realized." (Appellate  Body 
Report, US – Gasoline , WT/DS2/AB/R, adopted 20  May 1996, DSR 1996:I, 3, pp.  17-18)  
1670 The nature and purpose of the TRIPS  Agreement is different from that of other covered agreements. 
As noted in footnote 1502 above, the TRIPS  Agreement is principally concerned with the creation and 
protection of exclusive private rights, which may necessitate restricting commercial activity and requiring the 
active intervention of Members to enforce these restrictions. By contrast, other covered agreements are 
focused on the liberalization of international trade, effected through the progressive reduction, through mutual 
agreement, of barriers to trade.  
1671 Honduras' appellant's submission, para.  108. 
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  "the Panel introduced a broad policy exception in Article  20 which  … opens the door potentially to 
any policy considerations, and any type of encumbrances on trademarks ."1672 
6.649.   In our view, reasons for the imposition of special requirements do not have to relate to the 
trademark itself. Article  15.2 of the TRIPS  Agreem ent and Article  6quinquies  B of the 
Paris Convention (1967), which Honduras refers to1673, set out trademark -specific concerns  that may 
serve as a basis for denying registration of a trademark or its invalidation, which include, inter alia , 
concerns pertainin g to a trademark's deceitful nature.1674 In particular, Article  6quinquies of the 
Paris Convention (1967) provides that registration of a trademark may be denied, or a trademark 
may be invalidated, if it is contrary to morality or public order and is of such a nature as to deceive 
the public. These concerns, however, are pertinent to the registration or invalidation of a trademark . 
By contrast, Article  20, which regulates the imposition of encumbrances on the use of a trademark 
through special requirements, is silent as to the reasons for which special requirements may be 
imposed. In this connection, we note that Article  8 of the TRIPS Agreement , titled "Principles"1675, 
provides , in paragraph  1, that Members may "adopt measures necessary to protect public health 
and nutrition, and to promote the public interest in sectors of vital importance to their 
socio-economic and technological dev elopment, provided that such measures are consistent with 
the provisions of this Agreement".1676 Measures seeking to protect public health and nutrition 
encompass a range of measures specifically contemplated by the TRIPS  Agreement , including 
through exceptio ns to exclusive patent rights (Article  30), compulsory licences (Article  31), and the 
disclosure to the public of test data (Article  39.3). In this vein, we agree with the Panel that 
encumbrances on the use of trademarks by special requirements under Artic le 20 may also be 
imposed in pursuit of public health objectives.1677  
6.650.   Honduras further argues that the context provided by Article  17 of the TRIPS  Agreement  
suggests that encumbrances on the use of trademarks under Article  20 cannot be determined by 
public p olicy concerns and "must be 'limited' in nature".1678 We recall that Article  17 of the 
TRIPS  Agreement  stipulates that Members may provide "limited" exceptions to the rights conferred 
by a trademark, provided that such exceptions "take account of the legitima te interests of the owner 
of the trademark". Accordingly, pursuant to Article  17, Members should give consideration to such 
"legitimate interests" along with other factors (including the legitimate interests of third parties) 
before reaching a decision on whether to provide for a limited exception to the rights conferred by 
a trademark.1679 As the panel in EC – Trademarks and Geographical Indications ( Australia ) and 
EC – Trademarks and Geographical Indications (US)  observed,  "[e]very trademark owner has a 
legitimate interest in preserving the distinctiveness, or capacity to distinguish, of its trademark so 
that it can perform that function. This includes its interest in using its own trademark in connection 
with the relevant goods and services of its own and au thorized undertakings."1680 While Article  20, 
unlike Article  17, is not an exception to the rights conferred by a trademark, both provisions concern 
restrictions on trademarks. Furthermore, in these appellate proceedings it is uncontested that a 
 
1672 Honduras' appellant's submission, para.  105. 
1673 Honduras' appellant's submission, para.  108. 
1674 According to Article  6quinquies  B, a trademark registration may be denied, if a trademark: (i)  is of 
such a nature as to infringe rights acquired by third partie s in the country where protection is claimed; (ii)  is 
devoid of any distinctive character, or consists exclusively of signs or indications that may serve, in trade, to 
designate the kind, quality, quantity, intended purpose, value, place of origin of the g oods, or the time of 
production, or have become customary in the current language or in the bona fide and established practices of 
the trade of the country where protection is claimed; or (iii)  is contrary to morality or public order and, in 
particular, of  such a nature as to deceive the public. (Paris Convention (1967), Article  6quinquies  B) 
1675 We note that paragraph  5 of the Doha Declaration provides that "[i]n applying the customary rules 
of interpretation of public international law, each provision of th e TRIPS  Agreement shall be read in the light of 
the object and purpose of the Agreement as expressed, in particular, in its objectives and principles."  
1676 TRIPS  Agreement, Article  8.1. The scope of measures referred to in Article  8.1 is limited by 
two conditions. First, a measure must be "necessary" to protect public health and nutrition, and second, it 
must be consistent with the provisions of the TRIPS  Agreement.  
1677 Panel  Report, para.  7.2406.  
1678 Honduras' appellant's submission, para.  160. 
1679 As the  panel in EC – Trademarks and Geographical Indications (Australia)  and EC – Trademarks and 
Geographical Indications (US)  explained, "[g]iven that Article  17 creates an exception to the rights conferred 
by a trademark, the 'legitimate interests' of the trad emark owner must be something different from full 
enjoyment of those legal rights." (Panel  Reports, EC – Trademarks and Geographical Indications (Australia) , 
para 7.662; EC – Trademarks and Geographical Indications (US) , para.  7.662)  
1680 Panel  Reports, EC – Trademarks and Geographical Indications (Australia) , para.  7.664;  
EC – Trademarks and Geographical Indications (US) , para.  7.664.  
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  trademark own er has a "legitimate interest" in using its trademark in the course of trade.1681 We 
therefore consider that, in examining whether the use of a trademark has been unjustifiably 
encumbered by special requirements under Article  20, the legitimate interests of t he trademark 
owner in using the trademark and preserving its distinctiveness should be taken into account. 
Therefore, while we agree with Honduras that Article  17 provides relevant context for the 
interpretation of Article  20, we do not consider that it informs that provision in the way suggested 
by Honduras.  
6.651.   By using the term "unjustifiably", Article  20 of the TRIPS  Agreement  provides to Members a 
certain margin of discretion in imposing encumbrances on the use of trademarks. As noted, the term 
"unjustif iably" connotes an action for which there is no fair reason, and which cannot be reasonably 
explained. Accordingly, we understand that a Member that imposes encumbrances on the use of 
trademarks through special requirements must be able to provide a reason able explanation of how 
an objective pursued by introducing special requirements warranted the resulting encumbrances. At 
the same time, we agree with the Panel that the term "unjustifiably" should not be understood to 
"require only the existence of some r ational connection between encumbrances imposed on the use 
of a trademark and the reason for which they are imposed."1682 Due account should also be taken 
of the nature and extent of the encumbrance at issue, including the extent to which the relevant 
tradema rks are affected. Therefore, we agree with the Panel that  a determination of whether the 
use of a trademark in the course of trade is being "unjustifiably" encumbered by special requirements 
could involve a consideration of: (i)  the nature and extent of en cumbrances resulting from special 
requirements, taking into account the legitimate interest of the trademark owner in using its 
trademark in the course of trade; (ii)  the reasons for the imposition of special requirements; and 
(iii) a demonstration of how the reasons for the imposition of special requirements support the 
resulting encumbrances.1683  
6.652.   Honduras further argues that , "even if the Panel's interpretation was correct that Article  20 
enshrines a broad policy exception that could justify any blunt encum brance not linked to 
trademark -specific concerns, the Panel errs by adopting an excessively low bar for considering 
special requirements to be 'justifiably' encumbering the use of a trademark by failing to respect the 
proportionality principle."1684 In partic ular, Honduras considers that "the Panel errs by not 
considering it necessary for a Member, when imposing such special requirements, to opt for a less 
trademark -encumbering special requirement if such is available and provides an equivalent 
contribution."1685 In Honduras' view, Article  XX of the GATT  1994 and Article  2.2 of the 
TBT Agreement lend context to this interpretation of Article  20 of the TRIPS  Agreement .1686 For 
Honduras, "to the extent that the measures affect trademark rights, they must at least be 'n ecessary' 
in order to be 'justifiable'."1687 
6.653.   Honduras' suggestion that the encumbrances imposed by special requirements "must at 
least be 'necessary' in order to be 'justifiable'"1688 presupposes that the standard of "unjustifiability" 
under Article  20 should be  at least equivalent to the standard of "necessity". As noted, the use of 
the term "unjustifiably" in Article  20, as opposed to other provisions of the TRIPS  Agreement , which 
refer to the concept of necessity, indicates that the degree of discretion grante d to Members through 
 
1681 Honduras appellant's submission, para.  154; Australia's appellee's submission, paras.  90-93 
(quoting Panel  Report, EC – Trademarks and Geographical Indications (Australia) , paras.  7.662 and 7.664).  
1682 Panel  Report, para.  7.2422. (emphasis original)  
1683 Panel  Report, para.  7.2430. We note, however, that, in paragraph  7.2430 of its Report, the Panel 
used the auxiliary verb "should " in introducing the factors pertinent to the examination of whether the use of a 
trademark in the course of trade is unjustifiably encumbered by special requirements. Later, the Panel stated 
that "a consideration of whether the use of a trademark is 'unju stifiably encumbered' will normally involve  a 
consideration of various elements, including the nature and extent of the encumbrance arising from the special 
requirements at issue, the reasons for which these requirements are applied, and whether these reas ons 
sufficiently support them." (Panel  Report, para.  7.2441 (emphasis added)) We wish to clarify that, while an 
inquiry under Article  20 could include the consideration of the above -mentioned factors, the degree of 
discretion vested in Members under Articl e 20 does not call for a rigid and exact set of considerations that are 
relevant for the examination of whether the use of a trademark is unjustifiably encumbered by special 
requirements.  
1684 Honduras' appellant's submission, para.  111. 
1685 Honduras' appellant 's submission, para.  111. 
1686 Honduras' appellant's submission, para.  235. 
1687 Honduras' appellant's submission, para.  236. 
1688 Honduras' appellant's submission, para.  236. 
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  the term "unjustifiably" is higher than it would have been, had a term conveying the notion of 
"necessity" been used. Therefore, we do not consider that the test of necessity, which includes a 
consideration of alternative measures, cou ld be transposed into the examination of whether the use 
of a trademark is unjustifiably encumbered by special requirements under Article  20 of the 
TRIPS  Agreement . This does not mean that, in the circumstances of a particular case, the existence 
of an alt ernative measure involving a lesser degree of encumbrance on the use of a trademark 
cannot be used as a consideration in evaluating the justifiability of special requirements and related 
encumbrances on the use of a trademark. However, such an examination is not a necessary inquiry 
under Article  20 of the TRIPS  Agreement . 
6.654.   We recall that the Panel did not include the consideration of alternative measures into the 
list of factors it considered to be relevant for an examination of whether the use of trademark is 
unjustifiably encumbered by special requirements,  as set out in paragraph  7.2430 of the 
Panel  Report. In applying the legal standard it had developed to the facts of this case, the Panel 
stated that the latitude vested in Members under Article  20 "does not mean that the availability of 
an alternative measure that involves a lesser or no encumbrance on the use of trademarks could 
not inform an assessment of whether the reasons for which the special requirements are applied 
sufficiently support the resulti ng encumbrance" .1689 In particular, the Panel did "not exclude the 
possibility that the availability of an alternative measure could, in the circumstances of a particular 
case, call into question the reasons a respondent would have given for the adoption of a  measure 
challenged under Article  20".1690  
6.655.   In our view, the Panel did not err by not including an examination of alternative measures 
as a requisite consideration for determining whether the use of a trademark has been "unjustifiably" 
encumbered by special requirements. Indeed, as Australia argue s, if a consideration of alternative 
measures was required under Article  20, this would equate the concept of justifiability reflected in 
Article  20 of the TRIPS  Agreement  with the concept of necessity, withi n the meaning of Article  2.2 
of the TBT  Agreement and Article  XX of the GATT  1994. In our view, this would defy the drafters' 
intention to provide greater latitude to Members by using the term "unjustifiably" – as opposed to a 
term reflecting the notion of  necessity – in Article  20 of the TRIPS  Agreement . Accordingly, while  it 
may be possible that, in the circumstances of a particular case, an alternative measure that would 
lead to at least an equivalent contribution could call into question whether the rea sons for the 
adoption of the special requirements sufficiently support the resulting encumbrances on the use of 
the trademark, such an examination is not a necessary inquiry under Article  20. 
6.656.   Finally, Honduras asserts that the Panel erred in relying on the  Doha Declaration in its 
interpretation of Article  20. In Honduras' view, the Doha Declaration is not relevant to the 
interpretation of Article  20 because "it relates to the question of access to medicines and patents, 
and does not relate to any provisions  of the TRIPS  Agreement  concerning trademarks."1691 According 
to Honduras, "[t]he Doha Declaration is not, and was never intended to be, a more general 
declaration that would seek to allow Members to adopt public health related measures in violation 
of the TRIPS Agreement  in general or of the section on trademarks in particular."1692 Australia 
responds that the Panel referred to the Doha  Declaration to merely confirm that public health 
considerations are "unquestionably" among the societal interests that can "jus tify" an encumbrance 
upon the use of trademarks.1693 In Australia's view, in any event, "[w]hether or not the Doha 
Declaration constitutes a subsequent agreement … is ultimately beside the point" because 
"Article  8.1 of the TRIPS  Agreement , by itself, makes c lear that Members may adopt measures 
necessary for the protection of public health."1694 
6.657.   We recall that paragraph  5(a) of the Doha Declaration provides that, "[i]n applying the 
customary rules of interpretation of public international law, each provision of t he TRIPS  Agreement  
shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in 
 
1689 Panel  Report, para.  7.2598.  
1690 Panel  Report , para.  7.2598. The Panel clarified that "[t] his might be the case in particular if a readily 
available alternative would lead to at least equivalent outcomes in terms of the policy objective of the 
challenged measure, thus calling into question whether the stated reasons sufficiently support any 
encumbrances on the use of trademarks resulting from the measure." (Ibid .) 
1691 Honduras' appellant's submission, para.  256. 
1692 Honduras' appellant's submission, para.  256. 
1693 Australia's appellee's submission, para.  242. 
1694 Australia's appellee's submission, para.  242. 
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  its objectives and principles." We agree with the Panel that paragraph  5(a) of the Doha Declaration 
reflects "the applicable rules of i nterpretation, which require a treaty interpreter to take account of 
the context and object and purpose of the treaty being interpreted".1695 Accordingly, regardless of 
the legal status of the Doha Declaration, we see no error in the Panel's reliance on this general 
principle of treaty interpretation.  
6.658.   Furthermore, we note that the Panel referred to paragraph  5(a) of the Doha Declaration to 
confirm that "Articles  7 and 8 of the TRIPS  Agreement  provide important context for the 
interpretation of Article  20."1696 It appears that the Panel had reached the conclusion about the 
contextual relevance of Articles 7 and 8 of the TRIPS  Agreement  before it turned to paragraph  5(a) 
the Doha Declaration and used the latter to simply reconfirm its view.1697 In particular, before t urning 
to the Doha Declaration, the Panel observed that "Article  8 offers … useful contextual guidance for 
the interpretation of the term 'unjustifiably' in Article  20."1698 The Panel also remarked that the 
societal interests referred to in Article  8 may provide a basis of the justification of measures under 
Article  20.1699 Thus, we agree with Australia that, in any event, the reliance on the Doha Declaration 
was not of decisive importance for the Panel's reasoning since the Panel had reached its conclusions 
about the contextual relevance of Articles  7 and 8 of the TRIPS  Agreement  to the interpretation of 
Article  20 before it turned to the Doha  Declaration. The Panel relied on the Doha Declaration simply 
to reconfirm its previous conclusions regarding the cont extual relevance of Articles 7 and 8 of the 
TRIPS  Agreement . 
6.659.   In sum, the ordinary meaning of the term "unjustifiably", as read in the context of other 
provisions of the TRIPS  Agreement , indicates that Members enjoy a certain degree of discretion in 
imposin g encumbrances on the use of trademarks under Article  20 of the TRIPS  Agreement .1700 In 
order to establish that the use of a trademark in the course of trade is being unjustifiably encumbered 
by special requirements, the complainant has to demonstrate that a policy objective pursued by a 
Member imposing special requirements does not sufficiently support the encumbrances that result 
from such special requirements. We agree with the Panel that such  a demonstration could include a 
consideration of: (i)  the nature  and extent of encumbrances resulting from special requirements, 
taking into account the legitimate interest of the trademark owner in using its trademark in the 
course of trade; (ii)  the reasons for the imposition of special requirements; and (iii)  a demo nstration 
of how the reasons for the imposition of special requirements support the resulting encumbrances.  
6.660.   We therefore consider that the Panel did not err  in its interpretation of the term 
"unjustifiably" in Article  20 of the TRIPS  Agreement . Consequentl y, we uphold  the Panel's 
interpretation, in paragraph  7.2430 of the Panel  Report, of the term "unjustifiably".  
6.3.2.4   Whether the Panel erred in its application of Article  20 of the TRIPS  Agreement  
6.661.   In its appeal, Honduras focuses on two elements of the Panel's application of the legal 
standard under Article  20 of the TRIPS  Agreement . Specifically, Honduras argues that the Panel 
erred in: (i)  its focus on the economic value of trademarks and in its as sessment of the allegedly 
mitigating factors1701, and (ii)  its determination that "good reasons" provide "sufficient support" for 
the encumbrance.1702 With respect to the lat ter part of its claim , Honduras argues that: (i)  the 
Panel's finding that the TPP  measur es contribute to reducing the use of tobacco is vitiated by several 
errors of law1703; (ii)  the Panel erred by rejecting the reasonably available, less 
trademark -encumbering measures proposed by the complainants1704; and (iii)  the Panel gave undue 
 
1695 Panel  Report, para.  7.2411.  
1696 Panel  Report, para.  7.2411.  
1697 Panel  Report, paras.  7.2402 -7.2406. In particular, before turning to paragraph  5(a) of the 
Doha Declaration, the Panel concluded that Articles 7 and 8 of the TRIPS  Agreement "provide relevant context" 
to Article  20. (Ibid., para.  7.2399)  
1698 Panel  Report, para.  7.2404.  
1699 Panel  Report, para.  7.2406.  
1700 The degree of discretion reflected through the term "unjustifiably" in Article  20 is higher than it 
would have been, had the term reflecting the notion of "necessity" been used in this provision.  
1701 Honduras' appellant's submission, paras.  264-276. 
1702 Honduras' appellant's submission, paras.  277-317. 
1703 Honduras' appellant's submission, paras.  280-284. 
1704 Honduras' appellant's submi ssion, paras.  285-298. 
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  legal weight t o the FCTC  Guidelines.1705 In addition, Honduras claims that the Panel, despite its 
stated intention, did not engage in any weighing and balancing of the public health concerns 
underlying the TPP  measures against their implications on the use of trademarks in  the course of 
trade.1706 
6.662.   The Dominican  Republic independently argues that the Panel's findings under Article  20 of 
the TRIPS  Agreement  are in error because the Panel failed to make an objective assessment of the 
matter under Article  11 of the DSU.1707 In particular, the Dominican  Republic takes issue with the 
Panel's analysis of the contribution of the TPP  measures and that of the proposed alternative 
measures under Article  2.2 of the TBT  Agreement, which the Panel subsequently referred to in its 
analy sis under Article  20. With respect to these findings, the Dominican  Republic argues that, should 
we reverse the relevant Panel's findings on contribution and less trade -restrictive alternative 
measures under Article  2.2, we should also reverse the Panel's findings under Article  20 of the 
TRIPS  Agreement .1708  
6.663.   Australia argues that Honduras errs in considering that the Panel placed an "undue emphasis 
on the loss of economic value of the trademarks rather than focusing on the impact of the 
TPP measures on the us e of a trademark in terms of its distinguishing function" .1709 Australia 
acknowledges that the Panel took into account the economic value of the trademarks in its 
consideration of the impact of the TPP  measures, but not to the exclusion of the distinguishing 
function of trademarks.1710 In Australia's view, the Panel's analysis did not detract from the 
far-reaching nature of the encumbrances under the TPP  measures, but rather examined their 
"practical implications ".1711 Australia further submits that the appellants' argument regarding the 
Panel's analysis of possible alternatives wrongly presupposes that the examination of alternatives 
under a standard of "unjustifiability" is identical to the examination under the standard of 
"necessity".1712 With respect to Honduras' a ssertion that the Panel gave "undue legal weight"1713 to 
the FCTC  Guidelines, Australia considers that "[t]he Panel referred to the FCTC  Guidelines merely to 
'underscore[]' 'the importance of the public health reasons for which the trademark -related special 
requirements under the TPP  measures are applied', not to find that the existence of the Guidelines 
could somehow overcome a finding of 'WTO -inconsistency'."1714 
6.3.2.4.1   The Panel's examination of the nature and extent of encumbrances resulting 
from the TPP  measures  
6.664.   Honduras' first ground of appeal concerns the Panel's allegedly erroneous focus on the 
economic value of trademarks in examining the nature and extent of the encumbrances resulting 
from the special requirements under the TPP  measures. In Honduras' view, the  Panel erred by not 
focusing on the use of a trademark in terms of its distinguishing function and by concluding that 
there was a mitigating effect resulting from the permissible use of certain word marks.1715 Honduras 
submits that the relevant inquiry under Article  20 of the TRIPS  Agreement  is not whether the 
trademark owner can distinguish its goods in light of the encumbrances imposed, but how a 
trademark and its function have been affected.1716 Honduras underscores that "[t]he prohibition on 
the use of any fi gurative signs is the 'ultimate encumbrance' on the use of such trademarks."1717 
 
1705 Honduras' appellant's submission, paras.  299-312. 
1706 Honduras' appellant's submission, paras.  281-282 (referring to Panel  Report, 
paras.  7.2592 -7.2594).  
1707 Dominican  Republic's appellant's submission, para.  1587.  
1708 Dominican  Republic 's appellant's submission, para.  1588.  
1709 Australia's appellee's submission, para.  246 (quoting Honduras' appellant's submission, para.  266).  
1710 Australia's appellee's submission, para.  247. 
1711 Australia's appellee's submission, para.  248 (quoting Panel  Repor t, para.  7.2570). (emphasis added 
by Australia)  
1712 Australia's appellee's submission, para.  250. 
1713 Australia's appellee's submission, para.  253 (quoting Honduras' appellant's submission, paras.  299 
and 312).  
1714 Australia's appellee's submission, para.  254 (q uoting Panel  Report, para.  7.2596).  
1715 Honduras' appellant's submission, para.  266. 
1716 Honduras' response to questioning at the second hearing.  
1717 Honduras' appellant's submission, para.  267. 
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  6.665.   Australia responds that, in its analysis, the Panel focused exactly on what Honduras argues 
it should have focused, i.e.  "the implications of the TPP trademark requirements on a trademark's 
ability to distinguish goods and services of undertakings in the course of trade ".1718 Australia points 
out that the Panel took into account the "far -reaching" encumbrances that the TPP  measures impose 
in evaluating whether the TPP  measures impose  an unjustifiable encumbrance upon the use of 
trademarks.1719 In Australia's view, the Panel's consideration of the economic consequences "did not 
detract from the 'far -reaching' encumbrance".1720 Rather, "[t]he Panel's point was that the 'practical 
implications  of those prohibitions' were 'partially mitigated' by the fact that tobacco companies can 
still use word trademarks to distinguish their products from those of other undertakings."1721 
6.666.   We start by recalling that the first step of the legal test under Article  20 of the 
TRIPS  Agreement  that the Panel set out for itself was to examine "the nature and extent of the 
encumbrance resulting from the special requirements, bearing in mind the legitimate interest of the 
trademark owner in using its trademark in the cours e of trade and thereby allowing the trademark 
to fulfil its intended function".1722 In applying this element of the test to the facts of the case, the 
Panel agreed with the complainants that the trademark requirements of the TPP  measures are 
"far-reaching".1723 In this regard, the Panel recalled that "[t]he TPP  measures eliminate the 
possibility of applying figurative trademarks, or figurative or stylized elements of composite and 
word marks to tobacco retail packaging and products, to distinguish the goods of o ne undertaking 
in this manner from those of other undertakings."1724 According to the Panel, in this way, "[t]he 
TPP measures thus prevent any non -word components of the relevant trademarks … from 
contributing to distinguishing the products in the marketplace ."1725 
6.667.   Thereafter, the Panel recalled the panel's statement in EC – Trademarks and Geographical 
Indications (US)  that "[t]he function of trademarks can be understood by reference to Article  15.1 
[of the TRIPS  Agreement ] as distinguishing goods and services of  undertakings in the course of 
trade" and that "[e]very trademark owner has a legitimate interest in preserving the distinctiveness,  
or capacity to distinguish, of its trademark so that it can perform that function"1726, which includes 
its interest in using i ts trademarks. In the view of the panel in EC – Trademarks and Geographical 
Indications (US) , "[t]aking account of that legitimate interest will also take account of the trademark 
owner's interest in the economic value of its mark arising from the reputati on that it enjoys and the 
quality that it denotes."1727 While this statement was made by the panel in EC – Trademarks and 
Geographical Indications (US)  in the context of examining "the legitimate interests of the owner of 
the trademark" in Article  17 of the TRIPS Agreement , the Panel considered it to be important 
contextual guidance for the purposes of its analysis under Article  20 of the TRIPS  Agreement .1728 
The Panel recognized the legitimacy of the trademark owner's interest in using its trademark for 
various purposes, including identification of the source of the product and communication of its 
tangible or intangible benefits, and considered that it needed to examine the impact of the 
TPP measures on the right  holder's ability to use trademarks for these vari ous purposes.1729 
6.668.   The Panel noted that "[t]he complainants have not sought to demonstrate that consumers 
have in fact been unable to distinguish the commercial source of tobacco products of one undertaking 
from those of other undertakings … as a result of the  TPP trademark requirements."1730 The Panel 
further noted the complainants' argument that the removal of the figurative elements under the 
TPP measures undermined the ability of trademarks to signal individual tobacco products' quality, 
 
1718 Australia's appellee's submission, para.  246 (quoting Panel  Repor t, para.  7.2563). (emphasis added 
by Australia)  
1719 Australia's appellee's submission, para.  247. 
1720 Australia's appellee's submission, para.  248 (quoting Panel  Report, para.  7.2569).  
1721 Australia's appellee's submission, para.  248. (emphasis original)  
1722 Panel Report, para.  7.2430.a.  
1723 Panel  Report, para.  7.2557.  
1724 Panel  Report, para.  7.2557.  
1725 Panel  Report, para.  7.2558.  
1726 Panel  Report, para.  7.2560 (quoting Panel  Report, EC – Trademarks and Geographical Indications 
(US), para.  7.664).  
1727 Panel  Report, para.  7.2560 (quoting Panel  Report, EC – Trademarks and Geographical Indications 
(US), para.  7.664).  
1728 Panel  Report, para.  7.2562.  
1729 Panel  Report, para.  7.2562.  
1730 Panel  Report, para.  7.2564. (emphasis original)  
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  characteristics, and r eputation to consumers.1731 In the Panel's view, however, preventing such 
design features from creating positive product perceptions and discouraging the use of tobacco 
products by consumers was "the very purpose of the TPP  measures".1732 
6.669.   The Panel considered th at, "by disallowing the use of design features of trademarks  … the 
TPP measures prevent a trademark owner from extracting economic value from any design features 
of its trademark."1733 The Panel therefore concluded that the TPP  measures' prohibitions on the u se 
of figurative trademarks on tobacco retail packaging and products and of the figurative and stylized 
elements of composite and word marks "are far -reaching in terms of the trademark owner's expected 
possibilities to extract economic value from the use o f such features".1734 The Panel remarked, 
however, that "[t]he practical implications of those prohibitions are partly mitigated by the fact that 
the TPP  measures allow tobacco manufacturers to use word trademarks, including brand and variant 
names, to distin guish their products from each other."1735 The Panel further reiterated that "the 
complainants have not sought to demonstrate that, as a result of the encumbrances resulting from 
the trademark -related requirements of the TPP  measures, consumers have in fact been unable to 
distinguish tobacco products of one undertaking from those of other undertakings."1736 
6.670.   Honduras contends that, contrary to what the Panel found, the encumbrances imposed by 
the TPP  measures represented the "ultimate encumbrance" on the use  of trademarks because the 
TPP measures prohibit the use of any figurative signs on tobacco products and packaging.1737 In this 
regard, we note that the Panel recognized that the TPP  measures "eliminate the possibility of 
applying figurative trademarks, or fi gurative or stylized elements of composite and word marks to 
tobacco retail packaging and products"1738 and that they thus prohibit "any non -word components 
of the relevant trademarks".1739 Having recognized that the TPP  measures permit the use of word 
marks tha t appear in the form prescribed by the TPP Regulations and prohibit the use of any 
non-word components of the relevant trademarks, the Panel characterized the encumbrances as 
"far-reaching".1740 In doing so, the Panel recognized the comprehensive nature of th e TPP  measures' 
prohibition on the use of the non -word components of the relevant trademarks. At the same time, 
the Panel referred to both permissive (i.e.  use of word marks in  the form prescribed by the 
TPP Regulations) and prohibitive (i.e.  prohibition o n the use of non -word components of the 
trademarks) elements of the TPP  measures. It appears to us that, considering the two elements 
together, the Panel characterized the degree of the encumbrances at issue as "far -reaching" as 
opposed to constituting an "ultimate encumbrance" on the use of trademarks.  
6.671.   Honduras argues that the Panel erred by not focusing on the use of an individual trademark 
in terms of its distinguishing function and by focusing instead on a mitigating economic effect 
resulting from the p ermissible use of certain word marks.1741 We recall that, pursuant to Article  15.1 
of the TRIPS  Agreement , "[a]ny sign, or any combination of signs, capable of distinguishing the 
goods or services of one undertaking from those of other undertakings, shall be capable of 
constituting a trademark." Distinctiveness of signs (as such or acquired through use) is thus key to 
their eligibility to be registered as a trademark.1742 Furthermore, as the panel in EC – Trademarks 
and Geographical Indications  (Australia)  and EC – Trademarks and Geographical Indications  (US) 
observed in the context of its analysis under Article  17 of the TRIPS  Agreement , a trademark owner 
"has a legitimate interest in preserving the distinctiveness, o r capacity to distinguish" , of its 
trademark, which "includes its interest in using its own trademark".1743 The trademark owner's 
 
1731 Panel  Report, para.  7.2564.  
1732 Panel  Report, para.  7.2567.  
1733 Panel  Report, para.  7.2569.  
1734 Panel  Report, para.  7.2569.  
1735 Panel  Report, para.  7.2570.  
1736 Panel  Report, para.  7.2570. (fn  omitted)  
1737 Honduras' appellant's submission, para.  267. 
1738 Panel  Report, para.  7.2557.  
1739 Panel  Report, p ara. 7.2558.  
1740 Panel  Report, paras.  7.2557 and 7.2569.  
1741 Honduras' appellant's submission, para.  266. 
1742 Appellate  Body Report, US – Section 211 Appropriations Act , para.  154. 
1743 Panel  Reports, EC – Trademarks and Geographical Indications  (Australia) , para.  7.664;  
EC – Trademarks and Geographical Indications (US) , para.  7.664.  
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  legitimate interest in preserving the distinctiveness and using its trademark in the course of trade 
includes the interest in extracting the economic value from its trademark.1744  
6.672.   In this regard, we note that, in its analysis, the Panel reiterated several times that the 
complainants had not sought to demonstrate before the Panel that, as a result of the 
trademark -related requirements of the TPP  measures, consumers have been unabl e to distinguish 
the commercial source of tobacco products of one undertaking from those of other undertakings.1745 
Given that the complainants did not seek to establish that, as result of the TPP  measures, consumers 
have been unable to distinguish the source  of tobacco products at issue, we consider that it was 
appropriate for the Panel to examine another aspect of the trademark owner's legitimate 
interests  – the potential for extracting economic value from its trademark.1746 In examining the 
ability of the trademark owners "to otherwise extract economic value from those trademarks", the 
Panel addressed the arguments regarding price competition and downward substitution that the 
complainants themselves had raised.1747 
6.673.   Honduras also takes issue with the Panel's s tatement that "[t]he practical implications [of 
prohibitions on the use of any non -word components of the relevant trademarks] are partly mitigated 
by the fact that the TPP  measures allow tobacco manufacturers to use word trademarks … to 
distinguish their products."1748 As noted, the Panel considered both prohibitive and permissive 
elements of the TPP  measures. In our view, in making this statement, the Panel recognized that, 
despite the prohibition on the use of non -word components of trademarks, consumers ca n 
distinguish the source of tobacco products due to the permission on the use of word marks. This 
understanding is bolstered by the fact that, in the next sentence, the Panel reiterated that  the 
complainants had not sought to establish that consumers had b een unable to distinguish the source 
of the tobacco products.1749  
6.674.   Moreover, we do not consider that this observation affected or detracted from the Panel's 
general characterization of the encumbrances on the use of trademarks resulting from the 
TPP measures as "far -reaching".1750 In this respect we recall that, in paragraph  7.2604, summarizing 
its analysis under Article  20 of the TRIPS  Agreement , the Panel repeated its understanding that "the 
special requirements are far -reaching in terms of the trademark owners ' possibilities to extract 
economic value from the use of figurative or stylized features of trademarks."1751 
6.675.   In sum, we consider that, having assessed both prohibitive and permissive elements of the 
trademark -related requirements of the TPP  measures, the Pan el characterized the nature and extent 
of the encumbrance resulting from the special requirements under the TPP  measures as 
"far-reaching".1752 The Panel's observation that the "practical implications" of the prohibitions on the 
use of non -word elements of tr ademarks were "partly mitigated" by the permission to use word 
trademarks did not diminish this conclusion.1753 Rather, in making this statement, the Panel 
explained that, despite prohibitions on the use of non -word components of the trademarks, 
consumers cou ld still distinguish the source of tobacco products due to the use of word marks. 
Furthermore, given that the complainants did not contest that it was possible to distinguish the 
commercial source of the tobacco products at issue, the Panel addressed the l egitimate interests of 
the trademark owners by examining the owners' potential to extract economic value from their 
trademarks.  
 
1744 Panel  Reports, EC – Trademarks and Geographical Indications  (Australia) , para.  7.664; 
EC – Trademarks and Geographical Indications (US) , para.  7.664.  
1745 Panel  Report, paras.  7.2564 and  7.2570.  
1746 Panel  Report, para.  7.2571.  
1747 Panel  Report, paras.  7.2571 -7.2572.  
1748 Panel  Report, para.  7.2570.  
1749 Panel Report, para.  7.2570.  
1750 Panel  Report, paras.  7.2557 and 7.2569.  
1751 Panel  Report, para.  7.2604.  
1752 Panel  Report, paras.  7.2557, 7.2569, and 7.26 04. 
1753 Panel  Report, paras.  7.2570 -7.2571.  
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  6.3.2.4.2   The Panel's assessment of whether the reasons for the special requirements 
provide sufficient support for the resulting encumbra nces  
6.676.   Honduras' challenge of the Panel's conclusion that the reasons for special requirements 
under the TPP  measures sufficiently support the resulting encumbrances rests on several grounds. 
First, Honduras argues that  the Panel's finding that the TPP  meas ures contribute to the reduction in 
the use of tobacco was vitiated by several errors of law, including the lack of weighing and balancing 
in the Panel's analysis and the lack of objectivity in the Panel's assessment of evidence under 
Article  11 of the DSU .1754 Second, Honduras submits that the Panel erred by rejecting the reasonably 
available, less trademark -encumbering alternative measures proposed by the complainants.1755 
We address each of these concerns in turn.  
6.677.   Honduras' first argument is that the Panel did  not undertake the weighing and balancing of 
the public health concerns and their implications on the use of trademarks in the course of trade. 
Instead, Honduras argues that, "[i]n three  short paragraphs, the Panel simply repeat[ed] the fact 
that the prote ction of health is an important concern and recalls its (erroneous) finding made in 
respect of the claim under Article  2.2 of the TBT  Agreement that the plain packaging measures 
contribute to the reduction of smoking."1756 Australia responds that the Panel engaged in weighing 
and balancing in section 7.3.5.5.3.4 of its Report.1757 
6.678.   We recall that, as a fi rst step of its analysis, the Panel defined the degree of encumbrance 
resulting from the trademark -related requirements of the TPP  measures as "far -reaching".1758 As a 
second step of its analysis, the Panel established that, "for the purposes of Article  20, the reason for 
which Australia applies the trademark requirements, as an integral part of the TPP  measures, is to 
improve public health by reducing the use of, and exposure to, tobacco products."1759 The Panel 
recalled the Appellate  Body's observation that the  preservation of human life and health is "both 
vital and important in the highest degree".1760 Honduras does not take issue with this finding.  
6.679.   Thereafter, the Panel turned to its examination of whether the reasons for the application of 
the trademark require ments under the TPP  measures sufficiently support the resulting 
encumbrances. In doing so, the Panel stated that it would have to assess the public health concerns 
that underlie the TPP  measures' trademark requirements against the resulting encumbrances. 
Thereafter, the Panel stated that:  
The fact that these special requirements, as part of the overall TPP  measures and in 
combination with other tobacco -control measures maintained by Australia, are capable 
of contributing, and do in fact contribute, to Austr alia's objective of improving public 
health by reducing the use of, and exposure to, tobacco products, suggests that the 
reasons for which these special requirements are applied provide sufficient support for 
the application of the resulting encumbrances o n the use of trademarks.1761 
6.680.   The fact that the Panel made this statement upfront may have prompted Honduras' 
allegation that the Panel did not conduct any weighing and balancing. We note, however, that, after 
making that statement, the Panel elaborated on the reasons that led it to this conclusion. In 
particular, the Panel recalled its finding, made in the context of analysis under Article  2.2 of the 
TBT Agreement, that the rationale for the imposition of the TPP  measures was that the removal of 
design features on retail packaging and cigarettes had been determined to be apt to reduce the 
appeal of tobacco products and increase the effectiveness of GHWs. The Panel then underscored 
that the standardization of packaging was an integral part of th e TPP  measures and recalled its 
previous rejection of a pre -vetting mechanism as an alternative measure due to administrative 
discretion embodied in such a mechanism.1762 We consider that, by doing so, the Panel connected 
the requirements of the TPP  measures to the public health concern that they sought to address, 
which demonstrated that Australia's public health objectives could be achieved only by uniform and 
 
1754 Honduras' appellant's submission, paras.  280-284. 
1755 Honduras' appellant's submission, paras.  285-298. 
1756 Honduras' appellant's submission, para.  281 (referring to Panel  Report, paras.  7.2592 -7.2594).  
1757 Australia's appellee's submission, para.  249. 
1758 Panel  Report, paras.  7.2557 and 7.2569.  
1759 Panel  Report, para.  7.2586.  
1760 Panel  Report, para.  7.2587. (fn  omitte d) 
1761 Panel  Report, para.  7.2592.  
1762 Panel  Report, para.  7.2594.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  standardized requirements that did not leave any space for possible administrative discretion or 
non-uniform application. Thereafter, the Panel addressed the complainants ' arguments about the 
possible alternative less trademark -encumbering measures.  
6.681.   In light of the above, we do not agree with Honduras that the Panel did not undertake any 
weighing and ba lancing in its analysis. In our view, the Panel's analysis contains the basic elements 
of the weighing and balancing exercise, such as an assessment of the objectives pursued and the 
nature of the measures imposed, as well as an examination of the possible  alternative measures. 
Moreover, we do not consider that the weighing and balancing that the Panel was supposed to 
undertake under Article  20 is the same as that under Article  2.2 of the TBT  Agreement. The term 
"unjustifiably" in Article  20 of the TRIPS  Agreement  cannot be equated with the term "unnecessary" 
in Article  2.2 of the TBT  Agreement, and consideration of less trademark -encumbering alternative 
measures is not a necessary element in the assessment of justifiability under Article  20. 
6.682.   Honduras also t akes issue with the Panel's treatment of the proposed alternative measures. 
Honduras contends that, by finding that it is not always necessary to examine the availability of less 
trademark -encumbering alternative  measure s, the Panel rejected the notion tha t a measure would 
be "unjustifiably" encumbering the use of a trademark under Article  20, if the encumbrance goes 
beyond what suffices to address the specific policy objective.1763 Honduras further argues that the 
Panel "failed to apply its own legal test to the facts of the case".1764 Honduras recalls the Panel's 
statement that the availability of an alternative measure could call into question the reasons for the 
adoption of a measure challenged under Article  20 "if a readily available alternative would lead to  at 
least equivalent outcomes  in terms of the policy objective of the challenged measure, thus calling 
into question whether the stated reasons sufficiently support any encumbrances on the use of 
trademarks resulting from the measure".1765 However, Honduras c laims that later the Panel 
effectively changed this legal test by demanding that the alternative measures proposed by 
Honduras be " manifestly better  in contributing towards Australia's public health objective, operating 
in a manner comparable to  the TPP  measures as an integral part of Australia's comprehensive 
tobacco control policies and at the level desired by Australia".1766 
6.683.   Australia points out that Honduras' argument assumes that, as a matter of law, "the 
examination of alternatives under a standard of 'u njustifiability' should be identical in all respects to 
the examination of alternatives under a standard of 'necessity'", which Australia disagrees with.1767 
Australia also disputes Honduras' assertion that the Panel failed to "examine the alternative 
measures' contribution in light of their lesser degree of trademark  encumbrance" .1768 Australia 
considers that Honduras' position reflects the erroneous belief that  the TRIPS  Agreement  establishes 
a right to use the trademark.1769 Australia submits that, in any event, the Panel found that none of 
the proposed alternatives would have made an equivalent contribution to Australia's objective in the 
absence of the TPP  measu res.1770 
6.684.   As explained in paragraph  6.654.    above, the Panel did not consider that an examination of 
available less trademark -encumbering alternative measur es is required in examining whether the 
use of a trademark in the course of trade is unjustifiably encumbered by special requirements under 
Article  20 of the TRIPS  Agreement .1771 This is consistent with our understanding that an examination 
 
1763 Honduras' appellant's submission, para.  285. 
1764 Honduras' appellant's submission, para.  286. 
1765 Honduras' appellant's submission, para.  286 (quoting Panel Report, para.  7.2598). (emphasis added  
by Honduras)  
1766 Honduras' appellant's submission, para.  288 (quoting Panel  Report, para.  7.2601). (emphasis added 
by Honduras)  
1767 Australia's appellee's submission, para.  250. (fn  omitted) See also Australia's appellee's submission, 
part III.D.2(c).  
1768 Austr alia's appellee's submission, para.  251 (quoting Honduras' appellant's submission, para.  290). 
(emphasis original)  
1769 Australia's appellee's submission, para.  251. 
1770 Australia's appellee's submission, para.  252. 
1771 In this regard, the Panel stated:  
In our v iew, the term "unjustifiably" in Article  20 provides a degree of latitude to a Member to choose an 
intervention to address a policy objective, which may have some impact on the use of trademarks in the 
course of trade, as long as the reasons sufficiently s upport any resulting encumbrance. This, however, 
does not mean that the availability of an alternative measure that involves a lesser or no encumbrance 
on the use of trademarks could not inform an assessment of whether the reasons for which the special 
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  of whether the use  of a trademark is unjustifiably encumbered by special requirements under 
Article  20 may include a consideration of less trademark -encumbering alternative measures, but this 
is not a necessary element in the assessment of justifiability under Article  20 TR IPS. We thus see 
no error in the Panel's approach.  
6.685.   We now turn to address Honduras'  argument that the Panel failed to "examine the alternative 
measures' contribution in light of their lesser degree of trademark  encumbrance" .1772 In Honduras' 
view, the Panel erroneously transposed its analysis under Article  2.2 of the TBT  Agreement, which 
focuses on trade restrictiveness, to Article  20 of the TRIPS  Agreement , which focuses on trademark 
encumbrance.1773 
6.686.   We recall that Article  2.2 of t he TBT Agreement provides that Members shall ensure that 
technical regulations are not prepared, adopted, or applied with a view to or with the effect of 
creating "unnecessary obstacles to international trade", and that such regulations shall not be "more 
trade-restrictive than necessary to fulfil a legitimate objective". In the context of an analysis under 
Article  2.2, a comparison of the challenged technical regulation with possible alternative measures  
is "a conceptual tool for the purpose of ascertainin g whether a challenged measure is more 
trade-restrictive than necessary".1774 The Appellate  Body has clarified that, in order for a possible 
alternative measure to render the challenged measure inconsistent with Article  2.2, it must be 
"reasonably available and less trade -restrictive than the challenged measure, taking account of the 
risks non -fulfilment would create".1775 Moreover, the Appellate  Body has stated that the obligation 
to consider "the risks non -fulfilment would create" under Article  2.2 suggests a f urther element of 
the analysis, namely, a determination of whether a possible alternative measure "would make an 
equivalent contribution to the relevant legitimate objective", taking account of the risks of 
non-fulfilment.1776 
6.687.   Unlike Article  2.2 of the TBT  Agreement, which refers to " unnecessary  obstacles to 
international trade", Article  20 of the TRIPS  Agreement  requires that the use of a trademark in the 
course of trade not be " unjustifiably encumbered" by special requirements.1777 Thus, whereas the 
aim of Arti cle 2.2 is the prevention of unnecessary obstacles to international trade by ensuring that 
technical regulations are not more trade -restrictive than necessary, the purpose of Article  20 is to 
prevent the imposition of unjustifiable encumbrances on the use of trademarks. Indeed, the main 
interest protected under Article  2.2 of the TBT  Agreement is the unhindered flow of international 
trade, while under Article  20 of the TRIPS  Agreement  it is the prevention of unjustifiable 
encumbrances of the use of a tradem ark by its owner in the course of trade.1778 Accordingly, whereas 
under Article  2.2 of the TBT  Agreement an alternative measure must be reasonably available and 
less trade -restrictive than the challenged measure, an alternative proposed under Article  20 of th e 
TRIPS  Agreement  should entail a lesser degree or no encumbrance on the use of a trademark. As a 
result, a simple transplantation of an examination of the possible alternative measures under 
Article  2.2 of the TBT  Agreement into the analysis under Article  20 of the TRIPS  Agreement  would 
not be apposite because the focus of the inquiries under the two  provisions is different. At the same 
time, the same alternative measure may have both trade -restrictive and trademark -encumbering 
 
requirements are applied sufficiently support the resulting encumbrance. We do not exclude the 
possibility that the availability of an alternative measure could, in the circumstances of a particular case, 
call into question the reasons a respondent would have  given for the adoption of a measure challenged 
under Article  20. This might be the case in particular if a readily available alternative would lead to at 
least equivalent outcomes in terms of the policy objective of the challenged measure, thus calling in to 
question whether the stated reasons sufficiently support any encumbrances on the use of trademarks 
resulting from the measure.  
(Panel  Report, para.  7.2598)  
1772 Honduras' appellant's submission, para.  290. (emphasis original)  
1773 Honduras' appellant's submission, paras.  290-295. 
1774 Appellate  Body Report, US – Tuna II (Mexico) , para.  320. 
1775 Appellate  Body Report, US – Tuna II (Mexico) , para.  320 (referring to Appellate  Body Report, 
Korea  – Various Measures on Beef , para.  166, addres sing "necessity" in the context of Article  XX of the 
GATT  1994 and Article  XIV of the GATS). (emphasis original)  
1776 Appellate  Body Report, US – Tuna II (Mexico) , para.  321. The definition of the term "equivalent" 
includes "[e]qual in value, significance, or  meaning" and "having the same effect". ( Shorter Oxford English 
Dictionary , 5th edn, W. R. Trumble and A.  Stevenson (eds.) (Oxford University Press, 2002), Vol.  1, p. 851) 
1777 Emphasis added.  
1778 We recall, in this respect that, according to the preamble to th e TRIPS  Agreement, intellectual 
property rights are private rights.  
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  aspects. In this case, the t rade-restrictive elements of such a measure would be examined under 
Article  2.2 of the TBT  Agreement, and the measure's potential to encumber the use of trademarks 
would be examined under Article  20 of the TRIPS  Agreement . 
6.688.   We recall that, in its analysis o f the alternative measures, the Panel first indicated that the 
complainants "refer[red], in the context of their claims under Article 20 of the TRIPS  Agreement , to 
the same four  measures as under Article  2.2 of the TBT  Agreement".1779 These were: (i)  an incre ase 
in taxation of tobacco products; (ii)  an increase in the MLPA; (iii)  an improvement of anti -smoking 
social marketing campaigns; and (iv)  the creation of a pre -vetting mechanism for tobacco 
packaging. The Panel considered that the first three  of these alternatives would not involve any 
encumbrances on the use of trademarks, while creation of a pre -vetting mechanism would involve 
some encumbrances on the use of trademarks.1780 As noted above, the Panel relied on its analysis 
of the alternative measure s in the context of Article  2.2 of the TBT  Agreement in its assessment 
under Article  20 of the TRIPS  Agreement . 
6.689.   As the Panel observed, the same four  alternative measures had been put forward by the 
complainants under Article  2.2 of the TBT  Agreement and un der Article  20 of the 
TRIPS  Agreement .1781 As we observed above, even if an alternative measure had both 
trade-restrictive and trademark -encumbering aspects, the focus of the inquiry under Article  20 of 
the TRIPS  Agreement  is different from that under Article  2.2 of the TBT  Agreement. The inquiry 
under Article  20 of the TRIPS  Agreement  must focus on the trademark -encumbering aspects of the 
alternative measure. In this respect, we note that the Panel did consider in its analysis whether the 
proposed alternative  measures would involve encumbrances on the use of trademarks. The Panel 
found that "[t]hree of these alternatives would not involve any encumbrances on the use of 
trademarks, while a pre -vetting mechanism would also involve encumbrances on the use of 
trademarks."1782 Accordingly, contrary to what Honduras argues, the Panel did address the 
alternative measures from a trademark perspective.  
6.690.   Honduras' third ground for challenging the Panel's analysis of the alternative measures 
concerns the Panel's articulation of the degree of contribution that the proposed alternative 
measures should achieve. In Honduras' view, the Panel first stated that the alternative measures 
must "lead to at least equivalent outcomes", but then changed the standard by requiring that the 
alternative measures be "manifestly better" than the TPP  measures in contributing towards 
Australia's objective.1783 Thus, in Honduras' view, "the Panel's finding is based on a standard that is 
different from the one it appeared to have set for itself."1784  
6.691.   We re call that, in setting out its approach to the analysis of the alternative measures, the 
Panel stated that the challenged measure would be called into question "if a readily available 
alternative would lead to at least equivalent outcomes in terms of the po licy objective of the 
challenged measure".1785 The Panel then recalled that, in its previous analysis of the alternative 
measures under Article  2.2 of the TBT  Agreement, it found that "none of these alternative measures 
would be apt to make a contribution to Australia's objective equivalent to that of the 
TPP measures."1786 In light of these previous findings under Article  2.2 of the TBT  Agreement, the 
Panel concluded that "the complainants have not shown that any of the proposed measures alone 
or in combination would be manifestly better in contributing towards Australia's public health 
objective."1787 
 
1779 Panel  Report, para.  7.2599.  
1780 Panel  Report, para.  7.2599.  
1781 Panel  Report, para.  7.2599.  
1782 Panel  Report, para.  7.2599.  
1783 Honduras' appellant's submission, paras.  286 and 288 (quoting Panel  Report, paras.  7.2598 and 
7.2601). (emphasis omitted)  
1784 Honduras' appellant's submission, para.  289. 
1785 Panel  Report, para.  7.2598.  
1786 Panel  Report, para.  7.2600.  
1787 Panel  Report, para.  7.2601. The Panel addressed one of the proposed alternative measures – the 
creation of a pre -vetting mechanism – in more detail. The Panel recalled that "the TPP trademark requirements 
are not designed to address individual trademarks and their specific featur es, but to contribute, as an integral 
part of the TPP  measures, to the overall policy of standardizing packaging and product appearance." (Ibid., 
para. 7.2603) (fn  omitted) The Panel concluded that, since Australia is not required to conduct and assessment  
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  6.692.   Indeed, the Panel's references to the level of contribution of the alternative measures were 
not consistent. In articulating the standard by which it would abide, the  Panel stated that the readily 
available alternative measure should lead to " at least equivalent outcomes"  as the challenged 
measure.1788 By contrast, later in its analysis, the Panel concluded that the complainants have not 
shown that any of the proposed alt ernative measures " would be manifestly better"  in contributing 
towards Australia's objective.1789 However, we recall that, in its examination of the alternative 
measures under Article  20 of the TRIPS  Agreement , the Panel relied on its previous analysis of the  
alternative measures in the context of Article  2.2 of the TBT  Agreement. The Panel considered the 
findings it had made under Article  2.2 of the TBT  Agreement "relevant" for its analysis under 
Article  20 of the TRIPS  Agreement  and made its conclusions with  respect to the alternative measures 
under Article  20 of the TRIPS  Agreement  "[i]n light of these earlier findings" under Article  2.2 of the 
TBT Agreement.1790 Specifically, the Panel relied on its earlier finding under Article  2.2 of the 
TBT Agreement that n one of the alternative measures "would be apt to make a contribution to 
Australia's objective equivalent  to that of the TPP  measures".1791  
6.693.   In light of the above, we recognize that the language that the Panel used in referring to the 
expected degree of contri bution of the alternative measures in its analysis under Article  20 of the 
TRIPS  Agreement  was inconsistent. However, in reaching its conclusions regarding the contribution 
of the alternative measures under Article  20 of the TRIPS  Agreement , the Panel reli ed on its earlier 
findings with respect to the contribution of the alternative measures under Article  2.2 of the 
TBT Agreement, which were premised on the standard of equivalence. Accordingly, notwithstanding 
the terminological inconsistency, we consider t hat, in fact, the standard by which the Panel abided 
was the same as under Article  2.2 of the TBT  Agreement – i.e. at least an equivalent contribution to 
the stated objective.1792 
6.694.   We recall that  we have found that the Panel erred in finding that the complaina nts failed to 
demonstrate that two alternative measures – the MLPA for tobacco products and an increase in 
taxation of tobacco products – would be apt to make a contribution equivalent to that of the 
TPP measures.1793 Specifically, to the extent that the Panel suggested that each alternative measure 
may be considered apt to achieve a similar or comparable degree of "meaningful" overall reduction 
in smoking in Australia to that of the TPP  measures, and yet its contribut ion would not be equivalent 
because of its failure to address the design features of tobacco packaging that the TPP  measures 
seek to address in the context of Australia's broader tobacco control policy, we have found that the 
Panel erred in its application  of Article  2.2.1794 Having found that the Panel committed legal error in 
its findings concerning the contribution of these two alternative measures in the context of Article  2.2 
of the TBT  Agreement, we consider that the Panel could not rely on these finding s in assessing the 
contribution of these two  alternative measures in the context of Article  20 of the 
TRIPS  Agreement .1795 
 
of trademarks and their features on an individual basis, the availability of a pre -vetting mechanism, which 
amounts to a method of conducting such an assessment, would not call into question whether Australia's public 
health objective sufficiently support s the encumbrances resulting from the TPP trademark restrictions. (Ibid.)  
1788 Panel  Report, para.  7.2598. (emphasis added)  
1789 Panel  Report, para.  7.2601. (emphasis added)  
1790 Panel  Report, para.  7.2601.  
1791 Panel  Report, para.  7.2600. (emphasis added)  
1792 We recall  that, in response to questioning at the second hearing, Honduras stated that it considered 
the standard of equivalent contribution to be the correct standard for the examination of the alternative 
measures under Article  20 of the TRIPS  Agreement.  
1793 Panel  Report, paras.  7.1464 and 7.1531.  
1794 At the same time, we have concluded that the Panel did not err in finding that the complainants 
failed to demonstrate that these two alternative measures are less trade -restrictive than the TPP  measures. 
Consequently, a lthough we have concluded that the Panel erred in its application of Article  2.2 with respect to 
the equivalence of the contribution of each alternative measure, the Panel's findings, that the complainants 
have not demonstrated that the increase in the MLP A and the increase in taxation would each "be a less trade -
restrictive alternative to the TPP  measures, that would make an equivalent contribution to Australia's 
objective", stand. (Panel Report, para.  7.1545)  
1795 Having said so, we do not need to further a ddress the Dominican  Republic's claim that the Panel 
made a consequential error by relying on its findings, made under Article  2.2 of the TBT  Agreement, that none 
of the alternative measures proposed by the Dominican  Republic would achieve the same level o f contribution 
in the context of its analysis under Article  20 of the TRIPS  Agreement. (Dominican  Republic's appellant's 
submission, para.  1547)  
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  6.695.   Having said that, we recall our understanding that, while it may be possible that, in the 
circumstances of a particular case, an alterna tive measure that would lead to at least an equivalent 
contribution could call into question whether the reasons for the adoption of the special requirements 
sufficiently support the resulting encumbrances on the use of the trademark, such an examination 
is not a necessary inquiry under Article  20. In our view, given the degree of regulatory autonomy 
provided to Members under Article  20 through the use of the term "unjustifiably", an analysis of 
alternative measures is not required in each and every case , and does not provide decisive guidance 
in determining whether the encumbrances in question are imposed "unjustifiably" . We further recall 
our finding, in paragraph  6.655.   above, that the Panel did not err in the interpretation of Article  20 
of the TRIPS  Agreement  by not considering an examination of alternative measures to be a 
necessary element of an inquiry under Article  20. 
6.696.   We recall that, before turni ng to the analysis of the alternative measures in the context of 
Article  20, the Panel underlined that, through an overall standardization of tobacco packaging and 
product appearance, the trademark requirements of the TPP  measures make a contribution to 
Australia's objective of improving public health by reducing the use of, and exposure to, tobacco 
products.1796 For the Panel, "[t]his overall design of the TPP  measure s, of which the 
trademark -related requirements are an integral part" provided support for the  conclusion that the 
reasons for their adoption sufficiently supported these requirements, and that they therefore were 
not imposed unjustifiably.1797 The Panel thus may be seen as having reached the conclusion that the 
reasons for the adoption of the TPP tra demark requirements sufficiently supported the resulting 
encumbrances on the trademarks even before it turned to the examination of the proposed 
alternative measures. Furthermore, in reaching its final conclusion as to whether the reasons for the 
special r equirements under the TPP  measures supported the resulting encumbrances, the Panel did 
not rely on its conclusions regarding the alternative measures under Article  20. Rather, having 
recognized that trademarks "have substantial economic value" and that the  special requirements 
under the TPP  measures "are far -reaching in terms of the trademark owners' possibilities to extract 
economic value from the use of figurative or stylized features of trademarks", the Panel noted that 
"the TPP  measures, including their  trademark restrictions, are an integral part of Australia's 
comprehensive tobacco control policies, and designed to complement the pre -existing 
measures."1798  
6.697.   In our view, the Panel's overall conclusion that the complainants have not demonstrated 
that the t rademark -related requirements of the TPP  measures unjustifiably encumber the use of 
trademarks in the course of trade within the meaning of Article  20 would stand despite the Panel's 
error in its analysis of the alternative measures. As noted, Members enjo y a certain degree of 
regulatory autonomy in encumbering the use of trademarks by special requirements under Article  20 
and an analysis of alternative measures is not required under this provision.1799 In light of the 
contribution to Australia's objective tha t the trademark requirements of the TPP  measures make, we 
consider that Australia's public health reasons for the adoption of the TPP  measures sufficiently 
supported the far -reaching encumbrances on the use of trademarks resulting from the trademark 
requir ements of the TPP  measures.  
6.698.   Finally, we turn to address the appellants' consequential claims of error under Article  11 of 
the DSU. The appellants submit that, as a result of the Panel's reliance on its findings regarding 
contribution of the TPP  measures ma de in the context of Article  2.2 of the TBT  Agreement, which 
the appellants challenge under Article  11 of the DSU, the Panel's conclusions regarding contribution 
in the context of analysis under Article  20 are also flawed.1800 We recall that, in its analysis under 
Article  20 of the TRIPS  Agreement , the Panel relied on its conclusions that the TPP  measures are apt 
to and do make a contribution to Australia's objective, made in the context of Article  2.2 of the 
TBT Agreement. In paragraph  6.373.    above , we have upheld the Panel's findings under Article  2.2 
of the TBT  Agreement that the TPP  measures are apt to and do make a contribution to Australia's 
objective of reducing the use of, and exposure to , tobacco products. We therefore dismiss the 
 
1796 Panel  Report, para.  7.2593.  
1797 Panel  Report, para.  7.2593.  
1798 Panel  Report, para.  7.2604.  
1799 As noted, w hile it may be possible that, in the circumstances of a particular case, an alternative 
measure that would lead to at least an equivalent contribution could call into question whether the reasons for 
the adoption of the special requirements sufficiently support th e resulting encumbrances on the use of the 
trademark, such an examination is not a necessary inquiry under Article  20. 
1800 Honduras' appellant's submission, para.  284; Dominican  Republic's appellant's submission, 
para. 1547.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  appellants' consequential claim under Article  11 of the DSU regarding these findings raised in the 
context of Honduras' challenge under Article  20 of the TRIPS  Agreement .  
6.699.   In light of all of the above, we consid er that the Panel did not err in its examination of 
whether the reasons for special requirements under the TPP  measures sufficiently support the 
resulting encumbrances.  
6.3.2.4.3   The weight attributed by the Panel to the FCTC Guidelines  
6.700.   Honduras claims that the Pane l gave undue legal weight to the FCTC and its Guidelines.1801 
Honduras considers that the Panel's conclusion that the "good reasons" of public health protection 
"sufficiently support[ed]" the TPP measures was based on two  main elements: (i) the contribution 
to the reduction of smoking ; and (ii) Australia's pursuance of its "relevant domestic public health 
objective in line with the emerging multilateral public health policies in the area of tobacco control 
as reflected in the FCTC and the work under its auspic es, including the Article  11 and Article  13 
FCTC Guidelines" .1802 Honduras considers that the FCTC does not include any binding "commitment" 
to adopt plain packaging1803, and that its Guidelines cannot be used to justify WTO -inconsistent plain 
packaging measures , especially in situations where countries go beyond the requirements of the 
FCTC, as Australia does.1804  
6.701.   Australia responds that no party ever argued that the FCTC mandated the adoption of 
tobacco plain packaging, nor did the Panel find that the FCTC  Guidel ines could be used to justify 
otherwise WTO -inconsistent measures.1805 Australia points out that the adoption of the 
recommendation by 180 countries is " highly relevant"1806 to the analysis of unjustifiability.1807  
6.702.   At the outset, we recall that Australia had argued before the Panel that Articles 11 and 13 
of the FCTC Guidelines1808 constitute a "relevant international standard" for tobacco plain packaging 
within the meaning of Article  2.5 of the TBT  Agreement.1809 The Panel disagreed with Australia that 
Articles 11 and 13 of the FCTC Guidelines constitute a "standard" within the meaning of Annex 1.2 
to the TBT  Agreement and considered that it did not have to further examine whether they are 
"international".1810 The Panel remarked that "the FCTC and certain FCTC Guidelin es have been 
specifically discussed and relied on as evidence in at least two previous WTO disputes", which are 
Dominican  Republic – Import and Sale of Cigarettes  and US – Clove Cigarettes .1811 The Panel noted 
that Australia and certain complainants referred to the FCTC and its Guidelines as "evidence in 
support of specific arguments".1812 The Panel saw no reason to assume that the FCTC and its 
Guidelines "could not inform , together with other relevant evidence" , the Panel's understanding of 
relevant aspects of t he matters at issue, such as "tobacco control measures  … to reduce  … the 
prevalence of tobacco use".1813 These preliminary observations about the FCTC and its Guidelines 
 
1801 Honduras' appellant's submission, paras.  299-312. 
1802 Honduras' appellant's submission, para.  299 (quoting Panel  Report, para.  7.2604).  
1803 Honduras' appel lant's submission, para.  302. 
1804 Honduras' appellant's submission, paras.  303-306. 
1805 Australia's appellee's submission, paras.  253-254. 
1806 Australia's appellee's submission, para.  254. (emphasis original)  
1807 Australia's appellee's submission, para.  254. 
1808 Article  11 of the FCTC Guidelines concerns packaging and labelling of tobacco products. Article  13 of 
the FCTC Guidelines concerns measures against tobacco advertising, promotion, and sponsorship.  
1809 Panel  Report, para.  7.264.  
1810 Panel  Report, paras.  7.397 and 7.400.  
1811 Panel  Report, paras.  7.412 -7.414 (referring to Panel  Reports, Dominican  Republic – Import and Sale 
of Cigarettes , paras.  1.6, 4.370, and 7.216; US – Clove Cigarettes , paras.  2.2, 2.30, 7.4, and 7 .229-7.232).  
1812 Panel  Report, para.  7.416. In particular, the Panel noted that "Honduras and Cuba cite[d] Article  11 
of the FCTC in the course of their arguments regarding 'wear -out' effects of GHWs." (Panel  Report, fn  1272 to 
para. 7.416 (referring to Hond uras' response to Panel question No.  126, p.  38 and fn  148 thereto; 
second  written submission to the Panel, para.  51 and fn  50 thereto; Cuba's second written submission to the 
Panel, para.  155 and fn  56 thereto)). The Panel further noted that the Dominican  Republic referenced 
Article  11 of the FCTC and relied on Article  11 of the FCTC Guidelines. (Panel  Report, fn  1272 to para.  7.416 
(referring to Dominican  Republic's comments on Australia's response to Panel question No.  148, para.  87 and 
fn 105 thereto; c omments on Australia's response to Panel question No.  204, para.  891 and fn  958 thereto, 
and para.  897 and fn  973 thereto))  
1813 Panel  Report, para.  7.416 (quoting FCTC (Panel Exhibits AUS -44, JE -19), Article  3). WT/DS435/AB/R • WT/DS441/AB/R  
 
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  suggest that the Panel intended to use the m, where relevant, "as evidence" rather than as  an 
interpretative tool.  
6.703.   In the part of its analysis under Article  20 of the TRIPS  Agreement  that examined whether 
the reasons for the trademark requirements under the TPP  measures sufficiently supported the 
resulting incumbrances, the Panel made the following reference to the FCTC  Guidelines:  
7.2595. We recall that the Article  11 FCTC Guidelines provide that t he Parties to the 
FCTC "should consider adopting measures to restrict or prohibit the use of logos, colours, 
brand images or promotional information on packaging other than brand names and 
product names displayed in a standard colour and font style (plain packaging)". 
Similarly, the Article  13 FCTC Guidelines recommend that the Parties to the FCTC 
"consider adopting plain packaging requirements to eliminate the effects of advertising 
or promotion on packaging". The Guidelines elaborate on the standard featu res of plain 
packaging as including nothing other than a brand or product name, without any logos 
or other features, in a prescribed font style and size.  
7.2596. We note the reference made in the TPP Act and its Explanatory Memorandum 
to Australia's inten tion of giving effect to certain obligations under the FCTC through the 
adoption of the TPP  measures. In our view, the importance of the public health reasons 
for which the trademark -related special requirements under the TPP  measures are 
applied is further underscored by the fact that Australia pursues its domestic public 
health objective in line with its commitments under the FCTC, which "was developed in 
response to the globalization of the tobacco epidemic" and has been ratified by 
180 countries.1814 
6.704.   In this statement, having recalled the content of Articles 11 and 13 of the FCTC Guidelines, 
the Panel observed that "the importance of the public health reasons" for the adoption of the 
TPP measures "is further underscored  by the fact that Australia purs ues its domestic public health 
objective in line with its commitments under the FCTC".1815 We recall, in this respect, that the Panel 
had previously established that the objective pursued by Australia through the TPP  measures was 
"to improve public health by reducing the use of, and exposure to, tobacco products".1816 Contrary 
to what Honduras argues, we do not see the Panel suggesting that the FCTC Guidelines, in particular 
Articles 11 and 13, include a commitment to adopt TP P. Rather, as the Panel explicitly re cognized, 
that Article  11 of the FCTC Guidelines provides "that the Parties to the FCTC 'should consider 
adopting'" TPP  measures and that "the Article  13 FCTC Guidelines recommend that the Parties to 
the FCTC 'consider adopting plain packaging requirements '."1817 
6.705.   Further, in reaching its conclusion as to whether the reasons for the trademark requirements 
under the TPP  measures sufficiently supported the resulting incumbrances, the Panel made the 
following observation:  
Overall, we are not persuaded that the com plainants have demonstrated that Australia 
has acted beyond the bounds of the latitude available to it under Article  20 to choose an 
appropriate policy intervention to address its public health concerns in relation to 
tobacco products, in imposing certain special requirements under the TPP  measures that 
encumber the use of trademarks in the course of trade. … As noted above, the fact that 
the special requirements, as part of the overall TPP  measures and in combination with 
other tobacco -control measures mai ntained by Australia, are capable of contributing, 
and do in fact contribute, to Australia's objective of improving public health by reducing 
the use of, and exposure to, tobacco products, suggests that the reasons for which these 
special requirements are applied provide sufficient support for the application of the 
resulting encumbrances on the use of trademarks. We further note that Australia, while 
having been the first country to implement tobacco plain packaging, has pursued its 
relevant domestic publi c health objective in line with the emerging multilateral public 
 
1814 Panel  Report, paras.  7.2595 -7.2596. (fns  omitted) 
1815 Panel  Report, para.  7.2596. (emphasis added)  
1816 Panel  Report, para.  7.2586. (fn  omitted)  
1817 Panel  Report, para.  7.2595.  
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  health policies in the area of tobacco control as reflected in the FCTC and the work under 
its auspices, including the Article  11 and Article  13 FCTC Guidelines.1818 
6.706.   We note that, in the structu re of the Panel's analysis under Article  20 of the 
TRIPS  Agreement , the above statement is contained in the penultimate paragraph, before the 
Panel's overall finding that the complainants failed to establish the inconsistency of the 
trademark -related requi rements of the TPP  measures. Moreover, we note that, in the structure of 
the paragraph at issue, the observation about the FCTC Guidelines comes in the last sentence, after 
the Panel's conclusion that it was "not persuaded that the complainants have demons trated that 
Australia has acted beyond the bounds of the latitude available to it under Article  20".1819 In this 
sentence, the Panel recognizes, as a matter of fact, that Australia was the first country to implement 
tobacco plain packaging and that it did so "in line with the emerging multilateral public health policies 
in the area of tobacco control as reflected in the FCTC  …, including the Article  11 and Article  13 
FCTC Guidelines".1820 Moreover, this observation is introduced by the phrase "[w]e further note"1821, 
which suggests that the Panel relied on it as a further confirmation of the findings that it had already 
made about the importance of Australia's objective.  
6.707.   In light of the above, we do not agree with Honduras that the Panel attributed undue legal 
weigh t to Articles 11 and 13 of the FCTC Guidelines in its analysis by relying on those provisions to 
justify Australia's imposition of the TPP  measures. In our view, the Panel referred to Articles 11 and 
13 of the FCTC Guidelines as additional factual support to its previous conclusion that the 
complainants failed to establish that Australia acted inconsistently with Article  20 of the 
TRIPS  Agreement . 
6.3.2.5   Whether the Panel acted inconsistently with Articles 7.1 and 11 of the DSU in its 
analysis of the TPP  measures'  requirements for individual cigarette sticks  
6.708.   The Dominican  Republic claims that the Panel failed to assess its claim under Article  20 of 
the TRIPS  Agreement  regarding the prohibition of all trademarks on individual cigarette sticks and 
thus acted inconsis tently with Articles 7.1 and 11 of the DSU.1822 The Dominican  Republic argues 
that such prohibition on the use of trademarks on cigarette sticks is "materially different" from the 
prohibition regarding tobacco packaging and cigar sticks.1823 In the Dominican  Republic's view, the 
Panel "entirely failed to consider the situation of cigarette sticks in the context of its analysis under 
Article  20 of the TRIPS  Agreement "1824 despite this important distinction and thus "disregarded the 
Dominican  Republic's claim against a discrete element of the TPP  measures".1825 The 
Dominican  Republic thus requests that we reverse the Panel's findings under Article  20 of the 
TRIPS  Agreement  because the Panel did not make " any assessment"1826 of the part of the matter 
related to the appearance of individual cigarette sticks and that the Panel violated Articles 7.1 and  11 
of the DSU in this regard.  
6.709.   Australia responds that the Panel did examine the Dominican  Republic's claim concerning 
individu al cigarette sticks under Article  20 of the TRIPS  Agreement .1827 Australia  notes that the Panel 
made findings with respect to the TPP  measures, which include prohibitions on the use of any 
trademarks on individual cigarette sticks.1828 Australia also considers t hat the Panel's reasoning 
 
1818 Panel  Report, para.  7.2604.  
1819 Panel  Report, para.  7.2604.  
1820 Panel  Report, para.  7.2604.  
1821 Panel Report, para.  7.2604.  
1822 Dominica n Republic's appellant's submission, para.  1545. The Dominican  Republic argues that it 
made sufficiently clear in its panel request and its first written submission to the Panel that the "matter" at 
issue covered the appearance of individual cigarette stic ks. (Ibid., paras.  1576-1578 (referring to 
Dominican  Republic's panel request, pp.  2-3; first written submission to the Panel, para.  648))  
1823 Dominican  Republic's appellant's submission, para.  1569. The Dominican  Republic observes that the 
Panel evaluated a nd made findings on the justifiability of the TPP  measures' restrictions on the use of 
trademarks on tobacco product packaging and cigar sticks. (Ibid., para.  1543)  
1824 Dominican  Republic's appellant's submission, para.  1569.  
1825 Dominican  Republic's appellan t's submission, para.  1543.  
1826 Dominican  Republic's appellant's submission, para.  1582. (emphasis original)  
1827 Australia's appellee's submission, para.  256. 
1828 Australia's appellee's submission, para.  256. 
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  encompasses the requirements affecting the appearance of both retail packaging and tobacco 
products.1829 
6.710.   We recall that, in its panel request, the Dominican  Republic stated that the TPP  measures 
establish comprehensive regulation of the appearance and form of the retail packaging of 
tobacco  products, as well as of the tobacco products themselves. The TPP  measures, inter alia , 
"establish that individual  cigarettes  may not display trademarks, geographical indications or any 
other markin g other than an alphanumeric code for product identification purposes".1830 We note, 
however, that in its written submissions to the Panel, the Dominican  Republic  did not make a 
separate case of inconsistency with Article  20 with respect to the TPP  measure s' requirements on 
the appearance of cigarette sticks.1831 Nor did it request that the Panel make separate findings 
regarding whether this specific aspect of the TPP  measure s is inconsistent with Article  20. Rather , 
the Dominican  Republic  requested the Panel to find that the TPP measure s themselves are 
inconsistent with Article  20.1832 
6.711.   In its examination of the nature and extent of the encumbrances resulting from the 
TPP measures, the Panel first  recalled that the TPP  measures cover the retail packaging of tobacco 
products and the appearance of tobacco products themselves (including individual cigarette sticks 
and cigars).1833 The Panel described the requirements that apply for each category of products 
covered by the TPP  measures.1834 In particular, the Panel noted that " [i]n respect of tobacco 
products, the TPP  measures prohibit the use of all trademarks on cigarettes."1835 This suggests that, 
at the beginning of its analysis, the Panel indicated that its inquiry would cover the TPP measures' 
requirements for the packaging o f tobacco products and the tobacco products themselves, i.e.  cigars 
and cigarette sticks.  
6.712.   In its subsequent analysis, the Panel focused on the prohibition on the use of figurative 
trademarks, as well as of the figurative and stylized elements of composite  and word marks. The 
Panel characterized the prohibitions under the TPP  measures as "far -reaching" and underlined that 
the TPP  measures "prevent any non -word components of the relevant trademarks" from appearing 
on tobacco packaging and products.1836 At the same time, the Panel noted that "the TPP  measures 
 
1829 Australia's appellee's submission, paras.  257-263 a nd 270.  
1830 Dominican  Republic's panel request, section  A, p. 2. (emphasis original)  
1831 The Dominican  Republic's arguments focused on the lack of "evidence" for the imposition of 
prohibitions on all trademarks on cigarette sticks (Dominican  Republic's first w ritten submission to the Panel, 
paras.  43-44, 361, 648 -649, 655, 659, and 869; second written submission to the Panel, para.  204, 548 -549, 
and 551 -552) We note that, although the Dominican  Republic argued that the requirement on cigarette sticks 
is "formal ly distinct from the packaging requirements" and that the Panel should "consider this requirement 
separately from trademark requirements relating to the packaging", in our view the Dominican  Republic's 
arguments regarding cigarette sticks were not material ly different from its arguments regarding retail 
packaging. (Dominican  Republic's second written submission to the Panel, para.  549) Regarding cigarette 
sticks, the Dominican  Republic argued that there was no "evidence base" for the requirement pertaining to 
cigarette sticks, that the mechanisms through which the [T]PP  measures are intended to contribute to 
Australia's objective do not apply to cigarette sticks, and that, even if they did, the evidence indicates that the 
TPP measures have not made such a co ntribution. (Ibid., paras.  549-554) In our view, these arguments are 
identical to the Dominican  Republic's arguments that the plain packaging requirements were not "justifiable" on 
the basis that "Australia's predictions regarding the expected impact of th e PP measures were wrong", 
"Australia's conceptual framework rests on fundamental misconceptions regarding behavioural theory", and the 
evidence showed that "the PP measures have not even changed Australia's posited antecedents of behaviour, 
which provide the foundation for Australia's case that the measure will change smoking behaviour in the 
future." (Ibid., paras.  312-313 and 378)  
1832 See Dominican  Republic's first written submission to the Panel, para.  1032; second written 
submission to the Panel, para.  1012.  
1833 Panel  Report, para.  7.2556.  
1834 The Panel noted that, with respect to the retail packaging, the TPP  measures "permit the use of 
word marks that denote the brand, business or company name, or the name of the product variant, so long as 
these trademarks appear in the form prescribed by the TPP Regulations, but prohibit the use of stylized word 
marks, composite marks and figurative marks". The Panel noted that, with respect to cigars, the TPP  measures 
"permit the use of trademarks denoting the b rand, business, or company name, or the name of the product 
variant, as well as the country of origin, so long as these trademarks appear in the form prescribed by the 
TPP Regulations". (Panel  Report, para.  7.2556) (fn  omitted)  
1835 Panel  Report, para.  7.2556. We recall that, while all trademarks are prohibited from appearing on 
individual cigarette sticks, a cigarette may be marked with an alphanumeric code, which may appear on the 
cigarette only once. (Ibid., para.  2.34)  
1836 Panel  Report, para.  7.2558.  
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  allow undertakings to use word marks that denote the brand, business or company name, or the 
name of the product variant on retail packaging of tobacco products for the purposes of 
distinguishing th eir tobacco products from those of other undertakings."1837 The Panel stated that 
the complainants had "not sought to demonstrate that consumers have in fact been unable to 
distinguish the commercial source  of tobacco products of one undertaking from those of  other 
undertakings (i.e.  the identity of the source or maker of the product) as a result of the TPP trademark 
requirements" .1838 Summarizing the complainants' claim further, the Panel added that "they argue 
that the removal of figurative elements has undermi ned the ability of trademarks to signal individual 
tobacco products' quality, characteristics and reputation to consumers."1839 
6.713.   In its reasoning, the Panel then focused on the "role played … by colours and other design 
features, the use of which is prohibited  by the TPP  measures", recalling that "the TPP  measures 
prevent these trademark features from being used by trademark owners in the marketplace as a 
means of product promotion or differentiation."1840 The Panel nevertheless considered that these 
prohibitions were "partly mitigated by the fact that the TPP  measures allow[ed] tobacco 
manufacturers to use word trademarks".1841 The Panel then analysed the effect of the TPP  measures 
on the trademark owners' ability to extract economic value from its trademark.1842  
6.714.   In its final conclusion regarding the consistency of the TPP  measures with Article  20 of the 
TRIPS  Agreement , the Panel stated that "the complainants have not demonstrated that the 
trademark -related requirements of the TPP  measures unjustifiably encumber the us e of trademarks 
in the course of trade within the meaning of Article 20 of the TRIPS  Agreement ."1843 
6.715.   Having reviewed the relevant parts of the Panel's analysis, we note that, at the beginning of 
the section addressing the nature and extent of the encumbrances  at issue, in summarizing the 
requirements of the TPP  measures, the Panel indicated that its inquiry would cover the 
TPP measures' requirements for, inter alia , the appearance of individual cigarette sticks.1844 We recall 
our understanding, expressed above, t hat, in its analysis, the Panel examined the permissive and 
prohibitive elements of the TPP  measures together and that it reached its conclusion that the 
encumbrances at issue were "far -reaching"1845, taking into account both the permissive and 
prohibitive el ements of the TPP  measures. Moreover, it appears to us that the Panel examined the 
consistency of the TPP  measures with Article  20 of the TRIPS  Agreement  as a whole, without 
differentiating between the specificities of their application to tobacco packagin g and products.  
6.716.   We recall, in this respect, that, in our view, the Panel characterized the encumbrances 
imposed by the TPP  measures as "far -reaching" (as opposed to, for example, constituting an ultimate 
degree of encumbrance) because, despite the prohibi tion on the use of figurative marks on tobacco 
products and packaging and all marks on cigarette sticks, the TPP  measures permitted the use of 
word marks on tobacco packaging and cigars. Moreover, we consider that the fact that the Panel 
placed an emphasis  on the TPP  measure s' prohibition on the use of non -word marks can be explained 
by the arguments raised by the complainants before the Panel. In this respect, we note that, in 
summarizing the complainants' arguments, the Panel stated that "they argue[d] th at the removal of 
figurative elements has undermined the ability of trademarks to signal individual tobacco products' 
quality, characteristics and reputation to consumers."1846 Furthermore, as stated above, the 
complainants do not appear to have made a separate case of inconsistency with Article  20 with 
respect to the TPP  measures' requirements on cigarette sticks.  
6.717.   Finally, we note that the Panel reached its conclusions under Ar ticle 20 with respect to the 
TPP measures as whole. The Panel found that "the complainants have not demonstrated that the 
trademark -related requirements of the TPP  measures unjustifiably encumber the use of trademarks 
in the course of trade within the mean ing of Article 20 of the TRIPS  Agreement ."1847 In our view, 
 
1837 Panel  Report, para.  7.2564.  
1838 Panel  Report, para.  7.2564. (emphasis original)  
1839 Panel  Report, para.  7.2564.  
1840 Panel  Report, para.  7.2567.  
1841 Panel  Report, para.  7.2570.  
1842 Panel  Report, paras.  7.2571 -7.2573.  
1843 Panel  Report, para.  7.260 5. 
1844 Panel  Report, para.  7.2556.  
1845 Panel  Report, paras.  7.2557 and 7.2569.  
1846 Panel  Report, para.  7.2564.  
1847 Panel  Report, para.  7.2605.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  this conclusion covers the trademark requirements of the TPP  measures as they apply to packaging 
of tobacco products as well as tobacco products themselves, including cigarette sticks.  
6.718.   In light of th e foregoing, we do not consider that the Panel failed to address the 
Dominican  Republic's claim that the TPP  measures' requirements for individual cigarette sticks, 
which prohibit the use of any trademarks on a cigarette, are inconsistent with Article  20 of the 
TRIPS  Agreement . We therefore reject the Dominican  Republic's claim under Articles 7.1 and 11 of 
the DSU.  
6.3.2.6   Conclusion  
6.719.   In light of the above, we consider that the Panel did not err  in its interpretation, in  
paragraph  7.2430 of the Panel  Report , of the term "unjustifiably" in Article  20 of the 
TRIPS  Agreement  and in its application of this interpretation to the facts of the present dispute. 
Consequently, we uphold  the Panel's finding that the complainants have not demonstrated that the 
TPP measures are i nconsistent with Australia's obligations under Article  20 of the 
TRIPS  Agreement .1848 
7  FINDINGS AND CONCLUSI ONS 
7.1.  For the reasons set out in these Reports, the Appellate  Body makes the following findings and 
conclusions:  
7.1  Article  2.2 of the TBT  Agreement  
7.2.  With respect to the contribution of the TPP  measure s to Australia's objective, we have found  
that the appellants have not demonstrated that the Panel erred in finding, in parag raphs  7.1025 and 
7.1043 of the Panel  Report , that: 
7.1025. Overall … the complainants have not demonstrated that the TPP  measures are 
not apt to make a contribution to Australia's objective of improving public health by 
reducing the use of, and exposure to, tobacco products. Rather, we find that the 
evidence before us, taken in its totality, supports the view that the TPP  measures, in 
combination with other tobacco -control measures maintained by Australia (including the 
enlarged GHWs introduced s imultaneously with TPP), are apt to, and do in fact, 
contribute to Australia's objective of reducing the use of, and exposure to, tobacco 
products.  
… 
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports 
the view that, as ap plied in combination with the comprehensive range of other tobacco 
control measures maintained by Australia and not challenged in these proceedings, 
including a prohibition on the use of other means through which branding could 
otherwise contribute to the appeal of tobacco products and to misleading consumers 
about the harmful effects of smoking, the TPP  measures are apt to, and do, make a 
meaningful contribution to Australia's objective of reducing the use of, and exposure to, 
tobacco products.1849 
7.3.  With respe ct to the trade restrictiveness of the TPP  measures, we find that the appellants have 
not demonstrated that the Panel erred in finding, in paragraph  7.1255 of the Panel  Report, that:  
[T]he TPP  measures are trade -restrictive, insofar as, by reducing the us e of tobacco 
products, they reduce the volume of imported tobacco products on the Australian 
market, and thereby have a "limiting effect" on trade. We also conclude that, while it is 
plausible that the measures may also, over time, affect the overall value  of tobacco 
imports, the evidence before us does not show this to have been the case to date. We 
 
1848 Panel  Report (DS435), paras.  7.2606 and 8.1.e; Panel  Report (DS441), paras.  7.2606 and 8.1.b.iv.  
1849 Panel  Report, paras.  7.1025 and 7.1043.  
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  are also not persuaded that the complainants have demonstrated that the TPP  measures 
impose conditions on the sale of tobacco products in Australia or complian ce costs of 
such magnitude that they would amount to a limiting effect on trade.1850 
7.4.  With respect to the alternative measures, we have found that the Panel erred in finding 
that the complainants failed to demonstrate that each of the two alternative measures would 
be apt to make a contribution equivalent to that of the TPP  measures.1851 Specifically, to the 
extent that the Panel suggested that each alternative measure may be considered apt to 
achieve a similar or comparable degree of "meaningful" overall reductio n in smoking in 
Australia to that of the TPP  measures, and yet its contribution would not be equivalent because 
of its failure to address the design features of tobacco packaging that the TPP  measures seek 
to address in the context of Australia's broader t obacco control policy, we have found that the 
Panel erred in its application of Article  2.2.  
7.5.  At the same time, we have found that the Panel did not err in finding that the 
complainants failed to demonstrate that these two alternative measures are less 
trade-restrictive than the TPP  measures.1852 Consequently, although we have found that the 
Panel erred in its application of Article  2.2 with respect to the equivalence of the contribution 
of each alternative measure, the Panel's findings, in paragraphs  7.1471 a nd 7.1545 of the 
Panel  Report, that the complainants had not demonstrated that the increase in the MLPA and 
the increase in taxation would each "be a less trade -restrictive alternative to the TPP  measures 
that would make an equivalent contribution to Austr alia's objective ", stand.  
7.6.  For these reasons, we uphold  the Panel's conclusion, in paragraph  7.1732 of the 
Panel  Report, that:  
[T]he complainants have not demonstrated that the TPP  measures are more 
trade-restrictive than necessary to fulfil a legitimate o bjective, within the meaning of 
Article  2.2 of the TBT  Agreement.1853 
7.2  Article  16.1 of the TRIPS  Agreement  
7.7.  Article  16.1 of the TRIPS  Agreement  grants a trademark owner the exclusive right to preclude 
unauthorized third parties from using, in the course of trad e, identical or similar signs for goods or 
services that are identical or similar to those with respect to which the trademark is registered. The 
owner of a registered trademark can exercise its "exclusive right" a s against an unauthorized 
third party but not against the WTO  Member in whose territory the trademark is protected. Neither 
the TRIPS  Agreement  nor the provisions of the Paris Convention (1967) that are incorporated by 
reference into the TRIPS  Agreement  confer upon a trademark owner a positive rig ht to use its 
trademark or a right to protect the distinctiveness of that trademark through use. Accordingly, there 
is no corresponding obligation on Members to give effect to such "rights". Instead, in accordance 
with Article  1.1 of the TRIPS  Agreement , Members are required to give effect to Article  16.1 by 
ensuring that, in the Members' domestic legal regimes, the owner of a registered trademark can 
exercise its "exclusive right to prevent" the infringement of its trademark by unauthorized 
third parties. Hence, for purposes of WTO dispute settlement, i n order to establish that a 
WTO Member has acted inconsistently with Article  16.1, the complaining Member must demonstrate 
that, under the responding Member's domestic legal regime, the owner of a registered trademark 
cannot  exercise its "exclusive right to prevent" the infringement of its trademark by unauthorized 
third parties.  
7.8.  For these reasons, we conclude that the Panel did not err in its interpretation in finding, in 
paragraphs  7.1978, 7.1980, and 7.2031  of the Panel  Report, that:  
7.1978. In light of the ordinary meaning of the text and consistently with prior rulings, 
we agree with the parties that Article  16.1 does not establish a trademark owner's right 
to use its registered trademark. Rather, Article  16.1 only provides for a registered 
 
1850 Panel  Report, para.  7.1255.  
1851 Panel  Report, paras.  7.1464 and 7.1531.  
1852 Panel  Report, paras.  7.1417 and 7.1495.  
1853 See also Panel  Report (DS435), para.  8.1.a; Panel  Report (DS441), para.  8.1.b.i.  WT/DS435/AB/R • WT/DS441/AB/R  
 
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  trademark owner's right to prevent certain activities by unauthorized third parties under 
the conditions set out in the first sentence of Article  16.1. 
7.1980. [I]n order to show that the TPP  measures violate Aus tralia's obligation under 
Article  16.1, the complainants would have to demonstrate that, under Australia's 
domestic law, the trademark owner does not have the right to prevent third -party 
activities that meet the conditions set out in that provision . 
7.203 1. [W]e therefore conclude that the possibility of a reduced occurrence of a 
"likelihood of confusion" in the market does not, in itself, constitute a violation of 
Article  16.1, because Members' compliance with the obligation to provide the right to 
preven t trademark infringements under Article  16.1 is independent of whether such 
infringements actually occur in the market. Article  16.1 does not require Members to 
refrain from regulatory measures that may affect the ability to maintain distinctiveness 
of ind ividual trademarks or to provide a "minimum opportunity" to use a trademark to 
protect such distinctiveness .1854 
7.9.  Having found no error in the Panel's interpretation, we agree with the Panel that there was "no 
need to examine further the complainants' factual allegation that the TPP  measures' prohibition on 
the use of certain tobacco -related trademarks will in fact reduce the distinctiveness of such 
trademarks, and lead to a situation where a 'likelihood of confusion' with respect to these trademarks 
is less li kely to arise in the market" .1855 Honduras' claims that the Panel erred in its application of 
Article  16.1 and failed to make an objective assessment of the matter as required by Article  11 of 
the DSU are conditioned on our reversal of the Panel's interpretat ion. The condition on which 
Honduras' appeal is predicated, i.e.  the reversal of the Panel's interpretation, has not been satisfied. 
Consequently, we have found that we need not address Honduras' remaining claims of error.  
7.10.  In light of the foregoing, we uphold the Panel's conclusion, in paragraph  7.2051 of  the 
Panel  Report, that "the complainants have not demonstrated that the TPP  measures are inconsistent 
with Australia's obligations under Article  16.1 of the TRIPS  Agreement ."1856 
7.3  Article  20 of the TRIPS  Agree ment  
7.11.  The ordinary meaning of the term "unjustifiably", read in the context of other provisions of 
the TRIPS  Agreement , indicates that Members enjoy a certain degree of discretion in imposing 
encumbrances on the use of trademarks under Article  20 of the TRIPS Agreement .1857 In order to 
establish that the use of a trademark in the course of trade is being unjustifiably encumbered by 
special requirements, the complainant has to demonstrate that a policy objective pursued by a 
Member imposing special requirements does not sufficiently support the encumbrances that result 
from such special requirements. Such a demonstration could include a consideration of: (i)  the 
nature and extent of encumbrances resulting from special requirements, taking into account the 
legitim ate interest of the trademark owner in using its trademark in the course of trade; (ii)  the 
reasons for the imposition of special requirements; and (iii)  a demonstration of how the reasons for 
the imposition of special requirements support the resulting en cumbrances.1858 Moreover, while in 
the circumstances of a particular case, the existence of an alternative measure involving a lesser 
degree of encumbrance on the use of a trademark could be used as a consideration in evaluating 
the justifiability of special requirements and related encumbrances on the use of a trademark, such 
an examination is not a necessary inquiry under Article  20 of the TRIPS  Agreement . 
7.12.  We therefore consider that the Panel did not err in the interpretation of Article  20 of the 
TRIPS  Agreement  in stating, in paragraph  7.2430 of the Panel  Report, that:  
 
1854 Panel  Report, paras.  7.1978, 7.1980, and 7.2031. (fns  omitted)  
1855 Panel  Report, para.  7.2032.  
1856 Panel  Report (DS435), paras.  7.2051 and 8.1.d; Panel  Report (DS441), paras.  7.2051 and 8.1.b.iii.  
1857 The degree of discretion reflected through the term "unjustifiably" in Article  20 is higher than i t 
would have been, had the term reflecting the notion of "necessity" been used in this provision.  
1858 Panel  Report, para.  7.2430.  WT/DS435/AB/R • WT/DS441/AB/R 
 
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  [A] determination of whether the use of a trademark in the course of trade is being 
"unjustifiably" encumbered by special requirem ents should involve a consideration of the 
following factors:  
a. the nature and extent of the encumbrance resu lting from the special requirements, bearing 
in mind the legitimate interest of the trademark owner in using its trademark in the course 
of trade and thereby allowing the trademark to fulfil its intended function;  
b. the reasons for which the special requirements are applied, including any societal interests 
they are intended to safeguard; and  
c. whether these reasons provide sufficient support for the resulting encumbrance.1859  
7.13.  We also find that the Panel did not err in it s application of this interpretation to the facts of 
the present dispute. Consequently, we uphold the Panel's conclusion, in paragraph 7.2606 of the 
Panel Report, that the complainants have not demo nstrated that the TPP measures are inconsistent 
with Australia's obligations under Article 20 of the TRIPS Agreement.1860 
7.4  Recommendation 
7.14.  The Panel rejected the complainants' claims and found that Honduras and the 
Dominican Republic had not demonstrated that the TPP measures are inconsistent with the provisions of the covered agreements at issue. In light of these findings, the Panel declined 
Honduras' and the Dominican Republic's requests that the Panel recommend, in accordance with 
Article 19.1 of the DSU, that the DSB request Australia to bring the measures at issue into conformity with the TRIPS Agreement and the TBT Agreement. 
7.15.  Having upheld the Panel's findings under Article 2.2 of the TBT Agreement and Articles 16.1 
and 20 of the TRIPS Agreement, it follows that we also agree with the Panel that Honduras and the 
Dominican Republic have not succeeded in establishing that Australia's TPP measures are inconsistent with the provisions of the covered agreements at issue. Accordingly, we make no 
recommendation to the DSB, pursuant  to Article 19.1 of the DSU. 
Signed in the original in Geneva this 31st day of March 2020 by: 
 
 _________________________ 
 Shree B. C. Servansing 
 Presiding Member 
   
 _________________________  _________________________  
 Ujal Singh Bhatia Thomas R. Graham  
 Member Member 
__________  
 
1859 Panel Report, para. 7.2430. We note, at the same time, that, in paragraph 7.2430 of its Report, the 
Panel used the auxiliary verb "should"  in introducing the factors pertinent to the examination of whether the 
use of a trademark in the course of trade is unjustifi ably encumbered by special requirements. We wish to 
clarify that, while an inquiry under Article 20 could in clude the consideration of the above-mentioned factors, 
the degree of discretion vested in Members under Article 20 does not call for a rigid and exact set of 
considerations that are relevant fo r the examination of whether the use of a trademark is unjustifiably 
encumbered by special requirements. 
1860 Panel Report (DS435), paras. 7.2606 and 8.1.e; Panel Report (DS441), paras. 7.2606 and 8.1.b.iv. 
