. /.  WORLD TRADE  
ORGANIZATION  WT/DS246/7 
8 January 2004  
 (04-0070) 
 Original:   English 
 
 
 
EUROPEAN COMMUNITIES – CONDITIONS FOR THE GRANTING OF  
TARIFF PREFERENCES TO DEVELOPING COUNTRIES 
 
Notification of an Appeal by the European Communities  
under paragraph 4 of Article 16 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes ("DSU")  
 
  The following notification, dated 8 January 2004, from the Permanent Delegation of the European Commission, is being circulated to Members.    
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 Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU") and Rule 20 of the Working Procedures for Appellate Review, the 
European Communities hereby notifies its decision to appeal to the Appellate Body certain issues of 
law covered in the report of the pa nel established in response to the request from India in the dispute 
European Communities – Conditions for the Grantin g of Tariff Preferences to Developing Countries   
(WT/DS246R). 
  The European Communities seeks review of th e Panel's legal conclusion that the Special 
Arrangements to Combat Drug Production and Tra fficking provided in Council Regulation (EC)  
No. 2501/2001 (the "Drug Arrangements") ar e inconsistent with Article I:1 of the General Agreement 
on Tariff and Trade 1994  (the "GATT"). This conclusion is based on the following erroneous legal 
findings:   
- that the Enabling Clause is an "excep tion" to Article I:1 of the GATT;  
 
- that the Enabling Clause does not exclude the applicability of Article I:1 of the GATT;  
 - that the EC had the burden of proving that the Drug Arrangements were consistent with the 
Enabling Clause. 
 
 The above legal conclusion, a nd the related legal fi ndings and interpretations are set out in 
paragraphs 7.31 to 7.60 and 8.1 (b) and (c) of the Panel report. 
  India did not make any claims under the Enab ling Clause and, therefore, the Appellate Body 
should refrain from examining the consistency of the Drug Arrangements with the Enabling Clause. 
However, if the Appellate Body were to uphold the Panel's conclusion that the Drug Arrangements 
are inconsistent with Article I:1 of the GATT, or if the Appellate Body were to decide that India made 
a valid claim under the Enabling Clause, the Europ ean Communities appeals subsidiarily the Panel's 
legal conclusion that the European Communities "f ailed to demonstrate that the Drug Arrangements 
are justified under paragraph 2(a)  of the Enabling Clause". That co nclusion is based on the following 
erroneous legal findings: WT/DS246/7 
Page 2  
 
- that "the term "non-discriminatory" in footno te 3 to Paragraph 2(a) requires that identical 
tariff preferences under GSP schemes be provid ed to all developing countries without 
differentiation, except for the implemen tation of a priori limitations"; and 
 - that the term "developing countries" in Paragraph 2(a) means all developing countries. 
 
 This legal conclusion and the related legal findings and in terpretations are set out in 
paragraphs 7.61-7.177 and 8. 1(d) of the Panel report. 
  Finally the EC seeks review of the Panel's legal conclusion that the European Communities 
has nullified or impaired benefits accrued to I ndia under GATT 1994, which is  set out in paragraph 
8.1(f) of the Panel report.  
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