I was curious to know why the panel report in Russia - Tariff Treatment found violations by Russia because of duties that it was 'required' to apply. It turns out that the reason for this terminology is that the duty rates at issue were adopted, as a Common Customs Tariff (CCT), by the Eurasian Economic Union (EAEU), an organization that (unlike the EC-Turkey customs union at issue in Turkey – Textiles) has legal personality. This raised the question whether Russia was responsible for the EAEU’s CCT.
The EU’s submission is not yet available, but it would appear that it made three separate arguments on this point. None was contested by Russia.
First, the EU argued that Russia was responsible for the EAEU’s CCT by virtue of para 2 of its accession protocol (incorporating by reference certain commitments made in its Working Party Report) (para 7.43). One such commitment is in para 275, which states as follows:
The representative of the Russian Federation confirmed that, from the date of accession, the application of all laws, regulations and other measures affecting importation or exportation of goods, whether by the Russian Federation or the competent bodies of the CU, would be in conformity with relevant provisions of the WTO Agreement ….
It is not clear how Russia could, in practice, make promises about the conduct of an organization of which it is a mere member. But that aside, the relevance of such a commitment would presumably be that Russia had violated paragraph 2 of its accession protocol. And yet the EU did not make such a claim. Wisely, the Panel ignored this argument. On the other hand, the notion of responsibility for obligations may explain the 'required by' language used in the Panel's findings.
Second, the EU argued that the EAEU’s CCT could be attributed to Russia because 'the CCT is Russia's customs tariff'. This might have meant no more than that, as was uncontested, under Russian constitutional law the CCT had the status of Russian law (a point noted in the Working Party Report). Surprisingly, the Panel treated this somewhat straightforward argument (as it would appear to be) rather differently. It stated that '[i]n our view, the relevant CCT requirements are attributable to Russia, insofar as, on the evidence before us, it can be presumed that the CCT requirements will lead to the relevant duty rates being applied by Russia' (para 7.46). But the EU had not challenged future duty rates; it had challenged the CCT. So this argument linking the CCT with future duties imposed by Russia was irrelevant to the EU's claim. It also nothing to do with the question at issue, namely whether the CCT is attributable to Russia. Technically, then, it would appear that the Panel did not find that the CCT was Russian because it formed part of Russian law.
Third, the EU argued attribution on the basis that ‘Russia has treated the challenged measures as if they were its own measures, and has not denied that it actually applies duty rates enacted by the EAEU or that this happens pursuant to legal instruments enacted by bodies of the EAEU.’ (para 7.43). In a somewhat roundabout way, the Panel accepted this argument (para 7.46).
In sum, this means that Russia was responsible for the EAEU CCT not because this was also Russian law (which would have been a straightforward argument) but because it adopted the CCT as its own. This is in accordance with Article 11 of the Articles on State Responsibility (not cited by the Panel), which states:
Conduct which is not attributable to a State under the preceding articles shall nevertheless be considered an act of that State under international law if and to the extent that the State acknowledges and adopts the conduct in question as its own.
But it is a rather slender basis for the all-important finding of attribution of the CCT to Russia.
Some further observations.
First, the EU challenged the CCT ‘as such’ rather than duties actually ‘applied’ to any given imported products. That this can be done is well established in WTO law. Often, this is explained in policy terms: the point is to prevent systemic duty violations (eg in US – Corrosion-Resistant Steel Sunset Review, para 82). But there must also be a concrete legal basis for such a claim. In cases where the obligation itself refers to the future, such as competitive conditions of competition, this is straightforward. For formal obligations it can be a little trickier. But it can be done, and in particular it can be done for Article II:1(b), at issue here. This provision states that imported products ‘shall, on their importation into the territory to which the Schedule relates … be exempt from ordinary customs duties in excess of those set forth and provided therein’ (Art II:1(b) GATT). One can read ‘shall’ as meaning that both past and future ‘applied’ duties must not be in excess of the scheduled duty levels, in particular given the prospective damages regime in the WTO. The question then turns into one of evidence: is it likely that such duties (in excess) will be applied in future? If there is a rule requiring a customs authority to do this, then the answer will, presumably, be yes (as the Panel recognized, albeit at the wrong place).
Second, a slight twist to the facts would make for a more complex problem. Imagine a customs union with international legal personality that adopts a CCT, but the WTO member (a member of that customs union) does not have a monist system, and does not otherwise adopt a CCT either in practice or formally (in Art 11 ARS terms). All it does is apply customs tariffs. One could presumably treat that practice as the relevant ‘measure’, a la Argentina – Import Measures. But would it also be possible for the WTO Member to be responsible for the customs union’s measure in some other way? This has long been a tricky question of state responsibility.
Third, this panel report shows yet again that international law finds its way into WTO law, whether one likes it or not, even if only by analogy. But it also shows that this is unproblematic provided that WTO rights and obligations are not ‘added to or diminished’ as per Articles 3.2 and 19.2 of the DSU. That, it seems, will be the case when a rule of international law has the direct effect of rendering a WTO norm inapplicable to the relevant facts of the dispute (which could be facts relevant to jurisdiction). In this case, that did not happen because there is no WTO rule on attribution. And rightly so.