INTRODUCTION

The European Communities appeals certain issues of law and legal interpretations developed in the Panel Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries (the “Panel Report”). The Panel was established to consider a complaint by India against the European Communities regarding the conditions under which the European Communities accords tariff preferences to developing countries pursuant to Council Regulation (EC) No. 2501/2001 of 10 December 2001 “applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004” (the “Regulation”).

The Regulation provides for five preferential tariff “arrangements”, namely:

All the countries listed in Annex I to the Regulation are eligible to receive tariff preferences under the General Arrangements, which provide, broadly, for suspension of Common Customs Tariff duties on products listed as “nonsensitive” and for reduction of Common Customs Tariff ad valorem duties on products listed as “sensitive”. The General Arrangements are described in further detail in paragraphs 2.4 and 2.5 of the Panel Report. The four other arrangements in the Regulation provide tariff preferences in addition to those granted under the General Arrangements. However, only some of the country beneficiaries of the General Arrangements are also beneficiaries of the other arrangements. Specifically, preferences under the special incentive arrangements for the protection of labour rights and the special incentive arrangements for the protection of the environment are restricted to those countries that “are determined by the European Communities to comply with certain labour [or] environmental policy standards”, respectively. Preferences under the special arrangements for least-developed countries are restricted to certain specified countries. Finally, preferences under the Drug Arrangements are provided only to 12 predetermined countries, namely Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Pakistan, Panama, Peru, and Venezuela.