.\n\npest or disease prevalence relates to a subset of the SPS characteristics that are relevant under\nArticle 6.1. 337 We recall that, in India – Agricultural Products , with respect to the obligation in\nArticle 6.1, the Appellate Body held that this is not a \"static\", but an ongoing obligation, requiring\nthat SPS measures be adjusted over time so as to remain adapted to the SPS characteristics of the\nrelevant areas.338\n5.122. By referring to regional conditions \"including\" pest- or disease-free areas and areas of low\npest or disease prevalence, the title of Article 6 further supports the understanding that the pest or\ndisease status of an area is a subset of all the SPS characteristics of an area tha t may call for the\nadaptation of an SPS measure. As such, the pest and disease status is part of the broader set of\nregional conditions to be considered under Article 6.1.339 In this vein, together with the title to\nArticle 6, the words \"in particular\" in Article 6.2 underline the interlinkages between the first and\nsecond paragraphs of Article 6.340 Furthermore, the Appellate Body highlighted the particular\nsaliency of \"pest- or disease-free areas\" and \"areas of low pest or disease prevalence\" as factors to\nbe taken into account in assessing the SPS characteristics of a region, pursuant to the second\nsentence of Article 6.1.341\n5.123. Article 6.2 describes the scope of the Members' obligation as \"recogniz[ing] the concepts\"\nof pest- or disease-free areas and areas of lo w pest or disease prevalence. The definition of the\nword \"concept\" includes \"a general notion or idea\". 342 The verb \"recognize\", in turn, is defined as\n\"[t]o accept the authority, validity, or legitimacy of\" something. 343 Because the absence or low\nprevalence of a pest or disease is part of the broader set of regional conditions to be considered\nunder Article 6.1, we must consider the meaning of the terms of Article 6.2 within the context of\nthe principal obligation stipulated in Article 6.1, namely, that SPS m easures be adapted to the\nSPS characteristics of the area s from which the product originated and to which the product is\ndestined. Article 6.1 provides that Members shall \"ensure\" that their SPS measures are adapted to\nthe SPS characteristics of the area f rom which the product originated. The Appellate Body noted\nthat the verb \"ensure\" is defined as making certain the occurrence of a situation or outcome 344,\nand thus envisages that Members take steps towards the achievement of adaptation of their\nmeasures to the SPS characteristics of certain areas.\n5.124. The Appellate Body understood the use of the verb \"ensure\" in connection with the\nadaptation of \"SPS measures\" in the plural as indicating something that should be done\nconsistently and systematically by Members. 345 Moreover, the Appellate Body noted that the\nreference to \"SPS measures\" in the plural suggests that the obligation of adaptation to regional\nconditions applies generally, as well as in connection with each specific SPS measure maintained\nby a Member. At the same time, the Appellate Body attached significance to the fact that Article 6\ndoes not specify any particular manner in which a Member must ensure adaptation of its\nSPS measures within the meaning of Article 6.1, or how it must recognize the concepts s et out in\nArticle 6.2.346 The Appellate Body considered that this suggests that Members enjoy a \"degree of\nlatitude\" in determining how to ensure adaptation of their SPS measures to regional conditions\npursuant to Article 6.1, and how to recognize the relevant concepts pursuant to Article 6.2.347\n5.125. The second sentence of Article 6.2 refers to a Member's \"determination\" of pest - or\ndisease-free areas and areas of low pest or disease prevalence, and stipulates that such\ndetermination shall be based on factors such as those listed in that sentence. 348 As we see it,\nmaking a determination pursuant to Article 6.2 requires the importing Member to take specific\n\n337 Appellate Body Report, India – Agricultural Products, para. 5.140.\n338 Appellate Body Report, India – Agricultural Products, para. 5.132.\n339 Appellate Body Report, India – Agricultural Products, para. 5.133.\n340 Appellate Body Report, India – Agricultural Products, para. 5.133.\n341 Appellate Body Report, India – Agricultural Products, para. 5.133.\n342 Oxford English Dictionary online, definition of \"concept\", available at:\n<http://www.oed.com/view/Entry/38130>.\n343 Oxford English Dictionary online, definition of \"recognize\", available at:\n<http://www.oed.com/view/Entry/159656>.\n344 Appellate Body Report, India – Agricultural Products, para. 5.132.\n345 Appellate Body Report, India – Agricultural Products, para. 5.132.\n346 Appellate Body Report, India – Agricultural Products, para. 5.136.\n347 Appellate Body Report, India – Agricultural Products, para. 5.137.\n348 In particular, the second sentence of Article 6.2 refers to geography, ecosystems, epidemiological\nsurveillance, and the effectiveness of sanitary or phytosanitary controls.\n\nsteps, and thus envisages a certain process, for the determination of pest- or disease-free areas or\nareas of lo w pest or disease prevalence. In this vein, the Appellate Body has held that the\nassessment of whether a Member has complied with the obligations in Articles 6.1 and 6.2 may\ninvolve \"scrutiny of the specific steps and acts that the Member has or has not ta ken\" in light of\nthe SPS characteristics of the relevant areas, as well as of broader aspects of the importing\nMember's regulatory regime governing SPS matters. 349 Specific instances of recognition or\nnon-recognition of the concepts of pest - or disease-free areas and areas of low pest or disease\nprevalence may thus be relevant in the analysis of whether an importing Member complies with its\nobligation under the first sentence of Article 6.2. Where such instances of recognition are\npresented to a panel, these instances must be taken into consideration in the assessment of\nwhether or not a Member has complied with its obligation under Article 6.2.\n5.126. Furthermore, we attach significance to the fact that Article 6.3 envisages that the\nexporting Member may make the cl aim that areas within its territory are pest - or disease-free or\nof low pest or disease prevalence. Taking into account the ongoing nature of the obligation to\nadapt SPS measures to regional conditions, we consider that Article 6.2 requires the importing\nMember to provide an effective opportunity for the exporting Member to make the claim,\naddressed to the importing Member, that areas within its territory are pest - or disease-free or of\nlow pest or disease prevalence, by maintaining a practice of, or a proc ess for, receiving such a\nclaim by an exporting Member affected by a specific SPS measure. Accordingly, we see Article 6.2\nnot as an obligation to acknowledge the concept of regionalization as an abstract idea 350; rather,\nwe see it as an obligation to render operational the concepts of pest - or disease-free areas and\nareas of low pest or disease prevalence.\n5.127. Finally, we note that Article 6.2 does not prescribe a particular manner in which Members\nmust recognize the concepts of pest - or disease -free areas and areas of low pest or disease\nprevalence. We therefore consider that a Member's recognition of such concepts may be expressed\nin different ways. The recognition of the concepts of pest - or disease-free areas and areas of low\npest or disease prevalence will often be embodied in a Member's regulatory framework. In that\nrespect, the Appellate Body held that the assessment of the consistency of an SPS measure with\nthe obligations of Article 6.1 and Article 6.2 will be facilitated in circumstances where Members put\nin place a regulatory scheme or structure that accommodates adaptation of SPS measures on an\nongoing basis.351\n5.128. At the same time, we recall that the Appellate Body held that recognition of the relevant\nconcepts pursuant to Article 6.2 will not necessarily , and in every case, require an affirmative act\nthat is \"distinct from and taken prior to\" the adoption of an SPS measure. 352 Accordingly, specific\ninstances of recognition or non -recognition of the concepts of pest - or disease -free areas and\nareas of low pest or disease prevalence may be relevant for assessing a Member's compliance with\nArticle 6.2. In this vein, we can also conceive of the situation where recognition of the relevant\nconcepts is not contained in the regulatory framework, but manifests itself in a Member's practice\nof giving an effective opportunity to an exporting Member to make the claim that areas within its\nterritory are pest- or disease-free or of low pest or disease prevalence.\n5.129. In sum, while the assessment of a Member's compliance with Article 6.2 will be a function\nof the specific claims raised by the complainant and the circumstances of any particular case, we\nconsider that, in any event, the obligation to \"recognize the concepts\" of pest - or disease -free\nareas and areas of low pest or disease prevalence pursuant to Article 6.2 is part of the overarching\nobligation of Members to ensure adaptation of their SPS measures to regional conditions under\nArticle 6.1. Moreover, the obligation in Article 6.2 must also be interpreted in light of t he fact that\nArticle 6.3 envisages that an exporting Member may make the claim, addressed to the importing\nMember, that areas within its territory are pest - or disease -free or of low pest or disease\nprevalence. In particular, we have found that the importi ng Member must provide an effective\nopportunity for the exporting Member to make such a claim and thus render operational the\nconcepts of pest- or disease-free areas and areas of low pest or disease prevalence. This may be\nachieved through, individually or jointly: a provision in the reg ulatory framework; the very\nSPS measure at issue; and a practice of recognizing pest - or disease-free areas or areas of low\n\n349 Appellate Body Report, India – Agricultural Products, para. 5.137.\n350 See Panel Report, para. 7.373.\n351 Appellate Body Report, India – Agricultural Products, para. 5.138.\n352 Appellate Body Report, India – Agricultural Products, para. 5.143. (emphasis original)\n\npest or disease prevalence. All these elements may be relevant in an assessment of a Member's\ncompliance with the obligation under Article 6.2 of the SPS Agreement. As each element may\ncontribute to a different degree to the overall compliance by that Member with its obligation to\nrecognize the concepts of pest- or disease-free areas and areas of low pes t or disease prevalence,\nthe focus of a panel's analysis will depend on the circumstances of the case and the particular\ninstruments at issue.\n5.3.3.3 Whether the Panel erred in finding that Russia recognizes the concepts of\npest- or disease-free areas and areas of low pest or disease prevalence in respect of ASF\n5.130. We now turn to review the Panel's analysis under Article 6.2 of the SPS Agreement, in\norder to assess the European Union's claim that the Panel erred in finding that Russia recognizes\nthe concepts of pest- or disease-free areas and areas of low pest or disease prevalence in respect\nof ASF. In particular, the European Union contends that the Panel erred in considering that\nArticle 6.2 requires merely an \"abstract\" recognition of the concept of regionalizatio n, for instance,\nin the form of a pre -existing regulatory framework.353 The European Union highlights that the text\nof the first sentence of Article 6.2 does not refer to a particular manner in which a Member shall\nrecognize the concept of regionalization an d submits that, therefore, such recognition can occur in\ndifferent ways, such as through a pre -existing regulatory framework or through the very measure\nat issue.354\n5.131. For the European Union, a concrete measure post -dating the regulatory framework can in\nfact contradict the formal regulatory framework, effectively deny \"regionalization\", and thus\namount to actual non -recognition of the concepts of pest - or disease-free areas and areas of low\npest or disease prevalence. 355 The European Union argues that, in such situations, an importing\nMember would only \"pay lip service\" to the recognition of the concept and at the same time refuse\nthe imports of the products at issue. 356 Such conduct would not comply with the obligation under\nArticle 6.2 to recognize the concepts of pest - or disease -free areas and areas of low pest or\ndisease prevalence.\n5.132. For its part, Russia submits that the Panel correctly found that Article 6.2 requires an\nimporting Member to make the application of regionalization legally possible, but it does n ot\nrequire an examination of whether a particular challenged SPS measure is applied in a manner\nconsistent with \"regionalization\" requirements.357 Russia argues that Article 6.2 requires proof only\nof an express recognition of the concepts of pest - or disease-free areas and areas of low pest or\ndisease prevalence, not of a Member's proper application of the concept of regionalization in a\nparticular challenged SPS measure.358\n5.133. Russia submits that the approach advocated by the European Union would conflate\nArticle 6.1 and Article 6.2 of the SPS Agreement: if an SPS measure accords recognition to a\n\"regionalization\" request, it will likely comply with Article 6.1 and, consequently, with Article 6.2.\nConversely, \"if an importing Member has determined not to accord r ecognition to a regionalization\nrequest in violation of Article 6.1 and/or has failed to adapt its challenged SPS measure to\ndomestic SPS characteristics\", then the panel would have to make \"a negative finding of\n'recognition' under Article 6.2\", even wher e it is undisputed that the importing Member has\ndetailed the various concepts of regionalization in its regulatory framework. 359 For Russia, this\ncould lead to an \"absurd situation\" in which a panel finds, \"solely on the basis of the\nWTO-inconsistent application of a regionalization request, that a Member, in its entirety, does not\nrecognize the concept[s] of pest- or disease-free areas, or areas of low pest or disease prevalence\nunder Article 6.2, even if that Member has in place a robust and well -functioning regionalization\nframework, and has actively recognized and applied regionalization in many different contexts over\na considerable period of time.\"360\n\n353 European Union's other appellant's submission, para. 30.\n354 European Union's other appellant's submission, para. 38.\n355 European Union's other appellant's submission, para. 33.\n356 European Union's other appellant's submission, para. 36.\n357 Russia's appellee's submission, para. 51.\n358 Russia's appellee's submission, para. 28.\n359 Russia's appellee's submission, para. 66.\n360 Russia's appellee's submission, para. 64. (emphasis original)\n\n5.134. Turning to consider the Panel's analysis, we note that the Panel began by recalling the\nAppellate Body's statement in India – Agricultural Products that Article 6 of the SPS Agreement\ndoes not specify any particular manner in which a Member must \"recognize\" the concepts set out\nin Article 6.2 and that it does not prescribe whether recognition of the relevant concept must be\n\"done in writing through a formal governmental act, or whether it may be accomplished in some\nother manner\".361 The Panel then reviewed a number of legal instruments relied upon by Russia in\nsupport of its contention that it recognizes the co ncept of regionalization 362, and found that\nRussia's regulatory framework recognizes such concept within the meaning of Article 6.2.363 The\nPanel explained that this finding rested on the basis that the acknowledgement of particular\n\"abstract ideas\" is suffici ent for the purposes of Article 6.2, which it considered to be a less\nstringent obligation than that of \"ensuring\" that a measure is \"adapted\" to the SPS characteristics\nof an area under Article 6.1.364 The Panel also considered that it could not take into a ccount in its\nanalysis under Article 6.2 specific instances of recognition or non -recognition of the concepts of\npest- or disease-free areas and areas of low pest or disease prevalence. The Panel explained that,\nif it did take into consideration specific i nstances of recognition or non -recognition of the concepts\nof pest- or disease-free areas and areas of low pest or disease prevalence, it would be examining a\ncrucial element of the assessment under Article 6.1 – i.e. whether Russia calibrated the measures\nat issue to the existence or not of ASF -free areas within the European Union – through the lens of\nArticle 6.2. For the Panel, this would reduce parts of Article 6 of the SPS Agreement to redundancy\nand inutility and thus be incompatible with the principle of effective treaty interpretation.365\n5.135. We have set out in paragraphs 5.119-5.129 above our interpretation of Article 6.2 of the\nSPS Agreement. We consider that Articl e 6.2 elaborates on a specific aspect of the overarching\nobligation in Article 6.1 that Members shall ensure that their SPS measures are \"adapted\" to the\nSPS characteristics of the areas from which the product originated and to which the product is\ndestined.366 Furthermore, we consider that the obligation in Article 6.2 must be seen in light of the\nfact that Article 6.3 envisages that the exporting Member may make the claim that areas within its\nterritory are pest- or disease-free or of low pest or disease pr evalence, and in light of the ongoing\nnature of the obligation to adapt SPS measures to regional conditions. We have concluded that\nArticle 6.2 requires the importing Member to provide an effective opportunity for the exporting\nMember to make the claim, ad dressed to the importing Member, that areas within its territory are\npest- or disease -free or of low pest or disease prevalence, by maintaining a practice of, or a\nprocess for, receiving such claims from an exporting Member affected by a specific SPS measu re,\nand thus render operational the concept of regionalization. Accordingly, we disagree with the Panel\nthat the obligation in Article 6.2 is separate from and \"less exigent\" or \"less stringent\" than that of\nArticle 6.1, and that it requires merely an ackn owledgement of the concept of regionalization in\nthe form of \"abstract ideas\".\n5.136. Moreover, we consider that the Panel erred in finding itself precluded from taking into\naccount in its analysis under Article 6.2 specific instances of recognition or non -recognition of the\nconcepts of pest - or disease-free areas and areas of low pest or disease prevalence because this\nwould be incompatible with the principle of effective treaty interpretation. As explained above,\nArticle 6.2 and Article 6.1 do not set out separa te, unrelated obligations. Rather, as the\nAppellate Body clarified in India – Agricultural Products, there are common elements throughout\nArticle 6, which reveal the interlinkages that exist among the paragraphs of that Article. 367\nBecause Article 6.2 elaborates on one specific aspect of the overarching obligation in Article 6.1\nthat Members ensure that their SPS measures are adapted to regional conditions, the question of\nwhether a Member recognizes the concepts of pest - or disease-free areas and areas of low pest or\ndisease prevalence may be a relevant consideration under both Article 6.1 and Article 6.2. It\nfollows from this that consideration of specific instances of recognition or non -recognition of the\nconcepts of pest - or disease -free areas and areas of low pest or disease prevalence may be\nrelevant for the analys es under both Articles 6.1 and 6.2. Against this background, the concern\n\n361 Panel Report, para. 7.367 (referring to Appellate Body Report, India – Agricultural Products,\npara. 5.136).\n362 Panel Report, paras. 7.369 and 7.371 (referring to Customs Union Decision No. 317 (Panel Exhibit\nRUS-25.b); 2006 Memorandum (Panel Exhibit EU-61); and Veterinary certificate for EU exports to Russia\n(Panel Exhibit EU-52), fn 1)).\n363 Panel Report, para. 7.373.\n364 Panel Report, para. 7.373.\n365 Panel Report, paras. 7.377-7.378.\n366 Appellate Body Report, India – Agricultural Products, para. 5.141.\n367 Appellate Body Report, India – Agricultural Products, para. 5.141.\n\narticulated by the Panel, and embraced by Russia on appeal, about an overlap in the analys es\nunder Articles 6.1 and 6.2 seems inapposite.\n5.137. Furthermore, we have found above that recognizing the relevant concepts under\nArticle 6.2 may be achieved through, individually or jointly: a provision in the regulatory\nframework; the very SPS measure at issue; and a practice of recogniz ing pest- or disease-free\nareas or areas of low pest or disease prevalence. All such elements may be relevant to the\nassessment of a Member's compliance with the obligation to recognize the relevant concepts\npursuant to Article 6.2. Different elements may contribute to different degrees to the overall\ncompliance by that Member with its obligation to recognize the relevant concepts. Accordingly, we\nconsider that a panel must take into account in its analysis all elements that may be relevant in a\nparticular case and, on that basis, reach a conclusion as to whether, overall, the Member complies\nwith the obligation to recognize the concepts of pest - or disease-free areas and areas of low pest\nor disease prevalence. We therefore consider that the Panel erred in finding that it could not take\ninto account in its analysis under Article 6.2 specific instances of recognition or non -recognition of\nthe concept of regionalization.\n5.138. In sum, we disagree with the Panel that Article 6.2 sets out a less st ringent obligation as\ncompared to Article 6.1 of the SPS Agreement , requiring merely an acknowledgement of the\nconcept of regionalization in the form of \"abstract ideas\". We also consider that the Panel erred in\ndeeming itself precluded from taking into account in its analysis under Article 6.2 specific instances\nof recognition or non -recognition of the concept of regionalization. Therefore, we reverse the\nPanel's findings, in paragraphs 7.379, 7.485, and 8.1.d.iii, and i n paragraphs 7.925, 7.1029,\nand 8.1.e.vi of the Panel Report, that Russia recognizes the concepts of pest- or disease-free areas\nand areas of low pest or disease prevalence in respect of ASF, and that , therefore, the EU-wide\nban and the bans on the imports of the products at issue from Estonia, Latvia, Lithuan ia, and\nPoland, are not inconsistent with Russia's obligations under Article 6.2 of the SPS Agreement.\n5.139. This brings us to the question of whether we can complete the legal analysis of whether\nRussia recognizes the concept of regionalization within the meani ng of the first sentence of\nArticle 6.2 of the SPS Agreement. The European Union requests us to complete the legal analysis\nand find that Russia fails to recognize the concepts of pest - or disease-free areas and areas of low\npest or disease prevalence, and that therefore the EU -wide ban and country -specific bans on the\nimportation of the products at issue are inconsistent with Russia's obligation under Article 6.2.368\nIn this regard, the European Union refers to findings made by the Panel in its analysis unde r\nArticle 2.3 of the SPS Agreement, and asserts that, according to those findings, neither on the face\nof the measures at issue nor in their application does Russia recognize the concept of\nregionalization.369\n5.140. In response, Russia requests that, in the event that we reverse the Panel's findings under\nArticle 6.2, we complete the legal analysis and find that Russia recognizes the concept of\nregionalization.370 Russia refers to several letters sent by its authorities to the European Union\nexplaining its \"regionali zation\" requirements and requesting proof that the areas claimed by the\nEuropean Union to be ASF -free were in fact ASF -free, and submits that these letters demonstrate\nthat Russia recognizes the concept of regionalization.371\n5.141. At the outset, we note that the Appellate Body has completed the legal analysis with a\nview to facilitating the prompt settlement and effective resolution of the dispute when sufficient\nfactual findings by the panel or undisputed facts on the panel record allowed it to do so. 372\nHowever, t he Appellate Body has declined to complete the legal analysis where doing so would\n\n368 European Union's other appellant's submission, para. 50.\n369 In particular, the European Union refers to findings made by the Panel in paragraphs 7.1357-7.1360\nof the Panel Report. (European Union's other appellant's submission, para. 47)\n371 Russia's appellee's submission, paras. 82-89.\n372 See e.g. Appellate Body Reports, US – Gasoline, p. 19, DSR 1996:I, p. 18; Canada – Periodicals,\np. 24, DSR 1997:I, p. 469; EC – Hormones, para. 222; EC – Poultry, para. 156; US – Shrimp, paras. 123-124;\nAustralia – Salmon, paras. 117-118; Japan – Agricultural Products II, para. 112; US – FSC, para. 133;\nUS – Lamb, paras. 150 and 172; US – Section 211 Appropriations Act, para. 352; EC and certain member\nStates – Large Civil Aircraft, paras. 1174-1178; and US – Large Civil Aircraft (2nd complaint),\nparas. 1272-1274.\n\ninvolve addressing claims that the panel had not examined at all 373, particularly where, at the\nappellate review stage, the participants did not sufficiently address the issue s the Appellate Body\nwould have needed to resolve in order to complete the legal analysis, including the probative value\nof the evidence not considered by the panel.374\n5.142. Turning to the request at issue that we complete the legal analysis with respect to the\nEuropean Union's claim under Article 6.2, we recall that, in principle, compliance with the\nobligation of Article 6.2 may be achieved through, individually or jointly: a provision in the\nregulatory framework; the very SPS measure at issue; and a practice of recognizing pest - or\ndisease-free areas and areas of low pest or disease prevalence. A panel must take into account in\nits analysis all elements that may be relevant in a particular case and, on that basis, reach a\nconclusion as to whether, overall, the M ember complies with Article 6.2. Furthermore, we recall\nthat the obligation in Article 6.2 must also be seen in light of the fact that Article 6.3 envisages\nthat the exporting Member may make the claim that areas within its territory are pest - or\ndisease-free or of low pest or disease prevalence, and in light of the ongoing nature of the\nobligation to adapt SPS measures to regional conditions. On this basis, we have concluded that\nArticle 6.2 requires the importing Member to provide an effective opportunity for the exporting\nMember to make the claim, addressed to the importing Member, that areas within its territory are\npest- or disease -free or of low pest or disease prevalence, by maintaining a practice of, or a\nprocess for, receiving such claims from an ex porting Member affected by a specific SPS measure.\nAccordingly, we have found that Article 6.2 requires Members to render operational the concepts\nof pest- or disease-free areas and areas of low pest or disease prevalence.\n5.143. With these considerations in min d, and in order to complete the legal analysis, we turn to\nassess whether there are sufficient findings by the Panel and undisputed evidence on the Panel\nrecord to allow us to determine whether or not Russia recognizes the concepts of pest - or\ndisease-free areas and areas of low pest or disease prevalence. We begin by noting that, in order\nto determine whether Russia complies with the obligation to recognize these concepts, the Panel\nconsidered several aspects of Customs Union Decision No. 317. In particula r, the Panel noted that\nthis Decision states:\n\"Regionalisation\" is the determination of the well-being or otherwise of a country or its\nadministrative territory (republic, region, district, land, county, state, province, etc.)\nin terms of the contagious a nimal diseases included in the list of dangerous and\nquarantinable diseases of the Party, and in the control entities of third countries – in\nterms of the diseases referred to in these Requirements.375\nThe Panel noted that the same legal instrument also sta tes: \"Regionalization is carried out in\naccordance with the recommendations of the World Organization for Animal Health [OIE]\".376\n5.144. With respect to the definition of the term \"regionalization\" contained in Customs Union\nDecision No. 317, we note that it reflects the fact that a pest or disease may be limited to a certain\narea. In particular, it refers to \"republic, region, district, land, county, state, and province\". The\ndefinition itself, however, provides no effective opportunity for the European Union to m ake the\nclaim, addressed to Russia, that areas within the European Union are pest - or disease-free or of\nlow pest or disease prevalence. Thus it does not render operational the concepts of pest - or\ndisease-free areas and areas of low pest or disease prevalence.\n5.145. The Panel further found that Customs Union Decision No. 317 states that \"Regionalization\nis carried out in accordance with the recommendations of the World Organization for Animal Health\n[OIE]\".377 This raises the question of whether, on the basis of t hese recommendations, an\nexporting Member has an effective opportunity to make the claim that areas within its territory are\npest- or disease -free or of low pest or disease prevalence. Because the Panel had found that\n\n373 Appellate Body Reports, EC – Poultry, para. 107; EC – Asbestos, paras. 79 and 82; US – Section 211\n374 See e.g. Appellate Body Report, Japan – DRAMs (Korea), para. 142.\n375 Panel Report, para. 7.369 (quoting Customs Union Decision No. 317 (Panel Exhibit RUS-25.b),\n\"Terms used in the Common Veterinary (Veterinary and Health) Requirements\", p. 1).\n376 Panel Report, para. 7.369 (quoting Customs Union Decision No. 317 (Panel Exhibit RUS-25.b),\n\"Terms used in the Common Veterinary (Veterinary and Health) Requirements\", p. 1).\n377 Panel Report, para. 7.369 (quoting Customs Union Decision No. 317, \"Terms used in the Common\nVeterinary (Veterinary and Health) Requirements\", p. 1).\n\nArticle 6.2 merely requires the acknow ledgement of regionalization in the form of \"abstract\nideas\"378, the Panel did not explore to what extent the OIE recommendations referred to in\nCustoms Union Decision No. 317 or other legal instruments provide an effective opportunity for the\nEuropean Union to make the claim that certain areas within the E uropean Union are pest - or\ndisease-free or of low pest or disease prevalence, thus render ing operational the concepts of\npest- or disease-free areas and areas of low pest or disease prevalence.\n5.146. We note tha t Customs Union Decision No. 317 refers to the recommendations of the OIE\ngenerally, without identifying any specific recommendations. We consider that this reference may\nbe directed at Section 4, \"General Recommendations: Disease Prevention and Control\", of the\nTerrestrial Code. In particular, Chapter 4.3 is concerned with \"Zoning and Compartmentalisation\".\nBe that as it may, we note that the recommendations in Section 4 of the Terrestrial Code are\ndirected at OIE member countries and envisage that when OI E member countries adopt\nSPS measures, they do so in accordance with such recommendations. However, the\nOIE recommendations themselves provide no effective opportunity for the European Union to\nmake the claim, addressed to Russia, that areas within the Eur opean Union are pest - or\ndisease-free or of low pest or disease prevalence, and thus do not render operational the concept\nof regionalization.\n5.147. Furthermore, we note that the Panel found that Customs Union Decision No. 317\ncomprises chapters containing vete rinary requirements applicable to imports of a number of\nproducts into the Customs Union territory. In particular, the Panel noted that Chapter 7 provides\nthat:\n[t]he import into the customs territory of the Customs Union and/or the transfer\nbetween Parties of healthy breeding and commercial pigs originating from territories\nfree from the following contagious animal diseases shall be permitted … [including]\nAfrican swine fever – during the last 36 months in the territory of the country or\nadministrative territory in accordance with regionalization.379\nThe Panel also considered relevant that all the chapters that refer to the products at issue in this\ndispute include reference to the \"ASF situation necessary for accepting imports of the respective\nproducts\" and to \"the territory of the country or administrative territory\".380\n5.148. We note the Panel's finding that these elements of Customs Union Decision No. 317 refer\nto the concept of regionalization. However, we do not see that these elements of Customs Union\nDecision No. 317 provide an effective opportunity for the European Union to make the claim,\naddressed to Russia, that areas within the European Union are pest- or disease-free or of low pest\nor disease prevalence. At the same time, we are cognizant of the fact that, because the Panel had\nfound that Russia complies with the obligation of Article 6.2 by acknowledging regionalization in\nthe form of \"abstract ideas\" 381, the Panel did not further explore whether or to what extent\nRussia's regulatory framework provide s an effective opportunity for the European Union to make\nthe claim that certain areas within the European Union are pest- or disease-free or of low pest or\ndisease prevalence, thus render ing operational the concepts of pest - or disease -free areas and\nareas of low pest or disease prevalence.\n5.149. Given the absence of Panel findings as to whether elements of Russia's regulatory\nframework other than Customs Union Decision No. 317 recognize the concept of regionalization,\nwe must proceed to assess specific instances of application of this concept in order to determine\nwhether or not Russia is in compliance with its obligation under Article 6.2. The Panel made no\nfindings with respect to instances of application of the concepts of pest - or disease-free areas and\nareas of low pest or disease prevalence concerning legal instrume nts other than the specific\nSPS measures at issue. However, the Panel made a number of findings with respect to the specific\nSPS measures at issue in the context of its analysis under Article 2.3 of the SPS Agreement . In\nparticular, the Panel found that \"[n]one of the measures at issue contains any explicit indication\n\n378 Panel Report, para. 7.373.\n379 Panel Report, para. 7.370 (quoting Customs Union Decision No. 317 (Panel Exhibit RUS-25.b),\nChapter 7).\n380 Panel Report, para. 7.370 (quoting Customs Union Decision No. 317 (Panel Exhibit RUS-25.b),\nChapter 7). (emphasis added by the Panel)\n381 Panel Report, para. 7.373.\n\nthat there is a possibility to recognize ASF -free zones or compartments from the territory of the\nEuropean Union.\"382 The Panel also found that the same holds true in respect of the application of\nboth the EU-wide ban and the country-specific bans.383 On the basis of these findings by the Panel,\nwe consider that the SPS measures at issue provide no effective opportunity for the\nEuropean Union to make the claim, addressed to Russia, that areas within the European Union are\npest- or disease-free or of l ow pest or disease prevalence. These measures thus do not render\noperational the concepts of pest - or disease -free areas and areas of low pest or disease\nprevalence.\n5.150. Finally, we have found above that compliance with the obligation in Article 6.2 does not\nnecessarily require the recognition of the concepts of pest- or disease-free areas and areas of low\npest or disease prevalence in the regulatory framework or in a specific SPS measure, but that it\nmay also be demonstrated on the basis of an importing Member's practice of providing an effective\nopportunity for the exporting Member to make the claim, addressed to the importing Member, that\nareas wit hin its territory are pest - or disease -free or of low pest or disease prevalence, thus\nrendering operational the concept of regionalization. However, because the Panel had found that\nRussia complies with the obligation in Article 6.2 by acknowledging regio nalization in the form of\n\"abstract ideas\"384, the Panel did not explore whether or to what extent Russia's administrative\npractice with respect to SPS matters provided an effective opportunity for the European Union to\nmake the claim that certain areas with in the European Union are pest- or disease-free or of low\npest or disease prevalence, thus rendering operational the concept of regionalization.\n5.151. In light of the above considerations, we note that the Panel's findings with respect to\nCustoms Union Decision No. 317 and with respect to the specific SPS measures at issue suggest\nthat Russia fails to provide an effective opportunity for the European Union to make the claim that\nareas within its territory are ASF -free, and thus fails to render operational the con cept of\nregionalization. At the same time, we note that, because the Panel had found that Russia complies\nwith the obligation in Article 6.2 by acknowledging the concept of regionalization as an \"abstract\nidea\"385, and because the Panel erroneously considere d itself to be precluded from taking into\naccount specific instances of recognition of the concept of regionalization by Russia, the Panel did\nnot explore whether or to what extent Russia otherwise recognizes the concepts of pest - or\ndisease-free areas and areas of low pest or disease prevalence in respect of ASF. In particular, the\nPanel made no findings with respect to the recognition of the concept of regionalization with\nrespect to ASF in instruments of Russia's regulatory framework other than Customs Union Decision\nNo. 317. In addition, because the Panel considered itself precluded from taking into account\nspecific SPS measures, it neither explored specific instances of recognition, nor was it in a position\nto determine whether there was an administrati ve practice in Russia in respect of the recognition\nof the concept of regionalization.\n5.152. In sum, we note that, while the considerations relating to Customs Union Decision No. 317\nand the Panel findings regarding the SPS measures at issue suggest that Russia fails to recognize\nthe concepts of pest - or disease -free areas and areas of low pest or disease prevalence with\nrespect to ASF, we lack findings by the Panel as to whether or not other elements of Russia's\nregulatory framework relating to SPS matters, as well as Russia's administrative practice, suggest\nthat Russia recognizes these concepts. We are therefore not in a position to complete the legal\nanalysis and determine, based on findings by the Panel or undisputed evidence before the Panel,\nwhether or not Russia recognizes the concepts of pest- or disease-free areas and areas of low pest\nor disease prevalence in respect of ASF.\n5.3.3.4 Conclusion on the European Union's claim under Article 6.2 of the\nSPS Agreement\n5.153. With respect to the European Union's claim that th e Panel erred in finding that Russia\nrecognizes the concepts of pest- or disease-free areas and areas of low pest or disease prevalence\nin respect of ASF pursuant to Article 6.2 of the SPS Agreement, we consider that Article 6.2\n\n382 Panel Report, para. 7.1358. Furthermore, the Panel found that, while the measures on Estonia,\nLatvia, Lithuania, and Poland impose a \"temporary restriction\" on imports of the products at issue, they do not\nexplicitly provide for potential regionalization in the European Union. (Ibid., para. 7.1359)\n383 Panel Report, para. 7.1360.\n384 Panel Report, para. 7.373.\n385 Panel Report, para. 7.373.\n\nrequires the importing Memb er to provide an effective opportunity for the exporting Member to\nmake the claim, addressed to the importing Member, that areas within its territory are pest - or\ndisease-free or of low pest or disease prevalence, by maintaining a practice of, or a process for,\nreceiving such a claim from an exporting Member affected by a specific SPS measure, and thus to\nrender operational the concept of regionalization. This may be achieved through, individually or\njointly: a provision in the regulatory framework; the ver y SPS measure at issue; and a practice of\nrecognizing pest - or disease -free areas or areas of low pest or disease prevalence. All these\nelements may be relevant in the assessment of a Member's compliance with the obligation under\nArticle 6.2. As each element may contribute to a different degree to the overall compliance by that\nMember with its obligation to recognize the concepts of pest - or disease-free areas and areas of\nlow pest or disease prevalence, the focus of a panel's analysis will depend on the ci rcumstances of\nthe case and the particular instruments at issue. We disagree with t he Panel's finding that\nArticle 6.2 requires merely an acknowledgement of the concept of regionalization in the form of\n\"abstract ideas\". We also consider that the Panel erred in deeming itself precluded from taking into\naccount in its analysis under Article 6.2 specific instances of recognition or non -recognition of the\nconcept of regionalization.\n6 FINDINGS AND CONCLUSIONS\n6.1. For the reasons set out in this Report, the Appellate Body makes the following findings and\nconclusions.\n6.1 Claims relating to the attribution of the EU-wide ban\n6.2. We consider that the measure that the Panel attributed to Russia was not the condition in the\nbilateral veterinary certificates of EU -wide freedom from ASF over a three -year period but, rather,\nRussia's decision to deny the importation of the products at issue, i.e. the EU -wide ban. Russia\ndoes not dispute that it banned the importation of the products at issue, and the fact that the\nbasis for doing so may not have been set out in Russian law does not alter the conclusion that the\nEU-wide ban is attributable to Russia.\n6.3. Moreover, the Panel was not barred from reviewing the WTO -consistency of the EU-wide ban\ndue to commitments set out in Russia's terms of accession to the WTO. Given the ongoing nature\nof the obligation under Article 6 of the SPS Agreement and the requirement that SPS measures be\nadjusted over time to ensure adaptation to regional SPS characteristics, the fact that a\nWTO Member has adapted its measures to the SPS characteristics of an area at a specific point in\ntime may not ensure that such adaptation remains a dequate when the particular\nSPS characteristics of that area evolve. Irrespective of the commitment in Russia's terms of\naccession to the WTO regarding which certificate would be operative in the conduct of certain trade\nto Russia from other WTO Members, Russia remains under an ongoing obligation, pursuant to\nArticle 6 of the SPS Agreement, to adapt its measures to regional SPS characteristics.\na. Consequently, we uphold the Panel's finding, in paragraphs 7.84 and 8.1.a of the Panel\nReport, that the EU-wide ban is attributable to Russia.\nb. In addition, we uphold the Panel's finding, in paragraphs 7.116 and 8.1.b of the Panel\nReport, that Russia's terms of accession to the WTO d id not limit the Panel's assessment\nof the European Union's claims regarding the EU-wide ban.\n6.2 Claims relating to Article 6 of the SPS Agreement\n6.4. With respect to Russia's claims on appeal that the Panel erred in its interp retation of\nArticle 6.3 of the SPS Agreement, we consider that the proces s of adaptation to regional\nSPS characteristics pursuant to Article 6 requires that the importing Member evaluate all the\nrelevant evidence concerning the areas that an exporting Memb er claims are pest- or disease-free\nor of low pest or disease prevalence. This evaluation is addressed by the second sentences of\nArticles 6.1 and 6.2 of the SPS Agreement , as it relates to the importing Member's determination\nof the pest or disease status of the areas concerned and its assessment of their\nSPS characteristics, with a view to adapting its measures accordingly. Similarly, the period of time\nthat the importing Member may take to conduct its evaluation and t o adapt its measures to the\nSPS characteristics of the relevant areas is covered by Article 6.1 and the second sentence of\n\nArticle 6.2, as informed by Article 8 and Annex C(1)(a) to the SPS Agreement. By contrast, neither\nthe importing Member's evaluation of the relevant evidence nor the peri od of time required to\ncarry out this evaluation are covered by Article 6.3, which addresses the duties that apply to the\nexporting Member in connection with the process set out in Article 6. A panel's review under\nArticle 6.3 is limited to assessing wheth er the evidence provided by the exporting Member to the\nimporting Member is of a nature, quantity, and quality sufficient to enable the importing Member's\nauthorities ultimately to make a determination as to the pest or disease status of the areas that\nthe exporting Member claims to be pest- or disease-free or of low pest or disease prevalence.\n6.5. Consequently, we find that the Panel did not err in its interpretation of Article 6.3 of the\nSPS Agreement by not finding that this provision requires consideration of the evidence relied\nupon by the importing Member. In addition, we find that the Panel did not err in its interpretation\nof Article 6.3 of the SPS Agreement by not finding that this provision contemplates a certain period\nof time for the importing Member to evaluate and verify the evidence provided by the exporting\nMember.\na. Therefore, we uphold the Panel's findings, in paragraphs 7.456, 7.963, and 7.1004 of\nthe Panel Report, that, as at 11 September 2014, the European Union had provided the\nnecessary evidence to objectively demonstrate to Russia that: (i) areas within Estonia,\nLatvia, Lithuania, and Poland, as well as areas within the European Union outside of the\nfour affected member States, were ASF-free; and (ii) the ASF-free areas within Estonia,\nLithuania, and Poland, as well as the ASF -free areas within the European Union outside\nof the four affected member States, were likely to remain so.\nb. We also uphold the Panel's conclusions contained in para graphs 8.1.d.iv, 8.1.e.vii,\nand 8.1.e.viii of the Panel Report, which we understand as follows:\ni. in the period between 7 February 2014 and 11 September 2014, the European Union\nhad provided the necessary evidence to objectively demonstrate to Russia, pur suant\nto Article 6.3 of the SPS Agreement, that there were areas within the\nEuropean Union, outside of Estonia, Latvia, Lithuania, and Poland, which were free of\nASF and were likely to remain so;\nii. at least as at 11 September 2014, the European Union had provided the necessary\nevidence to objectively demonstrate to Russia, pursuant to Article 6.3 of the\nSPS Agreement, that there were areas within Estonia, Latvia, Lithuania, and Poland\nthat were free of ASF;\niii. at least as at 11 September 2014, the European Union had provided the necessary\nevidence to objectively demonst rate to Russia, pursuant to Article 6.3 of the\nSPS Agreement, that the ASF -free areas within Estonia, Lithuania, and Poland were\nlikely to remain so; however, the European Union failed to provide the necessary\nevidence to objectively demonstrate to Russia, pursuant to Article 6.3 of the\nSPS Agreement, that the ASF-free areas within Latvia were likely to remain so.\n6.6. With respect to Russia's claim on appeal that the Panel erred in its interpretation of the\nrelationship between Article 6.1 and Article 6.3 of th e SPS Agreement, we consider that an\nexporting Member's failure to provide the necessary evidence to objectively demonstrate that\nareas within its territory are pest - or disease -free or of low pest or disease prevalence will, in\nmany cases, have implications for the importing Member's ability to assess the SPS characteristics\nof such areas and to adapt its measures accordingly. A panel may, in certain specific situations\nsuch as those identified by the Appellate Body in India – Agricultural Products , find t hat an\nimporting Member failed to comply with Article 6.1 irrespective of the exporting Member's\ncompliance or non-compliance with Article 6.3. However, the panel should provide reasoning\nexplaining why the circumstances of the dispute fall within one or more of those specific situations,\nor why they otherwise warrant a finding that the importing Member acted inconsistently with\nArticle 6.1. The Panel in this dispute did not provide such reasoning.\n6.7. Consequently, we find that the Panel erred , in paragraph 7 .1028 of the Panel Report, in\nfinding that Russia had failed to adapt its measure to the ASF-free areas within Latvia and thereby\nacted inconsistently with Article 6.1."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:24.197089"}}},{"rowIdx":7782,"cells":{"folder_number":{"kind":"string","value":"475"},"case_number":{"kind":"string","value":"475"},"original_filename":{"kind":"string","value":"DS475_SEQ21_Report_Of_Appellate_Body_Add.pdf"},"new_filename":{"kind":"string","value":"DS475_SEQ21_Report_Of_Appellate_Body_Add.pdf"},"doc_sequence":{"kind":"number","value":21,"string":"21"},"doc_type":{"kind":"string","value":"Report_Of_Appellate_Body"},"doc_type_raw":{"kind":"string","value":"Report of the Appellate Body Addendum"},"doc_class":{"kind":"string","value":"AB_REPORT"},"variant":{"kind":"string","value":"Add"},"part_number":{"kind":"null"},"case_title":{"kind":"string","value":"RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION AB-2016-5"},"date":{"kind":"string","value":"23 February 2017"},"header_codes":{"kind":"string","value":"WT/DS475/AB/R/Add.1; WT/DS475/AB/R."},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['EU']"},"respondent":{"kind":"string","value":"['Russia']"},"third_parties":{"kind":"string","value":"['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 3 March 2021\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the European Union\nOn 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federation affecting the importation of live pigs and their genetic material, pork, pork products and certain other commodities from the European Union, purportedly because of concerns related to cases of African swine fever.\nThe European Union claims that the measures at issue are inconsistent with:\n\nPanel and Appellate Body proceedings\nOn 27 June 2014, the European Union requested the establishment of a panel. At its meeting on 10 July 2014, the DSB deferred the establishment of a panel.\nAt its meeting on 22 July 2014, the DSB established a panel. Australia, China, India, Japan, Korea, Norway, Chinese Taipei and the United States reserved their third-party rights. Subsequently, Brazil and South Africa reserved their third-party rights. On 13 October 2014, the European Union requested the Director-General to compose the panel. On 23 October 2014, the Director-General composed the panel.\nFollowing the resignation of a member of the panel on 30 October 2014, and pursuant to a request from the European Union on 3 November 2014, the Director-General appointed a new member of the panel on 6 November 2014. Following the resignation of a member of the panel on 26 November 2014, and pursuant to a request from the European Union on 28 November 2014, the Director-General appointed a new member of the panel on 4 December 2014.\nOn 22 April 2015, the Chair of the panel informed the DSB that the panel expected to issue its final report to the parties by February 2016, in accordance with the timetable adopted after consultation with the parties. On 7 January 2016, the Chair of the panel informed the DSB that in light of modifications to the timetable, as well as of the scale and complexity of the dispute, the panel expected to issue its final report to the parties by early April 2016.\nOn 19 August 2016, the panel report was circulated to Members.\nOn 23 September 2016, the Russian Federation notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 28 September 2016, the European Union notified the DSB of its decision to cross-appeal.\nOn 21 November 2016, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that the circulation date of the Appellate Body report in this appeal will be communicated to the participants and third participants shortly after the oral hearing, in the light of scheduling of parallel appeals, and shortage of staff in the Appellate Body Secretariat. On 16 December 2016, the Appellate Body informed the DSB that it expected to circulate the Appellate Body report in this appeal no later than 23 February 2017.\nOn 23 February 2017, the Appellate Body report was circulated to Members."},"page_count":{"kind":"number","value":27,"string":"27"},"clean_text":{"kind":"string","value":"RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE\nPIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION\nAB-2016-5\nReport of the Appellate Body\nAddendum\nThis Addendum contains Annexes A to D to the Report of the Appellate Body circulated as\ndocument\n\nThe Notice of Appeal and the executive summaries of written submissions contained in this\nAddendum are attached as they were received from the participants and third participants. The\ncontent has not been revised or edited by the Appell ate Body, except that paragraph and footnote\nnumbers that did not start at one in the original may have been re -numbered to do so, and the\ntext may have been formatted in order to adhere to WTO style. The executive summaries do not\nserve as substitutes for the submissions of the participants and thir d participants in the\nAppellate Body's examination of the appeal.\n\nLIST OF ANNEXES\nANNEX A\nNOTICES OF APPEAL AND OTHER APPEAL\nContents Page\nAnnex A-1 Russian Federation's Notice of Appeal A-2\nAnnex A-2 European Union's Notice of Other Appeal A-4\nANNEX B\nARGUMENTS OF THE PARTICIPANTS\nContents Page\nAnnex B-1 Executive summary of the Russian Federation's appellant's submission B-2\nAnnex B-2 Executive summary of the European Union's other appellant's submission B-8\nAnnex B-3 Executive summary of the European Union's appellee's submission B-9\nAnnex B-4 Executive summary of the Russian Federation's appellee's submission B-13\nANNEX C\nARGUMENTS OF THE THIRD PARTICIPANTS\nContents Page\nAnnex C-1 Executive summary of Australia's third participant's submission C-2\nAnnex C-2 Executive summary of Brazil's third participant's submission C-3\nAnnex C-3 Executive summary of the United States' third participant's submission C-4\n\nANNEX D\nPROCEDURAL RULING\nContents Page\nAnnex D-1 Procedural Ruling of 14 November 2016 regarding the Russian Federation's\nrequest for English-to-Russian interpretation at the oral hearing\nD-2\n\n- A-1 -\n\nANNEX A\nNOTICES OF APPEAL AND OTHER APPEAL\nContents Page\nAnnex A-1 Russian Federation's Notice of Appeal A-2\nAnnex A-2 European Union's Notice of Other Appeal A-4\n\n- A-2 -\n\nANNEX A-1\nRUSSIAN FEDERATION'S NOTICE OF APPEAL*\n1. Pursuant to Article 16.4 and Article 17.1 of the DSU, the Russian Federation hereby notifies\nto the Dispute Settlement B ody its decision to appeal to the Appellate Body certain issues of law\ncovered in the Panel Report and certain legal interpretations developed by the Panel in the dispute\nRussian Federation – Measures on the importation of live pigs, pork and other pig pro ducts from\nthe European Union). Pursuant to Rule 20(1) of the Working Procedures for Appellate Review , the\nRussian Federation simultaneously files this Notice of Appeal with the Appellate Body Secretariat.\n\n2. The Russian Federation is restricting its appeal to those errors that it believes constitute\nserious errors of law and legal interpretation that need to be corrected. Non -appeal of an issue\ndoes not signify agreement therewith.\n\n3. For the reasons to be further elaborated in its submissions to the Appellate Body, the\nRussian Federation appeals, and requests the Appellate Body to modify or reverse, certain issues\nof law and legal interpretations developed by the Panel in this dispute.1\n\nI. THE PANEL'S FINDINGS REGARDING THE ALLEGED EU-WIDE BAN\n\n4. The Russian Federation seeks review by the Appellate Body of the Panel's findings that the\nso-called EU-wide ban is a measure that can be attributed to the Russian Federation. 2 The Russian\nFederation also appeals the underlying findings of the Panel that led to this err oneous finding: the\nPanel's failure to differentiate between national Russian Federation SPS measures and the terms of\nthe bilateral EU -Russia veterinary certificates 3, the Panel's failure to give full legal effect to the\nRussian Federation's Accession Pro tocol,4 and, alternatively, the Panel's failure to recognize the\nsequencing inherent in the bilateral veterinary certificates. As a result, the Panel erred, under\nArticles 1.1, 2.2, 2.3, 3.1, 5.1, 5.2, 5.3, 5.6, 5.7, 6.1, 6.3, 8 and Annex C of the SPS Agre ement,\nand Article 3.3 DSU, in concluding that the Russian Federation's so -called EU-wide ban is conduct\nattributable to the Russian Federation that is inconsistent with the SPS Agreement.5 These findings\nare in error, and the Russian Federation respectful ly requests that the Appellate Body reverse\nthem.\n\nII. THE PANEL'S FINDINGS ON ARTICLE 6 OF THE SPS AGREEMENT\n\n5. The Russian Federation seeks review by the Appellate Body of the Panel's failure to interpret\nArticle 6.3 of the SPS Agreement to require panel s to take into account science -based and\ntechnical evidence relied upon by the importing Member, in accordance with the importing\nMember's appropriate level of protection. 6 The Russian Federation also appeals the Panel's\nconclusions – based on this interpr etative error – that the European Union has provided the\nnecessary evidence to objectively demonstrate to the Russian Federation that areas within the\nEuropean Union are and are likely to remain ASF -free under Article 6.3 of the SPS Agreement. 7\nSimilarly, the Panel incorrectly found that the European Union had provided the necessary\nevidence to objectively demonstrate to the Russian Federation that there are areas in Lithuania,\n\n * This document, dated 23 September 2016, was circulated to Members as document WT/DS475/8.\n\n1 Pursuant to Rule 20(2)(d)(iii) of the Working Procedures for Appellate Review this Notice of Appeal\nincludes an indicative list of the paragraphs of the Panel Report containing the alleged errors, without prejudice\nto the ability of the Russian Federation to refer to other paragraphs of the Panel Report in the context of its\nappeal.\n2 See, e.g., Panel Report, paras. 7.74, 7.76, 7.77, 7.78, 7.79, 7.80, 7.81, 7.82, 7.83, and 7.84.\n3 See, e.g., Panel Report, paras. 7.76, 7.77, 7.78, 7.80, 7.81, 7.82, 7.83 and 7.84.\n4 See, e.g., Panel Report, paras. 7.108, 7.109, 7.110, 7.111, 7.112, 7.114, 7.115, 7.116.\n5 See, e.g., Panel Report, paras. 7.216- 7.220, 7.235, 7.237, 7.484, 7.494, 7.571, 7.591, 7.707, 7.714,\n7.719, 7.720, 7.783, 7.834, and 7.846.\n6 See, e.g., Panel Report, paras. 7.384, 7.389, 7.391-6, 7.399, 7.404, 7.406, 7.412, 7.413, 7.414,\n7.416, 7.454, 7.930, 7.932, 7.933, 7.938, 7.939, 7.940, 7.969, 7.976, 7.978, 7.985, 7.987, 7.996, 7.1003,\nand 7.1004.\n7 See, e.g., Panel Report, paras. 7.449, 7.455 and 7.456.\n\n- A-3 -\n\nPoland, Latvia and Estonia that are ASF-free pursuant to Article 6.38, and that the European Union\nhad provided the necessary evidence to objectively demonstrate to the Russian Federation that\nthere are areas in Lithuania, Poland and Estonia that are likely to remain ASF -free pursuant to\nArticle 6.3.9 These findings are in error and are based on the Panel's erroneous findings of law and\nlegal interpretations of Article 6.3. The Russian Federation respectfully requests that the\nAppellate Body reverse the Panel's findings.\n\n6. The Russian Federation also seeks review of the Panel's legal in terpretation of Article 6.3 of\nthe SPS Agreement as not requiring a reasonable period of time for exporting Members to collect\nthe necessary evidence, on the one hand, and for importing Members to review the necessary\nevidence, on the other hand. 10 As a con sequence of the Panel's erroneous interpretation of\nArticle 6.3 as not requiring the production, translation and review of the necessary evidence over a\n\"reasonable period of time\", the Panel erroneously found in paragraphs 7.963 and 7.1003 that the\nEuropean Union had provided the necessary evidence to objectively demonstrate to the Russian\nFederation that parts of Estonia are and are likely to remain disease -free based on a three -day\nwindow from the first African Swine Fever outbreak in Estonia. Thus, the Russian Federation\nrequests that the Appellate Body to reverse the Panel's erroneous legal interpretation and its\nconclusion with respect to Estonia.\n\n7. The Russian Federation further seeks review of the Panel's interpretation of Article 6.1 and\nits relationship to Article 6.3 of the SPS Agreement.11 The Panel found that in situations involving a\nrequest by an exporting Member for zone recognition pursuant to Article 6.3, a finding of a\nviolation of Article 6.1 regarding conditions in the exporting Member can still be found even absent\na finding that the exporting country provided the necessary evidence to objectively demonstrate\nthat areas in its territory are and are likely to remain disease -free under Article 6.3. Based on this\nerroneous legal interpretation, the Panel found that while the European Union had failed to provide\nthe necessary evidence objectively demonstrating that parts of Latvia are likely to remain\nASF-free, the Russian Federation nevertheless violated Article 6.1, in part, because it failed to\nadapt its measures to the SPS characteristics in Latvia. 12 The Russian Federation requests the\nAppellate Body to reverse the Panel's erroneous legal interpretation and its erroneous conclusion\nwith respect to Latvia under Article 6.1 of the SPS Agreement.13\n\n8 See, e.g., Panel Report, para. 7.963.\n9 See, e.g., Panel Report, paras. 7.976, 7.985, 7.1001, 7.1003, and 7.1004 (second and third\nsentences).\n10 See, e.g., Panel Report, paras. 7.384, 7.393, 7.394, 7.395, 7.396, 7.399, 7.404, 7.406, 7.412,\n7.413, 7.414, 7.416, 7.454, 7.930, 7.932, 7.933, 7.938, 7.939, 7.940, 7.969, 7.978, 7.987, and 7.996.\n11 See, e.g., Panel Report, paras. 7.365, 7.1011 (second sentence), 7.1020, 7.1027, 7.1028.\n12 See, e.g., Panel Report, paras. 7.995, and 7.1028.\n13 To the extent that the Appellate Body reverses the Panel's findings under Article 6.3 with respect to\nLithuania, Poland, Estonia and the EU-wide ban in accordance with the argumentation set out in paras. 93-194\nabove, the Russian Federation also request the Appellate Body to reverse the Panel's findings that the import\nrestrictions on Lithuania, Poland and Estonia and the alleged EU-wide ban are inconsistent with Article 6.1 of\nthe SPS Agreement. See, e.g., paras. 7.484, 7.1020, 7.1028.\n\n- A-4 -\n\nANNEX A-2\nEUROPEAN UNION'S NOTICE OF OTHER APPEAL*\nPursuant to Article 16.4 of the DSU the European Union hereby notifies to the Dispute Settlement\nBody its decision to appeal to the Appellate Body certain issues of law covered in the Panel Report\nand certain legal interpretations developed by the Panel in the dispute Russian Federation –\nMeasures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union\n(WT/DS475). Pursuant to Rule 23(1) of the Working Procedures for App ellate Review , the\nEuropean Union simultaneously files this Notice of Other Appeal and the Other Appellant\nSubmission with the Appellate Body Secretariat.\n\nFor the reasons to be further elaborated in its submissions to the Appellate Body, the\nEuropean Union appeals, and requests the Appellate Body to reverse the findings, conclusions and\nrecommendations of the Panel, with respect to the following errors contained in the Panel Report:1\n\n(a) the Panel erred in the interpretation and application of the first sentence of Article 6.2 of the\nSPS Agreement when finding that Russia recognizes t he concepts of pest - or disease-free\nareas and areas of low pest or disease prevalence in respec t of ASF, and therefore, the\nEU-wide ban is not inconsistent with Russia's obli gations under Article 6.2 of the\nSPS Agreement. As a result, the European Union requests the Appellate Body to reverse the\nPanel's findings in paragraphs 7.373, 7.379, 7.485 and 8.1(d )(iii) of its report , which are\nbased on its legally erroneous reasoning in paragraphs 7.366 -7.379, and to complete the\nanalysis;\n(b) the Panel erred in the interpretation and application of the first sentence of Article 6.2 of the\nSPS Agreement when finding that Russia recognizes the concepts of pest - or disease-free\nareas and areas of low pest or disease prevalence in respect of ASF, and therefore, the bans\non the imports of the products at issue from Estonia, Latvia, Lithuania, and Poland are not\ninconsistent with Russia's obligations under Article 6.2 of the SPS Agreement . As a result,\nthe European Union requests the Appellate Body to reverse the Panel's findings in\nparagraphs 7.925, 7.1029 and 8.1(e)(vi) of its report, which are based on its legally\nerroneous reasoning in paragraphs 7.924- 7.925, and to complete the analysis.\n\n* This document, dated 28 September 2016, was circulated to Members as document WT/DS475/9.\n\n1 Pursuant to Rule 23(2)(c)(ii)(C) of the Working Procedures for Appellate Review this Notice of Other\nAppeal includes an indicative list of the paragraphs of the Panel Report containing the alleged errors, without\nprejudice to the ability of the European Union to refer to other paragraphs of the Panel Report in the context of\nits other appeal.\n\n- B-1 -\n\nANNEX B\nARGUMENTS OF THE PARTICIPANTS\nContents Page\nAnnex B-1 Executive summary of the Russian Federation's appellant's submission B-2\nAnnex B-2 Executive summary of the European Union's other appellant's submission B-8\nAnnex B-3 Executive summary of the European Union's appellee's submission B-9\nAnnex B-4 Executive summary of the Russian Federation's appellee's submission B-13\n\n- B-2 -\n\nANNEX B-1\nEXECUTIVE SUMMARY OF THE RUSSIAN FEDERATION'S APPELLANT'S SUBMISSION\nI. INTRODUCTION\n1. The Russian Federation appeals certain issues of law and legal interpretations in the Panel\nReport Russia Federation – Measures on the Importation of Live Pigs, Pork and other Pig Products\nfrom the European Union . In accordance with Rule 21 of the Working Proced ures for Appellate\nReview, the Russian Federation hereby submits its Appellant's Submission.\n2. The first set of appeals seek clarification regarding the legal nature of the so -called EU-wide\nban. In this context, the Russian Federation also seeks clarificat ion concerning the rights and\nobligations arising from the Protocol of Accession of the Russian Federation, with respect to all\nMembers, and in particular, the European Union.\n3. In the second set of appeals, the Russian Federation seeks to clarify Members' rights and\nobligations under Article 6.3 of the SPS Agreement, in addition to the relationship between\nArticle 6.1 and Article 6.3 of the SPS Agreement. As the Panel recognized, this is the first time a\npanel has interpreted the phrase \"in order to objectively demonstrate\" whether a disease-free area\nis \"likely to remain\" so under Article 6.3 of the SPS Agreement, especially in the context of a\nhighly contagious disease that is rapidly evolving.1\n4. As set out in this submission, the Russian Federation reques ts that the Appellate Body\nreverse various legal findings and conclusions of the Panel, as a result of the legal errors identified\nherein. The Russian Federation is concerned that, if left to stand, these legal findings and\nconclusions would upset the care fully negotiated balance between importing and exporting\nMembers' rights and obligations under the SPS Agreement.\nA. The Panel erred in finding an EU-wide ban attributable to the Russian Federation\n5. The Russian Federation appeals the Panel's findings that a so -called EU -wide ban is a\nmeasure that can be attributed to the Russian Federation. 2 The Russian Federation also appeals\nthe underlying findings of the Panel that led to this erroneous finding: the Panel's failure to\ndifferentiate between national Russi an Federation SPS measures and the terms of the bilateral\nEU-Russia veterinary certificates 3, the Panel's failure to give full legal effect to the Russian\nFederation's Accession Protocol4, and, alternatively, the Panel's failure to recognize the sequencing\ninherent in the bilateral veterinary certificates. As a result, the Panel erred in concluding that the\nRussian Federation's so -called EU-wide ban is conduct attributable to the Russian Federation that\nis inconsistent with Articles 2.2, 2.3, 3.1, 5.1, 5.2, 5.3, 5.6, 5.7, 6.1, 6.3, 8 and Annex C of the\nSPS Agreement.5 Accordingly, the Russian Federation requests that the Appellate Body reverse the\nPanel's findings.\n6. The Panel's findings are erroneous because (i) they fail to differentiate between the\nrequirement to import products accompanied by a valid veterinary certificates – a national SPS\nrequirement attributable to the Russian Federation – with the content of the bilateral veterinary\ncertificates which is not a national Russian SPS measure; (ii) they do not give full legal effect to\nthe valid and WTO -consistent bilateral veterinary certificates negotiated and agreed to by all\nWTO Members; and (iii), and alternatively, because they fail to recognize the sequencing inherent\nin the bilateral veterinary certificates.\n\n1 See, e.g., Panel Report, paras. 7.390, 7.965.\n2 See, e.g., Panel Report, paras. 7.74, 7.76, 7.77, 7.78, 7.79, 7.80, 7.81, 7.82, 7.83, and 7.84.\n3 See, e.g., Panel Report, paras. 7.76, 7.77, 7.78, 7.80, 7.81, 7.82, 7.83 and 7.84.\n4 See, e.g., Panel Report, paras. 7.108, 7.109, 7.110, 7.111, 7.112, 7.114, 7.115, 7.116.\n5 See, e.g., Panel Report, paras. 7.484, 7.494, 7.571, 7.591, 7.707, 7.714, 7.719. 7.720, 7.783, 7.834,\nand 7.846.\n\n- B-3 -\n\n7. First, the Panel erroneously considered that the content of the bilateral veterinary\ncertificates constitute national SPS measures attributable to the Russian Federation.\nCustoms Union (CU) Decision 317 and Table 41 of the Working Party Report o f the\nRussian Federation's Accession (\"Working Party Report\") establish, unambiguously, the\nRussian Federation's legitimate right to require valid veterinary certificates with respect to the\nimport of a certain number of live pigs and pork products from an y WTO Member. However, the\nexact content of the EU -Russia bilateral veterinary certificates is not established in the Russian\nFederation's national SPS framework. Indeed, nowhere does the Russian Federation's national SPS\nlegislation establish the requirem ent that to export relevant pork products to the Russian\nFederation from the European Union, the entire European Union, with the exception of Sardinia,\nmust be ASF -free for three years. Thus, the Panel erroneously considered the content of the\nEU-Russia bilateral veterinary certificates to be a national SPS measure of the Russian Federation.\n8. Second, the Panel failed to give full legal effect to the validity and WTO -consistency of the\nvalid EU -Russia bilateral veterinary certificates. In relevant part, parag raph 893 of the Russian\nFederation's Working Party Report provides that:\n[b]ilateral veterinary export certificates initialed by one of the CU Parties [e.g. the\nRussian Federation] before 1 July 2010 [e.g., in 2006] as well as any subsequent\namendments to such certificates agreed with the authorised body of such CU Party,\nwould remain valid for exports from the relevant country into the customs territory of\nthe CU [e.g. the Russian Federation] until an export certificate was agreed with a\nCU Party based on the agreed positions of the other CU Parties.\n9. The ordinary meaning, context, and object and purpose of the phrase \"would remain valid\"\nindicates that pursuant to the Russian Federation's accession to the WTO, all WTO Members\nagreed that the EU -Russia bila teral veterinary certificates are legally binding documents, which\nmust be recognized as a legitimate veterinary certificate for export into the territory of a\nCU Member. This necessarily means that these bilateral veterinary certificates must be\nWTO-consistent.\n10. Third, and alternatively, the Panel erred by failing to recognize an inherent \"sequence of\nsteps\" that must be followed when ensuring the validity of the bilateral veterinary certificates. It is\nundisputed that the European Union veterinary services, not the Russian Federation, is responsible\nfor issuing the bilateral veterinary certificates. Accordingly, as a pre -condition to exporting\nrelevant meat products to the Russian Federation, veterinary officials in the European Union must\ncertify the dise ase status with respect to relevant products originating in an EU Member State.\nWhile the Panel correctly found that after the first ASF outbreak in the European Union,\nEuropean Union officials were no longer able to issue valid veterinary certificates for export of a\nnumber of products to the Russian Federation, it erroneously attributed the European Union's\nveterinary services' inability to comply with the terms of the certificates to the Russian Federation.\nYet, there can be no legitimate finding of the Russian Federation's compliance or lack thereof, with\nthe valid bilateral certificates because that would represent a contingent second step in the\ncertification process. That step could occur only after the European Union veterinary officials have\nissued valid bilateral veterinary certificates.\n11. Based on the above, the Russian Federation requests the Appellate Body to reverse the\nPanel's findings that the European Union's failure to issue bilateral veterinary certificates is an\naction attributable to the Russian Federation.\nB. The Panel erred in its interpretation of Article 6.3 of the SPS Agreement by failing\nto find a requirement to take into account the importing Member's objective\nassessment of the necessary evidence\n12. The Russian Federation appeals the Panel's failure to interpret Article 6.3 of the\nSPS Agreement, which requires panels to take into account science -based and technical evidence\nrelied upon by the importing Member, in accordance with the importing Member's appropriate level\nof protection (A LOP), when assessing whether the exporting Member's regionalization request is\n\n- B-4 -\n\nsupported by the \"necessary evidence\". 6 The Russian Federation also appeals the Panel's\nconclusions – based on this interpretative error – that (a) the European Union has provid ed the\nnecessary evidence to objectively demonstrate to the Russian Federation under Article 6.3 that\nareas in Lithuania, Poland, Latvia and Estonia, and the European Union as a whole, are African\nSwine Fever (ASF) free 7, and (b) that the European Union ha d provided sufficient evidence to\ndemonstrate that zones in Lithuania, Poland, Estonia and the European Union as a whole, are likely\nto remain ASF-free.8\n13. In interpreting whether exporting Members have provided the necessary evidence under\nArticle 6.3 of t he SPS Agreement, the Panel considered it sufficient to limit its examination to the\nevidence provided by the exporting Member. The Panel did not consider it relevant for an\nArticle 6.3 interpretation to take into account, to the extent available, the scie nce-based and\ntechnical evidence the importing Member relied on, in accordance with its ALOP. This legal\ninterpretation of Article 6.3 is incorrect and unsupported by the ordinary meaning, context, object\nand purpose of Article 6.3.\n14. The phrase \"necessary evidence\" in Article 6.3 is directly connected through \"in order to\" to\nthe phrase \"objectively demonstrate to the importing Member\". This indicates that the purpose of\nthe exporting Member collecting the necessary evidence is to convince the importing Mem ber that\nparts of its territory are, and are likely to remain, disease -free. The reference to \"evidence\" and\n\"objectively demonstrate\" further indicates the centrality of scientific and technical evidence under\nArticle 6.3 – as opposed to mere information or conjecture. Moreover, the phrase \"necessary\nevidence\" indicates that an importing Member's assessment of the necessary evidence be\nconducted in accordance with its ALOP.\n15. An importing Member's right under the second sentence of Article 6.3 to undertake\ninspection visits to exporting Members claiming that parts of its territory are disease -free supports\na reading of Article 6.3 that requires panels to take into account the importing Member's objective\nassessment of the necessary evidence. This is further confirmed by the exchange of information as\npart of the regionalization process envisioned by both the OIE Terrestrial Code and the\nSPS Committee Guidelines to Article 6, which underscore the role of the importing Member as\nreviewer and assessor of the nec essary evidence provided. Finally, the relevant risk assessment\njurisprudence under Articles 5.1 and 5.2 underscores that, at a minimum, in assessing the\nnecessary evidence, a panel must take into account, where available, the science and technical\nevidence relied upon by the importing Member – be it minority or majority science. Indeed,\nimporting Members with a high ALOP may require evidence that establishes that a territory is\ndisease-freed with a higher degree of certainty than importing Members with a low ALOP.\n16. This legal interpretation is further supported by the object and purpose of Article 6 of the\nSPS Agreement. The key objectives of the regionalization provisions of Article 6 of the\nSPS Agreement are to facilitate international trade from at least some regions or zones of an\nexporting Member's territory while protecting the life and health of animals, plants, and human\nbeings in the importing Member. On the one hand, it does not provide unfettered discretion to\nimporting Members in conducting an as sessment of the necessary evidence under Article 6.3; on\nthe other hand, the proper interpretation of Article 6.3 allows the importing Member to base its\nevaluation on science -based and technical evidence in accordance with its ALOP when assessing\nwhether sufficient evidence has been provided. By contrast, the Panel's interpretation, which\nfocuses only on the science and evidence provided by the exporting Member, would lead to\nincongruity with the distinctly science -based disciplines of the SPS Agreement, i ncluding\nArticles 2.2, 3.3, 5.1, 5.2, 6.1 and 6.2 therein.\n17. Given the dearth of factual findings made by the Panel with respect to the scientific and\ntechnical evidence presented and relied upon by the Russian Federation, the Appellate Body would\nnot be in a position to complete the analysis should it reverse the Panel's interpretation of\nArticle 6.3. Key scientific evidence relied upon by the Russian Federation, about which the Panel\nfailed to make factual findings, includes evidence concerning wild boar mo vement and the critical\n\n6 See, e.g., Panel Report, paras. 7.384, 7.389, 7.3916, 7.399, 7.404, 7.406, 7.412, 7.413, 7.414,\n7.416, 7.454, 7.930, 7.932, 7.933, 7.938, 7.939, 7.940, 7.969,7.976, 7.978, 7.985, 7.987, 7.996, 7.1003,\nand 7.1004.\n7 See, e.g., Panel Report, paras. 7449, 7.455 7.456. and 7.963.\n8 See, e.g., Panel Report, paras. 7.976,7.985,7.1001, and 7.1004.\n\n- B-5 -\n\nimportance of intensified hunting as a wild boar control strategy, in addition to evidence\nconcerning the risk of ASF -spread through the large number of backyard farms with low levels of\nbiosecurity.\nC. The Panel erred in its interpretation of Article 6.3 of the SPS Agreement by failing\nto find a requirement for a reasonable period of time to collect and assess the\nevidence by exporting and importing Members, respectively\n18. The Russian Federation appeals the Panel's legal interpretat ion of Article 6.3 of the\nSPS Agreement as not requiring a reasonable period of time for the sequential process of an\nexporting Members to collect the necessary evidence followed by the review and assessment by an\nimporting Member of the necessary evidence .9 As a consequence of the Panel's erroneous legal\ninterpretation of Article 6.3, the Panel incorrectly found that the European Union had provided the\nnecessary evidence to objectively demonstrate to the Russian Federation that parts of Estonia are,\nand are likely to remain, disease-free based on a three-day window from the first ASF outbreak in\nEstonia.10 Thus, the Russian Federation requests the Appellate Body to reverse the Panel's\nerroneous legal interpretation11, and the conclusion stated in paragraphs 7.963 and 7.1003.\n19. In assessing whether the European Union had provided the necessary evidence under\nArticle 6.3 of the SPS Agreement, the Panel did not identify a reasonable period of time for the\noverall process to collect and review that evidence. Rather , the Panel engaged in its assessment\nunder Article 6.3 by applying the same, general cut-off date of 11 September 2014 with respect to\nall four infected EU Member States, even though the four infected EU Member States had\nexperienced ASF infections – and established ASF zones – at quite different time intervals. In\nparticular, the Panel's failure to assess the necessary evidence with respect to Estonia by\nemploying a reasonable period of time led to the erroneous finding that the European Union had\nprovided the necessary evidence to objectively demonstrate that parts of its territory are and are\nlikely to remain disease-free within three days of the first ASF outbreak in Estonia. In essence, the\nPanel found that three days sufficed for the European Union to demonstrate that parts of Estonia\nwould likely remain disease -free, and for the Russian Federation to translate, review, and assess\nthe \"necessary evidence\" through conducting inspection visits.\n20. In contrast to the Panel's interpretation, in assessing par ties' rights and obligations under\nArticle 6.3, a panel must recognize that it takes time for an importing Member to evaluate,\ninspect, and verify the measures and evidence both presented by the exporting Member and\nobtained through site -visits and for an exporting Member to gather the necessary evidence of its\ndisease situation. Accordingly, a panel must identify a reasonable period of time that begins the\nmoment an exporting Member requests a Member to recognize a disease -free area in response to\na diseas e outbreak. This interpretation of Article 6.3 is supported by the ordinary meaning,\ncontext, and object and purpose of Article 6.3 of the SPS Agreement. The ordinary meaning of\nArticle 6.3 of the SPS Agreement underscores that it cannot be given proper ef fect without a panel\nassessing the parties obligations over a reasonable period of time. On the one hand, exporting\nMembers require time to gather the necessary evidence and observe the evolution of the disease\nto objectively demonstrate to the importing M ember that their ASF -free territories are, and\nespecially, are likely to remain ASF-free in the future. On the other hand, importing Members\nrequire time to review the necessary evidence, including through Article 6.3 sanctioned inspection\nvisits to the ex porting Member. The appropriate length of the reasonable period of time will\nnecessarily be impacted by the establishment of new disease -free zones, both in countries already\ninfected with the disease and in countries that were previously free of the disea se and are\nexperiencing their first outbreak.\n21. This is further supported by the relevant context of Article 6.3. Both the SPS Committee\nGuidelines to Article 6 and relevant chapters in the OIE Terrestrial Code envision a dynamic\nexchange between importing and exporting Members in the context of a regionalization request. It\ntakes time for both parties to carry out these relevant steps, which include collecting evidence,\n\n9 See, e.g., Panel Report paras. 7.384, 7.389, 7.3916, 7.399, 7.404, 7.406, 7.412, 7.413, 7.414, 7.416,\n7.454, 7.930, 7.932, 7.933, 7.938, 7.939, 7.940, 7.969,7.976, 7.978, 7.985, 7.987, 7.996, 7.1003, and\n7.1004.\n10 Panel Report, paras. 7.963 and 7.1003.\n11 See, e.g., Panel Report paras. 7.384, 7.393, 7.394, 7.395, 7.396, 7.399, 7.404, 7.406, 7.412, 7.413,\n7.414, 7.416, 7.454, 7.930, 7.932, 7.933, 7.938, 7.939, 7.940, 7.969, 7.978, 7.987, and 7.996.\n\n- B-6 -\n\nreviewing evidence, requesting and providing additional evidence, and making inspection visits.\nSpecifically, the Guidelines to Article 6 anticipate an average reasonable period of time of around\n90 days to complete the information exchange. The disease -specific provisions of the\nOIE Terrestrial Code underscore that the extent of the reasonab le period of time is informed by,\nand may be altered as a result of, continuing outbreaks taking place in formerly disease -free\nareas. Moreover, pursuant to Article 8 and Annex C of the SPS Agreement, not every lapse of time\namounts to a delay. This furthe r indicates the relevance of finding a requirement for a reasonable\nperiod of time when it comes to assessing the necessary evidence under Article 6.3. The risk\nassessment jurisprudence which demands sufficient time to collect and assess available scientif ic\nevidence further corroborates this interpretation.\n22. The requirement of a reasonable period of time under Article 6.3 is also supported by the\nprovision's object and purpose. A reasonable period of time safeguards the importing Member's\nright to protect its territory from animal diseases by giving meaning to their right to review the\nnecessary evidence provided. Similarly, establishing limits on the amount of time an importing\nMember uses to assess necessary evidence of whether a region will remain disease free recognizes\nthe exporting Member's right to continue to trade from parts of its territory after objectively\ndemonstrating effective regionalization.\n23. The Panel has assessed the necessary evidence provided with respect to Estonia over only a\nthree-day period following Estonia's its first ASF outbreak. Accordingly, there are insufficient\nfindings on the record that would allow for the completion of an assessment whether the\nEuropean Union has provided the necessary evidence to objectively demonstrate to the\nRussian Federation the absence of ASF within a reasonable period of time from the first ASF\noutbreaks in Estonia.\nD. The Panel erred in its interpretation of the relationship between Articles 6.1\nand 6.3 of the SPS Agreement\n24. The Russian Federation a ppeals the Panel's interpretation of the relationship between\nArticles 6.1 and 6.3 of the SPS Agreement.12 The Panel found that, even in situations where, under\nArticle 6.3, an exporting Member has failed to provide the necessary evidence to establish that a\nregion will likely remain disease free, an importing Member can be found to violate Article 6.1 for\nfailing to adapt its SPS measures to regional conditions in the exporting Member. The Russian\nFederation requests the Appellate Body to reverse the Panel's erroneous legal interpretation13, and\nits erroneous finding that the Russian Federation's import restrictions on Latvia violate Article 6.1\nbecause they are not adapted to SPS characteristics in Latvia.14\n25. The Panel's finding reflects an incorrect interpre tation of the ordinary meaning, context,\nobject and purpose of Article 6.1. By using the word \"shall\", Article 6.3 establishes that exporting\nMembers claiming that parts of their territory are disease -free do not have the automatic right of\nrecognition for zones they claim to be disease -free; rather, they must first provide the necessary\nevidence that objectively demonstrates that the alleged disease -free areas are and are likely to\nremain disease-free. The fact that Article 6 contains a special provision ( Article 6.3) addressing\nsituations involving specific requests for recognition of disease free zones by exporting Members\nindicates that these situations warrant treatment that may differ from other types of Article 6\nclaims.\n26. This is supported by the context of the SPS Committee Guidelines to Article 6, which set out\na \"sequence\" of steps that must be followed by exporting and importing Members when engaging\nwith a regionalization request by an exporting Member. Based on the sequencing set out in the\nGuidelines, it follows that absent the exporting Member having provided the necessary evidence\nthat parts of its territory are and are likely to remain disease -free, the importing Member is not\nobligated to \"adapt\" its measures to the disease situation in the e xporting Member under\nArticle 6.1.\n27. Further context is found in Article 5.3.7 of the OIE Terrestrial Code, entitled \"sequence of\nsteps to be taken in establishing a zone/compartment and having it recognized for international\n\n12 See, e.g., Panel Report paras. 7.365, 7.1011 (second sentence), 7.1020, 7.1027 and 7.1028.\n13 See, e.g., Panel Report paras. 7.365, 7.1011 (second sentence), 7.1020, 7.1027 and 7.1028.\n14 Panel Report, para. 7.995 and 7.1028.\n\n- B-7 -\n\ntrade purposes.\" This corrobora tes that an importing Member must adapt its measures to the\nSPS characteristics in its territory only if the exporting Member requesting for zone recognition has\nprovided the importing Member with the necessary evidence. This is a logical sequencing, given\nthat the exporting Member's cooperation in providing the \"necessary\" evidence is an essential\nelement in allowing the importing Member to assess the risk and ultimately to adjust its own\nmeasures to that risk.\n28. By interpreting Article 6.1 findings vis -à-vis disease prevalence in exporting Members as\nbeing dependent and contingent on an exporting Member's compliance with its obligation under\nArticle 6.3 – in situations involving an exporting Member's request for zone recognition under\nArticle 6.3 – proper effect is given to the provisions of Article 6.3 and the corresponding obligation\non the exporting Member contained therein. By contrast, the Panel's interpretation attaches no\nlegal or practical evidentiary significance to the exporting Member's obligation to provide the\nnecessary evidence that a particular zone will likely remain disease -free under Article 6.3. This\nwould render Article 6.3 superfluous, and indeed, irrelevant for claims involving Article 6.1.\n29. Relevant jurisprudence from the Appellate Body Report in India – Agricultural Products and\nthe Panel Report in US – Animals further confirms that (i) in situations involving a request by an\nexporting Member for zone recognition under Article 6.3, consistency with Article 6.3 is required\nbefore finding a violation of Article 6.1 vis -à-vis the situation in the exporting Member, and (ii) for\nall other situations, a violation of Article 6.1 can be found absent a finding of consistency with\nArticle 6.3 of the SPS Agreement.\n30. Based on the above, the Russian Federation requests the Appellate Body to reverse the\nPanel's interpretation that in situations in which an exporting Member requests for zone\nrecognition, a violation of Article 6.1 can be found with respect to the conditions in the exporting\nMember even where the exporting Member has failed to provide the necessary evidence, and,\naccordingly, to reverse its findings under Article 6.1 vis-à-vis Latvia.\n\n- B-8 -\n\nANNEX B-2\nEXECUTIVE SUMMARY OF THE EUROPEAN UNION'S OTHER APPELLANT'S SUBMISSION1\nA. Claims\n1. The Pane l erred in the interpretation and application of the first sentence of\nArticle 6.2 of the SPS Agreement when finding that Russia recognizes the concepts of\npest- or disease -free areas and areas of low pest or disease prevalence in respect of\nASF, and therefore, the measures at issue are not inconsistent with Russia's obligations\nunder that provision\n1. A panel faced with an SPS measure adopted by a Member which has in place a regulatory\nframework that (only) formally recognizes the concepts described in the first sentence of\nArticle 6.2 may still find an inconsistency of a challenged measure with the first sentence of\nArticle 6.2.\n2. A determination by a panel based solely on the text of the regulatory framework of the\nimporting Member according to which that Member formally recognizes the concept of disease-free\nareas can only be a provisional one. In such a case, the European Union submits that a panel\nshould subsequently seek to confirm its provisional conclusion in light of its analysis under\nArticles 6.3 and 6.1 of the SPS Agreement.\n3. Contrary to what the Panel posits, the European Union's proposed interpretation would not\nlead to the inutility and redundancy of the first sentence of Article 6.2 for several reasons.\n4. First, throughout the covered agreements there was used as a general drafting technique\nthe spelling out of the more general obligations in first place, followed by more specific obligations\nafterwards. Article 6.2 starts with the phrase \"in particular\", clearly indicating that it develops a\ncertain aspect which is already contained in a more general form in Article 6.1.\n5. Second, the Appellate Body clearly indicated that the recognition of the concept of\ndisease-free areas in Article 6.2 should be harmoniously interpreted in the light of the\nrequirements in Article 6.1 and not read in isolation.\n6. Third, the first sentence of Article 6.2 is the place where a panel's analysis may start and\nmay very well end, without the need of going any further into the analysis of the other provisions\nin Article 6, in a scenario like India-Agricultural Products. However, in the present scenario a panel\nwould reach only a provisional conclusion under Article 6.2, which may very well not be\nconfirmed after a full analysis under Articles 6.3 and 6.1. Indeed, in such a case a panel faced with\nan SPS measure adopted by a Member which has in place a regulatory framework that only\nformally recognizes the concepts described in the first sentence of Article 6.2 will still find the\nchallenged measure inconsistent with the first sentence of Article 6.2.\n7. Finally, the European Union considers helpful the fact that elsewhere in its report the Panel\nmade findings according to which neither on the face of the measures at issue, nor in their\napplication, Russia recognizes the concept of regionalization.\n8. Therefore, the Panel erred in the interpretation and application of the first sentence of\nArticle 6.2 of the SPS Agreement when finding that Russia recognizes the concepts of pest - or\ndisease-free areas and areas of low pest or disease pr evalence in respect of ASF, and thus, the\nmeasures at issue are not inconsistent with Russia's obligations under that provision.\n\n1 Total number of words (including footnotes but excluding executive summary) = 5419; total number\nof words of the executive summary = 536.\n\n- B-9 -\n\nANNEX B-3\nEXECUTIVE SUMMARY OF THE EUROPEAN UNION'S APPELLEE'S SUBMISSION1\nA. Claims\n1. The Panel correctly found that the E U-wide ban is a measure at issue attributable\nto Russia\n1. It is not in dispute that exports of the products at issue from the entire European Union to\nRussia have ceased. Russia has essentially only two points on appeal, which have no merit :\n(i) that the EU-wide ban is attributable to the European Union and not to Russia and (ii) that the\nEuropean Union has agreed to this because of the bilateral veterinary certificates and Russia's\nterms of accession to the WTO.\n2. Russia adduces three types of \"creative\" arguments.\n3. First, Russia attempts to differentiate between \"the requirement to present a valid\nveterinary certificate\" and \"the exact content of the EU-Russia bilateral veterinary certificates\".\n4. Russia misrepresents the Panel's findings. The Panel n ever mentions that the bilaterally\nnegotiated certificates are the measure at issue. The measure at issue consists of different actions\nwhich amount to an EU-wide ban.\n5. A \"sanitary measure\" is a defined term, as set out in Annex A(1). The definition \"in cludes\"\n\"all relevant laws, decrees, regulations, requirements and procedures\". The Panel has correctly\nfound that the EU -wide ban is an SPS measure. Any act or omission may be a measure for the\npurposes of dispute settlement.\n6. The European Union recall s the different actions attributable to the Russian government,\nwhich taken together clearly denote the existence of a composite measure – the EU-wide ban –,\nreferred to by Russia as Russia's \"provisional compliance with the terms / language of the\nveterinary certificates\": the letter FS -SA-8/1277, the FSVPS Instructions FS -SA-7/1275, the letter\nНF-12-26/1650, a press clipping on the FSVPS webpage and the rejection of several consignments\nby the Russian authorities after 25 January 2014. As a matter of fact , the effect of the above\nactions was the practical absence of new attempts by exporters to ship the products at issue to\nRussia.\n7. Second, Russia claims that because the validity of the bilateral veterinary certificates is a\nterm of Russia's accession to the WTO, the bilateral certificates are \"frozen in time\".\n8. Russia's interpretation is contrary to the terms of its WTO a ccession. The text of\nparagraph 893 clearly refers to \"any subsequent amendments\" of bilateral certificates, in line with\nthe continuing obligation in Article 6.1.\n9. The Panel could not find that the provision relied on by Russia has clear and unambiguous\nlanguage to the effect that Russia's Protocol of Accession would allow it to depart from other\nobligations enshrined in the Multilateral Trade Agreements.\n10. To the contrary, a reading of the provisions at issue in good faith, in accordance with the\nordinary meaning to be given to the terms in their context and in light of their object and purpose\nreveals that Members were concerned with respect to R ussia's compliance with its\nWTO obligations, in particular with respect to regionalization. (paragraph 892).\n\n1 Total number of words (including footnotes but excluding executive summary) = 23380; total number\nof words of the executive summary = 2176.\n\n- B-10 -\n\n11. In fact, Russia confirms that the position of the Panel and the European Union on this point\nis correct. Russia sums up its ca se by asserting that the cert ificates must be \"presumed\"\nWTO-consistent. Indeed, all measures attributable to a WTO Member are presumed\nWTO consistent, until the contrary is demonstrated in DSU proceedings.\n12. Third, the alleged \"sequencing\" argument advanced by Russia is a misrepresentation. The\nimpossibility of the EU veterinary officials to sign valid certificates is due to Russia's own refusal to\nadapt the said certificates to the regional conditions in the European Union and in Russia.\n13. A proper ex planation of \"sequencing\" would take into account that as a first step Russia\nfailed to agree to the adaptation of the wording of the bilateral certificates in accordance with the\nEU proposals and scientific evidence. Russia agreed in the past with adaptat ion of the certificates\n(i) for imports of beef from the European Union and (ii) for imports of poultry from Canada.\n14. Russia's appeal on this point should be dismissed.\n2. Claims related to regionalization\ni) The Panel did not err in its interpretation of Article 6.3 of the SPS Agreement with\nregard to the scientific and technical evidence relied upon by the importing Member\n15. There are several introductory remarks. First, it is unclear what Panel finding Russia is\nactually appealing, as it invites consideration of 30 paragraphs of the Panel Report. Second, Russia\ndoes not explicitly appeal the findings at paragraph 8.1(d)(iv). Third, Russia attempts to fault the\nPanel for a \"failure to interpret\". This looks like a disguised Article 11 of the DSU appea l. Fourth,\nRussia asserts that Article 6.3 must be interpreted so as to \"require panels\" to do something. Fifth,\nRussia refers to evidence allegedly \"relied upon\" by Russia. Russia did not conduct an assessment\nof risk and the Panel's findings under Articl es 5.1 and 5.7 are not appealed in this context. Sixth,\nRussia adds to its appeal claim a reference to Russia's ALOP. The materials characterised as\n\"evidence\" submitted by Russia are not part of the \"matter\" that the Panel was required to assess\nunder Article 6.3.\n16. The European Union considers that these observations are in themselves sufficient to\ndispose of Russia's appeal on this point.\n17. The Panel made findings with respect to the evidence and information supplied by the\nEuropean Union and not wit h regard to Russia's alleged assessment of this information, because\nRussia never assessed this information.\n18. Contrary to what Russia alleges, the Panel did not omit the words \"in order to\" and \"to the\nimporting Member\".\n19. The European Union disagree s that two different elements (risk assessment and risk\nmanagement) should be \"merged\" into only one subjective requirement. Russia attempts to\nequate \"necessary\" (evidence) in Article 6.3 with a subjective test at the unfettered discretion of\nan importing Member.\n20. The context of Article 6.3 confirms this understanding. Article 3.3 provides that Members\nmay depart from international standards on the basis of a risk assessment or as a consequence of\na higher ALOP.\n21. The European Union agrees that it i s possible that a risk assessment may be based on\ndivergent or minority views, as long as these views are from qualified and respected sources. The\npresent case is different from previous cases such as the Hormones or GMOs cases, which involved\nrelatively \"new\" issues.\n22. Russia's allegations should be dismissed, taking into account that:\n the Panel did not commit any legal error and did not omit to give meaning to each and\nevery word in Article 6.3;\n\n- B-11 -\n\n Russia does not have any risk assessment;\n the issue of a risk assessment based on divergent or minority views, from qualified and\nrespected sources, is not likely to arise in a case like the present one;\n Russia's ALOP was found by the Panel to be high, but not very high and not zero risk;\nRussia considers appropriate the level of protection reflected in the OIE Terrestrial Code;\n the Panel has found that the EU regionalization measures represent a significantly less\ntrade restrictive alternative which meets Russia's ALOP;\n the factors to be taken into account under Article 6.3 are objective factors.\n23. According to Article 11 of the DSU, the standard of review in an SPS case, including with\nrespect to Article 6.3, is for a panel to make an objective assessment of the matter before it.\n24. The Appellate Body will no t reach the stage of considering whether or not it can complete\nthe analysis because it will not reverse the Panel's findings under Article 6.3.\n25. Russia reiterates arguments which it dropped before the Panel, as they had no relevance to\nthe present dis pute, related to containment zones and compartments. The EU regionalization\nmeasures are in line with the OIE Terrestrial Code.\n26. Russia further states that the Panel did not make factual findings about the science and\ntechnical evidence allegedly \"relied on\" by Russia. But Russia has no risk assessment.\n27. The Appellate Body should reject this ground of appeal and uphold the findings of the Panel.\nii) The Panel did not err in its interpretation of Article 6.3 of the SPS Agreement with\nregard to the reas onable period of time for exporting Members to collect the\nnecessary evidence and for importing Members to review the respective evidence\n28. A reasonable period of time is normally required in the process envisaged by Article 6.3. The\nPanel was right to c onclude that the European Union supplied the necessary evidence to Russia in\norder to objectively demonstrate that ASF -free areas are free and are likely to remain free in the\nEuropean Union, and in particular in Estonia.\n29. Russia employs as a \"litigati on technique\" a \"stuffing\" of claims exclusively under Article 6,\nwhile by their very nature such claims are closely linked to other provisions of the SPS Agreement,\nsuch as Articles 5.1, 5.7 and Annex C, while not appealing the respective findings of the Panel.\n30. First, according to Article 4.3.1. of the OIE Terrestrial Code, the process of regionalization is\n\"best implemented by trading partners through establishing parameters and gaining agreement on\nthe necessary measures prior to outbreaks of disease\".\n31. Second, the European Union provided abundant information and evidence with respect to\nthe ASF situation and the respective regionalization measures in the European Union (including\nEstonia), so as to objectively demonstrate to Russia that ASF -free a reas are ASF -free and are\nlikely to remain so. Such information and evidence comprises (i) general information and evidence\nwith respect to the ASF regulatory framework in the European Union; (ii) specific information and\nevidence pertaining to Estonia and (iii) immediate and constant updates with respect to the\nASF situation in the European Union, including Estonia.\n32. The European Union provided to Russia the necessary evidence with respect to geography,\nepidemiological surveillance, the effectiveness of sanitary controls in respect of ASF, relevant\necosystems, the prevalence of the disease and the existence of control or eradication programmes,\nin order to objectively demonstrate to Russia the requirements under Article 6.3.\n33. Third, between the notifi cation of an outbreak to the OIE and the moment trade resumes\nbetween the respective Members there is normally a short suspension period. This is a situation\ncovered by Article 5.7.\n\n- B-12 -\n\n34. The moment a Member is asking for information which is not necessary f or a more objective\nassessment of risk, that Member can no longer benefit from the provisional shelter of Article 5.7\nand the respective delays are undue as per Annex C(1)(a).\n35. Article 5.7 itself employs the notion of a \"reasonable period of time\" , with respect to the\nobligation (on importing Members) to review the measure in light of a more objective assessment\nof risk. Russia did not review the measures at issue within a reasonable period of time, and Russia\ndid not appeal this finding by the Panel.\n36. The notions of reasonable period of time in Article 5.7 and undue delays in Annex C(1)(a)\nare related to each other. While Russia claims that 3 days do not constitute a reasonable period of\ntime with respect to assessing the EU ASF regionalization measur es in Estonia, at the same time\nRussia made unnecessary information requests (resulting in undue delays) only 5 days after the\nreceipt of the EU regionalization request regarding Lithuania.\n37. Fourth, the European Union recalls that most of the products at issue from Estonia were\nalready subject to the EU-wide ban since 29 January 2014.\n38. Fifth, the ASF regionalisation measures in Estonia, while presenting certain particularities,\nare sufficiently closely related to the ASF regionalization measures in t he other affected\nEU Member States. Russia did not need an extensive period of time so as to assess the respective\nregionalization measures.\n39. Russia's third ground of appeal should be rejected. The Appellate Body will not need to\ncomplete the analysis, as it will uphold the Panel's findings.\niii) The Panel did not err in its interpretation of the relati onship between Articles 6.1\nand 6.3 of the SPS Agreement\n40. The debate with regard to regionalization measures is relevant only with regard to\nnon-treated products.\n41. At the interim review stage the European Union noted that certain paragraphs of the interim\nreport were factually inaccurate. The European Union promptly provided Russia significant\ninformation on revised or updated control measures with regard to Latvia from the first case until\n11 September 2014.\n42. The European Union did not previously provide the Panel with copies of these\ncommunications because it was never asked to do so. The European Union could not anticipate,\nand the Panel did not indicate at any moment during the proceedings, that the relevant date it will\ntake into account with regard to Latvia will be a date subsequent to the date of the Panel\nestablishment.\n43. The Panel considered that the supplied evidence is \"new evidence\" . However, the position\nwith respect to Article 6.1 remained unchanged.\n44. The Panel did not err with respect to the interpretation of th e relationship between\nArticles 6.3 and 6.1 neither as a matter of principle, nor in the particular case of the\nregionalization measures in Latvia. Russia's fourth ground of appeal should be rejected.\n\n- B-13 -\n\nANNEX B-4\nEXECUTIVE SUMMARY OF THE RUSSIAN FEDERATION'S APPELLEE'S SUBMISSION\n1 INTRODUCTION1\n1. Pursuant to Rule 22(1) of the Working Procedures for Appellate Review, th e Russian\nFederation hereby submits its Appellee's Submission.2\n2. The Russian Federation requests the Appellate Body to reject the European Union appeal,\nand to uphold the Panel's finding that the Russian Federation recognizes the concept of\nregionalization pursuant to Article 6.2, first sentence, of the SPS Agreement. The European Union's\nargument is based on the erroneous assumption that the only manner in which Members can\nsatisfy their obligations under Article 6.2 is by applying regionalization in th e challenged\nSPS measure. This position is unsupported both by the principles of treaty interpretation and the\njurisprudence.\nA. The European Union's interpretation of Article 6.2, first sentence, is unsupported\nby the ordinary meaning, context, and object and purpose\n3. The Panel did not err in its legal interpretation of Article 6.2, first sentence. The ordinary\nmeaning, context, and object and purpose of Article 6.2, first sentence, support the Panel's\ninterpretation of this provision as requiring only proof of an express recognition of the concepts of\npest-or disease -free areas and areas of low pest or disease prevalence, including through a\nMember's national SPS regulatory and legislative framework.\n4. The ordinary meaning of the phrase \"recognize the concepts\" confirms the Panel's\ninterpretation that Article 6.2 requires Members to enable the application of the concept of pest -or\ndisease-free areas, and areas of low pest or disease prevalence. This directly contradicts the\nEuropean Union's argument th at Article 6.2 requires Members to apply regionalization in their\nchallenged SPS measures. Indeed, the European Union's interpretation of Article 6.2, first\nsentence, erroneously conflates the requirements of Article 6.1 with the requirements of\nArticle 6.2, first sentence. The European Union's interpretation of Article 6.2, first sentence, is also\ncontradicted by the phrase \"in particular\" in Article 6.2. The existence of this phrase demonstrates\nthat Article 6.2 is linked to Article 6.1, and not, as the European Union claims, the reverse.\n5. Moreover, the Panel's interpretation of Article 6.2, first sentence, is confirmed by the context\nof the second sentence of Article 6.2, which provides guidance on the factors that Members may\ntake into account when re cognizing the concepts of pest -or disease-free areas and of low pest or\ndisease prevalence. It is further supported by the overall structure and design of Article 6,\nwhereby more general obligations are set out first in Article 6.1, followed by more specif ic\nobligations in Articles 6.2 and 6.3. Indeed, Article 6.2 is a subset of Article 6.1 to the extent that it\nrefers to situations involving pest or disease. Conversely, nothing in the context of Article 6.2, first\nsentence, supports the European Union's interpretation.\n6. The object and purpose of Article 6 further confirm that the Panel correctly interpreted\nArticle 6.2, first sentence. The Panel's interpretation properly differentiates between a situation\nwhere regionalization is outright prohibited (such as with respect to India's Avian Influenza\noutbreaks), and a situation where a Member has in place a detailed regulatory and legislative\nframework recognizing regionalization. In doing so, the Panel's interpretation furthers the object\nand purpose of ince ntivizing importing Members to create a legal framework that recognizes and\nfacilitates the concepts of pest- or disease-free areas and areas of low pest or disease prevalence.\nTo the contrary, the European Union's interpretation would not enable panels an d the\n\n1 Total number of words (including footnotes but excluding executive summary) = 10071; total number\nof words of the executive summary = 965.\n2 The Russian Federation should not be taken to agree with any argument or proposition advanced by\nthe European Union that is not specifically addressed in this Appellee's Submission.\n\n- B-14 -\n\nAppellate Body to tailor their findings to reflect these distinctly different situations, and thus offers\nno incentive for Members to integrate the key principle of regionalization into their national\nregulatory systems.\n7. Moreover, under the Europ ean Union's interpretation, where an importing Member with a\nlegal framework recognizes the concepts of pest -or disease -free areas or areas of low pest or\ndisease prevalence but fails to apply them in a particular case, the panel or Appellate Body will\nnecessarily find that the importing Member acted inconsistently with both Articles 6.1 and 6.2.\nThus, in this situation, a panel will not be able to make independent findings under Articles 6.1\nand 6.2, thus rendering Article 6.2, first sentence, largely redundant.\nB. The European Union's application of Article 6.2, first sentence, is unsupported by\nthe Panel's factual findings\n8. The European Union cannot demonstrate that the Panel's factual findings under Article 6.2,\nfirst sentence, are incorrect. The Pan el made factual findings that the Russian Federation\nrecognizes regionalization based on not one, but numerous legislative documents and agreements:\nCustoms Union Decision 317, the 2006 EU -Russia bilateral memorandum on regionalization, and\nthe text of the actual veterinary certificates applied between the Russian Federation and the\nEuropean Union. These findings reflect the existence of a comprehensive framework for the\nrecognition and application of the concepts of pest - or disease-free areas and areas of low pest or\ndisease prevalence as set out in Article 6.2, first sentence.\n9. Assuming, arguendo, that the Appellate Body were to find that recognizing the concepts of\npest- or disease- free areas and areas of low pest or disease prevalence would require some proof\nbeyond implementing a legal framework that expressly recognizes the concept of regionalization,\nvarious actions taken by the Russian Federation demonstrate that the Russian Federation both\nrecognizes and applies the concept of regionalization. T hese actions include the numerous letters\nsent by the Russian Federation to the European Union explaining its regionalization requirements\nand requesting additional evidence; the fact that the Russian Federation has applied, and made\npositive regionalization determinations, with respect to other Member States, and the fact that the\nPanel found that the EU-Russia bilateral veterinary certificates recognize regionalization.\n\n- C-1 -\n\nANNEX C\nARGUMENTS OF THE THIRD PARTICIPANTS\nContents Page\nAnnex C-1 Executive summary of Australia's third participant's submission C-2\nAnnex C-2 Executive summary of Brazil's third participant's submission C-3\nAnnex C-3 Executive summary of the United States' third participant's submission C-4\n\n- C-2 -\n\nANNEX C-1\nEXECUTIVE SUMMARY OF AUSTRALIA'S THIRD PARTICIPANT'S SUBMISSION\nARTICLE 6 OF THE SPS AGREEMENT\n1. Australia recalls the Panel's finding in this dispute that Russia had not breached Article 6.2\nbecause it recognized the concepts of pest - or disease-free areas and areas of low pest or disease\nprevalence in respect of African Swine Fever in its legislative framework.\n2. In Australia's view, the Appellate Body's findings in India – Agricultural Products indicate\nthat the obligation in Article 6.2 requires Members to do more than simply refer to or recognise\nsuch concepts in the abstract.\n3. The Appellate Body clarified that the overarching obligation in Article 6.1 requires a Member\nto ensure that its SPS measures are adapted to regional SPS characteristics, and that the furth er\nparagraphs in Article 6 elaborate on the specific aspects of this obligation.1\n4. In light of the Appellate Body's findings, Australia considers that to fulfil the obligation in\nArticle 6.2, it is not sufficient for a Member to merely have a declaratory recognition of the concept\nof regionalisation in its legislation. Rather, a Member must ensure that its SPS measures, as\nimplemented, are adapted to regional SPS characteristics.\n\n1 Appellate Body Report, India – Agricultural Products, para. 5.141.\n\n- C-3 -\n\nANNEX C-2\nEXECUTIVE SUMMARY OF BRAZIL'S THIRD PARTICIPANT'S SUBMISSION\nBrazil considers that the panel addressed satisfactorily the relationship between\nArticles 6.1, 6.3 and 5 but is concerned about the interpretation given to Article 6.2, which would\nmerely require WTO Members to \"recognize the concept of pest - or disease -free ar eas\", in\nabstract.\nArticle 6.2 does not command solely a formal recognition of the principle of regionalization.\nIt also entails that such recognition be practically functional. As any other relevant obligation\nenshrined in the SPS Agreement, the obligatio n to recognize the concept of regionalization in\nArticle 6.2 cannot be subject to a reductionist interpretation, that would devoid the provision of\nany practical repercussion and would encapsulate it on a mere theoretical level. The second\nsentence of the Article 6.2, moreover, defines precisely how the determination of the areas shall\nbe made, making it clear that a mere recognition of the principle is not sufficient in order to\ncomply with Article 6.2.\nAs regards Article 6.3, Brazil considers that the pan el correctly found that the exporting\nMember must objectively demonstrate to the importing Member that some areas are, and are\nlikely to remain, pest - or disease-free. As the panel correctly clarified Members have to \"provide\nevidence\" and not \"merely information\" concerning the information related to the determination of\na disease- or pest-free area. This requirement on the exporting member to demonstrate its claims\nof disease - or pest -free areas could be seem as an equivalent to the obligation put on the\nimporting Member to \"recognize\" the concept of regionalization.\n\n- C-4 -\n\nANNEX C-3\nEXECUTIVE SUMMARY OF THE UNITED STATES' THIRD PARTICIPANT'S SUBMISSION\n1. The United States welcomes the opportunity to present its views on certain findings raised\non appeal by t he Russian Federation (\"Russia\") and the European Union (\"EU\") in\nRussian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig Products from\nthe European Union (DS475).\n2. First, contrary to what Russia argues in its appellant submiss ion, the text of Article 6 of the\nAgreement on the Application of Sanitary and Phytosanitary Measures (\"SPS Agreement\") does not\nsupport a categorical rule that a breach of Article 6.1 – on the basis of a failure to recognize\nparticular disease free areas – can occur only after an exporting Member has satisfied its\nArticle 6.3 obligation to provide information.\n3. Second, contrary to what Russia argues, the Panel did not err in its interpretation of\nArticle 6.3 by not taking into account in its Article 6.3 analysis evidence relied upon by Russia.\nRather, both evidence supplied by the exporting Member pursuant to Article 6.3 and other\nevidence in the possession of the importing Member bear on the question of whether the importing\nMember has satisfied its Arti cle 6.1 obligation to ensure that its SPS measures are adapted to the\nSPS characteristics of relevant areas.\n4. Third, the Panel committed no error in its interpretation of Article 6.3 by failing to give\nRussia time to consider evidence following the Estonian ASF outbreak. This claim by Russia reflects\nits continued confusion between Article 6.1 and Article 6.3 analysis.\n5. Fourth, Article 6.1 imposes obligations with respect to measures, while Article 6.2 requires\nrecognition of concepts. Refusal to recogn ize specific areas as disease -free, standing alone, is\nunlikely to support a finding that the importing Member failed to recognize the concepts described\nin Article 6.2.\n\n- D-1 -\n\nANNEX D\nPROCEDURAL RULING\nContents Page\nAnnex D-1 Procedural Ruling of 14 November 2016 regarding the Russian Federation's\nrequest for English-to-Russian interpretation at the oral hearing\nD-2\n\n- D-2 -\n\nANNEX D-1\nPROCEDURAL RULING OF 14 NOVEMBER 2016\n1. On 2 November 2016, we received a letter from the Russian Federation requesti ng that the\nAppellate Body Division hearing the above appeal allow simultaneous English -to-Russian\ninterpretation at the oral hearing in this appellate proceeding. Specifically, Russia explains that\ngovernment officials in charge of sanitary and phytosanit ary issues will participate in the\noral hearing and that these officials do not have sufficient English skills to follow the hearing.\nRussia states that it will bear all costs associated with such simultaneous interpretation.\n2. On 3 November 2016, we invited the European Union and the third participants to comment\nin writing on Russia's request. We received a response from the European Union on 4 November\nand responses from Australia, Brazil, Japan, Norway, and the United States on 7 November 2016.\n3. The Euro pean Union opposes Russia's request. The European Union submits that this\nrequest is not related to the efficient conduct of the hearing or the effective exercise by Russia of\nits rights under the DSU, but reflects an attempt to promote Russian, de facto, as a language in\nWTO dispute settlement. The European Union states that the DSU does not prevent any delegation\nfrom taking steps, within the structures of the delegation, to ensure simultaneous interpretation\nfor convenience of one or more members of a de legation. For the European Union, Russia's\nrequest is in fact about access to the WTO interpretation booths. The European Union notes that\nWTO meeting rooms are equipped with a limited number of such booths and raises a number of\ngeneral questions that may arise in relation to the use and the allocation of these booths in\npractice.\n4. In their respective comments, Japan, Norway, and the United States express that they have\nno objection to Russia providing English -to-Russian interpretation at its own expense, so that\nMembers of its delegation may follow the proceedings. Brazil considers that such a request should\nbe granted only in exceptional circumstances and takes no position on whether such circumstances\nare present in this case. Australia opposes the reque st, considering it unnecessary in the light of\nits expectation that the issues on appeal will be of a legal, rather than factual, nature.\n5. Furthermore, Japan and the United States emphasize that they would oppose any request to\nallow interpretation going b eyond the one described in the preceding paragraph. Highlighting that\nthe three official working languages of the WTO are English, French, and Spanish, both Japan and\nthe United States object, in particular, to interpretation from Russian into an official WTO working\nlanguage being provided by interpreters. Australia emphasizes that all Members accede to the\nWTO and participate in proceedings in full knowledge of the constraint of three official working\nlanguages. Brazil states that WTO Members may face dif ficulties in having to express themselves\nin one of the three official working languages of the WTO when these are different from their own\nlanguages. Brazil adds that it has faced this challenge in WTO dispute settlement for the\npast 20 years and that every delegation should make every effort to resolve such languages issues\nwithin their delegation.\n6. We note that Russia requests that the Appellate Body Division hearing the above appeal\nallow only simultaneous English -to-Russian interpretation at the oral h earing in this appellate\nproceeding. Russia does not request, and we do not address in this ruling, Russian -to-English\ninterpretation.\n7. We further note that the official working languages of the WTO are English, French, and\nSpanish. In the present case, the appellate proceedings are being conducted in English and thus in\none of the official working languages of the Organization.\n8. We recall that the Appellate Body held in EC – Bananas III that, in principle, it is for a\nWTO Member to determine the compositio n of its delegation in appellate proceedings. 1 We\ntherefore see no impediment for a WTO Member to include individuals providing interpretation\n\n1 Appellate Body Report, EC – Bananas III, paras. 10 and 12.\n\n- D-3 -\n\nfrom one of the WTO official working languages into another language for the benefit of those\nmembers of its delegation lacking the language skills required to follow the hearing.\n9. At the same time, we consider interpretation provided by one member of a delegation to\nother members of that delegation present in the hearing room, and audible for all present in the\nroom, not conducive to an efficient conduct of the hearing. In the interest of orderly procedure in\nthe conduct of this appeal, the Division has therefore decided, on the basis of Rule 16(1) of the\nWorking Procedures for Appellate Review, to allow the booths t o be used by the interpreters of the\nRussian delegation during the oral hearing in this dispute. We do not see that the due process\nrights of other participants at the oral hearing would be affected by these arrangements. We also\nnote that the Panel allowe d for similar arrangements during the substantive meetings with the\nparties.\n10. In the light of these considerations, the Division hearing this appeal authorizes Russia to use\ninterpreters for the purpose of simultaneous interpretation from English -to-Russian. We note that\nRussia has undertaken to engage the interpreters and that Russia will cover all costs associated\nwith their engagement. We underline that the oral hearing is confidential and that Russia shall take\nall necessary measures to ensure that the i nterpreters engaged by Russia maintain the\nconfidentiality of the proceedings. The Division requests that Russia indicate in its delegation list\nwhich members of its delegation act as interpreters. In the interest of orderly procedure in the\nconduct of thi s appeal, the interpretation facilities available in the designated hearing room shall\nbe used for simultaneous interpretation."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:24.209740"}}},{"rowIdx":7783,"cells":{"folder_number":{"kind":"string","value":"475"},"case_number":{"kind":"string","value":"475"},"original_filename":{"kind":"string","value":"DS475_SEQ22_Recourse.pdf"},"new_filename":{"kind":"string","value":"DS475_SEQ22_Recourse.pdf"},"doc_sequence":{"kind":"number","value":22,"string":"22"},"doc_type":{"kind":"string","value":"Recourse"},"doc_type_raw":{"kind":"string","value":"RECOURSE TO ARTICLE 22.6"},"doc_class":{"kind":"string","value":"RECOURSE"},"variant":{"kind":"null"},"part_number":{"kind":"null"},"case_title":{"kind":"string","value":"RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE RUSSIAN FEDERATION"},"date":{"kind":"string","value":"3 January 2018"},"header_codes":{"kind":"string","value":"WT/DS475/18; WT/DS475/17"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['EU']"},"respondent":{"kind":"string","value":"['Russia']"},"third_parties":{"kind":"string","value":"['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 3 March 2021\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the European Union\nOn 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federation affecting the importation of live pigs and their genetic material, pork, pork products and certain other commodities from the European Union, purportedly because of concerns related to cases of African swine fever.\nThe European Union claims that the measures at issue are inconsistent with:\n\nPanel and Appellate Body proceedings\nOn 27 June 2014, the European Union requested the establishment of a panel. At its meeting on 10 July 2014, the DSB deferred the establishment of a panel.\nAt its meeting on 22 July 2014, the DSB established a panel. Australia, China, India, Japan, Korea, Norway, Chinese Taipei and the United States reserved their third-party rights. Subsequently, Brazil and South Africa reserved their third-party rights. On 13 October 2014, the European Union requested the Director-General to compose the panel. On 23 October 2014, the Director-General composed the panel.\nFollowing the resignation of a member of the panel on 30 October 2014, and pursuant to a request from the European Union on 3 November 2014, the Director-General appointed a new member of the panel on 6 November 2014. Following the resignation of a member of the panel on 26 November 2014, and pursuant to a request from the European Union on 28 November 2014, the Director-General appointed a new member of the panel on 4 December 2014.\nOn 22 April 2015, the Chair of the panel informed the DSB that the panel expected to issue its final report to the parties by February 2016, in accordance with the timetable adopted after consultation with the parties. On 7 January 2016, the Chair of the panel informed the DSB that in light of modifications to the timetable, as well as of the scale and complexity of the dispute, the panel expected to issue its final report to the parties by early April 2016.\nOn 19 August 2016, the panel report was circulated to Members.\nOn 23 September 2016, the Russian Federation notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 28 September 2016, the European Union notified the DSB of its decision to cross-appeal.\nOn 21 November 2016, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that the circulation date of the Appellate Body report in this appeal will be communicated to the participants and third participants shortly after the oral hearing, in the light of scheduling of parallel appeals, and shortage of staff in the Appellate Body Secretariat. On 16 December 2016, the Appellate Body informed the DSB that it expected to circulate the Appellate Body report in this appeal no later than 23 February 2017.\nOn 23 February 2017, the Appellate Body report was circulated to Members."},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,\nPORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION\nRECOURSE TO ARTICLE 22.6 OF THE DSU BY THE RUSSIAN FEDERATION\nThe following communication, dated 20 December 2017 , from the delegation of the R ussian\nFederation to the Chairperson of the Dispute Settlement Body, is circulated pursuant to\nArticle 22.6 of the DSU.\n\nRegarding the recourse of the European Union to Article 22.2 of the Understanding on Rules and\nProcedures Governing the Settlement of Disputes (\"DSU\") as set out in in the\ndispute Russian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig\nProducts from the European Union (DS475), my authorities have instructed me to inform yo u that\nthe Russian Federation disagrees with the al legations of the European Union that the Russian\nFederation failed to comply with the recommendations and rulings of the DSB within the\nreasonable period of time in this dispute. Moreover, pursuant to Art icle 22.6 of the DSU, the\nRussian Federation objects to the European Union's proposed level of suspension of concessions or\nother obligations under the General Agreement on Tariffs and Trade 1994, SPS Agreement and\nAgreement on Agriculture."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:24.210308"}}},{"rowIdx":7784,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ01_Request_For_Establishment_Of_Panel.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ01_Request_For_Establishment_Of_Panel.pdf"},"doc_sequence":{"kind":"number","value":1,"string":"1"},"doc_type":{"kind":"string","value":"Request_For_Establishment_Of_Panel"},"doc_type_raw":{"kind":"string","value":"REQUEST FOR THE ESTABLISHMENT OF A PANEL"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"null"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE RUSSIAN FEDERATION"},"date":{"kind":"string","value":"28 May 2015"},"header_codes":{"kind":"string","value":"WT/DS476/2"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":9,"string":"9"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nREQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE RUSSIAN FEDERATION\nThe following communication, dated 11 May 2015, fr om the delegation of the Russian Federation\nto the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.\n\nMy authorities have instructed me to request the establishment of a panel, pursuant to Article 6 of\nthe DSU, Article XXIII of the General Agreement on Trade in Services (\"GATS\"), and Article XXIII\nof the General Agreement on Tariffs and Tr ade 1994 (\"GATT 1994\"), with respect to certain\nmeasures maintained by the European Union (\" EU\") and its Member States, and implemented\nwithin EU territory by the EU and its Member States, including through the so-called \"Third Energy\nPackage\" and related legal instruments, as described below.\nOn 30 April 2014, the Russian Federation requested consultations with the EU and its Member\nStates pursuant to Articles 1 and 4 of the DS U, Article XXIII of the GATS, Article XXIII of the\nGATT 1994, Articles 4.1, 7.1 and 30 of the Agreement on Subsidies and Countervailing Measures\nand Article 8 of the Agreement on Trade-Related Investment Measures, with respect to certain\nrestrictions and requirements adopted, maintain ed and implemented by the EU and its Member\nStates within their respective territories , including Croatia, Hungary and Lithuania, through the\nso-called \"Third Energy Package\" and related lega l instruments. The request was circulated on 8\nMay 2014 as document , , , , On 23-\n24 June and 10 July 2014, the Russian Federation held consultations with the EU and its Member\nStates with a view to reaching a mutually satisfactory solution. Unfortunately, the consultations\nfailed to settle the dispute.\nThe EU adopted the Third Energy Package (\"TEP\") in July 2009. The TEP's principal component\nregarding gas, Directive 2009/73/EC (the \"Directive\"),\n1 establishes what it describes as common\nrules for the transmission, distribution, supply and storage in the EU of natural gas, including\nLNG.\n2 The Directive also states that the TEP repealed and replaced the legal acts making up the\nSecond Energy Package (\"SEP\"), even though cert ain SEP measures related to exemptions remain\nin effect. As such, the TEP is the latest in a series of legal instruments and policy initiatives\ndesigned to tighten and centralize control over the EU energy market, including the rights of\nRussian suppliers of natural gas and natural gas services, as well as imported Russian gas as a\nsource of supply to the EU market. The Russian Fe deration considers that the TEP, like the EU's\nnatural gas and broader energy policy overall, unjustifiably restricts imports of natural gas\noriginating in Russia and discriminates against Russian natural gas pipeline transport services and\nservice suppliers.\n3\n\n1 Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning\ncommon rules for the internal market in natural gas and repealing Directive 2003/55/EC, OJ L 211/94 of\n14.8.2009 (\"Directive 2009/73/EC\" or the \"Directive\").\n2 \"Natural gas\" includes liquefied natural gas (\"LNG\"), consistent with the provisions of the Directive.\n3 \"Natural gas pipeline transport services\" (or \"pipeline transport services\") include, but are not\nnecessarily limited to, the transmission (or transport) and supply of natural gas, including LNG, and the\nservices related to the transmission and supply of natural gas, including LNG services.\n\nAccordingly, the Russian Federation respectfully re quests that, pursuant to Article 6 of the DSU,\nthe DSB establish a Panel, with the standard term s of reference contained in Article 7.1 of the\nDSU, to examine the following matter:\n1. Unbundling, Third-Country Certificatio n and Infrastructure Exemption Measures\nThe Directive requires \"vertically integrated natural gas undertakings\" (\"VIUs\") to undergo\n\"unbundling\" and to separate their transmission system assets, or the transmission system\noperator (\"TSO\"), from assets relating to production and supply. The Directive grants Member\nStates discretion to select from among three alternative unbundling models: ownership\nunbundling, independent system operator (\"ISO\"), and independent transmission operator\n(\"ITO\").\n4 Ownership unbundling is the most restrictive model. It precludes the same person or\npersons from exercising control over an undertaking performing any of the functions of production\nor supply and exercising control or any right over the TSO or the transmission system, and vice\nversa. Among the rights that ownership unbundling precludes is the holding of a majority share. 5\nThe ISO model, in contrast, permits the VIU to re tain full ownership of the TSO upon designation\nof an outside entity, the ISO, to operate the TSO. 6 The ITO model is even less restrictive and\npermits VIUs to maintain control and operate the TSO through a separate subsidiary.7\nThe implementing laws of Croatia and Hungar y permit all three unbundling models, whereas\nLithuania permits only the ownership unbundling model. In the pipeline transport services sector,\nas set out in their GATS Schedules of Specific Commitments on Services (the \"Schedules\"),\nCroatia, Hungary and Lithuania undertook commitm ents under Articles XVI and XVII of the GATS\nwith respect to pipeline transport services. In lig ht of these commitments, the Russian Federation\nconsiders that the unbundling measures, as implem ented in the laws of Croatia, Hungary and\nLithuania, are inconsistent with these Members' market access obligations under GATS\nArticle XVI:1 to accord services and service su ppliers of any other Member treatment no less\nfavorable than that provided for in their Schedules, and that all three Members are each\nmaintaining or adopting measures set out in GATS Article XVI:2.\nThe Directive also provides that, when the owner of the VIU is the Member State or another public\nbody, two separate public bodies exercising control over the TSO and over an undertaking\nperforming production or supply functions shall be deemed not to be the same person or persons.\n8\nIn reality, this measure permits a Member State government to own and control both the TSO and\nthe production or supply portions of the VIU, whereas third-country service suppliers, including\nthose of Russia, may not. Croatia, Hungary and Lithuania have each implemented versions of this\nmeasure in their respective legislation. The Russian Federation considers that these measures are\ninconsistent, de jure, with the obligations of Croatia, Hungary and Lithuania under GATS Article\nXVII to accord services and service suppliers of any other Member treatment no less favorable\nthan they accord to their own like services an d service suppliers. Moreover, the governments of\nCroatia and Lithuania both own and control the TSO and production or supply portions of the single\nVIU supplying pipeline transport services in their respective territories. Therefore, the Russian\nFederation considers that these measures are inconsistent, de facto, with the obligations of Croatia\nand Lithuania under GATS Article XVII.\nIn addition, in certain Member States that have adopted implementing legislation requiring\nownership unbundling, including Lithuania and Esto nia, the Russian supplier of pipeline transport\nservices has been required to cede control in the TSO or will be required to do so in the future on\nthe basis of existing legislation. In other Memb er States that permit the ISO and/or ITO models,\nVIUs that are owned or controlled by a person or persons of other third-countries have been\npermitted to adopt either of those unbundling models, and thus to maintain ownership and varying\ndegrees of control over both the TSO and producti on or supply portions of the VIU. The Russian\nFederation considers that these measures result in less favorable treatment being accorded to\npipeline transport services and service suppliers of Russia than to like services and service\n\n4 Directive, Article 9. Article 9(9) of the Directive provides for a fourth ownership unbundling model. For\nthe sake of clarity, the Russian Federation notes that the references to specific provisions of legal instruments\nin this request are for explanatory purposes and without prejudice to the examination in the proceedings of\nother relevant provisions of the specific legal instruments cited herein.\n5 Directive, Article 9(2)(c).\n6 Directive, Article 14.\n7 Directive, Chapter IV.\n8 Directive, Article 9(6).\n\nsuppliers of other third-countries, contrary to the EU's obligations under GATS Article II:1.\nMoreover, contrary to the requirements of Arti cle I:1 of GATT 1994, the fact that third-country\nnatural gas suppliers in certain Member States have been permitted to adopt the ISO or ITO\nunbundling models grants an advantage, favor, priv ilege or immunity to the natural gas imported\nfrom those third-countries that is not immediately and unconditionally accorded to natural gas\noriginating in Russia, which is transported and placed on the market in Member States that require\nownership unbundling. Such Russian-origin natural gas is also accorded less favorable treatment\nthan domestic natural gas that is transported and placed on the market in Member States\npermitting the ISO and/or ITO models, contrary to the EU's obligations under Article III:4 of\nGATT 1994.\nNext, the Directive requires that TSOs in each Member State be certified as complying with the\nrelevant unbundling requirements. However, when certification is requested by a transmission\nsystem owner or TSO controlled by a person or persons from a third-country, the Directive\nrequires that the request be refused unless it is demonstrated that certification \"will not put at risk\nthe security of supply\" of the Member State and the EU.\n9 No similar requirement applies to\ncertification requests by domestic persons. Croatia, Hungary and Lithuania have implemented\nversions of this \"third-country certification measure\" in their respective legislation. The Russian\nFederation considers these measures to be inconsistent, de jure, with the obligations of Croatia,\nHungary and Lithuania under GATS Article XVII to accord services and service suppliers of any\nother Member treatment no less favorable than these three Members' like services and service\nsuppliers. In addition, pursuant to the Directive, requests for certification by a transmission\nsystem owner or TSO located in one EU Member St ate, but controlled by a person or persons of\nanother Member State, are not subject to the thir d-country certification measure. The services\nand service suppliers of one EU Member State ar e thus treated more favorably by other Member\nStates than are the services and service suppliers of other third-countries, including Russia. This\nis despite the fact that the EU and each such Me mber State is also a Member of the WTO. The\nRussian Federation considers this measure to be inconsistent, de jure, with the EU Member States'\nobligations under Article II:1 of the GATS to accord immediately and unconditionally to services\nand service suppliers of each Member treatment no less favorable than that it accords to like\nservices and service suppliers of any other country.\nIn the same sense, given the general applicability of the certification requirement, Croatia,\nHungary and Lithuania do not administer the third-country certification measure in a reasonable,\nobjective and impartial manner, contrary to these Members' obligations under GATS Article VI:1.\nLikewise, Russia considers the third-country certification measure as constituting a licensing and\nqualification requirement that nullifies or impairs the specific commitments of Croatia, Hungary\nand Lithuania in the pipeline transport services sector, in a manner inconsistent with GATS\nArticle VI:5(a).\nMoreover, various Member States have issued certification decisions, most of which the European\nCommission (\"Commission\") has approved. Yet the Commission refused to approve Poland's\ncertification of Gaz-System S.A. as an ISO for the Polish section of the Yamal-Europe Pipeline\n(\"Yamal\"). Having found that Yamal's owner, Europolgaz, is jointly controlled by the Polish gas\nincumbent and a Russian pipeline transport servic e supplier, the Commission required Poland to\nconduct a security of supply assessment. Previously, however, the Commission approved\ncertification of at least two TSOs in Member States in which other third-country persons owned up\nto 100 percent interests, without any control or \"security of supply\" assessments having been\nconducted. In so doing, contrary to its obligations under GATS Article II:1, the EU accorded\nRussian services and service suppliers less favora ble treatment than like services and service\nsuppliers of those third-countries.\nThe Directive further requires Member States to en sure implementation of a system of third-party\naccess (\"TPA\") to the transmission and distribution system and LNG facilities in the EU.\n10 T h e\nDirective permits \"major new gas infrastructure, i. e. interconnectors, LNG and storage facilities,\"\nto be exempted from the unbundling, TPA and othe r requirements under certain conditions. The\nsame exemptions are also permitted for \"significant increases of capacity in existing infrastructure\nand to modifications of such infrastructure which enable the development of new sources of gas\n\n9 Directive, Article 11.\n10 Directive, Article 32.\n\nsupply.\"11 The conditions to be examined in assessing such requests permit Member States and\nthe Commission significant discretion in determining whether to grant infrastructure exemptions.\nA number of infrastructure exemptions have been gr anted under these provisions of the Directive.\nSimilar exemptions remain in effect that were previously granted pursuant to comparable\nprovisions of Directive 2003/55/EC, as part of the SEP. 12 A Russian pipeline transport service\nsupplier controls the Ostseepipeline-Anbindungsleitung (\"OPAL\") pipeline. After being categorized\nas an \"inter-connector,\" the Germany authority granted the OPAL pipeline owners a limited\ninfrastructure exemption for capacity used to transport natural gas from Griefswald, where gas\nenters Germany from the Nordstream Pipeline (\"Nordstream\"), to Brandov, where gas exits\nGermany and enters the Czech Republic. However, the Commission imposed a 50 percent cap on\nthe ability of the Russian supplier operating the OPAL pipeline, described as a \"dominant\nundertaking,\" to acquire exit capacity at the Cz ech border. The Russian supplier may exceed this\ncap only by implementing a \"gas release\" program and selling 3 billion cubic meters (\"bcm\") of its\ngas annually at a government-set, fixed price to competing gas suppliers on the Czech market,\nregardless of what amount of additional capacity is booked by the Russian supplier. No similar gas\nrelease requirement was imposed in decisions granting infrastructure exemptions concerning\npipelines defined as interconnectors and controlled by other third-country suppliers of natural gas\nand pipeline transport services.\nIn addition, the Nordeuropäische Erdgasleitung (\"NEL\") pipeline is intended to transport Russian\ngas westward through Germany from Griefswald, the Nordstream entry point, to Rehden in\nGermany. The owners of the NEL pipeline, which include a Russian service supplier, requested an\nexemption from the requirements of the Directive. Germany denied this request on the basis that\nthe pipeline does not qualify as an interconnector. Although the definition of interconnector in the\nDirective was interpreted strictly in denying an exemption for NEL, exemption requests were\ngranted to the third-country service suppliers or ow ners of other pipelines, which also do not meet\nthe definition of an interconnector in the Directive (and in the SEP).\nThe Russian Federation considers that, contrary to its obligations under GATS Article II:1 in the\ncase of both the OPAL and NEL decisions, the EU accorded Russian services and service suppliers\nless favorable treatment than it accorded to like services and service suppliers of other third-\ncountries pursuant to relevant decisions granting exemptions to those suppliers. As a result of\nthese measures, natural gas originating in Russia is not accorded immediately and unconditionally\nany advantage, favor, privilege or immunity granted to natural gas originating in certain third-\ncountries, contrary to the EU's obligations under Article I:1 of GATT 1994.\nIn addition, requiring that the operator of the OPAL pipeline adopt the 3 bcm gas release program\nhas a limiting effect on the volume of Russian gas being imported into the EU market. The\nmeasure thus maintains or institutes a de facto restriction on importation, contrary to the\nrequirements of Article XI:1 of GATT 1994. The Russian Federation also considers that the OPAL\ngas release requirement also violates Article X:3(a) of GATT 1994. Specifically, by imposing the 3\nbcm gas release requirement under the conditions described above only on imported Russian gas,\nbut not third-country gas transported through pipe lines subject to other exemption decisions, the\nEU has failed to administer the infrastructure exemption provisions in the Directive and the SEP in\na uniform, impartial and reasonable manner, including with regard to the sale, distribution and\ntransportation of natural gas.\nFurthermore, the definition of \"transmission\" in the Directive expressly exempts \"upstream\npipeline networks,\" which are defined separately. The Directive also defines the functions of\ntransmission and LNG as separate from the functi ons of natural gas production and supply. The\nunbundling provisions, in turn, apply only to the transmission system and TSO, which must be\nseparated from the production and supply portions of the VIU. Domestic and third-country\npipeline transport service suppliers are thus exempt from the unbundling requirements with regard\nto their upstream pipeline networks and LNG facilities. As a result, contrary to the EU's obligations\nunder Article I:1 of GATT 1994, natural gas originat ing in third-countries that is transported and\nplaced on the EU market through either of these ty pes of infrastructure is accorded an advantage,\n\n11 Directive, Article 36.\n12 Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning\ncommon rules for the internal market in natural gas and repealing Directive 98/30/EC, Article 22, OJ L 176,\n15.7.2003, pp. 57-78 (\"Directive 2003/55/EC\").\n\nfavor, privilege or immunity that is not immediately and unconditionally accorded to natural gas\noriginating in Russia, which is transported and placed on the market by pipeline transport service\nsuppliers that are subject to the unbundling requirements. Such Russian-origin natural gas is also\naccorded less favorable treatment than domestic natural gas that is transported and placed on the\nmarket through upstream pipeline networks, and possibly LNG facilities, in a manner inconsistent\nwith Article III:4 of GATT 1994.\nThe Russian Federation understands that these measures are enacted and implemented through\nthe following legal instruments:\n Directive 2009/73/EC;\n Directive 2003/55/EC;\n Regulation (EC) No 715/2009 on conditions for access to the natural gas transmission\nnetworks and repealing Regulation (EC) No 1775/2005 (\"Regulation (EC) No\n715/2009\");\n13\n Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July\n2009 establishing an Agency for the Cooperat ion of Energy Regulators (\"Regulation\n(EC) No 713/2009\");14\n Regulation (EU) No 994/2010 of the European Parliament and of the Council of 20\nOctober 2010 concerning measures to safeguard security of gas supply and repealing\nCouncil Directive 2004/67/EC;15\n Certification decisions and opinions pursuant to Articles 10 and 11 of the Directive by\nthe Commission, and certification decisions and opinions by national regulatory\nauthorities of the EU Member States pursuant to their implementing laws, including\nbut not limited to:\n Commission Opinion, 6.9.2012, C(2012) 6255, Certification of jordgas Transport\nGmbH (Germany), pursuant to Article 3(1) of Regulation (EC) No 715/2009 and\nArticle 10(6) of Directive 2009/73/EC;\n Commission Opinion, 11.12.2012, C(2012) 9575, Certification of NABUCCO Gas\nPipeline International GmbH (Austria), pursuant to Article 3(1) of Regulation\n(EC) No 715/2009 and Article 10(6) of Directive 2009/73/EC;\n Commission Opinion, 9.9.2014, C(2014) 6463, Certification of Gaz-System S.A.\nas the operator of the Polish section of the Yamal-Europe Pipeline, pursuant to\nArticle 3(1) of Regulation (EC) No 715/2009 and Article 10(6) and 11(6) of\nDirective 2009/73/EC;\n Infrastructure exemption decisions and opinions pursuant to Article 36 of the Directive\nand its predecessors, including the SEP, by the Commission and national regulatory\nauthorities of the EU Member States;\n Member State legislation implementing the TEP, including but not limited to:\n Austria, Natural Gas Act of 2011 (Gaswirtschaftsgesetz), FLG I no 107/2011\n(National Council: GP XXIV RV 1081 AB 1128 p. 124. Federal Council: 8581 AB\n8593 p. 801);\n Belgium (Federal), Act of 8 January 2012, amending the Federal Gas Act of 12\nApril 1965; Government of Belgium (Flanders), Decree of 8 July 2011, amending\nthe Energy Decree of 8 May 2009; Government of Belgium (Brussels Capital\n\n13 OJ L 211, 14.8.2009, pp. 36-54.\n14 OJ L 211, 14.8.2009, pp. 1-14.\n15 OJ L 295, 12.11.2010, pp. 1-22.\n\nRegion), Edict of 20 July 2011, amending the Gas Edict of 1 April 2004;\nGovernment of Belgium (Wallonia), various amending decrees and governmental\norders implementing the Directive;\n Bulgaria, Energy Act (as amended through SG No. 66/26.07.2013, effective\n26.07.2013);\n Croatia, Energy Act (Official Gazette 120/12); Government of Croatia, the Act on\nthe Regulation of Energy Activities of 11 November 2012; Government of\nCroatia, Gas Market Act of 14 March 2013;\n Cyprus, Law for Regulating the Natural Gas Market, Law 1219(I)/2012, which\namends Laws for Regulating the Natural Gas Market 2004-2007;\n Czech Republic, Amendment of the Energy Act, Act No. 211/2011 Coll.,\namending the Act no. 458/2000 Coll., on business conditions and public\nadministration in the energy sectors and on amendment of certain laws (the\nEnergy Act), as amended, and other related laws;\n Denmark, Amendments to the Electricity Supply Act and the Natural Gas Supply\nAct, Act no. 466 of 18 May 2011;\n Estonia, Natural Gas Act, Maagaasiseaduse muutmise seadus, seaduse\nparandus, RT I, 28.06.2012, 2; Elektrooniline Riigi Teataja (MNE(2012) 52911);\n Finland, Act to amend the Natural Gas Market Act (laki maakaasumarkkinalain\nmuuttamisesta 589/2013); Electricity and Gas Market Supervision Act (laki\nsähkö- ja maakaasumarkkinoiden valvonnasta 590/2013); and Act on the\nEnergy Market Authority (laki energiamarkkinavirastosta 591/2013);\nlégislative du code de l'énergie;\n Germany, Energiewirtschaftsgesetz (Gesetz über die Elektrizitäts- und\nGasversorgung (Energiewirtschaftsgesetz – EnWG) i.d.F. von Artikel 2 des\nGesetzes vom 16.1.2012, BGBl I S. 74.);\n Greece, Law 4001/2011, \"For the operation of the energy markets of Electricity\nand Natural Gas, for research, production and transmission networks of\nhydrocarbons and other arrangements\" (Official Gazette A'176/22.08.2011);\n Hungary, Act No. XXIX of 2011 amending the Gas Supply Act; Act No. XL of\n2008 on Natural Gas Supply;\n Ireland, S.I. No. 463 of 2011, European Communities (Internal Market in\nElectricity and Gas) (Consumer Protection) Regulations 2011;\n Italy, Legislative Decree, 1 June 2011, no. 93, \"Attuazione delle direttive\n2009/72/CE, 2009/73/CE e 2008/92/CE relative a norme comuni per il mercato\ninterno dell'energia elettrica, del gas naturale e ad una procedura comunitaria\nsulla trasparenza dei prezzi al consumator e finale industriale di gas e di energia\nelettrica, nonche' abrogazione delle direttive 2003/54/CE e 2003/55/CE;\n Latvia, Energy Law (amended as of 25.03.2014);\n Lithuania, Law on Natural Gas, No VIII-1973, 10 October 2000 (amended as of\n13 March 2014 – No XII-772); Law Implementing the Law Amending the Law on\nNatural Gas, No. XI-1565, 30 June 2011; Resolution No. 1239 of 28 October\n2011, on Approval of the Plan for Perfor ming the Unbundling of Activities and\nControl of Natural Gas Undertakings That Do Not Conform to the Requirements\nof the Law on Natural Gas of the Republic of Lithuania; Plan for Performing the\n\nUnbundling of Activities and Control of Natural Gas Undertakings That Do Not\nConform to the Requirements of the La w on Natural Gas of the Republic of\nLithuania, Approved by Resolution No. 1239 of 28 October 2011 (Official\nGazette, 2011, No. 130-6170);\n Malta, Subsidiary Legislation 423.21, Natural Gas Market Regulations, 5 May\n2011, Legal Notice 167 of 2011, as amended by Legal Notice 189 of 2012;\n Netherlands, Dutch Gas Act (Gaswet) (amended as of April 2013);\n Poland, The Energy Law of 10 April 1997 - consolidated text (Journal of Laws of\n2012, item 1059, as amended).;\n Portugal, Decreto Lei 77/2011, de 20 de Junho (20 June 2011);\n Romania, Propunere ANRE de transpunere a Directivei CE si PE nr.73/2009;\n Slovakia, Act No. 251/2012 Coll. on the Energy Industry and on Amendment and\nSupplement of several acts;\n Slovenia, Energy Act;\n Spain, Legal Decree (Real Decreto-ley) 13/2012, 30 March 2012;\n Sweden, Natural Gas Act (2005:403) (amended as of 1 January 2012);\n United Kingdom, Electricity and Gas (Internal Markets) Regulations 2011;\n as well as any amendments or extensions, any replacement measures, any renewal\nmeasures, any other implementing measures or legal instruments, and other related\nmeasures of the foregoing.\n2. Capacity Allocation Measures\nAccess to transmission networks within the EU is granted by selling rights to gas suppliers for a\nparticular volume of capacity. The TEP imposed a system of regulations concerning the manner in\nwhich capacity allocation takes place. Th ese included Regulation (EC) No 715/2009 and\nCommission Regulation (EU) 984/2013, which was adopted subsequently.\n16 These regulations\ngrant Member States discretion to define interconnection points (\"IPs\") and entry points. Capacity\nat IPs must be sold by auction, whereas capacity at entry points is typically sold on a first-come-\nfirst-served (\"FCFS\") basis. Capacity for natural gas originating in Russia is disproportionately\ndefined as entering through IPs and thus is subj ect to auction, whereas domestic-origin and other\nthird-country-origin gas is generally defined as entering through entry points, making it subject to\nFCFS. FCFS (a) results in a tariff freely nego tiated between the contracting parties, while\nauctioning is subject to a tariff approved by the regulator; and (b) can be contracted for 20 or\nmore years, while auctioned capacity is limited to 15 years.\nAs a result, contrary to the EU's obligations under Article I:1 of GATT 1994, natural gas originating\nin third-countries that is transported, placed on the EU market and made subject to FCFS is\naccorded an advantage, favor, privilege or immunity that is not immediately and unconditionally\naccorded to natural gas originating in Russia, which is transported, placed on the market and\nmade subject to auction. Such Russian-origin natural gas is also accorded less favorable\ntreatment than domestic natural gas that is tran sported, placed on the market and made subject\nto FCFS, in a manner inconsistent with Article III:4 of GATT 1994.\n\n16 Commission Regulation (EU) 984/2013 of 14 October 2013 establishing a Network Code on Capacity\nAllocation Mechanisms in Gas Transmission Systems and supplementing Regulation (EC) 715/2009, OJ L 273,\n15.9.2013, pp. 5-17 (\"Commission Regulation (EU) 984/2013\").\n\nThe Russian Federation understands that these measures are enacted and implemented through\nthe following legal instruments:\n Directive 2009/73/EC;\n Regulation (EC) No 715/2009;\n Regulation (EC) No 713/2009;\n Commission Regulation (EU) 984/2013;\n as well as any amendments or extensions, any replacement measures, any renewal\nmeasures, any implementing measures, and other related measures of the foregoing.\n3. \"Projects of Common Interest\" Measures\nThe EU has also enacted regulations establishing \"trans-European energy infrastructure priority\ncorridors and areas,\" including four specific \"pri ority gas corridors.\" The principal regulation,\nRegulation (EU) No 347/2013, is referred to as the \"TEN-E regulation.\" It sets forth criteria for\nidentifying \"projects of common interest\" or \"PCIs,\" which are accorded priority status, including\nwithin priority gas corridors. The TEN-E regula tion provides for the implementation of PCIs,\nincluding those concerning natural gas, to be fa cilitated by \"streamlined and efficient permit\ngranting procedures,\" \"improved regulatory treatment\" and EU financial assistance. In\nOctober 2013, the Commission issued an amendment to the TEN-E regulation setting out the initial\nlist of PCIs.\n17 These include a number of projects that promote and facilitate the production and\ntransportation of domestic natural gas, as well as the importation and transportation of gas from\nvarious third-countries, including numerous LNG projec ts. However, the list of PCIs excludes any\nproject designed to facilitate the importation or transportation of natural gas from Russia. The\nRussian Federation is not aware of any such projects currently under consideration for designation\nas a PCI.\nThe Russian Federation considers that, contrary to GATS Article II:1, these measures accord\nRussian services and service suppliers less favorabl e treatment than is accorded to like services\nand service suppliers of other third-countries, which benefit from having projects listed as PCIs.\nNatural gas originating in third-countries that is transported and placed on the EU market through\npipelines or other infrastructure listed as PCIs is also accorded an advantage, favor, privilege or\nimmunity that is not immediately and unconditionally accorded to natural gas originating in Russia,\ncontrary to Article I:1 of GATT 1994. Such Russian-origin natural gas is also accorded less\nfavorable treatment than domestic natural gas th at is transported and placed on the market\nthrough pipelines or other infrastructure listed as PCIs, in a manner inconsistent with Article III:4\nof GATT 1994.\nThe Russian Federation understands that these measures are enacted and implemented through\nthe following legal instruments:\n Directive 2009/73/EC;\n Regulation (EC) No 715/2009;\n Regulation (EU) No 347/2013;\n Commission Delegated Regulation (EU) No 1391/2013; and\n Regulation (EU) No 1316/2013 of the European Parliament and of the Council of\n11 December 2013 establishing the Connecting Europe Facility, amending Regulation\n\n17 Commission Delegated Regulation (EU) No 1391/2013 of 14 October 2013, amending Regulation (EU)\nNo 347/2013 of the European Parliament and of the Council of 17 April 2013 on guidelines for trans-European\nenergy infrastructure as regards the Union list of projects of common interest, OJ L 349, 21.12.2013,\npp. 28-43 (\"Commission Delegated Regulation (EU) No 1391/2013\").\n\n(EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010,\nOJ L 348, 20.12.2013.\n as well as any amendments or extensions, any replacement measures, any renewal\nmeasures, any implementing measures, and other related measures of the foregoing.\nThe Russian Federation considers that the above-mentioned measures are inconsistent with the\nobligations of the EU and its Member States under Articles II:1, VI:1, VI:5(a), XVI, including XVI:1\nand XVI:2(a), (e) and (f), and XV II of the GATS; and Articles I:1, III:4, X:3(a) and XI:1 of the\nGATT 1994. These measures also appear to nullify or impair the benefits accruing to the Russian\nFederation directly or indirectly under the cited agreements.\nThe Russian Federation asks that this request be placed on the agenda for the regular meeting of\nthe Dispute Settlement Body to be held on 19 June 2015."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.809006"}}},{"rowIdx":7785,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ02_Note_By_Secretariat.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ02_Note_By_Secretariat.pdf"},"doc_sequence":{"kind":"number","value":2,"string":"2"},"doc_type":{"kind":"string","value":"Note_By_Secretariat"},"doc_type_raw":{"kind":"string","value":"NOTE BY THE SECRETARIAT"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"null"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE RUSSIAN FEDERATION NOTE BY THE SECRETARIAT"},"date":{"kind":"string","value":"8 March 2016"},"header_codes":{"kind":"string","value":"WT/DS476/3; WT/DS476/2; WT/DS476/2"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nCONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE RUSSIAN FEDERATION\nNOTE BY THE SECRETARIAT\n1. At its meeting on 20 July 2015, the Dispute Settlement Body (DSB) established a panel\npursuant to the request of the Russian Federation in document , in accordance with\nArticle 6 of the DSU (WT/DSB/M/365).\n\n2. The Panel's terms of reference are the following:\n\n\"To examine, in the light of the relevant provisions of the covered agreements cited\nby the parties to the dispute, the matter referred to the DSB by the Russian\nFederation in document and to make such findings as will assist the DSB\nin making the recommendations or in giving the rulings provided for in those\nagreements.\"\n3. On 22 February 2016, the Russian Federation requested the Director-General to determine\nthe composition of the panel, pursuant to paragr aph 7 of Article 8 of the DSU. This paragraph\nprovides:\n\n\"If there is no agreement on the panelists within 20 days after the date of the\nestablishment of a panel, at the request of either party, the Director-General, in\nconsultation with the Chairman of the DSB and the Chairman of the relevant Council\nor Committee, shall determine the composition of the panel by appointing the\npanelists whom the Director-General considers most appropriate in accordance with\nany relevant special or additional rules or procedures of the covered agreement or\ncovered agreements which are at issue in the dispute, after consulting with the parties\nto the dispute. The Chairman of the DSB shall inform the Members of the composition\nof the panel thus formed no later than 10 days after the date the Chairman receives\nsuch a request.\"\n4. On 7 March 2016\n1, the Director-General accordingly composed the Panel as follows:\n\nChairperson: Mr Felipe Lopeandía\n\n Members: Mr Jose-Victor Chan-Gonzaga\n Mr Marco Tulio Molina Tejeda\n\n5. Brazil, China, Colombia, India, Japan, the Republic of Korea, the Kingdom of Saudi Arabia,\nUkraine, and the United States have reserved their rights to participate in the Panel proceedings as\nthird parties."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.809957"}}},{"rowIdx":7786,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ03_Communication_00.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ03_Communication_00.pdf"},"doc_sequence":{"kind":"number","value":3,"string":"3"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"COMMUNICATION FROM"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":0,"string":"0"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL"},"date":{"kind":"string","value":"22 August 2016"},"header_codes":{"kind":"string","value":"WT/DS476/4"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nCOMMUNICATION FROM THE CHAIRPERSON OF THE PANEL\nThe following communication, dated 18 August 2016, addressed to the Chairperson of the Dispute\nSettlement Body (DSB), is circulated in accordance with Article 12.9 of the Dispute Settlement\nUnderstanding (DSU).\n\nArticle 12.8 of the Understanding on Rules and Procedures Governing the Settlement of Disputes\n(DSU) provides that the period in which a panel shal l conduct its examination, from the date that\nthe composition and terms of reference of the panel have been agreed upon until the date the final\nreport is issued to the parties to the dispute, shall, as a general rule, not exceed six months.\n\nArticle 12.9 of the DSU provides that, when a panel considers that it cannot issue its report within\nsix months, it shall inform the Dispute Settlement Body (DSB) in writing accordingly and indicate\nthe reasons, together with an estimate of the period within which it will issue its report.\n\nThe Panel on European Union and its Member States – Certain Measures Relating to the Energy\nSector (DS476) was established by the DSB on 20 July 2015 and composed on 7 March 2016.\n\nThe Panel expects to issue its final report to the parties in May 2017 , in accordance with the\ntimetable adopted after consultation with the parties.\n\nI would be grateful if you would circulate this letter to the Members of the DSB."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.810552"}}},{"rowIdx":7787,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ04_Communication_01.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ04_Communication_01.pdf"},"doc_sequence":{"kind":"number","value":4,"string":"4"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"COMMUNICATION FROM"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":1,"string":"1"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL"},"date":{"kind":"string","value":"7 April 2017"},"header_codes":{"kind":"string","value":"WT/DS476/5"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nCOMMUNICATION FROM THE CHAIRPERSON OF THE PANEL\nThe following communication, dated 4 April 2017, addressed to the Chairperson of the Dispute\nSettlement Body (DSB), is ci rculated in accordance with Article 12.9 of the Dispute Settlement\nUnderstanding (DSU).\n\nArticle 12.8 of the Understanding on Rules and Procedures Governing the Settlement of\nDisputes (DSU) provides that the period in which a panel shall conduct its examination, from the\ndate that the composition and terms of reference of the panel have been agreed upon until the\ndate the final report is issued to the parties to the dispute, shall, as a general rule, not exceed\nsix months.\n\n Article 12.9 of the DSU provides that, when a panel considers that it cannot issue its report\nwithin six months, it shall inform the Dispute Settlement Body (DSB) in writing accordingly and\nindicate the reasons, together with an estimate of the period within which it will issue its report.\n\n The Panel on European Union and its Member States – Certain Measures Relating to the\nEnergy Sector (DS476) was established by the DSB on 20 July 2015 and composed on\n7 March 2016. In its communication to the DSB of 18 August 2016 (WT /DS476/4), the Panel\nindicated that it expected to issue its final report to the parties in May 2017. However, it will not\nbe possible for the Panel to issue its final report to the parties by that time, due to the complexity\nof the dispute and the large volume of evidence.\n\n The Panel expects to issue its final report to the parties no later than the end of 2017 , in\naccordance with the revised timetable adopted after consultation with the parties.\n\n I would be grateful if you would circulate this letter to the Members of the DSB."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.811092"}}},{"rowIdx":7788,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ05_Working_Procedures_00.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ05_Working_Procedures_00.pdf"},"doc_sequence":{"kind":"number","value":5,"string":"5"},"doc_type":{"kind":"string","value":"Working_Procedures"},"doc_type_raw":{"kind":"string","value":"AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":0,"string":"0"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR NOTIFICATION OF AN APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW"},"date":{"kind":"string","value":"25 September 2018"},"header_codes":{"kind":"string","value":"WT/DS476/6"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":3,"string":"3"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nNOTIFICATION OF AN APPEAL BY THE EUROPEAN UNION UNDER\nARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES\nAND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),\nAND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW\nThe following communication, dated 21 September 2018, from the delegation of the European Union,\nis being circulated to Members.\n\nCertain Measures relating to the Energy Sector () concerning the third -country\ncertification measure, the infrastructure exemption measure and the TEN –E measure. Pursuant to\nRule 23(1) of the Working Procedures for Appellate Review, the European Union simultaneously files\nthis Notice of Appeal with the Appellate Body Secretariat.\n2. For the reasons to be further elaborated in its submissions to t he Appellate Body, the\nEuropean Union appeals, and requests the Appellate Body to reverse or declare moot and of no legal\neffect the findings and conclusions of the Panel with respect to the errors of law and legal\ninterpretations contained in the Panel Report described below, and where indicated to complete the\nanalysis on the basis of the Panel's findings and uncontested facts on the record.1\nI. THE THIRD-COUNTRY CERTIFICATION MEASURE\n3. The European Union appeals the Panel's conclusion 2 and related findings 3 that the\nthird-country certification measure, as implemented in the national laws of Croatia, Hungary a nd\nLithuania, is inconsistent with Article XVII of the GATS and is not justified under the general\nexception in Article XIV(a) of the GATS.\n4. This conclusion is based on the Panel's erroneous finding that the third -country certification\nmeasure, as implemented in the provisions of the laws of the three EU Member States cited above,\nis not applied consistently with the chapeau of Article XIV of the GATS4.\n5. In making this finding the Panel erred in the interpretation and application of the chapeau of\nArticle X IV of the GATS. More precisely, the Panel erred by holding that the lack of an\n\n1 Pursuant to Rule 20(2)(d)(iii) of the Working Procedures for Appellate Review this Notice of Appeal\nincludes an indicative list of the paragraphs of the Panel Report containing the alleged errors, without prejudice\nto the ability of the European Union to refer to other paragraphs of the Panel Report in the context of its\nappeal.\n3 Including the finding in Panel report, para. 7.1254 and the supporting reasoning in paras. 7.1241-\n7.1253.\n4 Panel report, para. 7.1254.\n\nex-ante mechanism for assessing the threats to the security of gas supply posed by TSOs controlled\nby persons of an EU Member constitutes a means of \"arbitrary or unjustifiable discrimination\".5\n6. The European Union requests the Appellate Body to reverse the appealed conclusion and\nrelated findings concerning the third-country certification measure and to find that the third-country\ncertification measure is justified under Article XIV (a) of the GATS.\nII. THE INFRASTRUCTURE EXEMPTION MEASURE\n7. The European Union appeals the Panel's findings and conclusion that the two challenged\nOPAL conditions within the 2009 OPAL exemption decision are inconsistent with Article XI:1 of the\nGATT 1994.6 The Panel erre d in finding that \"the two challenged OPAL conditions restrict market\naccess for EU imports of natural gas from Russia and limit competitive opportunities for importation\nof Russian natural gas into the European Union\".7\n8. The Panel's findings that the condi tions relating to the 50% capacity cap and the 3 bcm/yr\ngas release programme have a limiting effect on the importation of natural gas from Russia 8 are\nerroneous because the two conditions were examined in isolation from the generally applicable\nprovisions of EU law that provide their context. The effects of those conditions, which concern access\nto the OPAL pipeline 's capacities, must be assessed in the context of Directive 's rules that require\nthird-party access to the gas transmission and distribution sy stem (Article 32) and allow partial\nexemptions to be granted to major new infrastructure (Article 36).\n9. The Panel erred in failing to examine the two challenged OPAL conditions in their regulatory\ncontext and in mischaracterizing them as a measure on the importation of goods within the meaning\nof Article XI:1 of the GATT 1994.\n10. In the alternative, the European Union argues that, in any event, the Panel erred in finding\nthat those conditions have a limiting effect on the importation of natural gas from Russia.9\n11. The European Union requests the Appellate Body to reverse the Panel's findings and conclusion\nthat the challenged OPAL conditions (that is, the 50% capacity cap and 3 bcm/yr gas release\nprogramme) are inconsistent with Article XI:1 of the GATT 1994.10\nIII. THE TEN-E MEASURE\n12. The European Union appeals the Panel's conclusion 11 and related findings 12 that the\nTEN-E measure is inconsistent with Article III: 4 of the GATT 1994. This conclusion is based on the\nPanel's erroneous finding that the TEN –E measure accor ds \"less f avourable treatment\" to\nRussian natural gas than to like natural gas of EU origin13.\n13. The European Union also appeals the Panel's conclusion 14 and related findings 15 that the\nTEN-E measure is inconsistent with Article I:1 of the GATT 1994. This conc lusion is based on the\nPanel's erroneous finding that the TEN–E measure accords an \"advantage\" to imports of natural gas\noriginating in countries other than Russia16.\n\n5 Panel report, paras. 7.1252-7.1253.\n6 Panel report, paras. 7.980 -7.1003 and 8.1.d.iii.\n7 Panel report, para. 7.1002.\n8 Panel report, paras. 7.1000 -7.1002.\n9 Panel report, para. 7.1001.\n10 Panel report, paras. 7.980 -7.1003 and 8.1.d.iii.\n11 Panel report, para. 8.1.g.\n12 Including Panel report, paras. 7.1285, 7.1299-7.1301 and supporting reasoning in paras. 7.1267-\n7.1286 and 7.1314-7.1324.\n13 Panel report, para. 7.1300.\n14 Panel report, para. 8.1.g.\n15 Including Panel report, paras. 7.1285, 7.1311-7.1313 and supporting reasoning in paras. 7.1267-\n7.1286 and 7.1314-7.1324.\n16 Panel report, para. 7.1312.\n\n14. In making these two findings the Panel erred in law in the following two ways:\n• first, by relying on an erroneous legal standard for establishing the existence of \"less\nfavourable treatment\", for the purposes of Article III:4 of the GATT 1994, and of an\n\"advantage\", for the purposes of Article I:1 of the GATT 1994; and\n• second, by excl uding a priori from its analysis the legal relevance of the existing\ninfrastructures for transporting natural gas.\n15. In addition, when developing its analysis under both Article III:4 and I:1 of the GATT 1994\nthe Panel acted inconsistently with Article 11 o f the DSU by failing to conduct an objective\nassessment of the facts of the case:\n• first, the Panel failed to consider the detailed evidence and arguments submitted by the\nEuropean Union with regard to the actual implementation of the TEN –E measure and, as\na result, failed to undertake a \"holistic assessment\" of \"all the relevant elements\" in order\nto ascertain the meaning and expected operation of the TEN–E measure;\n• second, the Panel's analysis relied on the import statistics provided by the European Union\nas Exhibit EU - 190. Yet the Panel misunderstood those statistics and drew conclusions\nthat are not properly based on that evidence.\n16. Should the Appellate Body reverse the Panel's findings that the TEN–E measure is inconsistent\nwith Article III:4 of the G ATT 1994 and Article I:1 of the GATT 1994, the European Union further\nrequests the Appellate Body to declare moot and of no legal effect the Panel 's conclusion that the\nTEN–E measure is not justified under Article XX (j) of the GATT 199417.\n17. In the event that the Appellate Body upheld the Panel's findings that the TEN –E measure is\ninconsistent with Article III:4 of the GATT 1994 and/or with Article I:1 of the GATT 1994, the\nEuropean Union appeals the Panel's conclusion that the TEN –E measure is not justifi ed under\nArticle XX (j) of the GATT 1994 18. This conclusion stems from an erroneous legal interpretation of\nthe terms \"in short supply\" in Article XX (j) of the GATT 1994, according to which the terms\n\"'products in general or local short supply' do not cove r products at risk of being in short supply\"\nand only products that are \"currently\" in short supply can be considered to be \"in short supply\".\n18. Should the Appellate Body reverse the Panel's erroneous legal interpretation of the terms \"in\nshort supply\", the European Union further requests the Appellate Body to complete the analysis of\nthe TEN–E measure in the light of remaining elements of the legal standard under Article XX (j) of\nthe GATT 1994 and to find that the TEN–E measure is justified under that provision."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.813305"}}},{"rowIdx":7789,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ06_Working_Procedures_01.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ06_Working_Procedures_01.pdf"},"doc_sequence":{"kind":"number","value":6,"string":"6"},"doc_type":{"kind":"string","value":"Working_Procedures"},"doc_type_raw":{"kind":"string","value":"AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":1,"string":"1"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR NOTICE OF AN OTHER APPEAL BY THE RUSSIAN FEDERATION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW"},"date":{"kind":"string","value":"28 September 2018"},"header_codes":{"kind":"string","value":"WT/DS476/7"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":2,"string":"2"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nNOTICE OF AN OTHER APPEAL BY THE RUSSIAN FEDERATION UNDER\nARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES\nAND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND\nUNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW\nThe following communication, dated 26 September 2018, from the Delegation of the Russian\nFederation, is being circulated to Members.\n\nNotice of Other Appeal\nPursuant to Article 16.4 and 17 of the DSU, the Russian Federation hereby notifies to the Dispute\nSettlement Body its decision to appeal to the Appellate Body certain issues of law covered and certain\nlegal interpretations developed by the Panel in European Union – Certain Measures Relating to the\nEnergy Sector (WT/DS476) (\"Panel Report\"). Pursuant to Rule 23 of the Working Procedures for\nAppellate Review, the Russian Federation simultaneously files this Notice of Other Appeal with the\nAppellate Body Secretariat.\n\nFor the reasons further elaborated in its submissions to the Appellate Body, the Russian Federation\nappeals, and requests the Appellate Body to reverse, modify or declare moot and of no legal effect\nthe findings and conclusions of the Panel as summarized in paragraphs 8.1 (a) (i), (b), (c), and (e)\nof the Panel Report, with respect to the following errors of law and legal interpretations, and to\ncomplete the analysis1:\n\n• Unbundling Measure: Article 11 of the DSU\nthe Panel erred in finding that the Russian Federation had not \"substantiated its notion of the\nunbundling measure in the Directive and the unbundling measure in the national implementing\nlaws of Lithuania being 'a single measure', or its alternative notion of the unbundling measure\nin the Di rective and the unbundling measures in the natio nal implementing laws of all\nEU member States being 'a single measure'\". Thereby the Panel failed to make an objective\nassessment of the matter before it, including an objective assessment of the facts of the case\nand the applicability of and conformity with the relevant covered agreements in violation of\nArticle 11 of the DSU. The Russian Federation requests the Appellate Body to reverse the\nPanel's findings in paragraph 7.383, and to complete the analysis of the Russian Federation's\nclaims under the GATS and the GATT 1994 pertaining to the Unbundling Measure based on\nthe conclusion that the combined application of the Directive and the implementing laws of\nindividual EU member States constitutes 'a single measure', for the purpose of determining\nwhether treatment no less favourable was accorded by the European Union, to Russian\nservices, service suppliers, and goods.\n\n1 Pursuant to Rule 23(2)(c)(ii) of the Working Procedures, this Notice of Other Appeal includes an\nindicative list of the paragraphs of the Panel Report containing the alleged errors, without prejudice to Russia's\nability to refer to other paragraphs of the Panel Report in the context of this appeal.\n\n• Unbundling Measure: Article II:1 of the GATS\nthe Panel erred in finding that Russia had failed to demonstrate \"that the unbundling measure\nin the Directive accords less favourable treatment to Russian pipeline transport services and\nservice suppliers in comparison with that accorded to pipeline transport services and service\nsuppliers of any oth er non-EU country. The Russian Federation requests the Appellate Body\nto reverse the Panel's findings in paragraphs 7.497, 7.508, and 7.514, as they are based on\nthe Panel 's erroneous finding in paragraph 7.383, and the Panel 's ultimate conclusion in\nparagraph 8.1(a)(i). The Russian Federation requests the Appellate Body to complete the\nanalysis, based on an appropriate determination of the effect of the single measure, consisting\nof the combined application of the Directive and the implementing laws of the EU member\nstates and to find that the Unbundling Measure is inconsistent with Article II:1 of the GATS.\n\n• Public Body Measure: Article XVII:1 of the GATS\nthe Panel erred in finding that the Russian Federation had failed to demonstrate that the public\nbody measure in the national implementing laws of Croatia, Hungary and Lithuania modifies\nthe conditions of competition to the detriment of service suppliers of other Members in\ncomparison to like domestic service suppliers. The Russian Federation requests th e\nAppellate Body to reverse the Panel's findings in paragraphs 7.741, 7.823, and 7.787, and the\nerroneous analysis on which it is based, as well as the Panel's conclusion in paragraph 8.1(b),\nand to find that by exempting EU Government -Owned Suppliers from t he unbundling\nrequirements, the public body measure modifies the conditions of competition to the detriment\nof Russian service suppliers, in violation of Article XVII:1 of the GATS.\n\n• LNG Measure: Article I:1 of the GATT 1994\nthe Panel erred in finding that the Russian Federation had failed to demonstrate that natural\ngas from Russia and LNG imported from other countries are like products within the meaning\nof Article I:1 of the GATT 1994. The Russian Federation requests the Appellate Body to reverse\nthe Panel's findings in paragraph 7.855 and the erroneous analysis on which it is based in\nparagraphs 7.834-7.854, as well as the Panel 's conclusion in paragraph 8.1(c). The Russian\nFederation requests the Appellate Body to complete the analysis, based on an appropriate\ndetermination of the nature and extent of the competitive relationship between natural gas\nimported from Russia and LNG, and to find that the LNG measu re is inconsistent with\nArticle I:1 of the GATT 1994.\n\n• UPN Measure: Articles I:1 and III:4 of the GATT 1994\nthe Panel erred in finding that the Russian Federation had failed to demonstrate that the\nupstream pipeline networks measure grants an advantage to natural gas of any particular\norigin, and that the Russian Federation had failed to demonstr ate that the upstream pipeline\nnetworks measure is inconsistent with Article III:4 of the GATT 1994. The Russian Federation\nrequests the Appellate Body to reverse the Panel's findings in paragraphs 7.1044 and 7.1047,\nand the erroneous analysis on which it is based in para graphs 7.1007 -7.1043 and\n7.1045-7.1046, as well as the Panel 's conclusion in paragraph 8.1(e), and to find that the\nupstream pipeline networks measure is inconsistent with Art icles I:1 and III:4 of the\nGATT 1994."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.815102"}}},{"rowIdx":7790,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ07_Addendum_Add.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ07_Addendum_Add.pdf"},"doc_sequence":{"kind":"number","value":7,"string":"7"},"doc_type":{"kind":"string","value":"Addendum"},"doc_type_raw":{"kind":"string","value":"Addendum"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"string","value":"Add"},"part_number":{"kind":"null"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR REPORT OF THE PANEL"},"date":{"kind":"string","value":"10 August 2018"},"header_codes":{"kind":"string","value":"WT/DS476/R/Add.1; WT/DS476/R."},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":79,"string":"79"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES\nRELATING TO THE ENERGY SECTOR\nREPORT OF THE PANEL\nAddendum\nThis addendum contains Annexes A to D to the Report of the Panel to be found in document\n\nLIST OF ANNEXES\nANNEX A\nWORKING PROCEDURES OF THE PANEL\nContents Page\nAnnex A-1 Working Procedures of the Panel A-2\nAnnex A-2 Additional Working Procedures on BCI A-7\nANNEX B\nARGUMENTS OF THE PARTIES\nRUSSIA\nContents Page\nAnnex B-1 First part of the executive summary of the arguments of Russia B-2\nAnnex B-2 Second part of the executive summary of the arguments of Russia B-17\nEUROPEAN UNION\nContents Page\nAnnex B-3 First part of the executive summary of the arguments of the European Union B-26\nAnnex B-4 Second part of the executive summary of the arguments of the European Union B-41\nANNEX C\nARGUMENTS OF THE THIRD PARTIES\nContents Page\nAnnex C-1 Executive summary of the arguments of Colombia C-2\nAnnex C-2 Executive summary of the arguments of India C-3\nAnnex C-3 Executive summary of the arguments of Japan C-6\nAnnex C-4 Executive summary of the arguments of Ukraine C-10\nANNEX D\nPRELIMINARY RULINGS BY THE PANEL\nContents Page\nAnnex D-1 First Preliminary Ruling by the Panel (conclusions), 9 May 2016 D-2\nAnnex D-2 Second Preliminary Ruling by the Panel (conclusions), 10 November 2016 D-3\n\n- A-1 -\n\nANNEX A\nWORKING PROCEDURES OF THE PANEL\nContents Page\nAnnex A-1 Working Procedures of the Panel A-2\nAnnex A-2 Additional Working Procedures on BCI A-7\n\n- A-2 -\n\nANNEX A-1\nWORKING PROCEDURES OF THE PANEL\nAdopted on 31 March 2016\nAmended on 19 May 2016\n\n1.1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on\nRules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following\nWorking Procedures shall apply.\nGeneral\n\n1.2. The deliberations of the Panel and the documents submitted to it shall be kept confidential.\nNothing in the DSU or in these Working Procedures shall preclude a party to the dispute\n(hereafter \"party\") from disclosing statements of its own positions to the public. Members shall\ntreat as confidential information submitted to the Panel by another Member which the submitting\nMember has designated as confidential. Where a party submits a confidential version of its written\nsubmissions to the Panel, it shall also, upon request of a Member, provide a non -confidential\nsummary of the information contained in its submissions that could be disclosed to the public.\n1.3. The Panel shall meet in closed session. The parties, and Members h aving notified their\ninterest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU\n(hereafter \"third parties\"), shall be present at the meetings only when invited by the Panel to\nappear before it.\n1.4. Each party and third part y has the right to determine the composition of its own delegation\nwhen meeting with the Panel. Each party and third party shall have the responsibility for all\nmembers of its own delegation and shall ensure that each member of such delegation acts in\naccordance with the DSU and these Working Procedures, particularly with regard to the\nconfidentiality of the proceedings.\nSubmissions\n\n1.5. Before the first substantive meeting of the Panel with the parties, each party shall submit a\nwritten submission in which it s presents the facts of the case and its arguments, in accordance\nwith the timetable adopted by the Panel. Each party shall also submit to the Panel, prior to the\nsecond substantive meeting of the Panel, a written rebuttal, in accordance with the timetable\nadopted by the Panel.\n1.6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity\nand in any event no later than in its first written submission to the Panel. If the Russian Federation\nrequests such a ruling, the Europe an Union shall submit its response to the request in its first\nwritten submission. If the European Union requests such a ruling, the Russian Federation shall\nsubmit its response to the request prior to the first substantive meeting of the Panel, at a time to\nbe determined by the Panel in light of the request. Exceptions to this procedure shall be granted\nupon a showing of good cause.\n1.7. Each party shall submit all factual evidence to the Panel no later than during the first\nsubstantive meeting, except with res pect to evidence necessary for purposes of rebuttal, answers\nto questions or comments on answers provided by the other party. Exceptions to this procedure\nshall be granted upon a showing of good cause. Where such exception has been granted, the Panel\nshall accord the other party a period of time for comment, as appropriate, on any new factual\nevidence submitted after the first substantive meeting.\n1.8. Where the original language of exhibits is not a WTO working language, the submitting party\nor third party shal l submit a translation into the WTO working language of the submission at the\nsame time. The Panel may grant reasonable extensions of time for the translation of such exhibits\n\n- A-3 -\n\nupon a showing of good cause. Any objection as to the accuracy of a translation should be raised\npromptly in writing, no later than the next filing or meeting (whichever occurs earlier) following\nthe submission which contains the translation in question. Any objection shall be accompanied by a\ndetailed explanation of the grounds of objection and an alternative translation.\n1.9. In order to facilitate the work of the Panel, each party and third party is invited to make its\nsubmissions in accordance with the WTO Editorial G uide for Panel Submissions, to the extent that\nit is practical to do so.\n1.10. To facilitate the maintenance of the record of the dispute and maximize the clarity of\nsubmissions, each party and third party shall sequentially number its exhibits throughout the\ncourse of the dispute. For example, exhibits submitted by the Russian F ederation could be\nnumbered RUS -1, RUS -2, etc. If the last exhibit in connection with the first submission was\nnumbered RUS-5, the first exhibit of the next submission thus would be numbered RUS-6.\nQuestions\n\n1.11. The Panel may at any time pose questions to the parties and third parties, orally or in\nwriting, including prior to each substantive meeting.\nSubstantive meetings\n\n1.12. Each party shall provide to the Panel the list of members of its delegation in advance of\neach meeting with the Panel and no later than 5.00 p.m. the previous working day.\n1.13. The first substantive meeting of the Panel with the parties shall be conducted as follows:\na. The Panel shall invite the Russian Federation to make an opening statement to present\nits case first. Subsequently, the Panel shall invite the European Union to present its point\nof view. Before each party takes the floor, it shall provide the Panel and other\nparticipants at the meeting with a provisional written version of its statement. In the\nevent that interpretation is needed, each party shall provide additional copies for the\ninterpreters, through the Panel Secretary. Each party shall make available to the Panel\nand the other party the final version of its opening statement as well a s its closing\nstatement, if any, preferably at the end of the meeting, and in any event no later than\n5.00 p.m. on the first working day following the meeting.\nb. After the conclusion of the statements, the Panel shall give each party the opportunity to\nask each other questions or make comments, throug h the Panel. Each party shall then\nhave an opportunity to answer these questions orally. Each party shall send in writing,\nwithin a timeframe to be determined by the Panel, any questions to the other party to\nwhich it wishes to receive a response in writing. Each party shall be invited to respond in\nwriting to the other party's written questions within a deadline to be determined by the\nPanel.\nc. The Panel may subsequently pose questions to the parties. Each party shall then have an\nopportunity to answer these questions orally. The Panel shall send in writing, within a\ntimeframe to be determined by it, any questions to the parties to which it wishes to\nreceive a response in writing. Each party shall be invited to respond in writing to such\nquestions within a deadline to be determined by the Panel.\nd. Once the questioning has concluded, the Panel shall afford each party an opportunity to\npresent a brief closing statement, with the Russian Federation presenting its statement\nfirst.\n\n- A-4 -\n\n1.14. The second substantive meeting of the Panel with the parties shall be conducted as follows:\na. The Panel shall ask the European Union if it wishes to avail itself of the right to present\nits case first. If so, the Panel shall invite the European Union to present its opening\nstatement, followe d by the Russian Federation. If the European Union chooses not to\navail itself of that right, the Panel shall invite the Russian Federation to present its\nopening statement first. Before each party takes the floor, it shall provide the Panel and\nother participants at the meeting with a provisional written version of its statement. In\nthe event that interpretation is needed, each party shall provide additional copies for the\ninterpreters, through the Panel Secretary. Each party shall make available to the Pa nel\nand the other party the final version of its opening statement as well a s its closing\nstatement, if any, preferably at the end of the meeting, and in any event no later than\n5.00 p.m. on the first working day following the meeting.\nb. After the conclusion of the statements, the Panel shall give each party the opportunity to\nask each other questions or make comments, through the Panel. Each party shall then\nhave an opportunity to answer these questions orally. Each party shall send in writing,\nwithin a time frame to be determined by the Panel, any questions to the other party to\nwhich it wishes to receive a response in writing. Each party shall be invited to respond in\nwriting to the other party's written questions within a deadline to be determined by the\nPanel.\nc. The Panel may subsequently pose questions to the parties. Each party shall then have an\nopportunity to answer these questions orally. The Panel shall send in writing, within a\ntimeframe to be determined by it, any questions to the parties to which it wishes to\nreceive a response in writing. Each party shall be invited to respond in writing to such\nquestions within a deadline to be determined by the Panel.\nd. Once the questioning has concluded, the Panel shall afford each party an opportunity to\npresent a brief closing statement, with the party that presented its opening statement\nfirst, presenting its closing statement first.\nThird parties\n\n1.15. The Panel shall invite each third party to transmit to the Panel a written submission prior to\nthe first substantive meeting of the Panel with the parties, in accordance with the timetable\nadopted by the Panel.\n1.16. Each third party shall also be invited to present its views orally during a session of this first\nsubstantive meeting, set aside for that purpose. Each third pa rty shall provide to the Panel the list\nof members of its delegation in advance of this session and no later than 5.00 p.m. the previous\nworking day.\n1.17. The third-party session shall be conducted as follows:\na. All third parties may be present during the entirety of this session.\nb. The Panel shall first hear the arguments of the third parties in alphabetical order. Third\nparties present at the third -party session and intending to present their views orally at\nthat session, shall provide the Panel, the parties and other third parties with provisional\nwritten versions of their statements before they take the floor. Third parties shall make\navailable to the Panel, the parties and other third parties the final versions of their\nstatements, preferably at the end of the session, and in any event no later than\n5.00 p.m. on the first working day following the session.\nc. After the third parties have made their statements, the parties may be given the\nopportunity, through the Panel, to ask the third parties questions for clar ification on any\nmatter raised in the third parties' submissions or statements. Each party shall send in\nwriting, within a timeframe to be determined by the Panel, any questions to a third party\nto which it wishes to receive a response in writing.\n\n- A-5 -\n\nd. The Panel may subsequently pose questions to the third parties. Each third party shall\nthen have an opportunity to answer these questions orally. The Panel shall send in\nwriting, within a timeframe to be determined by it, any questions to the third parties to\nwhich it wishes to receive a response in writing. Each third party shall be invited to\nrespond in writing to such questions within a deadline to be determined by the Panel.\nDescriptive part\n\n1.18. The description of the arguments of the parties and third parties in the descriptive part of\nthe Panel report shall consist of executive summaries provided by the parties and third parties,\nwhich shall be annexed as addenda to the report. These executive summaries shall not in any way\nserve as a substitute for the submissions of the parties and third parties in the Panel's examination\nof the case.\n1.19. Each party shall submit executive summaries of the facts and arguments as presented to\nthe Panel in its written submissions and oral statements, in accordance with the timetable a dopted\nby the Panel. These summaries may also include a summary of responses to questions . Each such\nexecutive summary shall not exceed 15 pages. The Panel will not summarize in the descriptive\npart of its report, or annex to its report, the parties' responses to questions.\n1.20. Each third party shall submit an executive summary of its arguments as presented in its\nwritten submission and statement in accordance with the timetable adopted by the Panel. This\nsummary may also include a summary of responses to quest ions, where relevant. The executive\nsummary to be provided by each third party shall not exceed 6 pages.\nInterim review\n\n1.21. Following issuance of the interim report, each party may submit a written request to review\nprecise aspects of the interim report and request a further meeting with the Panel, in accordance\nwith the timetable adopted by the Panel. The right to request such a meeting shall be exercised no\nlater than at the time the written request for review is submitted.\n1.22. In the event that no further mee ting with the Panel is requested, each party may submit\nwritten comments on the other party's written request for review, in accordance with the timetable\nadopted by the Panel. Such comments shall be limited to commenting on the other party's written\nrequest for review.\n1.23. The interim report, as well as the final report prior to its official circulation, shall be kept\nstrictly confidential and shall not be disclosed.\nService of documents\n\n1.24. The following procedures regarding service of documents shall apply:\na. Each party and third party shall submit all documents to the Panel by filing them with\nthe DS Registry (office No. 2047).\nb. Each party and third party shall file nine paper copies of all documents it submits to the\nPanel. Exhibits may be filed in four copies on CD-ROM or DVD and three paper copies.\nThe DS Registrar shall stamp the documents with the date and time of the filing. The\npaper version shall constitute the official version for the purposes of the record of the\ndispute.\nc. Each party and third party shal l also provide an electronic copy of all documents it\nsubmits to the Panel at the same time as the paper versions, preferably in Microsoft\nWord format, either on a CD -ROM, a DVD or as an e -mail attachment. If the electronic\ncopy is provided by e -mail, it should be addressed to DSRegistry@wto.org, with a copy\nto ****.****@wto.org, ****.****@wto.org, ****.****@wto.org, ****.****@wto.org,\nand ****.****@wto.org. If a CD-ROM or DVD is provided, it shall be filed with the DS\nRegistry.\n\n- A-6 -\n\nd. Each party shall serve any document submitted to the Panel directly on the other party.\nEach party shall, in addition, serve on all third parties its written submissions in advance\nof the first substantive meeting with the Panel. Each third party shall serve any\ndocument submitted to the Panel directly on the parties and all other third parties. Each\nparty and third party shall confirm, in writing, that copies have been served as required\nat the time it provides each document to the Panel.\ne. Each party and third party shall file its documents with the DS Registry and serve copies\non the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on\nthe due dates established by the P anel. A party or third party may submit its documents\nto another party or third party in electronic format only, subject to the recipient party or\nthird party's prior written approval and provided that the Panel Secretary is notified.\nf. The Panel shall provide the parties with an electronic version of the descriptive part, the\ninterim report and the final report, as well as of other documents as appropriate. When\nthe Panel transmits to the parties or third parties both paper and electronic versions of a\ndocument, the paper version shall constitute the official version for the purposes of the\nrecord of the dispute.\n1.25. The Panel reserves the right to modify these procedures as necessary, after consultation\nwith the parties.\n\n- A-7 -\n\nANNEX A-2\nADDITIONAL WORKING PROCEDURES ON BCI\nAdopted on 5 April 2016\nThe following procedures apply to business confidential information (BCI) submitted in the course\nof the Panel proceedings.\n1. For the purposes of these proceedings, BCI means information: (a) that is clearly\ndesignated as such by the party submitting it; (b) that is not otherwise accessible to the general\npublic; and (c) that is commercially sensitive, such that release could seriously prejudice an\nessential interest of the Member submitting the information. Each party and third party shall act in\ngood faith and exercise restraint in designating information as BCI . The Panel shall have the right\nto intervene in any manner that it deems appropriate, if it is of the view that restraint in the\ndesignation of BCI is not being exercised.\n2. If a party or the Panel considers that a party or a third party designated information as BCI\nwhich should not be so designated, the party designating the information shall provide reasons for\nthe designation within five (5) working days. Similarly, if a party or the Panel considers that\ninformation submitted by a party or a third party should have been designated as BCI and objects\nto its submission without such designation, the party submitting the information shall provide\nreasons for not designating the information as BCI within five (5) working days. After giving the\nother party an opportunity to comment on the justification provided within five (5) working days,\nthe Panel shall decide on the designation of the information. The Panel, in deciding wh ether\ninformation subject to an objection should be treated as BCI for purposes of these Panel\nproceedings, will consider whether disclosure of the information in question could cause serious\nprejudice to the interests of the originator(s) of the information.\n3. Panel Members and employees of the WTO Secretariat assigned to the present dispute,\nincluding translators and interpreters, shall have access to BCI submitted in these proceedings.\nEmployees of the Governments of the European Union and the Russian Fed eration, as well as of\nthe third parties, shall have access to BCI submitted in these Panel proceedings to the extent\nnecessary for their involvement in their official capacity in DS476 proceedings. Subject to\nparagraph 4 of the Working Procedures of the P anel1, parties and third parties may give access to\nBCI to outside advisers and experts providing assistance to the parties in these proceedings and\ntheir clerical staff. An outside advisor is not permitted access to BCI if that advisor is an officer or\nemployee of an enterprise engaged in the production, sale, distribution, export, or import of the\nproducts that are subject of this dispute.\n4. Each party and third party shall maintain a list of the names of all outside advisers and\nexperts provided with access to BCI. The list shall be updated when additional outside advisers or\nexperts are provided with access to BCI.\n5. As required by paragraph 2 of the Working Procedures of the Panel, the deliberations of\nthe Panel and the documents submitted to it shall be k ept confidential. Further, as required by\nArticle 18.2 of the DSU, a party or third party having access to information designated as BCI\nsubmitted in these Panel proceedings shall treat it as confidential and shall not disclose that\ninformation other than to those persons authorized to receive it pursuant to these Additional\nWorking Procedures. Each party and third party is responsible for ensuring that its employees,\noutside advisers and experts comply with these Additional Working Procedures to protect BCI.\n6. The parties, third parties, the Panel, the WTO Secretariat, and any others permitted to\nhave access to documents containing BCI under the terms of these Additional Working Procedures\nshall store all documents containing BCI so as to prevent unauthorized access to such information.\n\n1 Adopted on 31 March 2016.\n\n- A-8 -\n\n7. On the request of either party, the Panel will review whether particular confidential\ninformation it has submitted is so sensitive that it should not be provided to the third parties,\ntaking into consideration the need for the third parties to have access to the particular\ninformation. If the Panel finds such information to be particularly sensitive, it will direct the party\nsubmitting the information to provide a non -confidential summary of the contents of the\ninformation that will be made available to the third parties.\n8. A party or third party submitting or referring to BCI in any written submission (including in\nany exhibits) shall mark the cover and the first page of the document containing any such\ninformation with the words \"Contains Business Confidential Information\". The specific information\nin question shall be enclosed in double brackets, as follows: [[xx.xxx.xx]], and the notation\n\"Contains Business Confidential Information\" shall be marked at the top of each page conta ining\nthe BCI.\n9. Any BCI that is submitted in binary -encoded form shall be clearly marked with the\nstatement \"Business Confidential Information\" on a label on the storage medium, and clearly\nmarked with the statement \"Business Confidential Information\" in the binary-encoded files.\n10. In the case of an oral statement containing BCI, the party or third party making such a\nstatement shall inform the Panel before making it that the statement will contain BCI, and the\nPanel will ensure that only persons authorized t o have access to BCI pursuant to these Additional\nWorking Procedures are in the room to hear that statement (or the relevant part thereof). The\nwritten versions of such oral statements submitted to the Panel shall be marked as provided for in\nparagraph 8.\n11. The Panel may include in its confidential interim report any information designated as BCI\nunder these Additional Working Procedures. However, the Panel will not disclose in its final report\nany information designated as BCI under these Additional Working Procedures. It will, as\nnecessary, redact the public version of its final report, with BCI being replaced with the\nformulation [[ BCI ]] . The Panel may, however, make statements of conclusion based on such\ninformation. Before the Panel makes its final repo rt publicly available, the Panel shall give each\nparty or third party an opportunity to ensure that any information it has designated as BCI is not\ncontained in the report.\n12. At the conclusion of the dispute 2, and within a period to be fixed by the Panel, ea ch party\nand third party shall either return all documents (including electronic material and photocopies)\ncontaining BCI, submitted during the Panel proceedings, to the party that submitted such\ndocuments or certify in writing to the Panel and the other p arties that all such documents have\nbeen destroyed, or otherwise protect the BCI against public disclosure, consistent with the party's\nobligations under its domestic laws. The Panel and the WTO Secretariat shall likewise return all\nsuch documents or certi fy to the parties that all such documents have been destroyed. The WTO\nSecretariat shall, however, have the right to retain one copy of each of the documents containing\nBCI for the archives of the WTO.\n13. If a party formally notifies the DSB of its decision t o appeal pursuant to Article 16.4 of the\nDSU, the Secretariat will inform the Appellate Body of these procedures and will transmit to the\nAppellate Body any BCI governed by these procedures, including any submissions containing\ninformation designated as BCI under these Additional Working Procedures. Such transmission shall\noccur separately from the rest of the Panel record, to the extent possible.\n\nDSB decides by consensus not to adopt the Panel or the Appellate Body report; (b) the authority for the\nestablishment of the Panel lapses under Article 12.12 of the DSU; or (c) a mutually satisfactory solution is\nnotified to the DSB under Article 3.6 of the DSU.\n\n- B-1 -\n\nANNEX B\nARGUMENTS OF THE PARTIES\nRUSSIA\nContents Page\nAnnex B-1 First part of the executive summary of the arguments of Russia B-2\nAnnex B-2 Second part of the executive summary of the arguments of Russia B-17\nEUROPEAN UNION\nContents Page\nAnnex B-3 First part of the executive summary of the arguments of the European Union B-26\nAnnex B-4 Second part of the executive summary of the arguments of the European Union B-41\n\n- B-2 -\n\nANNEX B-1\nFIRST PART OF THE EXECUTIVE SUMMARY OF THE ARGUMENTS OF RUSSIA\nI. INTRODUCTION\n1. This dispute has far reaching implications for international trade in natural gas. T he Russian\nFederation is a major natural gas producer and exporter. Russia also exports what have been\ndefined in this proceeding as \"pipeline transport services.\" Russia values its right to export natural\ngas and to supply pipeline transport services in territory of the European Union (the \"EU\").\n2. The EU imports natural gas and pipeline transport services. This includes a significant\nvolume from Russia. The EU and Russia have a long trade relationship in this sector. The EU has\ndecided, however, that it wants to import less gas and pipeline transport services from Russia and\nmore from places like Norway and Azerbaijan. Indeed, a major EU objective is now to reduce its\nreliance on Russian natural gas and pipeline transport services and service suppli ers. Toward this\nend, the EU has enacted a number of discriminatory measures. Most of these derive from Directive\n2009/73/EC (the \"Directive\"), the key part of the EU 's Third Energy Package ( \"TEP\"), as well EU\nMember States legislation adopted in connecti on with the Directive. Regulation (EU) No 347/2013\n(\"the TEN-E Regulation\"), as amended, is also relevant. It is closely related to the TEP and the\nDirective and also intended to reduce the EU's reliance on Russian natural gas.\n3. Russia weighed its optio ns. It finally chose to challenge many (but not all) of the EU 's\nmeasures as set out in the Directive and TEN -E Measure. Russia has raised issues that may not\nhave been considered directly by any previous panel. These include the EU 's responsibility, as a\nWTO Member, for the actions of its Member States. Notably, in the case of unbundling, the EU\ndevised a scheme to enable Member States to choose which models to permit, and subsequently\nenforced it in various Member States modifying the conditions of co mpetition to the detriment of\nRussian services provides and Russian gas. Russia views this as an overt attempt to manipulate\nthe WTO. The fact that EU Member States are also WTO Members is immaterial. They are still EU\nMember States. And the relevant market for assessing Russia's claims is the EU as a whole.\n4. This dispute also has far reaching implications for WTO jurisprudence. In considering\nRussia's claims, and the limited defenses the EU elected to put forth in response, Russia urges the\nPanel not to let the EU avoid its WTO responsibilities. The EU picks and chooses when to hide\nbehind its Member State veil. The Panel should not let the EU hide behind that veil here. Within\nthis context, the following summarizes each of Russia 's claims, as d iscussed in the proceeding to\ndate.\nII. GATS ARTICLE XVI:2 – MARKET ACCESS CLAIMS\n5. Croatia, Hungary and Lithuania each made market access commitments in their\nGATS Schedules pertaining to Sector 11G, \"Pipeline Transport \" services. Russia has presented\nseparate claims under 3 GATS Article XVI:2 provisions, each challenging different aspects of the\nunbundling measure, as implemented in the laws of Croatia, Hungary and Lithuania. Russia is\npursuing claims under GATS Article XVI:2(e) and (f) against Croat ia, Hungary and Lithuania.\nRussia is pursuing claims under Article XVI:2(a) against Croatia and Lithuania. Russia has\nidentified each of these sets of claims as a single claim based on its relevant WTO provision.\nRussia refers to the Member -specific claims under each sub-paragraph of Article XVI:2 collectively\nas Claim 1, Claim 2 and Claim 3.\n6. GATS Article XVI:2(e) – Article XVI:2(e) (\"sub-paragraph (e)\") provides that Members shall\nnot maintain or adopt \"measures which restrict or require specific types of legal entity or joint\nventure through which a service supplier may supply a service \". Russia demonstrated that\nCroatia, Hungary and Lithuania 's unbundling measures each violates this provision and thus the\nmarket access commitments in their respective Schedules. The EU responds that, to be prohibited\nby sub -paragraph (e), a measure must literally require a service supplier to establish (or not\nestablish) a specific corporate or other recognized type of legal entity. The EU refers to a\n\n- B-3 -\n\n\"corporation, trust, partnership, joint venture, sole proprietorship or association \" as types of legal\nentity \"recognized by law \" that a measure must expressly identify to be pr ohibited by\nsub-paragraph (e).\n7. Whether a measure expressly identifies specific types of lega l entity or not, however, if the\nmeasure is designed to restrict service suppliers from establishing one or more types of legal\nentity, it is prohibited by sub -paragraph (e). Likewise, measures are prohibited that have the\neffect of requiring specific typ es of legal entity by restricting the ability of service suppliers to\nestablish other types – again without expressly identifying any of the entities in question. This is\nexactly what each of the three models of unbundling measures does in v iolation of\nsub-paragraph (e).\n8. For instance, Article 17(3) of the Directive requires that ITOs \"shall be organised in a legal\nform as referred to in Article 1 of Council Directive 68/151/ECC.\" Croatia, Hungary and Lithuania's\nlaws each contain similar ITO provisions requiring the VIU to form an \"independent company\nseparate from\" the VIU, with \"a special corporate identity…clearly separating it from the parent\ncompany.\" These measures plainly restrict the service supplier from establishing certain types of\nlegal entity or forms of commercial presence. For instance, the VIU cannot establish a branch,\nwhich corporate law defines as not being a separate legal entity from the parent company. The\nownership unbundling ( \"OU\") model restricts the service supplier from estab lishing any specific\ntype of legal entity whatsoever. The VIU must divest all but a minority interest in the transmission\nsystem. As the service supplier, the VIU is deprived of any right or ability to supply its pipeline\ntransport services through commercial presence in the importing Member. The laws of Croatia and\nHungary provide for all three unbundling models, each of each which violates their market access\nobligations under Article XVI:2(e). Lithuania only permits th e OU model and violates\nArticle XVI:2(e) on this basis.\n9. GATS Article XVI:2(a) – Article XVI:2(a) ( \"sub-paragraph (a)\") prohibits \"limitations on the\nnumber of service suppliers whether in the form of numerical quotas, monopolies, exclusive\nservice suppliers or the requirements of an ec onomic needs test \". Regarding the second type of\nlimitation referred to in sub-paragraph (a), the GATS defines a \"monopoly supplier of a service\" as\nany person that is \"authorized or established formally or in effect \" by a Member \"as the sole\nsupplier of that service.\" The GATS defines the third limitation, \"exclusive service suppliers, \" as\ninstances in which \"a Member, formally or in effect, (a) authorizes or establishes a small number\nof service suppliers and (b) substantially prevents competition among those suppliers in its\nterritory.\"\n10. In Croatia, despite ostensibly permitting all three unbundling models in its Gas Market Act,\nthe Croatian government actually owns and controls the country 's entire natural gas network,\nincluding the transmission sys tem, the sole TSO, Plinacro, and the sole gas supplier, HEP.\nBy designating Plinacro as the national TSO for 30 years, Croatia has \"authorized or established \"\nPlinacro \"formally or in effect as the sole supplier \" of transmission services (i.e., the sole TS O) in\nthe country. This constitutes a \"monopoly supplier of a service\". Similarly, having been appointed\nas Croatia's natural gas supplier until 31 March 2017, HEP acts as a monopoly supplier of supply\nservices. Both Plinacro and HEP may also be viewed a s \"exclusive service suppliers \" within the\nmeaning of Article XVI:2(a).\n11. In Lithuania, the Natural Gas Law requires a domestic TSO to own the country 's\ntransmission assets. Following expropriation of the Lithuanian TSO from the Russian service\nsupplier, Lithuania's State -owned TSO now owns all transmission pipelines in Lithuania and,\npursuant to the terms of its license, supplies pipeline transport services in each of Lithuania 's ten\ncounties. As no other company in these circumstances can be designated a TSO, Lithuania\ninstituted a \"monopoly supplier of a service \" or \"exclusive service suppplier, \" contrary to\nArticle XVI:2(a).\n12. GATS Article XVI:2(f) – Article XVI:2(f) ( \"sub-paragraph (f) \") forbids Members such as\nCroatia, Hungary and Lithuania from adopting or maintaining measures that impose \"limitations on\nthe participation of foreign capital in terms of maximum percentage limit on foreign shareholding\nor the total value of individual or aggregate foreign investment. \" This includes limitations in th e\nform of majority ownership prohibitions. Russia demonstrated that, consistent with the provisions\nof Article 9 of the Directive, Croatia, Hungary and Lithuania all impose majority ownership\nprohibitions as part of the OU models of their unbundling measu res. The EU responds that these\n\n- B-4 -\n\nprohibitions are outside the scope of sub -paragraph (f) because they apply to all potential\ninvestors, \"domestic or foreign.\"\n13. Contrary to the EU 's assertions, sub -paragraph (f) does not forbid measures containing\nmajority ownership prohibitions that apply only to foreign capital investment. It forbids any and\nall measures that impose majority ownership prohibitions on foreign capital investment. Measures\nwhich also impose majority ownership prohibitions on domestic inve stment are not exempt from\nthe scope of sub -paragraph (f). Simply stated, sub -paragraph (f) forbids measures containing\nprohibitions against foreign majority ownership. Croatia, Hungary and Lithuania 's unbundling\nmeasures forbid any type of majority owner ship, including foreign. The fact that the measures\nalso forbid domestic majority ownership is irrelevant. For these reasons, the Panel should find\nthat Croatia, Hungary and Lithuania's unbundling measures are contrary to their obligation s under\nGATS Article XVI:2(f).\nIII. GATS ARTICLE XVII:1 – THE PUBLIC BODY MEASURES\n14. Russia's next two claims (Claims 4 and 5) concern GATS Article XVII and the \"public body\nmeasures\" (or \"government exemption measures \") in the unbundling provisions of Croatia,\nHungary and Lithuania's laws. Specifically, Article 9(1) of the Directive prohibits \"the same person\nor persons \" from exercising control both over the TSO and supply portion of an undertaking.\nArticle 9(6) and the corresponding Member State laws each recognizes that a Member State or\n\"another public body \" may be the \"person\" that otherwise would be subject to the unbundling\nmeasure – that is, the \"person\" that \"directly or indirectly \" exercises control over both the TSO\nand supply portion of the VIU. Provided t he government arranges for control to be exercised by\n\"two separate public bodies, \" however, it is exempted from the unbundling requirements.\nAlthough both of these so -called \"separate public bodies \" are part of the same Member State\ngovernment, they are \"deemed\" for purposes of the unbundling measure \"not to be the same\nperson or persons. \" Croatia, Hungary and Lithuania all adopted provisions in their implementing\nlaws modeled on Article 9(6).\n15. As an initial matter, Russia explained in the context of these claims that domestic and all\nthird-country pipeline transport services and services suppliers, including those of Russia, are\n\"like\" one another within the meaning of both GATS Articles II:1 and XVII. The EU argues only\nthat LNG services and servic e suppliers are not \"like\" other pipeline transport services and service\nsuppliers. But Russia has demonstrated, first, that LNG services include the importation,\noffloading and reconversion or regasification of LNG to its natural gaseous state, as well a s the\nadditional services necessary, including any temporary storage, to transport this reconverted\nnatural gas to the transmission system for supply to the market along with all other natural gas.\nAs with other pipeline transport services, these LNG serv ices concern both the supply and\ntransmission of gas. Because they serve the same purpose as other pipeline transport services\nand are in a directly competitive relationship, LNG services are \"like\" other pipeline transport\nservices within the meaning of the GATS.\n16. Turning to the substance of these claims, Russia challenges the public body measures in\nClaim 4 as violating Article XVII:1, as such . Each measure represents an instance of de jure\ndiscrimination, because the respective versions of Article 9( 6) in these Member 's laws each\ndistinguishes between foreign and domestic services and service suppliers based exclusively on\norigin. In response, the EU argues only that Article 9(6) also makes the exemption available to\nthe \"persons controlled by a publ ic body from a third country. \" According to the EU, a third -\ncountry government that controls a TSO through one public body may seek to unbundle in\naccordance with Article 9(6), provided it controls a production or supply undertaking through\nanother public body. Russia and the Panel both have highlighted evidence, including Recital 20 of\nthe Directive and the Commission 's Interpretative Note on Unbundling, showing that this is simply\nthe EU's post facto effort to avoid its Member States ' national treatment obligations. Article 9(6)\nwas designed to permit Member States to own and control their entire transmission and supply\nsystems. Otherwise, contrary to the EU Treaty, the EU would have imposed an obligation on the\nEU Member States to privatize State asset s. Croatia, Hungary and Lithuania 's public body\nmeasures achieve the EU's objective and each violates GATS Article XVII:1.\n17. In Claim 5, Russia challenges the public body measures in Croatia, Hungary and Lithuania 's\nlaws as resulting in de facto discrimination. Each of these Members, through separate government\nagencies, actually owns and controls their entire network supplying both transmission and supply\n\n- B-5 -\n\nservices to all or a portion of their respective markets. As implemented, therefore, the public body\nmeasures provide each of these government-controlled services and service suppliers different and\nmore favorable treatment than those of other Members, in violation of GATS Article XVII:1.\nIV. GATS ARTICLE II:1 AN D GATT ARTICLES I:1 AND III:4 – THE UNBU NDLING\nMEASURE\n18. Claims 8 through 11 each concerns the unbundling mea sure. The Directive enables\nEU Member States, in implementing the unbundling measure, to draw informal regulatory\ndistinctions and thus discriminate between like pipeline transport serv ices and service suppliers of\nRussian and other third-country origin, as well as like Russian and other third -country natural gas.\nThe EU expected and encouraged Member States to draw distinctions among and between like\nservices and service suppliers as w ell as gas of different origins. The EU knew this differential\ntreatment would modify the conditions of competition in the EU as a whole, the relevant market\nfor purposes of analyzing claims particularly under GATS Article II:1 and GATT Article I:1. Indee d,\nthe EU fully anticipated that the different manner in which various Member States implemented\nthe unbundling measure would have an adverse impact on the competitive opportunities in the EU\nmarket for Russian pipeline transport services and service suppl iers and Russian gas. That\noutcome of implementing the unbundling measure throughout the EU – which resulted in only\nGazprom-owned TSOs being forced to undergo ownership unbundling – was a major pillar in\nfurthering the EU's overall objective of reducing its reliance on Russian natural gas.\n19. The EU enacted the unbundling measure in the Directive. Implementation of the measure in\nLithuania, as well as the other EU Member States, should also be attributed to the EU. After all,\nthe Member States make up the EU and the EU is responsible for Member States' WTO compliance.\nPreviously, Lietuvos, the sole undertaking in Lithuania responsible for the supply, transmission and\ndistribution of natural gas, was jointly owned and controlled by Gazprom. Indeed, as Ru ssia has\nexplained, the Lithuanian government itself originally solicited Gazprom's investment in Lietuvos in\n2004. Acting as part of and at the direction of the EU, the Lithuanian government then\nimplemented the unbundling measure so as to require that Lietuvos select the ownership\nunbundling model. The objectives on the part of the EU and Lithuania included, first, to oust\nGazprom from Lithuania so that the Lithuanian government could acquire monopoly ownership and\ncontrol over the entire gas supply and transmission system; and, second, to guarantee a\ntransportation channel for Norwegian gas to be supplied in the form of LNG, thus reducing the\nmarket share of Russian gas imported via pipeline.\n20. Through its implementation of the unbundling measure in L ithuania, the EU has\naccomplished each of its objectives. Gazprom was forced to divest its interest in Lietuvos by\ntransferring the TSO, which was first separated as Amber Grid, and the supply portion of the\nundertaking to the Lithuanian government. Impor ts of Norwegian LNG -gas have dramatically\nincreased. And, as the EU planned, the conditions of competition have been modified to the\ndetriment of Russian gas, the market share of which in Lithuania through 2016 has fallen steadily,\nwhile that of Norwegian LNG-gas has increased.\n21. At the same time, as enabled by the EU in the Directive, other Member States permitted\nVIUs to adopt the less restrictive ISO and ITO models. For example, consistent with the demands\nof Germany and France, those Member States implemented the unbundling measure by permitting\ntheir more politically powerful VIUs to adopt the ITO model. As a result, Statoil, the Norwegian\nVIU, was permitted to continue owning 100% of its TSO in Germany, jordgas, which operates\nunder the ITO model. The EU also permitted an ITO model for TAP AG, which is jointly controlled\nby EU and Azeri VIUs; DESFA, which is to be controlled by SOCAR, the Azeri government -owned\nVIU; as well as multiple TSOs controlled by domestic VIUs, including Engie and GRTGaz, its ITO, in\nFrance. This preferential treatment extended by the EU to other third -country and domestic\nservices and service suppliers and natural gas is in sharp contrast with the treatment accorded to\nGazprom, which was forced to divest its interests not only in Lithuania, but also in Estonian and\nUK/Belgian TSOs, and will be forced to do so soon in the Latvian TSO.\n22. Implementing the unbundling measure so as to accomplish the EU 's objective of ousting\nGazprom from the EU gas market, by forcing the Russi an pipeline transport service supplier to\ndivest its TSO interest in Lithuania and every other relevant EU Member State, has modified the\nconditions of competition, as the EU intended, and has had a detrimental impact on the\ncompetitive opportunities for t he transportation and sale of Russian gas in the EU market. While\n\n- B-6 -\n\nother third-country and domestic VIU service suppliers have been permitted to continue supplying\ntheir pipeline transport services to the EU market, as well as their natural gas, the same\nopportunity has been largely denied to like Russian pipeline transport services and service\nsuppliers, while also adversely impacting the supply of Russian -origin natural gas. As a result of\nthis differential treatment, the unbundling measure is contrary to the EU's obligations under:\n23. GATS Article II:1 – The unbundling measure, as such and as applied, as adopted by the EU\nin Lithuania by means of the Directive, the Law on Natural Gas and the Law Implementing the Law\non Natural Gas to permit only the own ership unbundling model, on the one hand, and as adopted\nin other EU Member States by means of the Directive and their respective implementing legislation\nto permit the ISO and ITO models, on the other hand, modifies the conditions of competition to\nthe de triment of Russian pipeline transport services and service providers, as compared to the\ntreatment accorded to like third-country services and service suppliers.\n24. GATT Article I:1 – The unbundling measure, as such and as applied, modifies the conditions\nof competition in the EU market, by according an advantage to natural gas of other third -\ncountries, which is permitted to be transported and sold through ISOs or ITOs on the EU market\nby VIUs that own and control EU transmission networks, while not accord ing the same advantage\nimmediately and unconditionally to like Russian gas.\n25. GATT Article III:4 – The unbundling measure, as such and as applied , modifies the\nconditions of competition in the EU market, by according less favourable treatment to Russian gas,\nwhich has been prevented from being transported and sold on the EU market by Russian VIUs that\nown and control transmission networks in the territory of the EU, compared to like domestic -origin\ngas that is sold and transported on the EU market through such VIUs.\nV. GATT ARTICLE I:1 – THE LNG MEASURE\n26. In Claim 12, Russia challenges the LNG measure as violating GATT Article I:1, as such. This\nclaim derives from several provisions of the Directive, including Article 9, which sets out the basic\nunbundling requirement, and Article 2(20), which defines a \"vertically integrated undertaking,\" or\nVIU, as well as Articles 2(11) and 2(12), which define LNG system operators ( \"LSOs\") and LNG\nfacilities, respectively. By its terms, Article 9 only requires a person or persons, including a VIU,\nthat controls the production or supply portion of an undertaking to unbundle its commonly\ncontrolled TSO and transmission system. The unbundling requirement does not apply to\ncommonly controlled LSOs that import third -country natural gas through EU -based LNG facilities.\nIn defining a VIU, Article 2(20) establishes that LSOs are not considered to be either a TSO or\nproduction-supply undertaking, thus confirming that LSOs and their LNG facilities are exempt from\nthe Article 9 unbundling requirement.\n27. Indeed, the EU has conceded that the Directive is designed to exempt LSOs and LNG\nfacilities from unbundling. The EU 's main argument in response is that LNG is not \"like\" other\nnatural gas within the meaning of the GATT. Russia has established, however, in relation to this\nand related claims, that LNG is natural gas . LNG has merely been condensed temporarily for\neconomical ocean transport. Natural gas, whether domestically sourced or imported, and whether\nimported via pi peline or in the form of LNG, has the same physical characteristics and the same\nend uses. LNG is also in a directly competitive relationship with all other natural gas. For these\nreasons, LNG is \"like\" all other natural gas within the meaning o f GATT Ar ticle I:1\n(and Article III:4).\n28. Russia has also demonstrated that exempting LSOs and LNG facilities from unbundling\naccords a competitive advantage to natural gas imported from other third -countries in the form of\nLNG to the detriment of Russian gas. Russia demonstrated, for one, that the French -based VIU\ngas supplier Engie owns and controls several LNG facilities in France through its wholly -owned\nsubsidiary, Elengy S.A. Engie also owns 75% of the French TSO, GRTGaz, an ITO. As the EU has\nacknowledged, Engie's LSOs are not required to unbundle, either from Engie itself, as the supplier,\nor from GRTGaz, the wholly -owned TSO. Based on this exemption, Engie is free to dictate the\nforeign suppliers from which those LSOs source gas in the manner that be st suits Engie 's\ncompetitive interests. By controlling all stages of the natural gas supply from extraction in the\ncountry of origin up to delivery to the customers in the EU via its own transmission networks,\nEngie is also enjoying a major advantage in t erms of the possibility to enter into long -term\n\n- B-7 -\n\ncommitments with the EU customers. Russia also demonstrated that LSOs such as Dragon and\nSouth Hook in the UK, which are controlled by foreign supply entities, import third -country natural\ngas in the form of LNG through their EU-based LNG facilities. Unlike suppliers of Russian pipeline\ngas, these VIUs are not required to unbundle their LSOs and are thus able to exercise influence,\nsimultaneously, over the \"functions of LNG \" and \"supply,\" as permitted by the unbundling\nprovision in Article 9 and the definitions in the Directive.\nVI. GATT ARTICLES I:1 AND III:4 – THE UPSTREAM PIPELINE NETWORK MEASURE\n29. Russia next demonstrated that upstream pipeline networks ( \"UPNs\") are subject to broad\nexemptions under the Directive. Both Claim 13 and Claim 14 challenge the upstream pipeline\nnetwork measure, as such. To start, Article 2(2) of the Directive defines an \"upstream pipeline\nnetwork\" as including not only pipelines that are \"operated and/or constructed as part of an oil or\ngas production project, or used to convey natural gas from one or more such projects to a\nprocessing plant\" but also pipelines used to convey gas from a processing facility to a \"terminal or\nfinal coastal landing terminal \". Article 2(3) then expressly exempts UPNs from the definition of\n\"transmission\" and implicitly from the transmission system. The definition of VIUs in Article 2(13)\nconfirms that VIUs that own and control a UPN are exempt from unbundling. In addition, Article 32\nof the Directive provides that \"Member States shall ensure the implementation of a system of third\nparty access to the transmission…system\". Because UPNs are defined as not used for\n\"transmission\" and not part of the \"transmission system \", or indeed any system, they are not\nsubject to the TPA requirement applicable to TSOs. UPNs are similarly defined as exempted from\nthe tariff regulation requirements in Article 41 of the Directive.\n30. The carefully worded but broad definition of a UPN, together with the other defin itions in the\nDirective, were all designed to ensure that Norwegian -owned and operated pipelines in the North\nSea, as well as offshore domestic pipelines, were exempt from the unbundling, TPA and tariff\nregulation requirements in the Directive. Russia dem onstrated, by submitting legislative history\nand other documentation, that the Norwegian government and natural gas industry lobbied for and\nobtained this exemption expressly to reduce the costs of transporting gas and to grant an\nadvantage within the meaning of GATT Article I:1 to Norwegian-origin gas.\n31. Russian pipelines entering the EU do not benefit from any similar exemptions.\nConsequently, imported Russian gas is denied the same advantage as like Norwegian gas, thus\ndistorting the competitive opp ortunities for Russian gas transported and sold on the EU market.\nThe EU does not even dispute that Norwegian UPNs are exempt from unbundling. The EU contends\nonly that, UPNs are actually subject to TPA requirements pursuant to Article 34 of the Directive\nand that, therefore, \"equal competitive opportunities are guaranteed to all gas, no matter its\norigin.\" However, Russia showed that, in fact, Article 34 sets out a vague, non-mandatory regime;\nit grants Member States discretion to oversee implementation; and is clearly designed to favor\nupstream pipeline network operators and developers. Thus, because UPNs are exempt from the\nTPA requirements under Article 32, and because Article 34 in no way requires TPA, the TPA\nrequirements contended by the EU cannot and do not mitigate the detrimental impact on\ncompetitive opportunities for imported Russian gas of the unb undling exemption under the\nUPN measure.\n32. Through the differential treatment provided by the UPN measure, the Directive modifies the\nconditions of competition to the detriment of Russian gas. It grants an advantage to imported\nNorwegian gas, not accorded unconditionally and immediately to Russian natural gas, in violation\nof GATT Article I:1. The measure also provides domestic gas more favorable t reatment than like\nRussian gas, in violation of GATT Article III:4, as shown in Claim 14.\nVII. GATS ARTICLES XVII:1 AND II:1 – THE THIRD -COUNTRY CERTIFICATIO N\nMEASURES\n33. Claims 15 through 18 challenge the discriminatory third -country certification requ irement\ncontained in Article 11 of the Directive, as well as the implementing laws of Croatia, Hungary and\nLithuania. Article 10 of the Directive sets out the certification procedures for designating TSOs\ncontrolled by domestic persons. However, a third -country certification applicant must satisfy the\nadditional vague and burdensome requirements in Article 11. This includes demonstrating that\n\"security of supply\" will not be put at risk by granting certification. The additional requirements in\n\n- B-8 -\n\nArticle 11 and the corresponding provisions in Croatia, Hungary and Lithuania 's laws are referred\nto as the \"third-country certification\" measures.\n34. Article XVII:1 – Claim 15, Russia 's first claim concerning the third -country certification\nmeasures, describes an as such violation of Article XVII:1 of the GATS. It is undisputed that\nCroatia, Hungary and Lithuania each made national treatment commitments in their respective\nGATS Schedules. Russia demonstrated that, by imposing the additional certification requir ements\non third -country applicants, the text of Croatia, Hungary and Lithuania 's laws implementing\nArticle 11 of the Directive each distinguishes between like foreign and domestic services and\nservice suppliers based exclusively on origin. This formally d ifferent treatment provided by the\nthird-country certification measures in each of these Members ' laws modifies the conditions of\ncompetition in the EU market, de jure , resulting in less favorable treatment being accorded to\nservices and service suppliers of other Members, including Russia, compared to like domestic\nservices and service suppliers.\n35. The EU offers no rebuttal to this de jure claim. Accordingly, Russia requests the Panel to\nfind that the EU has conceded that the third -country certification measures accord less favorable\ntreatment in violation of Article XVII:1. The EU contends only that the third -country certification\nmeasures are \"necessary…to ensure the EU 's security of energy supply, which is part of the EU 's\npublic order,\" and, therefore, justified pursuant to GATS Article XIV(a). To provisionally justify a\nmeasure under Article XIV(a), a respondent must demonstrate both that it is \"necessary…to\nmaintain public order \" and that the chapeau of Article XIV is satisfied. On this basis, t he EU's\n\"security of supply\" or \"SoS\" defense should be rejected. The EU argues first that ensuring SoS is\na \"fundamental interest \" of society, regarding which foreign -controlled TSOs \"may in some\ncircumstances pose genuine and sufficiently serious threats.\" Russia does not agree that SoS is an\nEU fundamental interest. The EU has also failed to demonstrate how foreign control of TSOs, as\nopposed to national control, poses a \"genuine and sufficiently serious threat\" to the EU's SoS. The\nEU's main contention is that third -country governments have \"strong incentives to undermine \" its\nSoS policies. For example, the EU argues, foreign -controlled TSOs could discontinue gas supply\nduring cold weather or refuse to provide all users with non -discriminatory access to information.\nThe EU presents no evidence that such threats actually exist, however. While disruptions in the\ntransport of Russian natural gas through Ukraine occurred in 2006 and 2009, these were isolated\nevents and in no way related to Russian owner ship or control of TSOs or the supply of Russian\npipeline transport services in the EU.\n36. The EU has also not demonstrated that the third -country certification measures are\n\"necessary\" to address its alleged concerns. A necessity analysis involves \"weighing and balancing\"\na series of factors, including the objective 's importance, the measure 's contribution to that\nobjective, and the trade -restrictiveness of the measure. The third -country certification measures\nmake no contribution, material or otherwise, to ensuring SoS. According to the EU, Article 11 \"is\npart of a comprehensive policy consisting of a multiplicity of interacting measures, \" making its\neffect \"very difficult to isolate and quantify. \" Regardless, to the extent the prospect of TSOs\ndiscontinuing gas transmission is a realistic concern, it is equally applicable to domestic and\nforeign-controlled TSOs; thus, imposing additional requirements only on foreign applicants does\nnot contribute to solving the perceived problem. Moreover, the EU has o ther means in place to\naddress these concerns. For one, all TSOs are required by Article 2(4) of the Directive \"to operate,\nmaintain and develop under economic conditions a secure, reliable and efficient transmission\nnetwork.\" Plus, the EU 's \"Security of Supply Regulation\" requires all natural gas undertakings to\n\"take measures to ensure gas supply \" during periods of extreme temperatures. Similarly, as the\nEU recognizes, domestic and foreign TSOs are required to make information public as necessary\nfor \"effective competition and the efficient functioning of the market.\"\n37. In determining whether a measure is necessary, the Panel should also examine its restrictive\nimpact on international commerce. The EU claims that the third -country certification measu res\nallow for a \"case-by-case\" approach that limits \"the trade-restrictive effects as much as possible. \"\nAs demonstrated by Russia, however, the measures' very existence creates uncertainty and results\nin significant trade restrictive effects. The Directi ve also grants Member States essentially\nunlimited discretion to assess restrictions on third-country TSOs, particularly in the absence of key\ndefinitions, including the concept of \"security of supply\" itself. The Commission also recommends\nrestrictions, leading to decisions that unfairly restrict the supply of services from some Members\ncompared to others.\n\n- B-9 -\n\n38. There are also reasonably available alternative measures that the EU could and should have\nadopted instead. Rather than requiring third -country transmission system owners and operators\nto undertake an additional certification burden, the EU could have required the same set of\nprocedures from all operators, regardless of origin. Doing so would not affect the EU 's ability to\nensure its security of su pply, given the number of legal mechanisms in place to ensure this goal\nalready. Similarly, the EU could enact a \"blocking statute \" to prevent any TSO from acting on\ninstructions from a foreign shareholder or government that are contrary to the EU law. T he same\nrestriction would apply to domestic and all third -country interests. Notably, the EU has used th is\napproach in other contexts.\n39. Even if considered provisionally necessary to maintain public order, the measures must also\nsatisfy the requirements of the chapeau of Article XIV, which include not resulting in arbitrary or\nunjustifiable discrimination. Toward this end, the EU cannot demonstrate that the measures are\nrationally related to its stated policy objective of ensuring SoS. The EU argues th at the third -\ncountry certification measures satisfy this requirement because EU -controlled TSOs do not pose\n\"comparable threats \" to SoS. As discussed, however, the EU has not identified any realistic\n\"threats\" posed by third -country control of TSOs not al so posed by domestic persons and not\notherwise addressed by existing laws and regulations. The EU also argues that the measures have\nnot been applied in a discriminatory manner between other WTO Members, because \"no\ncertification has been refused on SoS g rounds.\" Id., para. 542. The lack of certification denials\ndoes not equal the absence of discrimination, however. Russia demonstrated that the measures\ndiscriminate on their face, de jure, vis-à-vis domestic services and suppliers, a claim the EU did\nnot even try to rebut. Russia also demonstrated that certain TSOs and transmission systems in\nwhich it has an interest have been subjected to more restrictive EU certification conditions than\nthose of other foreign owners. This discrimination results in pa rt from ambiguities in the third -\ncountry certification standard and the broad discretion granted to NRAs and the Commis sion to\nassess those requests.\n40. GATS Article II:1 – Russia included two claims challenging the third -country certification\nmeasure in the Directive under GATS Article II:1. Claim 16 challenges the measure, as such ,\nbased on the underlying provisions of Article 11 of the Directive. Specifically, Article 11 conditions\na favorable security of supply assessment at least in part on the exis tence of a pre -existing\nagreement between the relevant Member States and the EU, on the one hand, and the supplying\ncountry, on the other. Certification applicants from such third -countries are automatically granted\na competitive advantage. By providing this formally differential treatment, the third -country\ncertification measure distorts the conditions of competition and results in less favorable treatment\nbeing accorded to the services and service suppliers of certain Members, including Russia, which\nhas not concluded similar agreements with the EU or its Member States, in violation of Article II:1.\nMoreover, notwithstanding the EU 's contention to the contrary, Russia believes that this de jure\nclaim was properly included in its panel request and, there fore, is not outside the Panel 's terms of\nreference.\n41. Claim 17 challenges the third -country certification measure, as applied , based on specific\ninstances of application on Article 11 by Member States and the Commission that also violated\nGATS Article II:1. Russia demonstrated, for one, that the Commission provided different treatment\nto the certification application of Gaz -System to operate the Yamal pipeline in Poland than it did\napplications by various third -country applicants. The Commission made cl ear in two certification\nopinions that, from its standpoint, Gaz -System could not qualify for certification because of\nperceived SoS risks based on the joint control of Europolgaz, the owner of the Yamal pipeline in\nPoland, by Gazprom, the Russian supplier of natural gas and pipeline transport services. The fact\nthat ERO, the Polish NRA, ultimately elected to certify Gaz -System is not the issue. The issue is\nthe impact on the conditions of competition in the EU market as a result of the Commission 's\nrefusal to approve Gaz-System's certification.\n42. In Lithuania, the EU declared Lietuvos, the TSO jointly controlled by the Russian service\nsupplier, to be a \"non-complaint undertaking, \" thus preventing it from applying for a TSO\ndesignation and certification, unless and until the Russian service supplier divested its interest in\nthe TSO – which the Russian supplier ultimately did. On the other hand, the Commission\napproved several certification decisions by NRAs regarding TSOs controlled by other third -country\nundertakings. This includes jordgas, which is wholly-owned by Statoil, the Norwegian VIU. Indeed,\njordgas was not even required to satisfy the requirements of the third -country certification\nmeasure, due to the arbitrary effective date of Article 11, 3 March 2013. It also includes DESFA,\n\n- B-10 -\n\nwhich owns and operates the entire Greek transmission system and is scheduled to be acquired\nand brought under the sole control of SOCAR, an Azerbaijan government entity.\n43. The different treatment reflected in these inconsistent decisions distorts the competitive\nopportunities for Russian pipeline transport services and service suppliers in the EU. The\nCommission's original delay in issuing a decision increased the uncertainty regarding Gazprom 's\nsupply of its services. The perception of other market participants, including potential customers,\nwas also negatively impacted. In Lithuania the legislative framework adopted by the EU made it\nimpossible for the domestic TSO controlled by the Russian service supplier to a pply for\ncertification. It is also relevant that, in the process of adopting the TEP, as well as throughout its\napplication, Article 11 of the Directive has been commonly referred to as the \"Gazprom Clause\".\nIt is precisely the fact that the Russian pipeline transport service supplier is singled out by name in\nthe context of Article 11 that is at the heart of Russia 's contention un der GATS Article II:1.\nArticle 11 was clearly designed to deprive Russia of equal competitive opportunities in the EU\nmarket and the EU's implementation of Article 11 has modified the conditions of competition to the\ndetriment of Russian pipeline transport services and service suppliers, in violation of Article II:1.\n44. GATT Article III:4 – Finally, Claim 18 challenges the th ird-country certification measure, as\nsuch, also based on the underlying provisions of Article 11. Russia argued that the measure\nresults in de jure discrimination by adversely impacting the competitive opportunities for other\nMembers' imported natural ga s transported and sold on the EU market, compared to domestic -\norigin gas, in violation of Article III:4 of the GATT 1994.\nVIII. GATS ARTICLE VI – THE THIRD-COUNTRY CERTIFICATION MEASURES\n45. Claims 19 and 20 also concern the third -country certification m easures. Russia\ndemonstrated that Croatia, Hungary and Lithuania 's third-country certification measures are each\ninconsistent with Articles VI:1 and VI:5(a) of the GATS. Beginning with Claim 19, Article VI:1\nrequires that a measure be administered in a \"reasonable, objective and impartial manner. \" The\nthird-country certification measures do not satisfy any of these requirements. The measures lack\nany meaningful standards or criteria by which NRAs may evaluate third -country applications.\nNRAs are thus granted virtually unlimited discretion to evaluate the alleged effects of third -country\ncertification requests on the amorphous concept of \"security of supply. \" Absent concrete,\nmeaningful standards, it is impossible for NRAs to administer the third -country certification\nmeasures in a \"reasonable, objective, and impartial manner. \" Croatia, Hungary and Lithuania 's\nmeasure are thus each in violation of Article VI:1.\n46. The three third -country certification measures are also inconsistent with\nGATS Article VI:5(a). The measures are \"licensing and qualification requirements \" within the\nmeaning of Article VI:5(a). They also \"nullify or impair\" Croatia, Hungary and Lithuania 's specific\ncommitments in Sector 11G, \"Pipeline Transport\" services, in a manner that does not comply with\nthe criteria set forth in GATS Article VI:4. The lack of a clear definition of the term \"security of\nsupply\" means that the laws are not \"based on objective and transparent criteria, \" as required by\nArticle VI:4(a). The measures are also \"more burdensome than necessary to ensure the quality of\nthe service, contrary to Article VI:4(b), since third -country applicants must meet a far higher\nburden than domestic applicants, which are not required to demonstrate that they pose no r isk to\nthe security of supply.\n47. Moreover, requiring third -country applicants to satisfy this standard has nothing to do with\nthe \"quality\" of the service – their ability to consistently transmit and supply gas. The measures,\nas \"licensing procedures \" setting forth the information required for third -country applicants to\napply for a license, are themselves a \"restriction on the supply of the service, \" contrary to\nArticle VI:4(c). The measures limit the supply of pipeline transport services by third -country\napplicants by conditioning that supply on the ability of applicants to meet the nebulous criteria as\ndetermined by NRAs. Finally, the third -country certification requirements \"could not reasonably\nhave been expected \" at the time Croatia, Hungary and Lithuania sched uled their commitments,\npursuant to Article VI:5(a)(ii). They each made commitments years before the third -country\ncertification measure was enacted. It could not have been reasonable for Russia or other Members\nto expect that Croatia, Hungary or Lithuania would then act to limit those commitments.\n\n- B-11 -\n\nIX. GATT ARTICLE X:3(A) – THE INFRASTRUCTURE EXEMPTION MEASURE\n48. Article 36 of the Directive governs exemptions from the unbundling, TPA and tariff regulation\nrequirements of the Directive for certain types of \"new infrastructure\" and \"significant increases of\ncapacity in existing infrastructure and to modifications of such infrastructure which enable the\ndevelopment of new sources of gas supply. \" Article 22 of the SEP Directive provided for the same\nexemptions, several of which are still in effect. This is referred to as the \"infrastructure exemption\nmeasure.\"\n49. Claim 21 challenges the EU's failure to administer the infrastructure exemption measure in a\nuniform, impartial and reasonable manner, based on spec ific instances of application of the\nmeasure by the Commission, in violation of Article X:3(a). To establish a violation of Article X:3(a),\nit is necessary to show, first, that a law, regulation, judicial decision or administrative ruling of\n\"general appli cation,\" as referred to in GATT Article X:1, is \"pertaining…to requirements,\nrestrictions or prohibitions on imports\" and/or \"affecting the sale, distribution, transportation,\" etc.\nof imports. Second, the respondent must have failed to \"administer\" the legal instrument at issue\nin a \"uniform, impartial and reasonable \" manner. Notably, a violation of any of these three\nobligations will lead to a violation of the obligations under Article X:3(a).\n50. Russia demonstrated that the infrastructure exemption mea sure satisfies each of the\nelements of Article X:3(a). The Commission has issued exemption decisions pursuant to the\ninfrastructure exemption measure regarding the OPAL, Gazelle, TAP, Nabucco and Poseidon\npipelines, while also approving denial of an exemption for the NEL interconnector. The Commission\nhas also either issued or approved various exemption decisions concerning LNG facilities, including\nDragon and South Hook in the UK, regarding which no material restrictions were imposed. Russia\nviews these as additional applications by the Commission of the infrastructure exemption measure,\nfurther demonstrating its lack of uniform, impartial and reasonable administration of the measure\nin violation of Article X:3(a).\n51. Russia demonstrated that the individ ual decisions issued pursuant to the infrastructure\nexemption measure put into practical effect, or apply, the meas ure, as contemplated by\nArticle X:3(a) and interpreted by the Appellate Body. Russia showed, for one, that all of the\nexemption applicants have been similarly situated, including OPAL GT and TAP AG, as well as the\napplicants for the Gazelle, Nabucco and Poseidon exemptions. The measure also requires NRAs\nand the Commission, in every case, to examine a series of five \"conditions\" or criteria, i ncluding\nthat the investment enhances competition in gas supply and security of supply; that the level of\nrisk associated with the investment is such that it would not take place absent an exemption; and\nthat the exemption is not detrimental to competition. Leaving aside for now that these criteria are\nthemselves vague and permit excessive discretion, it is in evaluating each individual exemption\napplication, based on these criteria, that the Commission administers, applies or puts the\ninfrastructure exemp tion measure into practical effect. Each decision by the Commission\nrepresents a separate application of the same criteria and thus of the measure.\n52. Russia thus demonstrated that the Commission 's application of the infrastructure exemption\nmeasure, incl uding its examination of the five criteria that must be applied in reviewing every\napplication, constitutes administration of the measure within the meaning of Article X:3(a). Russia\nalso demonstrated that, in administering the measure, the Commission did so in a non -uniform,\npartial and unreasonable manner, in violation of Article X:3(a). The Commission completely failed\nto justify imposing not only a 50% capacity cap on the OPAL exemption, but also a 3 bcm/year gas\nrelease requirement, while imposing vag ue and much less restrictive conditions on the TAP,\nNabucco and Poseidon exemptions and no conditions whatsoever on the exemptions for LNG\nfacilities such as Dragon and South Hook in the UK. In Russia 's view, the EU has deliberately\ninterpreted and administered the infrastructure exemption measure in order to reduce reliance on\nRussian natural gas, while encouraging and helping to facilitate imports from alternative sources.\nIndeed, as Russia explained at length, the Commission 's already flawed rationale f or imposing the\nOPAL restrictions totally disappeared after the Gazelle pipeline was completed and all of the gas\nbeing transported via OPAL was required to be transited across the Czech Republic, back into\nGermany and onwards to France and elsewhere. Yet the EU has consistently refused even to\nconsider rescinding or modifying the discriminatory restrictions on the volume of gas that may be\nimported and transported over OPAL.\n\n- B-12 -\n\nX. GATT ARTICLE I:1 AND GATS ARTICLE II:1 – THE INFRASTRUCTURE E XEMPTION\nMEASURE\n53. GATT Article I:1 – Claims 22, 23 and 24 also all concern the infrastructure exemption\nmeasure. Each of these claims challenges specific instances of application by the Commission of\nthe measure, as applied, in violation of GATT Article I:1. In Claim 22, Russia demonstrated that,\nin implementing the infrastructure exemption measure, BNetzA, the German NRA, narrowly\ninterpreted the term \"interconnector\" to justify denying an exemption from the Directive's TPA and\ntariff regulation requirements for NEL. The Commission approved BNetzA 's decision. The\nCommission later adopted a broader interpretation of the same term to justify granting\ninfrastructure exemptions for the Gazelle and TAP pipelines. Claim 23 challenges the manner in\nwhich the EU implemented the infrastructure exemption measure by imposing on the exemption\ngranted for the OPAL interconnector more restrictive conditions than it later imposed on the\nexemptions for Gazelle and TAP, and that it had previously imposed on exemptions for the\nNabucco and Poseidon pipelines. Claim 24 challenges the manner in which the EU applied or\nimplemented the measure by denying the NEL exemption and imposing these restrictive conditions\non the OPAL exemption, while granting exemptions to various LNG facilities, in cluding Dragon and\nSouth Hook in the UK, without imposing any conditions whatsoever.\n54. In its first written submission, Russia carefully explained the EU's differing approach to these\ninfrastructure exemption decisions. The EU offered very little in res ponse. Unlike Russia, the EU\nfailed either to analyze the definition of \"interconnector\" or the meaning of \"new\" infrastructure in\nthe measure. The EU also made no attempt to explain BNetzA and the Commission 's decisions. In\nreaching those decisions, as Russia has described, the EU sought to further its overall objective of\nreducing reliance on Russian gas and helping facilitate access to gas from other third -country\nsources. To do so, the EU found it necessary to adopt inconsistent interpretations of the relevant\nprovisions in the Directive and to take a discriminatory approach in exemption decisions. In light\nof this reality, in its first written submission, the EU basically just asserted that those decisions and\nits approach were the \"right\" thing to do.\n55. When examined objectively, however, as Russia has done, it is clear that the EU provided\ndifferential treatment in granting the various infrastructure exemptions, which modified the\nconditions of competition in the EU market to the detriment of Russ ian gas. In assessing whether\nan advantage is granted to imported products of certain third -countries within the meaning of\nArticle I:1 that is not immediately and unconditionally extended to like products from another\nMember, it is necessary to determine whether the \"equality of competitive opportunities for like\nimported products from all Members \" is preserved. In reaching this determination, the Appellate\nBody has made clear that the Panel should analyze whether \"any condition attached \" by the\nmeasure \"to the granting of an ‘advantage ' within the meaning of Article I:1...has a detrimental\nimpact on the competitive opportunities for like imported products from any Member. \" Where a\nmeasure modifies the conditions of competition between like imported products to the detriment of\nthe third-country imported products at issue, it is inconsistent with Article I:1.\n56. Russia demonstrated with regard to Claim 22 that the owners and operators of TAP will be\nable to import, transport and sell significant volumes of Azeri natural gas on the EU market that\nare exempt from the otherwise applicable unbundling, TPA and tariff regulation requirements.\nBecause the NEL exemption was denied based on the EU's narrower interpretation of the measure,\n100% of the imported Russian natural gas that is transported via NEL and sold into the EU market\nis subject to the TPA and tariff regulation requirements.\n57. Likewise, regarding Claim 23, Russia showed that, due to the far less restrictive conditions\nimposed by the EU on the T AP, Nabucco and Poseidon infrastructure exemptions, compared to the\nconditions imposed on the OPAL exemption, imported Russian gas that is transported over OPAL\nand sold on the EU market is denied an advantage granted to Azeri and possibly other third -\ncountry gas that will be transported over TAP, or that would have been transported over Nabucco\nand Poseidon. Finally, in Claim 24, Russia described how the EU granted infrastructure exemptions\nto the Dragon and South Hook LNG facilities without imposing any m aterial conditions. Thus,\nbecause these LSOs are completely exempt from the TPA and tariff regulation requirements, third -\ncountry natural gas imported in the form of LNG through these LNG facilities is granted an\nadvantage that is not immediately and uncon ditionally extended to Russian gas transported via\nNEL and OPAL and sold on the EU market, which modifies the conditions of competition between\nlike imported products to the detriment of Russian gas.\n\n- B-13 -\n\n58. As a result, the infrastructure exemption measure, a s implemented, detrimentally impacts\nthe \"equality of competitive opportunities\" in the EU between Azeri and other third-country gas, on\nthe one hand, and Russian gas, on the other, in violation of Article I:1 of the GATT 1994\n59. GATS Article II:1 – Claim 25 also challenges the infrastructure exemption measure, as\napplied, in Article 36 of the Directive (and Article 22 of the SEP Directive). In this claim, Russia\ndemonstrated that the EU violated its MFN obligations under Article II:1 of the GATS. Specif ically,\nthis claim challenges the manner in which the EU implemented the measure by denying the NEL\nexemption and imposing restrictive conditions on the OPAL exemption, while granting exemptions\nto other pipelines and various LNG facilities, but without im posing similarly restrictive conditions\nand no conditions in the case of Dragon and South Hook in the UK. As Russia showed, the EU 's\nimplementation of the measure, as applied in each of the exemption decisions to date, including\nboth those for interconnec tors and LNG facilities, demonstrates de facto discrimination and\nresulted in less favourable treatment being provided to Russian services and service suppliers than\nlike services and service suppliers of other Members, in violation of Article II:1.\nXI. GATT ARTICLE I:1 AND GATS ARTICLE II:1 – THE INFRASTRUCTURE E XEMPTION\nMEASURE AND THE UPSTREAM PIPELINE EXEMPTION\n60. Claim 26 concerns GATT Article I:1. Claim 27 concerns GATS Article II:1. Both of these\nclaims also challenge the Commission's implementation of the infrastructure exemption measure in\nArticle 36 of the Directive (and Article 22 of the SEP Directive). Both can also best be characterized\nas \"as applied\" claims. Unlike previous claims, however, Claim 26 and Claim 27 are predicated on\nthe fac t that, in contrast with the EU 's treatment of the NEL and OPAL interconnectors, the\nDirective provides an \"as such \" exemption to upstream pipeline networks. Specifically, Russia\nchallenged implementation of the infrastructure exemption measure to deny th e NEL exemption\nand impose restrictive conditions on the OPAL exemption, while the Directive automatically\nexempts UPNs from the unbundling, TPA and tariff regulation requirements. Russia demonstrated\nthat this differential treatment results in de facto discrimination, by providing an advantage to\nnatural gas primarily of Norwegian origin transported through upstream pipeline networks and sold\non the EU market, which is not accorded immediately and unconditionally to like Russian gas\ntransported and sold o n the EU market through NEL and OPAL, in violation of GATT Article I:1.\nLikewise, Russian pipeline transport service suppliers and their services supplied through NEL and\nOPAL are treated less favourably than like Norwegian service suppliers and their ser vices supplied\nthrough upstream pipeline networks, which are automatically exempted from the Directive 's\nrequirements, in violation of GATS Article II:1.\nXII. GATT ARTICLE XI:1 – QUANTITATIVE RESTRICTIONS\n61. Claim 28 concerns GATT Article XI:1, which prov ides a general prohibition on quantitative\nrestrictions. This general prohibition on quantitative restrictions is intended to be \"comprehensive\"\nand apply to \"all measures instituted or maintained \" by a Member, other than duties or taxes,\nwhich prohibit or restrict the import or export of products. In Claim 28, Russia challenges a specific\ninstance of application by the Commission and Germany of the infrastructure exemption measure\nset forth in Article 36 of the Directive (and Article 22 of the SEP Directi ve), and thus may be\nconsidered an \"as applied \" claim. Specifically, the restrictive conditions imposed by the\nCommission on the OPAL exemption instituted a quantitative restriction on the volume of Russian\ngas imported into the EU, in violation of GATT Ar ticle XI:1. Importantly, as previous panels have\nheld: \"There can be no doubt…that the disciplines of Article XI:1 extend to restrictions of a de\nfacto nature.\" Thus, the prohibition on quantitative restrictions also applies to restrictions that\nhave the real-world effect of limiting the importation or exportation of a product. The EU 's OPAL\nexemption decision pursuant to the infrastructure exemption measure institutes such\nimpermissible quantitative restrictions on the importation of natural gas from Russia.\n62. In its first written submission and in response to multiple questions from the Panel, Russia\nexplained the manner in which the 50% capacity cap and 3 bcm/year gas release program\nimposed by the Commission as conditions on the OPAL exemption each co nstitute separate\nquantitative restrictions in violation of Article XI:1. OPAL 's total capacity is 36.5 bcm/year, of\nwhich 4.5 bcm/year is not subject to the exemption because it is allocated for release in Germany\nat the Groß Köris compressor station sout h of Berlin. The remaining 32 bcm/year capacity, which\nis subject to the exemption, is required to be dedicated for transport south to the Czech Republic\nat the Brandov exit point. However, because Gazprom may book only 50% of that 32 bcm/year\n\n- B-14 -\n\nexit capacity at Brandov, or 16 bcm/year (aside from the 3 bcm/year gas release program), it may\nalso only book that amount of entry capacity at Griefswald for gas being transported to Brandov.\nAccordingly, Gazprom is limited in its ability to control (or own) not only 16 bcm/year of capacity\non OPAL, but also 16 bcm of the actual gas that may be transported each year on the pipeline.\nBecause Gazprom is effectively prohibited from controlling more than 16 bcm of the capacity and\ngas transported on OPAL, its ability to import Russian gas via Nord Stream for transport over OPAL\nis also restricted by that amount – 16 bcm/year.\n63. There also is no basis for the EU to argue that Gazprom can exceed the 50% capacity cap by\nimplementing the required 3 bcm/year gas release program. In reality, the gas release program\nonly institutes another quantitative restriction on the importation of Russian gas in violation of\nArticle XI:1. To exceed the 50% capacity cap, not only must Gazprom \"release\" or sell 3 bcm of\ngas per year at artificially imposed prices, it must also implement a \"capacity release program\" to\n\"ensure the availability of corresponding transport capacity, \" in the words of the Commission 's\nOPAL Exemption Decision, at paragraph 89(b). See Exhibit RUS-82. Of course, this includes both\nentry and exit capacity, \"which are only offered in bundled form. \" In order to exceed the 50%\ncapacity cap, therefore, Gazprom must unconditionally release or forego the right to transport 3\nbcm/year of imported Russian gas over OPAL.\nXIII. GATS ARTICLE II:1 AND GATT ARTICLES III:4 AND I:1 – THE TEN-E MEASURE\n64. Claims 29, 30 and 31 concern the TEN-E Measure. The EU enacted the TEN-E Regulation on\n17 April 2013. It is referred to together with its later amendments as the \"TEN-E Measure.\" The\nTEN-E Measure sets out a framework for infrastructure planning and identifies nine strategic\ngeographic infrastructure priority corridors, including for natural gas. It establishes a process to\nidentify \"projects of common interest \" (\"PCIs\") which benefit from \"accelerated and streamlined\npermit granting procedures, better regulatory treatment and – where appropriate – financial\nsupport under the ‘Connecting Europe Facility. '\" See Exhibit RUS-17, p. 2. The TEN -E Measure,\ntogether with its un derlying policy objective of enhancing diversification and security of supply, is\ndesigned to treat Russian services and service suppliers less favourably than those of other\ncountries. Equally, Russian natural gas is accorded less favourable treatment th an like domestic\nand third-country gas.\n65. This is evident from the definition of the \"Priority Gas Corridors\", including the requirement\nto reduce dependency on \"a single supplier\" in Annex I.2(8) of the TEN -E Regulation. This \"single\nsupplier\" is ident ified as Russia. Exhibit RUS -109, p. 36. Creation of the priority corridors was\naimed at reducing the role of Russian services and service suppliers and decreasing competitive\nopportunities for Russian natural gas. The totality of facts surrounding the TE N-E Measure reveals\nthat its design, structure and expected operation are such that projects that would be operated by\nnon-Russian service suppliers and which would facilitate the importation of non -Russian natural\ngas are to be preferred.\n66. This is evid ent from the selection criteria used to determine which projects would be\ndesignated as PCIs. Annex III.1 of the TEN-E Regulation sets out Working Group rules. The Terms\nof Reference of the Ad Hoc Working Group for North -South Gas Interconnections in Cent ral-\nEastern (CEE) and South -Eastern Europe (SEE) are particularly instructive. That Working Group\nagreed on the weighting of gas -specific criteria and assessed the proposed projects in light of\nthese criteria. See Exhibit RUS-145, p. 8.\n67. Criteria such as diversification, as specified by the sub -criteria \"diversification of external\nsupply\" and \"lower import dependence \", were given substantial weight in respect of the project\nprioritization. Exhibit RUS -147, p. 12. In terms of category weighting, \"physical availability\" was\ngiven a weight of 0.25/1; \"promotion of the internal energy market\" was given a weight of 0.31/1;\nand \"diversification\" was given a weight of 0.44/1. This evidence should be sufficient for the Panel\nto find the existence of a policy aimed at replacing Russian natural gas imports with domestic\nproduction. The implications of these weighting criteria become even more apparent upon\nexamining the application for PCI designation from the South Stream project companies. The EU\nsection of t he South Stream pipeline project was one of 25 projects that were scored by the\nWorking Group. It was denied PCI designation after receiving by far t he lowest score of all\nprojects – 0.16. See Exhibit RUS-146, p. 6.\n\n- B-15 -\n\n68. This is not surprising. South Stre am was intended to transport Russian natural gas from\nRussia via the Black Sea to Bulgaria and other destinations in the EU. Clearly, this project,\npromoted by the Russian service supplier Gazprom, could never have obtained a high PCI -score as\nit would hav e led to opening a new route for Russian gas, as was directly acknowledged by the\nEU Commissioner for Energy. See Exhibit RUS-165, p. 2.\n69. PCI natural gas benefits from the infrastructure through which it is transmitted, or in which\nit is stored, receiv ing substantial financial support from the CEF fund. The same applies to the\nservices supplied through PCI -designated projects and the service suppliers supplying these\nservices. PCIs have access to financial support totalling €5.35 billion. Among the projects selected\nunder the 2014 Energy Call were PCIs 8.2.3 (Capacity Enhancement of the Klaipeda -Kiemenai\npipeline in Lithuania) and 8.5 (Gas Interconnection Poland -Lithuania; or GIPL). Exhibit RUS -161,\np. 5. PCI 8.2.3 is eligi ble for a maximum of €27,595,500. This provides the project with a\nsubstantial advantage as compared to projects that did not receive PCI designation. The same\napplies to PCI 8.5, albeit in even greater numbers. Exhibit RUS-162, p. 1. The construction of this\nPCI is eligible for a maximum of €295,386,600.\n70. GATS Article II:1 – Under GATS Article II:1, less favourable treatment is accorded whenever\na measure modifies the conditions of competition to the detriment of another WTO Member's\nservices or servi ce suppliers as compared to those of other countries. Specific instances of\napplication by the EU of the TEN-E Measure demonstrate the inability of Russian projects to qualify\nfor PCI designation.\n71. By laying down inherently biased criteria for PCI -designation, the TEN -E measure modifies\nthe conditions of competition to the detriment of Russian services and Russian like service\nsuppliers. Projects that are likely to reduce reliance on Russian n atural gas are eligible for\nPCI-designation. Projects that are unlikely to reduce such re liance are unable to obtain\nPCI-designation. Inevitably, private actors will choose to invest in projects that are likely to benefit\nfrom the more favourable administrative, regulatory and financial treatment. This modification o f\nthe conditions of competition to the detriment of like Russian services and service suppliers\namounts to less favourable treatment being accorded to these services and service suppliers, in\nviolation of Article II:1 of the GATS.\n72. GATT Article III:4 – The applicable legal standard under Article III:4 of the GATT 1994\nrequires an assessment as to whether a measure modifies the conditions of competition to the\ndetriment of like imported products in the relevant market.\n73. Russia submits that the modifi cation of the conditions of competition to the detriment of\nRussian natural gas arises because of the sole fact that the PCI-designation system is in place. The\nsystem creates an incentive for TSOs and operators to invest in projects that are not aimed at\nmaintaining the same – or an increased – level of Russian natural gas imports. These projects will\nbenefit from more favourable regulatory, administrative and financial treatment. This system\ndirectly impacts the decision of operators as to where they sour ce their natural gas imports from\nand as to which projects they are likely to invest in. A decision to source natural gas from Russia\nbecomes increasingly unlikely as projects that would make this possible will not benefit from the\nmore favourable regulatory treatment.\n74. Natural gas transported through designated PCIs will be able to be marketed at reduced\ncosts as compared to non-PCI natural gas, because of the more favourable regulatory regime that\nis applicable to PCIs. PCI natural gas thus directly b enefits from the reduced regulatory burden\nthat is placed on certain designated projects. The criteria used to allocate the more favourable\ntreatment give effect to the EU's wish to reduce reliance on Russian gas by favouring projects that\n\"enhance diversification\" and do not contribute to maintaining or improving the position of Russian\nnatural gas on the EU market. As a result of these criteria, an incentive is created to develop and\nsubmit projects for PCI designation that are not intended to promote Russian natural gas.\n75. Clearly, the substantial amounts of government support reduce the costs of operators and\npromoters of these PCIs, which enables them to reduce the price of the gas that is being sold.\nInevitably, this modifies the conditions of competition to the detriment of imported Russian natural\ngas, which is transmitted using facilities that are not eligible for this type of government support.\n\n- B-16 -\n\nThis treatment is inconsistent with the national treatment obligati on of Article III:4 of the\nGATT 1994.\n76. GATT Article I:1 – Article I:1 of the GATT 1994 requires WTO Members to grant any\nadvantage, favour, privilege, or immunity granted to one country 's products immediately and\nunconditionally to the like products of all other WTO Members.\n77. As a dir ect consequence of PCI -designation, natural gas transported through designated\nPCIs is able to be marketed at reduced costs as compared to non -PCI natural gas, because of the\nmore favourable regulatory regime that is applicable to PCIs. PCI natural gas thu s directly benefits\nfrom the reduced regulatory burden that is placed on certain designated projects. The operating\ncosts are reduced, thereby resulting in an advantage being accorded to PCI natural gas in the form\nof more favourable competitive opportunities.\n78. As explained, Russian natural gas is predominantly transported and sold through\ninfrastructure that is unable to obtain PCI -designation. The advantage that is granted to PCI -\nnatural gas is not accorded immediately and unconditionally to like Russian natural gas. The TEN-E\nmeasure is therefore inconsistent with Article I:1 of the GATT 1994.\nXIV. CONCLUSION\n79. For the forgoing reasons, the Russia Federation requests the Panel to recommend that the\nEuropean Union bring each of its nonconforming measu res into conformity with its obligations\nunder the relevant provisions of the GATS and GATT 1994.\n\n- B-17 -\n\nANNEX B-2\nSECOND PART OF THE EXECUTIVE SUMMARY OF THE ARGUMENTS OF RUSSIA\nI. INTRODUCTION\n1. The European Union has implemented a broad -based regime to regulate trade in the natural\ngas sector. Among the EU 's principal objectives is to reduce its reliance on natural gas and\n\"pipeline transport services \" from the Russian Federation. The EU seeks instead to import more\ngas and pipeline transport services from other countries, including Norway (a WTO Member) and\nAzerbaijan. The EU has enacted a series of discriminatory measures to achieve these objectives.\nThese measures include Directive 2009/73/EC (the \"Directive\"), the key component of the EU 's\nThird Energ y Package ( \"TEP\"), and Regulation (EU) No 347/2013 ( \"the TEN -E Regulation \"), as\namended, which is closely related to the TEP.\n2. This dispute has far reaching implications for international trade in natural gas and pipeline\ntransport services. This dispute also raises important, novel WTO issues. These include the scope\nof the EU 's obligation, as a WTO Member, for the actions of its Member States. Notably, the EU\nrequired the Member States to implement the unbundling measure. Russia has demonstrated tha t\nthe unbundling measure, as set forth in the Directive and implemented by the Member States, is a\nsingle measure, and not \"different measures by different Member States, \" as argued by the EU.\nThis measure detrimentally impacted the competitive opportunit ies, de facto, in the EU market or\nterritory for Russian pipeline transport services and service suppliers and for Russian natural gas.\nAccordingly, Russia has shown that the relevant market for assessing its national treatment and\nmost-favoured nation ( \"MFN\") claims under the General Agreement on Tariffs and Trade\n(\"GATT 1994\") and its MFN claims under the General Agreement on Trade in Services ( \"GATS\") is\nthe EU as a whole. The Member States did so in a manner that treated Russian pipeline transport\nservices and service suppliers and natural gas less favourably than like domestic and other third -\ncountry services, services suppliers and gas.\n3. Including Russia's claims against the unbundling measure, this dispute includes a total of 26\nclaims against t he EU and its Member States under both the GATS and the GATT 1994. The\nfollowing summarizes each of Russia's claims, as discussed in the proceeding to date.\nII. THE COVERED SERVICES\n4. For purposes of its GATS claims, Russia defined the covered services as natural gas pipeline\ntransport services, which Russia explained should be construed broadly to include the transmission\nand supply of natural gas, including liquefied natural gas ( \"LNG\"), and all services related to or\nassociated with the transmission and supply of natural gas, including LNG services. The EU argues\nthat LNG is not \"like\" natural gas within the meaning of the GATT 1994 and that LNG services are\nnot \"like\" pipeline transport services within the meaning of the GATS. Three EU Member States,\nCroatia, Hungary and Lithuania, as separate WTO Members, also made specific mode 3\n(commercial presence) market access and national treatment commitments in their GATS\nSchedules regarding the relevant services sector, Sector 11G, \"Pipeline Transport\" services. The\nEU argues that Sector 11G does not include LNG services.\n5. Russia has demonstrated, however, first, that LNG is natural gas and thus \"like\" all other\nnatural gas within the meaning of the GATT 1994. Russia has also demonstrated that Sector 11 G\nincludes LNG services. For one, the relevant UN Provisional Central Product Classification ( \"CPC\")\ncode, CPC 713, as relied upon by Croatia, Hungary and Lithuania to schedule their commitments,\nincludes LNG services. However, Russia has stressed, even if the Panel finds CPC 713 does not\ninclude LNG services, and that LNG services are thus excluded from Croatia, Hungary and\nLithuania's GATS commitments, LNG services and LNG system operators ( \"LSOs\") are still \"like\"\nother pipeline transport services and services suppliers, respectively, within the meaning of the\nGATS. The Panel should thus find that the covered services include LNG services, which are \"like\"\nall other pipeline transport services.\n\n- B-18 -\n\nIII. THE UNBUNDLING MEASURE (CLAIMS 6, 8 AND 10)\n6. The E U enacted the unbundling measure in the Directive, which it required the Member\nStates, collectively, to implement into their laws. Through the Directive, the EU required all\nMember States to permit the ownership unbundling ( \"OU\") model. The EU let Member States\nchoose whether to also permit the independent transmission operator ( \"ITO\") model and/or the\nindependent system operator ( \"ISO\") model. The OU model requires vertically integrated\nundertakings ( \"VIUs\") to divest ownership and control of their trans mission system operator\n(\"TSO\"). The ITO model and, to a lesser extent, the ISO model are both less restrictive. The ITO\nmodel, in particular, permits the VIU to retain ownership and some degree of control over its TSO,\nthe ITO. The VIU thus continues t o benefit by supplying natural gas and pipeline transport\nservices through its ITO.\n7. Russia challenges the unbundling measure, as a single measure, as set forth in the Directive\nand the implementing laws of the Member States, as violating GATS Article II:1 and GATT Articles\nIII:4 and I:1. Russia has demonstrated that the unbundling measure modifies the conditions of\ncompetition within the EU market to the detriment of Russian pipeline transport services and\nservice suppliers and natural gas, compared w ith like services and service suppliers of other third -\ncountries and like domestic and other third -country gas. Specifically, certain EU Member States,\nincluding Lithuania, Latvia and Estonia, permitted only the OU model, as intended by the EU.\nGazprom, the Russian VIU and natural gas exporter, had supplied pipeline transport services and\ngas through TSOs (i.e., commercial presence) in these Member States. Pursuant to the OU model\nunder the Directive, Gazprom was required to divest ownership and control o f these TSOs.\nMeanwhile, other Member States, such as Germany and France, permitted the ITO model. Their\ndomestic and other third -country VIUs were thus permitted to adopt the ITO model and continue\nbenefitting from ownership and partial control of their TSOs.\n8. Because the Directive is an EU measure, which the EU required be implemented on an EU -\nwide basis, the detrimental impact of the measure is also EU -wide. Therefore, as Russia has\ndemonstrated, the entire EU market must serve as the basis for ass essing this de facto less\nfavourable treatment. Russia has also shown that, as the Member responsible for enacting the\nDirective, the EU was both obligated and had the legal authority to ensure that its Member States\nimplemented the unbundling measure in accordance with the EU's substantive obligations. The EU\nfailed to fulfill this obligation. The EU 's arguments to the contrary – including that doing so would\nundermine \"the constitutional structure of the European Union \" and that the Member States are\nnot \"regional\" governments – are all unavailing.\n9. Moreover, even if the Panel determines to base its less favourable treatment assessment of\nthe unbundling measure on only the Directive, the Panel should nevertheless find that de facto\ndiscriminatory treatment of Russian services and service suppliers is apparent on the face of the\nDirective alone, based on the design and expected operation of the unbundling measure. Indeed,\nRussia has demonstrated that the EU fully intended the different manner in which the unbundling\nmeasure was implemented among the Member States to have an adverse impact on the\ncompetitive opportunities in the EU market for Russian pipeline transport services and service\nsuppliers and Russian gas. This outcome throughout the EU resulted in only Gazprom undertakings\nbeing forced to undergo ownership unbundling and was a major pillar in furthering the EU 's overall\nobjective of reducing its reliance on Russian natural gas and pipeline transport services.\nIV. MARKET ACCESS CLAIMS (CLAIMS 1, 2 AND 3)\n10. Russia has pursued separate claims under three GATS Article XVI:2 provisions, each\nchallenging different aspects of the unbundling measure, as implemented by Croatia, Hungary and\nLithuania. First, GATS Article XVI:2(e) prohibits \"measures which restrict or require specific types\nof legal entity or joint venture through which a service supplier may supply a service \". Croatia,\nHungary and Lithuania 's unbundling measures each violates this provision and thus their\nrespective market access commitments. The EU responds that, to be prohibited, a measure must\nliterally require a service supplier to establish a specific corporate or other recognized type of legal\nentity. However, Article XVI:2(e) prohibits any measure that is designed to restrict service\nsuppliers from establishing one or more types of legal entity, or that has the effect of requiring\nspecific types of legal entity by restricting the ability of service suppliers to establish other types.\nCroatia, Hungary and Lithuania's unbundling measures fall within the scope of Article XVI:2(e) and\nthus are prohibited.\n\n- B-19 -\n\n11. GATS Article XVI:2(a) prohibits \"limitations on the number of service suppliers whether in\nthe form of numerical quotas, monopolies, exclusive service suppliers or the requi rements of an\neconomic needs test\". A \"monopoly supplier of a service\" is any person \"authorized or established\nformally or in effect \" by a Member \"as the sole supplier of that service \". \"Exclusive service\nsuppliers\" include where \"a Member, formally or i n effect, (a) authorizes or establishes a small\nnumber of service suppliers and (b) substantially prevents competition among those suppliers in\nits territory.\" Despite ostensibly permitting all three unbundling models, Croatia actually owns and\ncontrols its entire natural gas network, including the sole TSO, Plinacro, and gas supplier, HEP.\nThis constitutes a \"monopoly supplier of a service \" or \"exclusive service suppliers. \" Lithuania\nrequires a domestic TSO to own the country 's transmission assets. Fol lowing its expropriation of\nthe TSO from the Russian service supplier, Lithuania assumed ownership and control of its entire\nnetwork. Because no other company may be designated a TSO, this also violates Article XVI:2(a).\n12. GATS Article XVI:2(f) forbids \"limitations on the participation of foreign capital in terms of\nmaximum percentage limit on foreign shareholding or the total value of individual or aggregate\nforeign investment.\" Russia demonstrated that, consistent with the provisions of Article 9 of t he\nDirective, the unbundling measures of Croatia, Hungary and Lithuania all impose majority\nownership prohibitions. The EU argues that these prohibitions apply to all potential investors,\n\"domestic or foreign,\" and so are outside the scope of Article XVI:2(f). The fact that the provisions\nalso prohibit domestic majority ownership is irrelevant, however. Sub -paragraph (f) forbids any\nand all measures that impose majority ownership prohibitions on foreign capital investment. For\nthese reasons, Croatia, Hun gary and Lithuania 's unbundling measures are contrary to their\nobligations under GATS Article XVI:2(f).\n13. The EU 's GATS Article XIV(a) and (c) Defenses – The EU contends that, if the laws of\nCroatia, Hungary or Lithuania implementing the unbundling mea sure are found to violate any of\nthe relevant provisions of GATS Article XVI:2, such laws are justified under GATS Article XIV(a) as\nbeing \"necessary to maintain public order (which includes competition in the energy sector as a\n'fundamental interest of so ciety' in the EU). \" The EU also argues that the unbundling measure,\nimplemented in these Member States ' laws, is necessary to secure compliance with the TPA\nobligation in Article 32 of the Directive, consistent with the requirements in GATS Article XIV(c).\n14. However, the EU has failed to justify any of its three Member States' laws under either GATS\nArticle XIV(a) or (c). This includes after the Panel asked the EU to explain what aspect(s) of the\nchallenged measures would be relevant for the Panel's assessment under these provisions, bearing\nin mind (i) the differences between the three challenged measures and (ii) the differences between\nArticle XVI:2(a), (e) and (f). Regarding Article XIV(a), the EU has not demonstrated that a\n\"genuine and sufficiently serious threat\" to competition exists in Croatia, Hungary or Lithuania; or\nhow any of their different implementing laws is \"necessary\" to achieve this objective, including the\nrelative importance of the objective pursued by the measure, its \"contribution\" to realizing the\nends pursued, or \"the restrictive impact of the measure on international commerce .\" There are\nalso less restrictive, reasonably available alternatives in the case of each Member State. Similarly,\nnone of the laws can be considered \"necessary\" under Article XIV(c) for achieving the EU 's stated\nobjective of securing compliance with the TPA obligation.\nV. THE PUBLIC BODY MEASURES (CLAIMS 4 AND 5)\n15. Russia's next two claims concern GATS Article XVII and the \"public body measures \" (or\n\"government exemption measures \") in the unbundling provisions of Croatia, Hungary and\nLithuania's laws. Article 9(1) of the Directive prohibits \"the same person or persons \" from\nexercising control both over the TSO and supply portion of a VIU. Article 9(6 ) exempts Member\nState governments from the unbundling requirements, provided they own and control both the\nTSO and supply entities through \"two separate public bodies. \" These so-called \"separate public\nbodies\" are \"deemed\" for purposes of the unbundling measure \"not to be the same person or\npersons.\" Croatia, Hungary and Lithuania all modeled provisions in their implementing laws on\nArticle 9(6), which Russia first challenges as violating Croatia, Hungary and Lithuania 's national\ntreatment obligations under Article XVII:1, as such. Their laws each distinguishes de jure between\nforeign and domestic services and service suppliers based exclusively on origin.\n16. The EU argues that Article 9(6) also makes the exemption available to \"persons controlled\nby a public body from a third country. \" However, this is simply the EU 's post facto effort to avoid\nits Member States ' national treatment obligations. Article 9(6) was designed to permit Member\n\n- B-20 -\n\nStates, including Croatia, Hungary and Lithuania, to own and con trol their entire transmission and\nsupply systems. This exemption does not apply to third -countries. The public body measures in\nCroatia, Hungary and Lithuania 's laws also each results in de facto discrimination. Each\ngovernment actually owns and control s all or a portion of the entire transmission and supply\nnetworks within its respective territory. As implemented, the measures thus provide their\ngovernment-controlled services and service suppliers more favorable treatment than those of\nother Members, again contrary to GATS Article XVII.\nVI. THE LNG MEASURE (CLAIM 12)\n17. This claim concerns the LNG measure, pursuant to which LSOs and LNG facilities are\nexempted from the unbundling requirements. The EU concedes this claim. Its response that LNG\nis not \"like\" other natural gas within the meaning of the GATT is without merit, as noted above.\nRussia demonstrated that exempting LSOs and LNG facilities from unbundling accords a\ncompetitive advantage to natural gas imported in the form of LNG from other thir d-countries to\nthe detriment of Russian gas. Russia used the French-based VIU gas supplier Engie as an example.\nEngie owns and controls all of the LNG facilities in France through its wholly -owned subsidiary,\nElengy S.A. Engie also owns its TSO, GRTGaz, an ITO. Russia also highlighted LSOs such as\nDragon and South Hook in the UK, which are controlled by foreign supply entities and import third-\ncountry natural gas in the form of LNG through their EU -based LNG facilities. As a result, in these\nand numerous other instances throughout much of the EU, the LNG measure modifies the\nconditions of competition and results in less favourable treatment being accorded to Russian\nnatural gas.\nVII. THE UPSTREAM PIPELINE NETWORK MEASURE (CLAIMS 13 AND 14)\n18. The EU designed the Directive to ensure that so-called upstream pipeline networks (\"UPNs\"),\nwhich consist of Norwegian -owned and operated pipelines in the North Sea and offshore domestic\npipelines, are exempted from the Directive 's unbundling, TPA and tariff regula tion requirements.\nRussia demonstrated by reference to the legislative history accompanying the First Gas Directive\nthat the Norwegian Government lobbied for and obtained the UPN exemption to avoid unbundling\nthe Norwegian natural gas production and trans portation monopoly and, thereby, to reduce the\ncosts of transporting Norwegian -origin and EU -origin gas. Russian pipelines entering the EU do\nnot benefit from similar exemptions. On this basis, Russia demonstrated that the UPN measure\naccords Norwegian -origin gas a competitive advantage within the meaning of GATT Article I:1\ncompared to like Russian gas. Likewise, the UPN measure provides domestic gas more favorable\ntreatment than like Russian gas, in violation of GATT Article III:4. In both situations, the UPN\nmeasure distorts the competitive opportunities for Russian gas transported and sold on the EU\nmarket.\n19. The EU does not dispute that Norwegian and domestic UPNs are exempt from unbundling.\nThe EU mainly argues that Article 34 of the Directive actually subjects UPNs to TPA requirements\nand that, therefore, \"equal competitive opportunities are guaranteed to all gas, no matter its\norigin.\" But Russia showed that, besides never being utilized, Article 34 sets out a vague, non -\nmandatory regime; gr ants Member States discretion to oversee implementation; and is clearly\ndesigned to favor UPN operators and developers. Thus, because UPNs are exempt from the TPA\nrequirements under Article 32, and Article 34 in no way requires TPA, it does not mitigate th e\ndetrimental impact on competitive opportunities for imported Russian gas caused by the UPN\nmeasure.\nVIII. THIRD-COUNTRY CERTIFICATION MEASURES (CLAIMS 15 THROUGH 17)\n20. Russia next challenges the discriminatory third -country certification measure cont ained in\nArticle 11 of the Directive, as well as the implementing laws of Croatia, Hungary and Lithuania.\nArticle 10 of the Directive sets out the certification procedures for designating TSOs controlled by\ndomestic persons. However, a third -country certi fication applicant must satisfy the additional\nvague and burdensome requirements in Article 11. This includes demonstrating that \"security of\nsupply\" will not be put at risk by granting certification. The additional requirements in Article 11\nand the corr esponding provisions in Croatia, Hungary and Lithuania 's laws are referred to as the\nthird-country certification measures.\n\n- B-21 -\n\n21. Article XVII:1 – Russia first challenges the third -country certification measures as violating\nGATS Article XVII:1, as such, in Claim 15. Russia demonstrated that, by imposing the additional\nthird-country certification requirements, Croatia, Hungary and Lithuania 's laws implementing\nArticle 11 each distinguishes between like foreign and domestic services and service suppliers\nbased exclusively on origin. This formally different treatment modifies the conditions of\ncompetition in the EU market, de jure, thus according less favorable treatment to services and\nservice suppliers of other Members, including Russia, compared to like do mestic services and\nservice suppliers.\n22. The EU does not contest this de jure claim. It contends instead that the measures are\n\"necessary…to ensure the EU 's security of energy supply, which is part of the EU 's public order, \"\nand, therefore, are justif ied pursuant to GATS Article XIV(a). Article XIV(a) requires that a\nmeasure both be \"necessary…to maintain public order \" and satisfy the chapeau of Article XIV.\nEven assuming that ensuring \"security of supply \" or \"SoS\" is a \"fundamental interest\" of society,\nthe EU has not demonstrated that foreign TSO control poses a \"genuine and sufficiently serious\nthreat\" to the EU's SoS. The EU's main contention is that third-country governments have \"strong\nincentives to undermine\" its SoS policies and could discon tinue gas supply during cold weather or\nrefuse non -discriminatory information access. The EU presents no evidence that such threats\nactually exist, however. While disruptions in the transport of Russian natural gas through Ukraine\noccurred in 2006 and 2009, these were isolated events and in no way related to Russian ownership\nor control of TSOs or the supply of Russian pipeline transport services in the EU.\n23. The EU has also not demonstrated that the third -country certification measures are\n\"necessary\" to address its alleged concerns. The third -country certification measures make no\ncontribution, material or otherwise, to ensuring SoS. To the extent the prospect of TSOs\ndiscontinuing gas transmission is a realistic concern, it is equally applicable to domestic and\nforeign-controlled TSOs, for which the EU has other measures in place. Russia has also\ndemonstrated that the third -country certification measures result in significant trade restrictive\neffects. The Directive also grants Member States essen tially unlimited discretion to assess\nrestrictions on third -country TSOs, particularly in the absence of key definitions, including the\nconcept of \"security of supply\" itself.\n24. There are also reasonably available, alternative measures that the EU could and should have\nadopted. The EU could have required the same additional certification procedures from all\noperators, regardless of origin. Doing so would not affect the EU 's ability to ensure SoS, given the\nnumber of legal mechanisms in place to ensure this goal already. Similarly, the EU could enact a\n\"blocking statute\" to prevent any TSO from acting on instructions from a foreign shareholder or\ngovernment that are contrary to the EU law. The same restriction would apply to domestic and all\nthird-country interests. Notably, the EU has used this approach in other contexts. Claim 16 is an\nalternative claim.\n25. Even if considered provisionally necessary to maintain public order, the measures do not\nsatisfy the Article XIV chapeau requirements, to in clude not resulting in arbitrary or unjustifiable\ndiscrimination. The EU argues that the third -country certification measures are rationally related\nto its stated policy objective of ensuring SoS because EU-controlled TSOs do not pose \"comparable\nthreats\" to SoS. Yet the EU has not identified any realistic \"threats\" posed by third-country control\nof TSOs not otherwise addressed by existing laws and regulations. The lack of certification denials\nalso does not equal the absence of discrimination. Russia h as demonstrated that the measures\ndiscriminate on their face, which the EU did not even try to rebut. This discrimination results in\npart from ambiguities in the third -country certification standard and the broad discretion granted\nto NRAs and the Commission to assess those requests.\n26. GATS Article II:1 – In Claim 17, Russia also challenges the third -country certification\nmeasure based on specific instances of application of Article 11 of the Directive by Member States\nand the Commission in violation o f GATS Article II:1. Russia demonstrated, for one, that the\nCommission provided different treatment to the certification application of Gaz -System to operate\nthe Yamal pipeline in Poland than it did applications by various third -country applicants. The\nCommission made clear in two certification opinions that, from its standpoint, Gaz -System could\nnot qualify for certification because of perceived SoS risks based on the joint control of Europolgaz,\nthe owner of the Yamal pipeline in Poland, by Gazprom, the Russian supplier of natural gas and\npipeline transport services. The fact that ERO, the Polish NRA, ultimately elected to certify Gaz -\nSystem is not the issue. The issue is the impact on the conditions of competition in the EU market\n\n- B-22 -\n\nas a result of the Commission's refusal to approve Gaz-System's certification.\n27. In Lithuania, the EU declared Lietuvos, the TSO jointly controlled by the Russian service\nsupplier, to be a \"non-complaint undertaking, \" thus preventing it from applying for a TSO\ndesignation and certification, unless and until the Russian service supplier divested its interest in\nthe TSO – which the Russian supplier ultimately did. On the other hand, the Commission approved\nseveral certification decisions by NRAs regarding TSOs controlled by o ther third -country\nundertakings. This includes jordgas, which is wholly -owned by Statoil, the Norwegian VIU.\nIndeed, jordgas was not even required to satisfy the requirements of the third-country certification\nmeasure, due to the arbitrary effective date of Article 11, 3 March 2013. It also includes DESFA,\nwhich owns and operates the entire Greek transmission system and was scheduled to be acquired\nand brought under the sole control of SOCAR, an Azerbaijan government entity.\n28. The different treatment reflected in these inconsistent decisions distorts the competitive\nopportunities for Russian pipeline transport services and service suppliers in the EU. The\nCommission's original delay in issuing a decision increased the uncertainty regarding Gazprom 's\nsupply of its services. The perception of other market participants, including potential customers,\nwas also negatively impacted. In Lithuania the legislative framework adopted by the EU made it\nimpossible for the domestic TSO controlled by the Russian s ervice supplier to apply for\ncertification. It is also relevant that, in the process of adopting the TEP, as well as throughout its\napplication, Article 11 of the Directive has been commonly referred to as the \"Gazprom Clause\". It\nis precisely the fact t hat the Russian pipeline transport service supplier is singled out by name in\nthe context of Article 11 that is at the heart of Russia 's contention under GATS Article II:1. Article\n11 was clearly designed to deprive Russia of equal competitive opportuniti es in the EU market and\nthe EU's implementation of Article 11 has modified the conditions of competition to the detriment\nof Russian pipeline transport services and service suppliers, in violation of Article II:1.\nIX. THIRD-COUNTRY CERTIFICATIO N MEASURES : ARTICLES VI:1 AND VI:5(A)\n(CLAIMS 19 AND 20)\n29. Russia also demonstrated that Croatia, Hungary and Lithuania 's third -country certification\nmeasures are each inconsistent with Articles VI:1 and VI:5(a) of the GATS. Article VI:1 requires\nthat a measure b e administered in a \"reasonable, objective and impartial manner. \" These\nmeasures lack any meaningful standards or criteria by which NRAs may evaluate third -country\napplications. NRAs are thus granted virtually unlimited discretion to evaluate the alleged effects of\nthird-country certification requests on the amorphous concept of \"security of supply. \" Croatia,\nHungary and Lithuania's measure are thus each in violation of Article VI:1. The measures are also\n\"licensing and qualification requirements, \" contrary to GATS Article VI:5(a), based on the specific\ncriteria set out in Article VI:4(a)-(c).\nX. THE INFRASTRUCTURE EXEMPTION MEASURE: GATT ARTICLE X:3(A) (CLAIM 21)\n30. Article 36 of the Directive, and previously Article 22 of the SEP Directive, govern ex emptions\nfrom the unbundling, TPA and tariff regulation requirements of the Directive for certain types of\n\"new infrastructure \" and \"significant increases of capacity in existing infrastructure and to\nmodifications of such infrastructure which enable the d evelopment of new sources of gas supply. \"\nThis is referred to as the \"infrastructure exemption measure.\" Claim 21 challenges the EU's failure\nto administer the infrastructure exemption measure in a uniform, impartial and reasonable\nmanner, based on specific instances of application of the measure by the Commission, in violation\nof Article X:3(a).\n31. The Commission has issued exemption decisions regarding the OPAL, Gazelle, TAP, Nabucco\nand Poseidon pipelines, in addition to various exemptions for LNG f acilities, including Dragon and\nSouth Hook in the UK, regarding which no material restrictions were imposed. The infrastructure\nexemption measure requires NRAs and the Commission, in every case, to examine a series of five\n\"conditions\" or criteria. It is i n evaluating each individual exemption application based on these\ncriteria that the Commission administers, applies or puts the measure into practical effect. Russia\ndemonstrated that, in administering the measure, the Commission did so in a non-uniform, partial\nand unreasonable manner, in violation of Article X:3(a). The Commission failed to justify imposing\nnot only a 50% capacity cap on the OPAL exemption, but also a 3 bcm/year gas release\nrequirement, while imposing vague and much less restrictive cond itions on the TAP, Nabucco and\n\n- B-23 -\n\nPoseidon exemptions and no conditions whatsoever on the exemptions for LNG facilities such as\nDragon and South Hook in the UK. Indeed, as Russia explained, the Commission 's already flawed\nrationale for imposing the OPAL rest rictions disappeared after the Gazelle pipeline was completed\nand all of the gas being transported via OPAL was required to be transited across the Czech\nRepublic, back into Germany and onwards to France and elsewhere. Yet the EU refused to\nconsider rescinding or modifying the restrictions on the volume of gas that may be imported and\ntransported over OPAL.\nXI. THE INFRASTRUCTURE EXEMPTION MEASURE (CLAIMS 22-25)\n32. In Claims 22 through 24, Russia challenges specific instances of application by the\nCommission of the infrastructure exemption measure, in violation of GATT Article I:1. Russia\ndemonstrated in Claim 22 that the German NRA narrowly interpreted the term \"interconnector\" to\njustify denying the NEL exemption. The Commission later adopted a broader interpretation of this\nterm to grant the Gazelle and TAP exemptions. Thus, the operators of TAP will be able to import,\ntransport and sell significant volumes of Azeri gas on the EU market exempt from the otherwise\napplicable unbundling, TPA and tariff re gulation requirements. Meanwhile, 100% of the imported\nRussian natural gas that is transported via NEL and sold on the EU market is subject to the TPA\nand tariff regulation requirements. Claim 23 challenges implementation of the measure to impose\nmore restrictive conditions on OPAL than on these other pipelines. Once again, imported Russian\ngas is denied an advantage granted to Azeri and possibly other third -country gas that will be\ntransported over TAP, or that would have been transported over Nabucco a nd Poseidon. Claim 24\nchallenges implementation of the measure to deny the NEL exemption and impose more restrictive\nconditions on OPAL, while granting exemptions to various LNG facilities, including Dragon and\nSouth Hook in the UK, with no conditions wha tsoever. In each instance, the EU violated its\nobligations under Article I:1 of the GATT 1994. Similarly, Russia demonstrated in Claim 25 that,\nby denying the NEL exemption and imposing more restrictive conditions on OPAL, the EU 's\nimplementation of the measure provided de facto less favourable treatment to Russian services\nand service suppliers than like services and service suppliers of other Members, in violation of\nArticle II:1.\nXII. THE INFRASTRUCTURE EXEMPTION MEASURE AND UPN EXEMPTION (CLAIM 26)\n33. Claim 26 is predicated on the fact that, in contrast with the EU 's treatment of the NEL and\nOPAL interconnectors, the Directive provides an \"as such \" exemption to upstream pipeline\nnetworks. Specifically, Russia challenges implementation of the infras tructure exemption measure\nto deny the NEL exemption and impose restrictive conditions on the OPAL exemption, while the\nDirective automatically exempts UPNs from unbundling, TPA and tariff regulation requirements.\nThis differential treatment results in de facto discrimination, by providing an advantage to\nNorwegian-origin natural gas, which is not accorded immediately and unconditionally to like\nRussian gas transported and sold on the EU market through NEL and OPAL, in violation of GATT\nArticle I:1.\nXIII. QUANTITATIVE RESTRICTIONS: GATT ARTICLE XI:1 (CLAIM 28)\n34. GATT Article XI:1 provides for a general prohibition on quantitative restrictions, which is\nintended to be \"comprehensive\" and apply to \"all measures instituted or maintained\" by a Member,\nother than duties or taxes, which prohibit or restrict the import or export of products. In Claim 28,\nRussia challenges the restrictive conditions imposed by the Commission on the OPAL exemption as\ninstituting a quantitative restriction on the volume of Russia n gas imported into the EU. Russia\ndemonstrated the manner in which the 50% capacity cap and 3 bcm/year gas release program\nimposed as conditions on the OPAL exemption each constitute separate quantitative restrictions in\nviolation of Article XI:1. Of OP AL's total capacity, 32 bcm/year is subject to the exemption and\nrequired to be dedicated for transport south to the Czech Republic at the Brandov exit point.\nBecause Gazprom is effectively prohibited from controlling more than 16 bcm of that total capac ity\nand gas transported on OPAL, its ability to import Russian gas via Nord Stream for transport over\nOPAL is also restricted by that amount – 16 bcm/year. The EU also lacks any basis to argue that\nGazprom can exceed the capacity cap by implementing the r equired 3 bcm/year gas release\nprogram, which actually institutes another quantitative restriction on the importation of Russian\ngas. To exceed the capacity cap, not only must Gazprom \"release\" or sell 3 bcm of gas per year at\nartificially imposed prices, it must also implement a \"capacity release program \" to \"ensure the\navailability of corresponding transport capacity\". Therefore, Gazprom must unconditionally release\n\n- B-24 -\n\nor forego the right to transport 3 bcm/year of imported Russian gas over OPAL.\nXIV. THE TEN-E MEASURE (CLAIMS 29-31)\n35. The TEN -E Regulation and its later amendments are referred to together as the \"TEN-E\nMeasure.\" The TEN -E Measure, together with its underlying policy objective of enhancing\ndiversification and security of supply, is desig ned to treat Russian services and service suppliers\nless favourably than those of other countries. Equally, Russian natural gas is accorded less\nfavourable treatment than like domestic and third -country gas. This is evident from the definition\nof the \"Priority Gas Corridors \", including the requirement to reduce dependency on \"a single\nsupplier\" in the TEN -E Regulation. This \"single supplier \" is identified as Russia. Creation of the\npriority corridors was aimed at reducing the role of Russian services and service suppliers and\ndecreasing competitive opportunities for Russian natural gas. The totality of facts surrounding the\nTEN-E Measure reveals that its design, structure and expected operation are such that projects\nthat would be operated by non-Russian service suppliers and which would facilitate the importation\nof non-Russian natural gas are to be preferred.\n36. This is also evident from the selection criteria used to determine which projects would be\ndesignated as PCIs. Annex III.1 of the TEN -E Regul ation sets out Working Group rules. The\nTerms of Reference of the Ad Hoc Working Group for North -South Gas Interconnections in Central-\nEastern (CEE) and South -Eastern Europe (SEE) are particularly instructive. That Working Group\nagreed on the weighting o f gas -specific criteria and assessed the proposed projects in light of\nthese criteria.\n37. Criteria such as diversification, as specified by the sub -criteria \"diversification of external\nsupply\" and \"lower import dependence \", were given substantial weigh t in respect of the project\nprioritization. In terms of category weighting, \"physical availability\" was given a weight of 0.25/1;\n\"promotion of the internal energy market \" was given a weight of 0.31/1; and \"diversification\" was\ngiven a weight of 0.44/1. This evidence should be sufficient for the Panel to find the existence of a\npolicy aimed at replacing Russian natural gas imports with domestic production. The implications\nof these weighting criteria become even more apparent upon examining the application for PCI\ndesignation from the South Stream project companies. The EU section of the South Stream\npipeline project was one of 25 projects that were scored by the Working Group. It was denied PCI\ndesignation after receiving by far the lowest score of all projects – 0.16.\n38. This is not surprising. South Stream was intended to transport Russian natural gas from\nRussia via the Black Sea to Bulgaria and other destinations in the EU. Clearly, this project,\npromoted by the Russian service supplier Gazprom, could never have obtained a high PCI-score as\nit would have led to opening a new route for Russian gas, as was directly acknowledged by the EU\nCommissioner for Energy.\n39. PCI natural gas benefits from the infrastructure through which it is transmitte d, or in which\nit is stored, receiving substantial financial support from the CEF fund. The same applies to the\nservices supplied through PCI -designated projects and the service suppliers supplying these\nservices. PCIs have access to financial support tota ling €5.35 billion. Among the projects selected\nunder the 2014 Energy Call were PCIs 8.2.3 (Capacity Enhancement of the Klaipeda -Kiemenai\npipeline in Lithuania) and 8.5 (Gas Interconnection Poland-Lithuania; or GIPL). PCI 8.2.3 is eligible\nfor a maximum of €27,595,500. This provides the project with a substantial advantage as\ncompared to projects that did not receive PCI designation. The same applies to PCI 8.5, albeit in\neven greater numbers. The construction of this PCI is eligible for a maximum of €295,386,600.\n40. GATS Article II:1 – By laying down inherently biased criter ia for PCI-designation, the TEN-E\nmeasure modifies the conditions of competition to the detriment of Russian services and service\nsuppliers. Projects that are likely to reduce reliance on Russian natural gas are eligible for PCI -\ndesignation; projects that are unlikely to do so, are not. Inevitably, private actors will choose to\ninvest in projects that are likely to benefit from the more favourable administrative, regulatory and\nfinancial treatment. This modification of the conditions of competition to the detriment of like\nRussian services and service suppliers amounts to less favourable treatment being accorded to\nthese services and service suppliers, in violation of Article II:1 of the GATS.\n41. GATT Articles III:4 and I:1 – The modification of the conditions of competition to the\n\n- B-25 -\n\ndetriment of Russian natural gas arises because of the sole fact that the PCI -designation system is\nin place. The system creates an incentive for TSOs and operators to invest in projects that are not\naimed at maintaining the same – or an increased – level of Russian natural gas imports. These\nprojects will benefit from more favourable regulatory, administrative and financial treatment. This\nsystem directly impacts the decision of operators as to where they source their natural gas imports\nfrom and as to which projects they are likely to invest in. A decision to source natural gas from\nRussia becomes increasingly unlikely as projects that would make this possi ble will not benefit\nfrom the more favourable regulatory treatment.\n42. Natural gas transported through designated PCIs will be able to be marketed at reduced\ncosts as compared to non-PCI natural gas, because of the more favourable regulatory regime that\nis applicable to PCIs. PCI natural gas thus directly benefits from the reduced regulatory burden\nthat is placed on certain designated projects. The criteria used to allocate the more favourable\ntreatment give effect to the EU's wish to reduce reliance on Russian gas by favouring projects that\n\"enhance diversification\" and do not contribute to maintaining or improving the position of Russian\nnatural gas on the EU market. As a result of these criteria, an incentive is created to develop and\nsubmit projects for PCI designation that are not intended to promote Russian natural gas.\n43. Clearly, the substantial amounts of government support reduce the costs of operators and\npromoters of these PCIs, which enables them to reduce the price of the gas being sold. I nevitably,\nthis modifies the conditions of competition to the detriment of imported Russian natural gas, which\nis transported using facilities that are not eligible for this type of government support. This\ntreatment is inconsistent with the national treat ment obligation of Article III:4 and Article I:1 of\nthe GATT 1994.\nXV. CONCLUSION\n44. For the forgoing reasons, the Russia Federation requests the Panel to recommend that the\nEuropean Union bring each of its nonconforming measures into conformity with its obligations\nunder the relevant provisions of the GATS and GATT 1994.\n\n- B-26 -\n\nANNEX B-3\nFIRST PART OF THE EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION\n1. INTRODUCTION\n1. In this integrated executive summary, the European Union ( \"EU\") summarizes the facts and\narguments presented to the Panel in its first written submission, its opening and closing oral\nstatements at the first substantive meeting and its responses to the Panel 's and Russia 's\nquestions.\n2. FACTUAL BACKGROUND AND THE MEASURES AT ISSUE\n2. In 2009, the EU accepted adopted Directive 2009/73/EC, concerning common rules for the\ninternal market in natural gas (\"the Directive\") as part of its Third Energy Package. The Directive\nincludes unbundling requirements, third country certification requirements and provides for certain\ninfrastructure exemptions. In addition, the EU adopted, in 2013, Regulation 347/2013 (\"the\nRegulation\" or the \"TEN – E Regulation\") on guidelines for trans -European energy infrastructure,\nwhich allows for the designation of Projects of Common Interest (\"PCIs\"). These specificities of the\nDirective and the Regulation are at the basis of Russia's claims before the Panel and will be\nexamined in the sections below.\n3. UNBUNDLING\n3. The unbundling requirement in EU energy law has d eveloped since 1998. The Directive\napplies it with regard to transmission system operators (\"TSO\") and producers/suppliers of natural\ngas, aiming at eliminating conflicts of interest, ensuring independence and transparency of TSOs\nand access to transmissio n networks for all users, producers and suppliers, thus furthering the\nobjectives of competition, efficient market functioning and security of supply. The principle has\ngrown to demand greater legal and functional independence of TSOs, with the Directive n ow\ndemanding effective unbundling of transmission activities from production and supply activities.\nThree models of unbundling are set out – ownership unbundling, independent system operator\n(\"ISO\"), and independent transmission operator (\"ITO\").\n4. Ownership unbundling demands that the TSO owns the network which it operates and\nprohibits the TSO from being part in a vertically integrated undertaking (\"VIU\"), leading to a full\nstructural separation between transmission and production and/or supply activiti es. Further\nrequirements with regard to influence and control are imposed to ensure the independence of the\nTSO. Nevertheless, passive financial rights of minority shareholders are not affected by the\nownership unbundling, provided no voting or appointment rights are exercised.\n5. The ownership unbundling model must be transposed by Member States in their national\nlegal orders. They have the possibility to also transpose the ITO and/or ISO unbundling models, if\nat the entry into force of the Directive – 3 September 2009 – their transmission system existed\nand belonged to a VIU. These alternative models allow for the TSO or the transmission system\nowner to be part of a VIU, i.e. being a subsidiary of the VIU or part of the group to which the VIU\nbelongs, whi le providing for detailed behavioural and organisational requirements for\nindependence, management, investment and network development. They are strictly and\npermanently controlled by a national regulatory authority (\"NRA\"). The TSO may choose which\nunbundling model to apply amongst those transposed into its relevant national law, and subject to\na \"certification process\" by a NRA. The unbundling requirement applies to all TSOs in the EU,\nirrespective of ownership or control of the networks or the operators, as well as to all producers or\nsuppliers of gas, irrespective of their nationality.\n6. Russia's claims with regard to unbundling focus on the implementation of the Directive in\nCroatian, Hungarian and Lithuanian national laws.\n\n- B-27 -\n\n3.1. RUSSIA'S CLAIM OF A VIOLATION OF ARTICLE XVI GATS\n7. According to Russia, the unbundling requirement and its implementation in Croatian,\nHungarian and Lithuanian laws violates the market access obligations for pipeline transport\nservices in these Member States, or more specif ically Article XVI:1, which requires that a WTO\nMember accord to services and service suppliers of any other Member treatment no less\nfavourable than that provided in their schedules. Russia believes that the unbundling requirement\nis a prohibited market access limitation, as set out in Article XVI:2(e), (a) and (f) of the GATS.\n8. Since Article XVI GATS applies only where the WTO Member concerned has undertaken a\ncommitment for the service sector as well as the specific mode of supply in question, subject to\nthe terms in its Schedule, the EU points out that such commitments have not been undertaken by\nany of its member States (\"MS\"), as well as that, of the three states concerned, only Croatia has\nmade any market access commitments with regard to the mode of supply in question (mode 1).\nFurthermore, the EU submits that Russia has failed to establish its prima facie case by not\nspecifying the mode of supply at stake, nor how the unbundling requirement would restrict market\naccess.\n9. As regard the definitio n of the sector \"pipeline transport services\", the EU argues that it\nshould not be read as wide as Russia's definition seems to suggest (i.e. to include the sale of gas\nas well as LNG services). Recalling the rules of interpretation of Article 32 of the Vi enna\nConvention of the Law of Treaties, as well as the Appellate Body's guidance ( US – Gambling), the\nEU pleads that the term does not include the supply, i.e. the sale, of natural gas in its definition,\nbut, instead, should be read as a specific service t hat transports a good from one point to another\nvie a line of joined pipes. It must, therefore, be distinguished from the production, distribution and\nsupply of natural gas, as well as from other methods of gas transportation and processing.\nInstead, gas and its supply, i.e. sale, should be considered as a good and, therefore, beyond the\nscope of the GATS (Panel – Canada – Feed-In Tariff Program ). Given the foregoing, any\ncommitment that may have been made by Croatia in this regard would be intended to cove r\nmerely the transportation of natural gas as a service.\n10. Should the Panel consider that the commitments made by the MS in question under the\nGATS apply to the sector and activities at hand, the EU argues that the measures challenged are\nnot impermissible \"limitations\" within the meaning of Article XVI:2 GATS. The list of limitations of\nmarket access which is prohibited under Article XVI:2 GATS is exhaustive, as confirmed by panel\ninterpretations and the Scheduling Guidelines. Therefore, Russia bears th e burden to demonstrate\nthat the challenged measure corresponds to one of the types of measures listed in the raised sub -\nparagraphs (e), (a) and (f) of Article XVI:2.\n3.1.1. THE INTERPRETATION AN D APPLICATION OF ART ICLE XVI :2(E) GATS WITH REGARD TO THE\nCONTESTED MEASURE\n11. Sub-paragraph (e) prohibits measures that restrict, require or prohibit specific types of legal\nentities or joint ventures through which a service supplier may supply a service. Interpreting the\nterm in the context of the WTO, the EU ar gues that Article XVI:2(e) does not cover measures that\ndetermine or restrict how the legal entity must be formed, organized, structured, how it must\nconduct its business, or that determine its characteristics, but only forbids measures that require\nor pro hibit the use of a specific legal entity for the provision of services. For this reason, the\nunbundling requirement does not fall within the scope of sub -paragraph (e). The models only\nimpose requirements pertaining to the characteristics of that legal ent ity, and in particular the\nactivities (gas production and supply, on the one hand, and transmission, on the other hand) that\nmust not be combined. This applies both to the Directive, as well as to its implementation in\nCroatian, Hungarian and Lithuanian laws.\n12. For the foregoing reasons, the unbundling requirement, as implemented in the laws of\nCroatia, Hungary and Lithuania, is not a measure that falls within the scope of Article XVI:2(e)\nGATS and does not violate any market access commitments.\n\n- B-28 -\n\n3.1.2. THE INTERPRETATION AN D APPLICATION OF ART ICLE XVI :2(A) GATS WITH REGARD TO THE\nCONTESTED MEASURE\n13. Article XVI:2(a) GATS prohibits a market access limitation on the number of service\nsuppliers allowed on a market. Relying on the interpretations of the article by the Appellate Body\nand panels, as well as the Scheduling Guidelines, the EU argues that the scope of the article is\nlimited to measures that impose essentially quantitative maximum limitations on the number of\nservice suppliers of a given market . Therefore, measures that impose a qualitative criteria or\nminimum requirements for services and service suppliers do not constitute market access\nlimitations, as prohibited under Article XVI:3(a) GATS. In such a case, the imposition of minimum\nrequirements, including the unbundling requirement, for TSO certification in the EU does not\namount to a quantitative limitation.\n14. The contested measure does not, in any way, limit the quantity of TSOs in a given market,\ndespite the current situation of having o ne TSO and one natural gas supplier in Croatia and\nLithuania. There are no legal restrictions, nor exclusive rights granted, to prevent other entities,\nregardless of the nationality of their ownership, from operating a transmission network as a TSO in\neither country. Therefore, the unbundling requirement does not violate Article XVI:2(a) GATS.\n3.1.3. THE INTERPRETATION AND APPLICATION OF ARTICLE XVI:2(F) GATS WITH REGARD TO THE C ONTESTED\nMEASURE\n15. Article XVI:2(f) GATS prohibits any quantitative limitatio ns on the participation of foreign\ncapital in the financing of service suppliers. Pursuant to panel interpretations, these prohibited\nlimitations must be expressed in terms of a maximum percentage limit on foreign shareholding, or\na maximum percentage limi t of the total value of individual or aggregate foreign investment.\nQuantitative maximum restrictions are prohibited, which specifically target foreign investment and\nrequire discriminatory treatment. Sub -paragraph (f) does not cover measures that apply wi thout\ndistinction to both domestic and foreign investment. Since the unbundling requirement, as\ntransposed in Croatian, Hungarian and Lithuanian laws, is a non -discriminatory measure and\napplies to all potential investors, both domestic and foreign, the EU believes it does not fall under\nsub-paragraph (f).\n3.1.4. JUSTIFICATION UNDER ARTICLES XIV(A) AND XIV(C) OF THE GATS\n16. Should the Panel deem the unbundling measures in Croatia's, Hungary's and Lithuania's\ndomestic laws to be violations of sub -paragraphs (a), (e) and (f) of Article XVI:2 ( quod non), the\nEU argues that the unbundling requirement is nevertheless justified under Article XIV(a) and (c) of\nthe GATS.\n17. The justification of a measure under Article XIV must be determined based on (i) the\nprovisional justification under one of the sub -paragraphs of Article XIV GATS – here we will\nexamine in turn sub -paragraph (a) and (c), and (ii) the compliance of the measure with the\nchapeau of Article XIV.\n3.1.4.1. JUSTIFICATION UNDER ARTICLE XIV(A) OF THE GATS\n18. The measure at hand is justified under Article XIV(a) GATS, which covers measures\nnecessary to maintain the public order. Relying on the interpretations by the Appellate Body and\nby the panel in US – Gambling, The EU has utilized its freedom to se t its policy objectives by\ntaking measures to ensure efficiency gains, competitive prices, a higher standard of service,\nsecurity of supply and sustainability. This effectively prevents a \"genuine and sufficiently serious\nthreat\" to competition in the energy sector and to the maintenance of public order.\n19. The maintenance and fostering of competition is a fundamental interest of EU society, and\nwell reflected in EU law and policy, including in the European energy policy with regard to natural\ngas and ele ctricity. It is directed at achieving energy efficiency and competitiveness, security of\nsupply and sustainability. Competition in the energy market is a fundamental interest of the EU\nand falls within the scope of its public order. Furthermore, incomplete unbundling requirements,\nunder the predecessors of the Directive, still constitute a threat to the competition in the energy\nsector, as EU experience has established. Therefore, the unbundling requirement is necessary to\n\n- B-29 -\n\neffectively ensure fair competition and non-discriminatory access to and quality of the transmission\nnetwork.\n20. Viewing \"necessity\" in light of the importance of the pursued objective, the contribution of\nthe measure towards the attainment of the objective and the restrictiveness on int ernational\ncommerce, the EU has not adopted measures that are more restrictive than necessary. This is\nsupported by the historical experience and development of the unbundling requirement in EU law\nand by the lack of reasonably available less restrictive a lternatives that would achieve the\nobjective in question.\n3.1.4.2. JUSTIFICATION UNDER ARTICLE XIV(C) GATS\n21. Article XIV(c) GATS provides an exception for measures \"necessary to secure compliance\nwith laws or regulations which are not inconsistent with the provisions of this Agreement\". First,\nthe unbundling requirement in the Directive and in the Croatian, Hungarian and Lithuanian\nmeasures in question are necessary to secure compliance with that Article 32, which imposes third\nparty access obligations t o the transmission system. Furthermore, Article 32 is not in itself\ninconsistent with WTO law, because its goal is to enable competition on the natural gas market,\nwhich is in conformity with WTO's objective of \"expanding the production of and trade in goo ds\nand services\" and GATS' goal to achieve \"progressively higher levels of libera lization of trade in\nservices\".\n22. Finally, there are no less restrictive alternatives available to ensure third party access to\ntransmission networks, as evidenced by the lo ng history of development of the unbundling\nrequirement. For these reasons, the measures are also justified under Article XIV(c) GATS.\n3.1.4.3. JUSTIFICATION UNDER THE CHAPEAU OF ARTICLE XIV OF THE GATS\n23. The chapeau of Article XIV GATS prohibits any a rbitrary or unjustifiable discrimination\nbetween countries in which the same conditions prevail, as well as the imposition of disguised\nrestrictions on international trade. The unbundling requirement applies indistinctly to all pipeline\ntransmission servic e suppliers, treating them equally where like conditions prevail. There is,\ntherefore, no arbitrary or unjustifiable discrimination. Further, the requirement does not involve\nany \"concealed or unannounced\" restrictions on international trade, but genuinely contributes to\nensuring their objective.\n3.2. RUSSIA'S CLAIM THAT THE PUB LIC BODY SPECIFICATI ON IN ARTICLE 9(6) OF DIRECTIVE 2009/73/EC\nVIOLATES DE JURE OR DE FACTO THE NATIONAL TREATMENT OBLIGATION IN ARTICLE XVII OF THE GATS\n24. Article 9(6) of the Dire ctive provides for non -discrimination between public and private\nbodies, whereby two separate public bodies are allowed to control the production and supply\nactivities, on the one hand, and the transmission services, on the other, if it can be demonstrated\nthat the ownership unbundling requirement is complied with. The requirement of ownership\nunbundling, therefore, applies to public bodies as well, subject to national regulatory oversight and\ncontinued compliance supervision and a Commission opinion. Arti cle 9(6) applies regardless of\nwhether or not the two public bodies' activities operate in the same or different countries, similar\nto the application of the unbundling requirement to private bodies. There is no limitation on the\nrange of Russian public bodies that could make use of this provision.\n25. Article 9(6), as implemented in the relevant national laws, does not violate Article XVII\nGATS, since it does not provide for either de jure, nor de facto discrimination with regard to its\ntreatment of foreig n and domestic public bodies. The text of Article 9(6) allows for a TSO,\ncontrolled by a third country public body, to unbundle, provided all requirements are fulfilled and\nindependence between the third-country public bodies is established. There is no di stinction based\non origin in the laws and, therefore, there is no de jure discrimination.\n26. There is also no de facto discrimination resulting from Article 9(6), since the conditions of\ncompetition are not modified to the detriment of like imported serv ices or third country service\nsuppliers. All service suppliers and operators have the right to seek the application of Article 9(6)\nregardless of their nationality on equal competitive positions. The effects of the measure are not\ndiscriminatory. Furthermore, Article 9(6) extends the unbundling requirements to public bodies,\n\n- B-30 -\n\nensuring the equality between public and private bodies and the TSOs controlled by them. Russia\nhas failed to show that the conditions of competition are modified to the detriment of no n-\ndomestic suppliers of pipeline transmission services.\n3.2.1. JUSTIFICATION UNDER ARTICLE XIV(C) OF THE GATS\n27. If the Panel finds that Article 9(6) of the Directive and its implementation in domestic laws\nviolate Article XVII of the GATS ( quod non ), th e EU claims that the measure is \"necessary to\nsecure compliance with laws and regulations which are not inconsistent with the provisions of [the\nGATS]\", and as such is justified under Article XIV(c) GATS. Article 9(6) of the Directive requires\nnon-discrimination between public and private bodies with regards to their treatment in law.\nFurthermore, Article 9 of the Directive is not inconsistent with GATS, as it ensures independence\nand separation between the separate transmission and production/supply functi ons, under a\nregulatory supervision. It is, therefore, justified under Article XVI(c) GATS.\n3.3. RUSSIA'S CLAIM THAT THE UNB UNDLING MEASURE VIOL ATES THE MOST FAVOUR ED NATION OBLIGATION IN\nARTICLE II:1 OF THE GATS\n28. The most favoured nation (MFN) obligation requires that the measures in question fall within\nthe scope of the GATS, that the services or service suppliers are \"like\", and that the measures\ntreat services and suppliers of one country less favourably than from other WTO Members,\nmeaning that it modifies the conditions of competition to the detriment of foreign services or\nservice suppliers.\n29. While the EU agrees that the contested measure falls within the broad scope of GATS, as\nwell as that Russian and other third country suppliers of pipelin e transport services are \"like\"\nsuppliers, it disagrees that LNG services and service suppliers would be \"like\" pipeline transport\nservices and service suppliers. LNG services involve the liquefaction of natural gas, the\nimportation, offloading and re-gasification of LNG and do not involve the transport of gas from one\nplace to another. Both services differ with regard to their characteristics, consumer tastes, end -\nuse and UN Central Product Classification. Therefore, they are not \"like\".\n30. Regarding the MFN obligation, the EU believes that the Directive does not provide for \"less\nfavourable treatment\" of Russian service suppliers (i.e. Russian TSOs) than of other third\ncountries' TSOs. First, the Directive does not make a distinction on the basis of ori gin of the TSO,\nits unbundling requirement applies indiscriminately to both EU and foreign service providers.\n31. Second, contrary to Russia's claim, MS are obliged to transpose the ownership unbundling\ninto their national laws, but may opt to transpose t he ITO and ISO models as well, only when\ncertain factual circumstances are fulfilled, as explained above. The origin of the service supplier is\nnot considered at all.\n32. Third, a Russian service provider is subject to the same unbundling requirements and\nsubject to the same available models in a given MS as any other service provider from another\nthird country in that same MS. Since it is each individual MS that implements the unbundling\nrequirement, the MFN obligation must be examined under the domestic laws of each MS\nseparately. Depending on the regulatory jurisdiction from which the measure in question that\ndetermines the treatment emanates, the MFN obligation would apply throughout the EU or in each\nindividual Member State. The MFN treatment must be a ssessed in the EU as a whole in cases\nwhere the EU implements a fully harmonized legal framework across all MS, in particular through a\nRegulation. The treatment must be assessed in each individual Member State separately when the\nmeasure at issue is in fa ct the national implementation in a Member State of a requirement in a\nDirective that leaves Member States certain options for implementing the requirement.\n33. Russia seeks compare its own treatment in one Member State with a third country's\ntreatment i n another Member State. Such approach is manifestly incorrect. Applying the MFN\nobligation to the EU cannot mean that a measure in one Member State regulating trade in services\nhas to be exactly the same as the measures adopted in other Member States. The Directive nor\nthe Member State measures do not make a distinction based on the origin of the service supplier.\nTherefore, there is no de jure violation of the EU's MFN obligation under Article II:2.\n\n- B-31 -\n\n34. In the event that the Panel disagrees with the EU a nd allows a comparison of treatments\nacross Member States, the EU argues that the Directive does not constitute a de facto\ndiscrimination. Considering the \"design, structure, and expected operation\" of the Directive, there\nis no evidence of a differential treatment between Russian pipeline transmission service suppliers\nand all \"like\" service suppliers of any other origin, both potential and existing. The requirements of\nthe Directive apply to all service suppliers that operate in the EU, regardless of thei r origin. The\nchoice of unbundling models in each MS does not affect Russian service providers to a greater\nextent than it does other third country service providers. Finally, there is no evidence that the ISO\nand the ITO unbundling models are \"less restri ctive\" than ownership unbundling. All three models\naim to enhance the competitive conditions on the market and therefore affect the competition\namong market players to the same degree, albeit choosing different avenues. Furthermore, the\nISO and the ITO unb undling models may be more restrictive than the ownership unbundling with\nregard to their behavioural and organisational requirements, as well as the constant regulatory\noversight implied.\n35. First, with regard to the ownership of the network, irrespecti ve of the unbundling model\nchosen, effective unbundling of a VIU will have to be ensured. The \"advantages\" claimed by Russia\nfor a VIU in the ISO and the ITO models, through influence over the TSO, would be blatant abuses\nof the law, contrary to its purpose.\n36. Second, regarding alleged financial benefits for the VIU, effective unbundling demands\nfinancial separation of the TSO and the producer/supplier of natural gas and this is enforced by\nnational regulators. Any financial benefits in a VIU structure would take the form of dividends from\nshares, which may happen under all three models of unbundling.\n37. Third, Russia is mistaken in believing that the supervisory body under the ITO model would\nallow any influence to be exerted by the VIU over the TSO. T he representation of the VIU through\nthe Supervisory Body is limited to specific decisions, such as those which may have a significant\nimpact on the value of the assets of the shareholders of the TSO, and is subject to a number of\nregulatory requirements. The separation between the production and supply interests in the VIU\nand the operation of the network is ensured and monitored by the NRAs and enforced through\nfinancial penalties.\n38. In conclusion, there is no evidence that the ISO and ITO unbundling mo dels are \"less\nrestrictive\" than ownership unbundling, that the unbundling requirement of the Directive would\nmodify the competition conditions to the detriment of Russian service suppliers, nor that the ISO\nand ITO models are not available to Russian serv ice suppliers. Russian service suppliers are\ntreated equally to all other third country service suppliers in each MS in which they are active.\nHence, there is no de facto discrimination in violation of Article II:1 GATS.\n3.4. RUSSIA'S CLAIM UNDER ARTICLE III:4 OF THE GATT 1994\n39. Russia claims that the EU has violated its national treatment (\"NT\") obligation in Article III:4\nof the GATT 1994 because TSOs in certain MS have been allowed to adopt the ISO and/or ITO\nunbundling models, while Russian -origin na tural gas would be transported and placed on the\nmarket in MS that require ownership unbundling. However, as stated above, the Directive does not\nallow MS to choose freely between the different unbundling models they may implement into their\nnational laws. Furthermore, as discussed above, the ITO and ISO models cannot be considered to\nbe \"less restrictive\" than ownership unbundling.\n40. The three elements of Article III:4 are examined in turn. First, with regard to the \"likeness\"\nof the products in questio n, while natural gas is a like product regardless of its origin, LNG is not\n\"like\" natural gas, as stated above. Second, with regard to the effect of the measure on the sale,\npurchase, transportation, distribution or use of the product, the Russia has not demonstrated that\nthe unbundling requirement affects the conditions of competition on the gas market and is\ntherefore within the scope of Article III:4. There cannot be any presumption that a measure that\nregulates characteristics of a service supplier (i. e. the unbundling requirement regulating\ntransmission pipeline service suppliers) affects trade in goods that are transported by the supplier.\n41. Third, with regard to any less favourable treatment being accorded to foreign products, the\nunbundling requi rement in the Directive does not distinguish on the basis of origin of the gas,\n\n- B-32 -\n\nneither with regard to the unbundling models to be adopted by the states, nor with regard to the\nmodels to be applied to specific undertakings. The TSOs choose themselves which models to\nfollow. The requirement, furthermore, does not modify the competitive opportunities of imported\ngas, since Russian gas is subject to the same legislation as domestic gas, including the\nrequirement of financial separation of the VIU and the TSO u nder any of the three unbundling\nmodels. Moreover, Russian gas, and gas of any origin, can freely enter the EU market, without its\ncompetitive position being affected by the unbundling requirement. Finally, Russia has failed to\nshow that any negative compe titive impact falls predominantly on Russian gas, the relevant test\nfor de facto discrimination.\n42. Finally, the NT obligation must be assessed and compared in each MS separately. Comparing\nthe models implemented in one Member State of the EU with another does not establish a violation\nof the NT obligation, as long as within a single MS all gas, regardless of its origin, is subject to the\nsame laws and treated equally. The relevant comparison is determined by the regulatory\njurisdiction from which the mea sure in question emanates, as argued above with regard to the\nEU's MFN obligation. In case of the unbundling requirement implemented in the Member States,\nthis is each individual Member State. When an examination is conducted, it is clear that there is no\ndifference in treatment between domestic and Russian gas. Even if it would be appropriate to\ncompare gas imported in certain Member States and domestic gas from other Member States,\nRussia still has not shown that Russian gas is predominantly imported in c ountries that impose\nownership unbundling only.\n3.5. RUSSIA'S CLAIM UNDER ARTICLE I:1 OF THE GATT 1994\n43. Russia further claims that the unbundling requirement is a violation of the MFN obligation of\nArticle I:1 of the GATT 1994, because Russian gas impo rted to the EU is treated less favourably\nthan other third countries' gas, since Russian gas is placed on the market in Member States that\nrequire ownership unbundling. However, several elements of Article I:1 of the GATT 1994 are not\nfulfilled.\n44. First, the unbundling measure does not fall within the s cope of Article I:1 of the GATT 1994,\nas it does not constitute a \"customs duty\" or \"charge\" nor the method of levying duties and\ncharges. It is, furthermore, not a \"rule[]\" or \"formalit[y] in connection w ith importation and\nexportation\". It is an obligation that applies without distinction to all pipeline service suppliers\ntransporting gas in the EU. In addition, the measure is not among those referred to in Article III:2\nand III:4 of the GATT 1994 since it does not concern any \"internal taxes or other internal charges\nof any kind\" and because it does not affect trade in gas on the domestic market, as argued above.\n45. Second, with regard to an \"advantage, favour, privilege or immunity\" being granted to ga s\nfrom other third countries, Russia is unable to demonstrate why and how the unbundling\nrequirement affects the competitive opportunities of imported gas from Russia. The Directive does\nnot impose any discriminatory requirements and does not distinguish g as on basis of its\nnationality.\n46. Furthermore, the MFN obligation of the GATT 1994 must be assessed in each MS\nindividually, rather than imposing a harmonized EU approach to all third countries. Russian gas is\ntreated equally to any other gas in that MS , subject to its national legislation and the unbundling\nmodel it has transposed therein. There is no discrimination against Russian -origin gas and any\nalleged advantage that is granted to imported gas from another origin is extended immediately\nand unconditionally to gas imported from Russia.\n47. To support this, the EU recalls that the unbundling requirement in the Directive is not de\nfacto discriminatory, since it cannot be shown to affect the competitive opportunities of imported\ngas and of Russian gas specifically. Finally, Russia's claims regarding Norwegian LNG imports in\nLithuania are not only unfounded, but were also not part of its panel request and must, therefore,\nfall beyond the Panel's terms of reference.\n\n- B-33 -\n\n3.6. RUSSIA'S CLAIM OF VIOLATION OF ARTICLE I:1 OF THE GATT 1994 BECAUSE THE DIRECTIVE WOULD ACCORD\nNATURAL GAS OF OTHER THIRD COUNTRIES IMPO RTED THROUGH LNG FACILITIES AND UPSTR EAM PIPELINE\nNETWORKS AN ADVANTAGE NOT EXTENDED TO RUSSIAN GAS\n48. Contrary to Russia's claim of an MFN obligation violation under the GATT with regard to LNG\nfacilities and upstream pipeline networks, the EU argues the differences in the unbundling\nrequirement and its application to LNG facilities is based on objective differences in their technical\nrole and function s in the gas market. They allow the transportation and storage of gas over long\ndistances where a pipeline is not or cannot be built. Additionally, the differences between LNG and\ngas have already been discussed above and are supplemented by differences in infrastructure,\nactivities and operating entities.\n49. The Directive sets out a comprehensive framework for LNG facilities, ensuring their\nindependent operation and protecting non -discriminatory and transparent third party access. The\nunbundling requirement, however, does not apply to LNG facilities, unless the LNG operator is also\na TSO, because, unlike transmission networks, LNG operators do not form natural monopolies but\ncompete with one another. Furthermore, LNG facilities require access to transmis sion networks,\nwhile TSOs do not. However, LNG facilities are subject to the third party access requirement.\nImportantly, the Directive defines the LNG infrastructure, but not the goods that are processed or\ncarried by that infrastructure.\n50. The EU doe s not consider LNG and natural gas to be \"like\" products, meaning that no\ndiscrimination can exist between the two as a result of the Directive. Additionally, the Directive\nand its provisions on LNG facilities do not distinguish in any way on the basis of the origin of the\ngas and do not provide any competitive advantage to gas from a certain origin. The Directive\nrequires third party access to all LNG facilities in the EU for all producers and suppliers of gas,\nirrespective of their country of origin, ensu ring equal competition opportunities for all gas in the\nEU.\n51. Moreover, the application of different rules to LNG operators and TSOs has not been shown\nto provide for competitive advantages to gas from a certain origin as opposed to gas from Russia.\nGas that passes through an LNG facility has exactly the same competitive opportunities as gas\ntransported through a transmission pipeline and Russian producers/suppliers are free to operate\nthrough LNG terminals in the EU. Furthermore, there are no limitatio ns in EU law on the\nparticipation of Russia or Russian companies in LNG facilities on EU territory or on the use of LNG\nfacilities in the EU for Russian gas.\n52. Finally, no supplier active on the EU market, irrespective of the origin of the supplier, can\nown or control the entry points of the transmission network in use. It is subject to the unbundling\nand third party access requirements in the Directive, ensuring competition on the EU gas market.\n53. Further, with regard to upstream pipelines, the EU str esses that transmission networks are\ndifferent from upstream pipelines. Upstream pipelines are used to convey natural gas from an oil\nor gas production field to a processing plant or terminal or final coastal landing terminal, therefore\nnot carrying processed gas. Since upstream pipelines are inherently linked to gas production fields,\nthey are tailored to a specific production field and its capacity. There is no risk of competitive\nforeclosure. In the exceptional situation where such a risk would exist, th e Directive prescribes\nmeasures to ensure access to upstream pipeline networks to natural gas undertakings and eligible\nconsumers, namely the third party access requirement.\n54. There is no unbundling requirement for upstream pipelines, since it is only n ecessary where\nseveral potentially competing parties participate, leading to risk of discriminatory access to the\nnetwork. Since upstream pipelines are tailored to the gas field's production capacity and may be\nshared between producers, this risk only exis ts at the moment the gas enters the transmission\nnetwork from an upstream pipeline. That is the point where the unbundling requirements apply.\n55. Hence, the treatment of upstream pipelines by the Directive is based on objective elements\nand ensures equal competitive opportunities for gas from different origins. The rules on upstream\npipelines apply without any distinction of the origin of the gas, nor the pipelines.\n\n- B-34 -\n\n56. Finally, Russia has not demonstrated how the treatment of upstream pipelines would l ead to\na competitive advantage granted to gas from other countries as compared to Russian gas,\nprovided third party access is guaranteed.\n3.7. RUSSIA'S CLAIM OF VIOLATION OF ARTICLE III:4 OF THE GATT 1994 BECAUSE THE DIRECTIVE WOULD\nACCORD RUSSIAN GAS TREA TMENT LESS FAVOURABL E THAN LIKE DOMESTIC GAS TRANSPORTED VIA UPSTREAM\nPIPELINE NETWORKS\n57. As argued above, the EU contends that the Directive does not make a distinction based on\nthe origin of gas and Russia cannot demonstrate that the application of the Directive to upstream\npipeline networks from EU countries is more favourable than that accorded to Russian upstream\nnetworks and that it modifies the conditions of competition to the detriment of imported gas.\n4. THIRD COUNTRY CERTIFICATION\n58. Directive 2009/73/EC requires that the undertakings providing gas transmission services\nmust be approved and designated as TSOs by the competent NRA. In turn, before an undertaking\nis designated as TSO, it must be certified in accordance with the requirements and p rocedures laid\ndown in Articles 10 and 11 of the Directive. Article 10 applies to all TSOs. Article 11 lays down\nspecial requirements and procedures which apply when either the TSO or the transmission system\nowner is controlled by a person or persons from a third country or third countries. Specifically,\nArticle 11(3) of the Directive provides that, in those cases, the certification is to be refused when it\nwould put at risk the security of energy supply (\"SoS\") of the Member State concerned and of the\nUnion.\n59. Russia claims that the SoS certification requirement stipulated in Article 11(3) of the\nDirective, as transposed into the national laws of Croatia, Hungary and Lithuania, is inconsistent\nwith Articles XVII, VI:1 and VI:5 GATS. Russia further claims that Article 11(3) of Directive\n2009/73/EC is, by itself, inconsistent with Article II:1 GATS and Article III:4 GATT.\n4.1. ARTICLE XVII OF THE GATS\n60. As regards Russia's claims under Article XVII GATS, the European Union submits that the\nSoS certification requirement is justified under the exception contained in Article XIV(a) GATS with\nregard to measures that are necessary to maintain public order.\n61. The policy objective pursued by the SoS certification requirement is to ensure the security of\nenergy supply in the European Union. That objective is a \"fundamental interest\" of the EU society,\nas reflected in EU's law and policies. Foreign control of TSOs and transmission system owners may\nin some circumstances pose \"genuine and sufficiently serious thr eats\" to such fundamental\ninterest. TSOs and other gas undertakings play a critical role in ensuring SoS within the European\nUnion. They can undermine the EU's SoS strategy either by failing to comply with the legal\nobligations imposed upon them with a vie w to ensuring SoS; or by acting in a manner that, while\nnot being contrary to EU law, is not in their own commercial interest, thereby undermining the\neffectiveness of the market based instruments on which the EU's SoS policies are based.\n62. Unlike the au thorities of the EU Member States, the governments of third countries may in\nsome cases have important economic and/or political interests which conflict with the EU's own\ninterest in ensuring SoS within the European Union. As a result, third -country governments may,\nunder certain circumstances, have strong incentives to take measures that have the effect of\nundermining the EU's SoS policies. In addition, a third -country government has at its disposal\nadequate means to require or induce the TSOs or transmis sion systems owners which it controls,\nor which are controlled by persons of that country, to act in manners that have the effect of\nundermining the EU's SoS. Moreover, where the TSO or the transmission system owner is\ncontrolled by the government or persons of a third country, the threats to SoS are compounded by\nthe fact that it may be more difficult for the EU authorities to enforce effectively the legal\nobligations imposed by EU law with a view to ensuring SoS.\n63. Article 11 of Directive 2009/73 addr esses the threats to SoS posed by the TSOs or the\ntransmission system owners controlled by persons of a third country in a direct, effective and fully\ncalibrated manner. It does so by putting in place a screening mechanism which allows the\n\n- B-35 -\n\ncompetent authorities to detect and assess in advance the potential risks to SoS posed specifically\nby each foreign controlled TSO or transmission system owner on the basis of a careful examination\nof all the relevant facts. Where warranted on the basis of that case -by-case assessment, the\ncompetent authorities may deny access to the transmission market for those operators that would\nput at risk the SoS or make it conditional upon compliance with appropriate safeguards, thereby\npreventing the risks to SoS from materialisin g. This preventive approach ensures a high level of\nprotection against the risks to SoS.\n64. The challenged measure is, nevertheless, much less restrictive than other possible\nalternatives, such as a complete ban on third -country TSOs. The competent autho rities must take\ninto account all specific facts and circumstances of each case, including any agreements concluded\nbetween the European Union or its Member States and the third country concerned which address\nthe issues of SoS. This case -by-case approach allows the competent authorities to limit the trade -\nrestrictive effects as much as possible, by refusing certification only in those specific instances\nwhere it has been positively established that a TSO poses a genuine risk to SoS. In practice, the\nchallenged measure has been applied so far in a manner that has caused only minimal trade\nrestrictions, if any at all. The competent authorities have received three applications for\ncertification under Article 11 of Directive 2009/73/EC, including one where the owner of the\ntransmission system was jointly owned and controlled by a Russian entity. None of the three\napplications has been refused on grounds of SoS and all the three TSOs concerned operate\ncurrently on the EU market.\n65. The SoS certification does n ot apply in respect of the certification of TSOs controlled by EU\npersons. But this difference in treatment is fully consistent with the objective pursued by the SoS\ncertification requirement. Indeed, the SoS certification requirement does not apply to TSO s\ncontrolled by EU persons because those TSOs do not pose comparable threats to the EU's SoS.\nFurthermore, the SoS certification requirement does not give rise to any discrimination between\nservices and service suppliers of third countries, let alone to \" unjustifiable or disguised\ndiscrimination\". The SoS certification requirement applies to all TSOs controlled by persons of any\nthird country, without any distinction being made among them, either directly or indirectly, on the\nbasis of their nationality.\n66. Russia also claims that, besides the SoS certification requirement, some allegedly additional\nrequirements included in the national laws of Hungary and Lithuania transposing the Directive\n2009/73/EC are also inconsistent with Article XVII GATS. However , these claims are either outside\nthe Panel's terms of reference and/or unfounded.\n4.2. ARTICLE II:1 OF THE GATS\n67. Russia claims further that Article 11 of Directive 2009/73/EC is inconsistent de jure with\nArticle II:1 GATS. According to Russia, it \"conditions a favourable security of supply assessment at\nleast in part on the existence of [a] pre -existing agreement\" concluded between the European\nUnion and/or the EU Member State concerned and the third country of origin of the certification\napplicant which addresses the issues of security of supply.\n68. This claim was not raised in the Panel request and is manifestly outside the Panel's terms of\nreference. In any event, this claim is unfounded in substance. The SoS requirement applies equally\nto all transmission system owners or TSOs which are controlled by a person or persons from any\nthird country or third countries, regardless of the third country of origin. Contrary to Russia's\nallegations, the certification under Article 11 of Directive 2009/73/EC is not conditional, even \"at\nleast in part\", upon the existence of an agreement addressing the issues of security of supply. The\nexistence of such an agreement is just one of the facts to be \"taken into account\" by the NRAs and\nthe Commission. It is neither n ecessary nor dispositive in itself. Furthermore, there is no basis in\nArticle 11 of the Directive for Russia's contention that only agreements such as the EEAA or the\nEnergy Community Treaty are to be \"taken into account\".\n69. Russia also claims, in the a lternative, that the European Union has acted inconsistently with\nArticle II:1 GATS because it has implemented the SoS certification requirement in a manner that,\nde facto, accords less favourable treatment to Gazprom, a Russian service supplier, than to certain\nTSOs controlled by persons of other countries. These claims are partly outside the Panel's terms of\nreference and, in any event, factually incorrect.\n\n- B-36 -\n\n4.3. ARTICLE III:4 OF THE GATT 1994\n70. Russia further claims that the \"third -country certificatio n measure\" is inconsistent with\nArticle III:4 GATT because it has, \"on its face\", a detrimental impact on the competitive\nopportunities of gas imported from other WTO Members vis -à-vis domestically produced EU gas.\nThis claim is manifestly outside the Pane l's terms of reference. The Panel request did not include\nany claim under Article III:4 GATT with respect to the \"third country certification measure\". In\nany event, Article 11 of Directive 2009/73/EC applies equally to all TSOs controlled by persons of\nthird countries, irrespective of whether the infrastructure operated by each of them is used to\ntransmit domestic and/or imported gas. Russia has not explained, let alone demonstrated, how the\nchallenged measure results in different and less favourable trea tment being accorded to imported\ngas. In practice the TSOs controlled by EU persons very often operate infrastructures that are used\nexclusively or mainly to transmit imported gas, including Russian gas. Conversely, TSOs controlled\nby persons of third countries operate infrastructures used in part to transmit EU gas.\n4.4. ARTICLE VI:1 OF THE GATS\n71. Russia claims that Croatia, Hungary and Lithuania act inconsistently with Article VI:1 GATS\nbecause they do not \"administer\" their respective national laws tr ansposing Article 11 of Directive\n2009/73/EC in a \"reasonable, objective and impartial manner\". None of the three EU Member\nStates concerned has taken yet any measure in order to \"administer\" its national laws transposing\nArticle 11 of the Directive. Ther e is no basis whatsoever, therefore, for Russia's claim that those\nthree EU Member States' \"administration\" of their national laws is not reasonable, objective or\nimpartial. In reality, the claim submitted by Russia is not addressed against the \"administration\" of\nmeasures of general application within the scope of Article VI:1. Instead, it is addressed against\nthe \"substantive content\" of those measures and, more precisely, against the SoS requirement.\nThat requirement, however, is not open to challenge \"as such\" under Article VI:1 GATS.\n72. In any event, the European Union takes issue with Russia's contention that the SoS\nrequirement is insufficiently precise, let alone so imprecise as to \"lead necessarily\" to an\nimpermissible \"administration\" of that req uirement. While Article 11 of Directive 2009/73/EC does\nnot define explicitly the term \"security of supply\", the European Union has pointed out a number of\nother elements that provide sufficient and adequate guidance for interpreting and applying that\nnotion.\n4.5. ARTICLE VI:5 OF THE GATS\n73. Russia further claims that the national laws of Croatia, Hungary and Lithuania transposing\nArticle 11 of Directive 2009/73/EC are inconsistent with Article VI:5 GATS.\n74. Article 11 of Directive 2009/73/EC and the tr ansposing measures enacted by Croatia,\nHungary and Lithuania are fully compliant with each of the three criteria listed in letters (a), (b)\nand (c) of Article VI:4. Therefore, those measures are consistent with Article VI:5, without it being\nnecessary to examine whether those measures could have been reasonably expected by Russia at\nthe time the commitments were made.\n75. First, contrary to Russia's contentions, the mere fact that the measures at issue do not\ndefine the notion of SoS does not mean, as just explained, that the SoS certification requirement\nis not an \"objective\" and \"transparent\" criterion within the meaning of Article VI:4 (a) GATS.\n76. Second, Russia's allegations under letter (b) of Article VI:4 are based on a fundamental\nmisunderstanding of the scope of that provision. The domestic regulation of services may pursue\nmany legitimate policy objectives in addition to ensuring the \"quality\" of the services. Letter (b) of\nArticle VI:4 applies only to the extent that a measure is aimed at ensurin g the \"quality\" of the\nservice. It does not apply where, as in the present case, a measure (or a requirement of a\nmeasure) pursues a different legitimate policy objective.\n77. Third, letter (c) of Article VI:4 applies to \"licensing procedures\", rather tha n to \"licensing\nrequirements\". Russia has not alleged, let alone proven, that the licensing procedures for the\nsubmission and processing of certification applications are in themselves restrictive. Instead,\nRussia limits itself to argue that the underlying substantive licensing requirement (i.e. the\n\n- B-37 -\n\nrequirement that the TSO does not put at risk SoS) is restrictive. This claim, therefore, falls plainly\noutside the scope of letter (c) of Article VI:4.\n5. INFRASTRUCTURE EXEMPTIONS\n78. Article 36 of the Direct ive allows for certain major new gas infrastructures to be exempted\nfor a defined period of time from some of the Directive obligations, including unbundling, third\nparty-access and regulated tariff requirements, provided that five cumulative conditions ar e met.\nOf all measures challenged, this is the only one providing an exemption from the unbundling,\nthird-party access and regulated tariff requirements. The procedure for administering that\nmeasure through the granting of individual exemption decisions is laid down in the same article.\nThe purpose of the exemptions is to incentivise investment in major new infrastructure, while\nstriking a balance with the objective of enhancing competition in the relevant markets. Each\nexemption must be proportionate and l imited to what is strictly necessary to realize the\ninfrastructure project. The assessment of exemption requests by NRAs takes place on a case -by-\ncase basis.\n5.1. THE ALLEGED EXEMPTION FOR UPSTREAM PIPELINE NETWORKS\n79. As explained above, upstream pipe line networks are not exempted from the requirements\nof the Directive, but these requirements are tailored to them, due to the specificities of upstream\npipeline networks. Therefore, the Directive does not provide for a blanket exemption from its rules\nto upstream pipeline networks.\n5.2. RUSSIA'S CLAIM UNDER ARTICLE X:3(A) OF THE GATT 1994\n80. The EU does not agree that it failed to administer the infrastructure exemption measure in a\nuniform, impartial and reasonable manner, therefore not complying with Article X:3(a) GATT 1994.\nArticle X:1 GATT 1994 applies to measures of general application that affect the sale, distribution\nand transportation of goods. However, exemptions are granted only upon request and are not\nnecessary for building or operating an infrastructure or the carrying out any of those activities. An\nindividual exemption is not an act of general application. Furthermore, it is unclear how the\napplication of the contested EU measure affects the sale, distribution or transportation of natural\ngas, since it creates an incentive for new infrastructure projects. Such effects are not of the kind\nthat the wording of Article X:1 GATT 1994 is inte nded to apprehend. Therefore, Article X:1 GATT\n1994 is not applicable to the facts of this dispute.\n81. If the Panel would believe that Article 36 of the Directive fa lls within the scope of Article X:1\nGATT 1994, the EU argues that Russia's Article X:3(a) violation claim is unfounded. Russia has not\nprovided appropriate evidence to support its claim. Exempti ons under Article 36 are granted on a\ncase-by-case basis, provided that five cumulative conditions are met. Variations and differences\namong individual exemption decisions are due to the specific characteristics of each infrastructure\nproject and of the ma rkets concerned. Case -by-case decision -making by national authorities\nentails complex economic and legal assessments and is not a mechanical operation. Nonetheless,\nthe requirement of \"uniformity\" in Article X:3(a) is fulfilled by the existence of a singl e set of\ncriteria, detailed procedural rules and a review by the Commission designed to ensure consistency\nat EU -level. Judicial review of decisions taken on exemption requests is also available in\naccordance with general principles.\n82. Importantly, Russia's attempt to have the individual exemption decision for OPAL reviewed\nunder Article X:3(a) GATT 1994 must fail, since that decision is not an act of general application\nfalling within the scope of that provision . The \"administration\" of the measure in Article 36 of the\nDirective should be assessed on the basis of the universe of all relevant individual decisions.\nFurthermore, Russia 's assertion that the most restrictive conditions were those imposed on the\nOPAL exemption is not supported by the facts.\n\n- B-38 -\n\n5.3. RUSSIA'S CLAIM UNDER ARTICLE I:1 OF THE GATT 1994\n83. Having regard to the requirements of Article I:1 GATT 1994, the EU argues that the\ninfrastructure exemption measure does not fall within its scope, since the measure does not\ngovern the \"internal sale, offering for sale, purchase, transportation, distribution or use\" of natural\ngas within the EU, nor does it restrict the competitive opportunities for gas of any origin. Any such\neffects are too remote, difficult to assess and have not been demonstrated by Russia. In any case,\nexemptions are limited to what is necessary and can only be granted if competition is not hindered\n. Furthermore, gas infrastructure expansion is aimed at enhancing competition.\n84. The infrastructure exemption measure does not grant any advantage to products with a\nspecific origin, neither de jure, nor de facto. Not only is gas origin not considered when deciding to\nexempt infrastructure projects, it is often not known in advance either. As to any difference in\ntreatment in ind ividual exemption decisions, they do not seem to result in a disadvantage to\nRussian gas, given the planned uses of the infrastructure. Furthermore, any differences are\njustified by the different characteristics of the investment projects. Finally, due to the lack of\n\"likeness\" between LNG and natural gas, any supposed advantage accorded to LNG through\nexemption decisions would not discriminate against natural gas. In any event, the same detailed\nand objective conditions of Article 36 of the Directive apply to LNG facilities. As stated above, how\nthis would result in reduced competitive opportunities for Russian gas is unclear.\n5.4. RUSSIA'S CLAIM UNDER ARTICLE II:1 OF THE GATS\n85. The EU does not dispute that the infrastructure exemption measure falls wit hin the scope of\nthe GATS, nor that there is likeness between Russian and other third -country suppliers of pipeline\ntransport services and between the services they supply. However, the individual exemption\ndecisions regarding NEL, OPAL, Gazelle, TAP and N ABUCCO pipeline investment projects have not\nresulted in less favourable treatment of Russian service suppliers and services less, since any\ndifferences were justified by the factual circumstances of each investment project and comply with\nthe criteria laid down in Article 36 of the Directive. Furthermore, any comparison must take place\nwith due regard to all individual exemption decisions. The identity of the service supplier using the\ninfrastructure is considered in view of assessing the competitive cond itions on the relevant gas\nmarkets, its origin has no bearing on the analysis.\n86. Due to the lack of likeness of LNG services and natural gas transport services, any\ncomparison with them is without merit. Furthermore, LNG exemption decisions comply with the\nobjective criteria of Article 36 of the Directive and do not consider the origin of the service supplier\nin question. Therefore, the infrastructure exemption measure does not discriminate against\nRussian pipeline transport services and service suppliers.\n5.5. RUSSIA'S CLAIM UNDER ARTICLE I:1 OF THE GATT IN RESPECT OF UPSTREAM PIPELINE NETWORKS\n87. As explained above, upstream pipeline networks do not benefit from a blanket exemption\nunder the Directive, nor do they distinguish based on the origin of t he gas that is transported over\nsuch pipelines. Therefore, no advantage is granted to any third country's gas that is not\nimmediately and unconditionally extended to like Russian gas sold on the EU market. There is no\nviolation of Article I:1 GATT.\n5.6. RUSSIA'S CLAIM UNDER ARTICLE II:1 OF THE GATS IN RESPECT OF UPSTREAM PIPELINE NETWORKS\n88. For analogous reasons as those above and including the argument that the Directive does\nnot distinguish upstream pipeline networks on the basis of the origin of a pipeline transport service\nprovider, no advantage is granted to any third country's service providers that is not available to\nRussian ones as well. There is no violation of Article II:1 GATS.\n5.7. RUSSIA'S CLAIM UNDER ARTICLE XI:1 OF THE GATT 1994\n89. Although Russia claims that the two conditions attached to the OPAL exemption decision\nconstitute de facto quantitative restrictions, their wording clearly shows that they do not impose\nany restrictions on the importation of Russian natural gas. The capacity cap prescribed applies only\nto services supplied by undertakings dominant on the relevant Czech markets, and does not affect\n\n- B-39 -\n\nuse of the OPAL pipeline by Russian gas, including gas produced by Gazprom, provided that it is\nnot transported into the Czech territ ory by undertakings already holding a dominant position in its\ngas markets. The design, architecture and structure of the conditions attached to the OPAL\nexemption decision ensure that the exemption is not detrimental to competition or the effective\nfunctioning of the internal market of natural gas. The conditions are clear, and provide legal\ncertainty for importers of Russian gas, allowing other undertakings to access and use the OPAL\npipeline. For these reasons, Russia's claim is unfounded.\n6. PROJECTS OF COMMON INTEREST\n90. PCIs are Trans -European energy infrastructure projects which are considered necessary for\nachieving the European Union's energy policy objectives. Regulation 347/2013 (the \"TEN – E\nRegulation\") lays down a procedure for selecting the PCIs and provides for certain measures in\norder to promote their timely development and interoperability. Russia claims that the TEN – E\nRegulation and its implementing measures are inconsistent with the EU's obligations under\nArticle II:1 of the GATS and under Articles III:4 and I:1 of the GATT because what Russia calls\n\"Russian projects\" have been deliberately excluded from designation as PCIs.\n6.1. ARTICLE II:1 OF THE GATS\n91. Russia's claims under Article II:1 GATS are manifestly without merit. Article II:1 GATS is not\nconcerned with discrimination between infrastructures. Instead, it concerns discrimination between\nservice suppliers and services of different Members. The TEN –E Regulation does not afford\nRussian services or service suppliers less favour able treatment. There is nothing in the TEN – E\nRegulation which excludes, either directly or indirectly, the projects promoted by Russian persons\nor entities from being designated as a PCI because of the Russian nationality of the promoter.\n92. Russia's claim appears to be premised on the unstated and unproven assumption that\nRussian suppliers of services would have, merely by reason of their nationality, an inherent\ncompetitive advantage vis-a-vis the suppliers of the European Union or other third countr ies with\nrespect to the supply of services for gas of Russian origin. But there is no basis for making such an\nassumption. As shown by the European Union, in practice, the TSOs controlled by EU persons very\noften operate infrastructures that are used exclu sively or mainly for imported gas, including\nRussian gas. Conversely, TSOs controlled by Russian persons operate infrastructure used, at least\nin part, for gas originating in the European Union or in third countries.\n93. In any event, as discussed under t he next claims, the TEN – E Regulation sets out objective\ncriteria and does not exclude, either de jure or de facto , the designation as PCIs of projects\nconcerning infrastructure used for gas of Russian origin.\n6.2. ARTICLES III:4 AND I:1 OF THE GATT 1994\n94. Russia further claims that the TEN – E measure violates Articles III:4 and I:1 GATT\nAccording to Russia, this violation would stem from the fact that what Russia calls \"Russian\nprojects\" are excluded de jure, or at least de facto, from designation as PCIs.\n95. Russia's claim is unfounded because, for the reasons explained in the EU's first written\nsubmission, the TEN – E Regulation sets out objective criteria and does not exclude either de jure\nor de facto what Russia calls \"Russian projects\". The selec ted PCIs can be used for gas from all\nsources and in practice many of them will be used also for Russian gas, sometimes to a large\nextent.\n96. Russia does not specify anywhere what it regards as a \"Russian project\". Russia appears to\nconsider, nevertheless, that only those projects aimed specifically at building pipelines for carrying\nRussian gas into the EU territory can be considered as \"Russian projects\". This meaning is unduly\nrestrictive and misleading. It disregards that, to repeat once again, all PC Is can be used for gas of\nall sources, including Russian gas, and that, in practice many PCIs are likely to be used for Russian\ngas, sometimes to a large extent. In any event, even \"Russian projects\" within the narrow\nmeaning given by Russia to those terms could fall in principle within the scope of some of the\npriority gas corridors defined in Annex I of the TEN – E Regulation.\n\n- B-40 -\n\n97. Contrary also to Russia's contentions, in order to be selected as a PCI, a project does not\nnecessarily have to contribute to the \"diversification of supply sources\". This is but one of the sub -\ncriteria for the overall assessment of candidate projects. In any event, the use of that sub-criterion\nis not inconsistent with Articles III:4 or I:1 GATT. Those two provisions do not gua rantee existing\nmarket shares. Instead, they guarantee equality of opportunities to compete. Where existing\nmarket conditions do not afford such equality, a Member is permitted, and indeed required, to take\nmeasures in order to ensure such equality. The TE N – E Regulation seeks, inter alia, to improve\nthe access to all the potential sources of supply of gas around the European Union, as well as the\ninterconnections among the traditionally isolated national markets of the EU Member States with a\nview to ensuring SoS and promoting competition. By pursuing, among others, this priority the TEN\n–E Regulation does not distort market opportunities in favour of domestic gas (or of gas from\nother third countries) and to the detriment of Russian gas. Rather, it contri butes to achieve\ngreater equality of competitive opportunities for gas from all potential sources, including Russia.\n98. Russia claims in the alternative that the TEN – E Regulation is applied de facto by the EU\nauthorities in a discriminatory manner because, in practice, no \"Russian project\" has been included\nin the first or in the second Union list of PCIs. Again, however, this allegation is premised on\nRussia's very narrow understanding of what can be considered as a \"Russian project\". Many PCIs\nincluded in the first and the second Union lists are located in EU Member States where Russia is a\nmajor supplier and where the existing transmission and storage infrastructure is already being\nused extensively for Russian gas. By expanding and upgrading the infr astructure of those EU\nMember States, those PCIs will also benefit Russian gas. Moreover, by improving the\ninterconnectivity of the various national systems, some PCIs will accord to Russian gas greater\naccess to other EU Member States.\n\n- B-41 -\n\nANNEX B-4\nSECOND PART OF THE EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION\n1. COMMON ISSUES\n1.1 RUSSIA'S \"RELEVANT MARKET\" ARGUMENT\n1. As a first common issue, Russia argues that its discrimination claims against the unbundling\nmeasure and third -country certification measure must be assessed in the \"EU as a whole\" as the\n\"relevant market\".\n2. Russia's argument fails to recognise that, in case of the unbundling requirement, it is the\nindividual Member States' measures that determine how the unbundling requirement applies to\nservice suppliers in each Member State's territory. The relevant comparator for assessing whether\na measure is discriminatory for the purposes of Articles II:1 or XVII GATS must be determined\nhaving regard to the regulatory jurisdiction of the a uthority from which the measure emanates.\nComparing treatment of service suppliers between different Member States – as Russia does –\nessentially involves comparing treatment through different measures. Rather, the treatment\noffered by the unbundling measu re must be assessed in each Member State separately. In\ncontrast, in case of the third country certification measure, it is Article 11 of the Directive that\ndetermines the treatment of service suppliers throughout the EU. In that case, the appropriate\ncomparator is indeed the treatment of service suppliers through the EU as a whole with the\ntreatment of third country suppliers.\n3. Russia claims that the EU has no support for its \"regulatory jurisdiction\" theory. However, it\nis Russia who has been unable to cite any GATT or WTO jurisprudence where different treatment in\nseparate territorial parts of a WTO Member was considered to establish discrimination. The reason\nfor this is simple: such a claim does not fit the discrimination provisions of the GATT and GA TS\nsince it involves the comparison of treatment through different measures applicable in different\nparts of the territory. Russia essentially advances the absurd interpretation that the WTO's non -\ndiscrimination obligations prevent the existence of differe nt measures in different parts of a WTO\nMember's territory.\n4. The EU stresses the systemic importance of this point: if the mere fact that an EU measure\nleaves discretion to the EU Member States on how to achieve a particular legitimate objective –\nand as a consequence there is some diversity in the requirements that the Member Stat es\nimpose – would mean that the EU measure is the cause of the different treatment that services or\nsuppliers, or goods, receive in each of the Member States, the WTO's non -discrimination\nobligations would prevent the existence of different measures in different parts of a WTO Member's\nterritory. Such an interpretation would be manifestly absurd and be a direct attack against the\nconstitutional structure of the EU, and of WTO Members with a decentralised or federal governance\nsystem. Central governments would not be permitted to provide different options for decentralised\nentities to achieve a particular legitimate objective.\n5. In disputes where the non -discrimination obligation was applied to a measure by sub -\nterritories of a federal state, in particular provinces and states, no panel has ever considered it\nappropriate to compare the treatment by measures from different provinces or states to find\ndiscrimination. The GATT Panel R eports on Canada – Provincial Liquor Boards (US) and United\nStates – Malt Beverages demonstrate that, under the non -discrimination obligations, an imported\ngood, or service or service supplier, is entitled to the best treatment granted to a domestic good,\nservice or supplier from anywhere in the federal territory. However, the treatment that is\nconsidered is the treatment granted by the provincial (or other sub -federal) measure. It does not\ninvolve a comparison with the treatment granted through another measure by another sub-federal\nentity (as Russia is arguing). Neither the United States, nor Canada suggested such comparison in\nthose cases.\n6. Russia takes issue with the fact that the EU has in a Directive allowed Member States the\ndiscretion to implement ownership unbundling only, or also the ITO and ISO models. Yet, allowing\nsuch discretion does not mean discrimination. It was for Russia to show that discretion is\n\n- B-42 -\n\nnecessarily exercised in a discriminatory manner. Russia has failed to do so. The Directive' s\nunbundling provisions are not de jure discriminatory: they do not distinguish based on the origin of\nthe service supplier, nor on the basis of the origin of the gas. Russia is also unable to show that\nthe requirement is de facto discriminatory: Even if the ITO and ISO models conferred a\ncompetitive advantage (as Russia wrongly alleges), the EU has shown that there are Member\nStates where Gazprom had important interests and where the ITO and ISO models are available as\nwell. Russian pipeline transport ser vice suppliers have indeed made use of the ITO model and\nEU suppliers and other third country pipeline transport service suppliers have been subject to\nownership unbundling. Russia cannot establish either that gas from Russia is treated less\nfavourably than gas from other origins.\n7. Russia also confuses the \"responsibility\" of WTO Members with regional sub -divisions under\nWTO law with the \"comparator\" that must be used to determine whether a measure by a regional\ngovernment is discriminatory. The cited GAT T 1994 cases apply Article XXIV:12 of the GATT. This\nprovision requires federal governments to take all reasonable measures to ensure compliance by\ntheir regional governments. Yet, besides the fact that this provision does not apply to the EU –\nwhere the M ember States are WTO Members themselves and thus not \"regional governments\" –\nthis provision concerns merely the responsibility after it has been established that a measure by\nsuch sub -federal government is discriminatory. Article XXIV:12 does not require that one\ncompares the treatment offered by different measures taken by different sub -federal entities. The\nsame applies to the EU's confirmation that it would take responsibility in the WTO to defend\nMember States' actions: the fact that the EU takes such responsibility does not imply at all that the\ncomparator for treatment by different individual Member States should be the \"EU as a whole\".\n8. Russia desperately seeks to establish a \"conspiracy\" between the Member States and the EU\nto discriminate against Russian service suppliers and gas. Russia thereby cites to a compilation of\nonline newspaper articles and WikiLeaks documents. The EU recalls, first, that several panels have\nstressed that newspaper articles have questionable, i f any, evidentiary value in WTO proceedings.\nSecond, in any event, \"intent\" does not play a role in assessing measures under the WTO's anti -\ndiscrimination provisions. Already in the early years of the WTO, the Appellate Body recognized\nthat panels could not \"sort through the many reasons legislators and regulators often have for what\nthey do and weigh the relative significance of those reasons to establish legislative or regulatory\nintent\". Rather, what matters is the \"design, structure, and expected operation\" of the gas\nDirective. Russia is unable to demonstrate that this reveals discrimination: as explained, the text\nof the Directive does not show any de jure discrimination and neither do the facts support any\nclaim of de facto discrimination.\n1.2 DEFINITION OF THE SERVICES AT ISSUE\n9. A second common issue concerns the definition of the services at issue. Russia considered it\nessential to define the covered services as including both transmission and supply services. Russia\nmay indeed find such broad definition \"essential\" for mak ing its case before the WTO, but it does\nnot fit with the reality in the gas markets and with the objective characteristics of the activities at\nstake.\n10. First, the entry \"pipeline transport services\" in the Members' schedules does not cover the\nsupply, i.e. the sale, of gas. Such activities concern trade in goods and not the supply of services.\nServices that may somehow be associated with the gas industry are not covered by \"pipeline\ntransport services\" either.\n11. The basis for interpreting \"pipeline t ransport services\" should not be the business model\nused by one specific Russian company, i.e. Gazprom. Rather, the interpretation should base itself\non the ordinary meaning of the commitments, and the objective characteristics of the service at\nstake, taking into account the CPC classifications that the UN has drafted, the WTO's scheduling\nguidelines and services sectoral classification list (Document W/120) as well as the schedules of\nthe WTO Members at stake. Such an interpretation should not render the meaning of the distinct\nand mutually exclusive services sectors and sub-sectors in the CPC meaningless.\n12. Indeed, on this basis it is clear that there is no such thing as a \"supply service\" in the GATS,\ncontrary to what Russia suggests. Services are supplied and the question is whether a WTO\nMember has made a commitment for each specific and distinct service at stake. There exist\n\n- B-43 -\n\ndistinct activities relating to energy, including pipeline transport services, wholesale services, retail\nservices and services auxiliary to transport, as well as the distinct activity of production and sale of\nthe good: gas.\n13. Second, \"LNG services\" must be distinguished from, and are not \"like\", \"pipeline transport\nservices\". The essence of LNG services is liquefaction and importation, offloading and\nre-gasification of natural gas. It does not concern the transmission via a pipeline. Russia claims\nthat the \"end -uses of the products are exactly the same\". It thereby erroneously focuses on the\ngood, rather than the service. Users of LNG services are gas producers who want to have their gas\ntransported by ships or trucks; traders of LNG; or operators of LNG ships. LNG services are not\npipeline transport services under CPC 713, but services auxiliary to gas transport.\n14. Third, \"upstream pipeline network\" (\"UPN\") services must also be distinguished from, and\nare not \"like\", \"pipeline transport services\". UPNs connect a gas field to a processing plant or\nterminal or final coastal landing terminal. They do not carry out transmission as pipeline transport\nservices. Because upstream pipelines are closely linked to the gas extraction field, they are\n\"services incidental to mining\".\n2. CLAIMS RELATING TO UNBUNDLING\n2.1 THE UNBUNDLING REQUIR EMENT, AS IMPLEMENTED IN TH E LAWS OF CROATIA, HUNGARY AND\nLITHUANIA, IS CONSISTENT WITH T HE EU'S MARKET ACCESS COMM ITMENTS UNDER ARTICLE XVI OF\nTHE GATS\n15. Russia argues that the unbundling requirement, as implemented in the laws of Croatia,\nHungary and Lithuania, is inconsistent with the market access commitments for \"pipeline\ntransmission services\" under Article XVI of the GATS in respect of these countries.\n16. The EU has summarised its objections against Russia's overly broad interpretation of the\nmarket access obligation in sub -paragraphs (e), (a) and (f) of Article XVI:2, as well as its defence\nunder Article XIV, already in its first executive summary.\n17. The EU stresses that the ITO and ISO models are not less trade restrictive alternative\nmeasures compared to ownership unbundling. The ITO and ISO models are certainly not\nalternatives to OU in Croatia or Hungary, where they are also implemented. With regard to\nCroatia, Russia suggests that Croatia \"could allow competing private entities to own and operate\nthe transmission system\". Yet, Russia hasn' t been able to point to any element in Croatia's laws\nthat would prevent other pipeline transport services providers to own a transmission system. With\nregard to Hungary, Russia only states that \"the government could have taken other measures\",\nwithout, in fact, specifying what such \"other measures\" would be. Hence, with regard to Croatia\nand Hungary Russia has not even begun to meet its burden to provide any alternative measures.\n18. Also with regard to Lithuania, the ITO is not a less trade restrictive alternative. The EU has\nexplained that the \"restrictiveness\" that Russia complains about is the inability to control gas\nproducing/selling competitors' access to the transmission network. The EU has also demonstrated\nthat all three models prohibit this, an d thus that one is not less trade -restrictive than another.\nMoreover, when enforcement and compliance costs are considered, the OU model is the least\nburdensome model because the lower degree of structural separation that exists under the ITO or\nISO models is compensated with behavioural requirements and intense supervision. Therefore, the\nOU model is the \"most effective tool\" to promote investments in infrastructure in a non -\ndiscriminatory way, fair access to the network for new entrants and transparency i n the market. If\na Member State considers that it wants to avoid the high enforcement and compliance costs for\nthe alternative models, and therefore implements the OU model only since that is what the\nMember State considers to be the only reasonably availa ble possibility, that is its sovereign right\nand does not run counter the Directive. Hence, when the trade -restrictiveness of the models and\nthe Member's assessment of the enforcement costs are taken into account, the other models are\nnot reasonably available less trade restrictive alternatives to OU.\n\n- B-44 -\n\n2.2 THE PUBLIC BODY SPECI FICATION IN ARTICLE 9(6) OF DIRECTIVE 2009/73/EC DOES NOT VIOLATE\nTHE NATIONAL TREATMENT OBLIGATION IN ARTICLE XVII OF THE GATS\n19. There is no reason why third country public bodies c ould not make use of Article 9(6). The\nEU referred to the Merger Jurisdictional Notice, demonstrating that the term \"public body\" covers\nalso third countries, something that Russia had disputed.\n20. Indeed, when calculating the turnover of a State -owned c ompany (in order to determine\nwhether the EU Commission has jurisdiction to assess a planned merger), the turnover of other\nundertakings that are owned by a Member State or another public body are not taken into\naccount, unless several State -owned companie s are under the same independent centre of\ncommercial decision -making. As explained by the EU with reference to several merger control\ndecisions, this approach has also been applied to companies owned by third countries.\n21. This demonstrates that the term \"public body\" in the phrase \"Member States (or other public\nbodies)\" – which is used in the Merger Jurisdictional Notice as well as in the Gas Directive – covers\nthird country governments. This proves that Article 9(6) of the Directive, as implemented in the\nMember States' laws, is not discriminatory.\n22. Contrary to what Russia tries to convey, all TSOs in all Member States are subject to the\nunbundling requirement and must respect them: the prohibition of cross -subsidisation and the\nobligation to separa te accounts prevent States owning TSOs through public bodies to \"receive …\nthe total amount of revenue and other directly accruing benefits\". Moreover, the obligation to be\ntruly separate prohibits one public body in a Member State to \"dictate business dec isions\" by the\npublic body owning the TSO. There is no \"exemption\" for publicly -owned TSOs and Russia\nconstructs \"benefits\" that are simply contrary to the law.\n2.3 THE UNBUNDLING MEASUR E DOES NOT VIOLATE T HE NON -DISCRIMINATION OBLIGATIONS IN\nARTICLE II:1 OF THE GATS AND ARTICLES I:1 AND III:4 OF THE GATT 1994 (RUSSIA'S CLAIMS\n6, 8 AND 10)\n23. Turning to the unbundling measure, the EU also disputes that it discriminates against\nRussian service suppliers, or against Russian gas.\n24. First, Russia has not de monstrated that the OU model alters the competitive position of\npipeline transport service suppliers, or of gas of a certain origin.\n25. Indeed, the type of unbundling model does not alter the competitive relationship of the\npipeline transport service supplier. The consequence of unbundling is that the supplier that is part\nof a VIU cannot provide privileged access to related producers or suppliers that are part of the\nVIU, or foreclose access to competing producers and sellers of gas. Such actions are also illegal\nunder the ITO and ISO models. There is no \"competitive benefit\" attached to the latter models.\n26. Also with respect to its GATT claims, Russia cannot show that a particular unbundling model\ntranslates into a competitive disadvantage for gas of a certain origin. To the contrary, because\nunbundling prevents a pipeline transport service supplier to abuse its monopoly position to\nforeclose access, gas from any origin can access each EU Member State without limitation.\n27. Second, the EU contested Russ ia's attempt to compare the treatment of service suppliers in\ndifferent Member States. It is the individual Member States' measures that determine how the\nunbundling requirement applies to service suppliers in each specific Member State's territory.\nTherefore, the treatment offered by the unbundling measure must be assessed in each Member\nState separately.\n28. Third, even if, under an incorrect legal standard, Russia could compare the treatment\noffered in different Member States, Russia is still unable to p rovide any evidence to show that any\nalleged negative impact of the unbundling requirement is predominantly on Russian service\nsuppliers, or predominantly on Russian gas.\n29. According to the Appellate Body, when determining whether the measure at issue mo difies\nthe conditions of competition, a panel must examine the \"design, structure, and expected\n\n- B-45 -\n\noperation\" of that measure. Hence, the analysis of whether de facto discrimination exists must not\nbe static, but focus on whether, under the applicable law, th e competitive opportunities in the\nmarket are such that they are to the disadvantage of the group of service suppliers from a certain\norigin. The Appellate Body in EC – Seal Products has indeed stressed the focus on the expected\noperation in order to avoid a conclusion that a measure that is pro -competitive and challenges the\nestablished monopoly's position in a market by enabling competition in the market and avoiding\nabuses of a monopoly would be found to violate the non -discrimination provision s in WTO l aw.\nA panel should take a dynamic and forward -looking view of the market, considering what the\ncompetitive opportunities in the gas market are for service suppliers. Such view can only confirm\nthat the opportunities are the same for pipeline transport serv ice suppliers in each Member State\nand that there is nothing in the Directive, nor in the Member States' individual measures\nimplementing the unbundling requirement that is biased against service suppliers, or goods, of any\nparticular origin.\n30. The EU pr ovided extensive evidence showing that Russian gas transport service suppliers\nare also active in Member States that have implemented ITO models. Russian pipeline transport\nservice suppliers in Germany – which is the largest gas market in the European Union and the\nlargest export market for Gazprom – have made use of this model and gas transport service\nsuppliers with substantial Russian shareholdings have benefitted from derogations from the\nunbundling rules granted to Latvia and Finland. The EU provided t ables with an overview of the\nunbundling models and the TSOs in all Member States, demonstrating that OU is not\npredominantly imposed on the group of Russian service suppliers.\n31. Also with respect to the alleged negative competitive impact of OU on Russi an gas, Russia\nhas not demonstrated that there is a link between the unbundling model and the volume of\nRussian gas imports in Member States. Russia seeks to connect the origin of the pipeline service\nsupplier with the origin of the gas flowing through the pipeline. Yet, under the unbundling\nmeasure, there is no such relationship. If there would be such link, this would mean that TSOs\ngive preferential treatment to gas of a certain origin. This is illegal under EU law, which requires\nthe TSO – irrespective of the unbundling model – to respect the third party access (\"TPA\")\nprinciple and give access to the networks users under non -discriminatory and transparent terms.\nMoreover, undisputed facts directly contradict Russia's claims. Russian imports into the EU\nincreased since 2009. Further, the EU provided evidence that in Member States that have\ntransposed OU only, Russian imports increased with 30% from 2009 to 2014 and Russia's share\ncompared to total gas imports increased as well.\n2.4 THE LNG MEASURE DOES NO T VIOLATE THE NON -DISCRIMINATION OBLIG ATION IN ARTICLE I:1 OF\nTHE GATT 1994 (RUSSIA'S CLAIM 12)\n32. With regard to Russia's MFN claim in respect of the LNG measure, we recall that this is not\nan \"exemption\" from a generally applicable unbundling rule. Rat her, it is a specific measure that\nprevents abuses of a monopoly, taking into account the specific technical and economic\ncharacteristics of the infrastructure, i.e. LNG facilities. Moreover, Russia cannot demonstrate that\nthe LNG measure, which applies to LNG service providers, alters the competitive position of gas\nimported from Russia. Russia's reliance on the investigation against Engie in fact demonstrates\nexactly the opposite of what Russia claims: LNG operators cannot restrict access of non -affiliated\ngas producers. If they would do so, they would violate EU law and enforcement actions will be\ntaken, at the national level or by the EU Commission.\n2.5 THE UPSTREAM PIPELINE NETWORKS MEASURE DOES NOT VIOLATE THE NON -DISCRIMINATION\nOBLIGATIONS IN ARTICLES I:1 AND III:4 OF THE GATT 1994 (RUSSIA'S CLAIMS 13 AND 14)\n33. This lack of evidence is also emblematic of Russia's claims against the UPN measure. Russia\nclaims that, because Article 32 of the Directive does not apply to UPNs, there is \"different\ntreatment accorded to domestic -origin gas\", and, therefore, there would be a \"modifi[cation of]\nthe conditions of competition to the detriment of Russian gas\". Once more, Russia jumps from a\nmeasure that applies to a service supplier to an alleged impact on a go od, without explaining why\nsuch impact would necessarily follow. The UPN measure does not prevent that Russian suppliers\nqualify as UPN operators and there is no reason why Russian gas would necessarily be excluded\nfrom being transported via such pipeline.\n\n- B-46 -\n\n34. Indeed, even if the TPA obligation under Article 32 does not apply, Article 34 of the Directive\nrequires Member States to ensure that UPN operators do not abuse their dominant position and\nforeclose access to gas from third party producers if there wo uld be such need. The competitive\nconcern for UPNs is entirely different from the concern attached to transmission networks: UPNs\nare directly linked to the production field and there is normally no risk of foreclosure of competing\ngas producing or supplyi ng undertakings. The Member States are obliged to implement Article 34\nin their domestic laws and the European Union has provided evidence that Member States have\nimplemented this requirement as well as examples that this obligation has been applied in\npractice.\n3. CLAIMS RELATING TO THIRD COUNTRY CERTIFICATION\n3.1 THE THIRD COUNTRY CERTIFICATION MEASURE IS JUSTIFIED UNDER ARTICLE XIV (A) GATS\n3.1.1 TSOs controlled by persons of third countries pose genuinely and\nsufficiently serious threats to SoS\n35. Russia argues that third -country controlled TSOs pose no \"real threat\" because the EU\nlegislation in place imposes upon all TSOs certain legal obligations in order to ensure SoS. The\nthreats to SoS identified by the European Union do not result, however, from the absence of\nadequate legal obligations on the TSOs. Instead, they stem from the fact that the governments of\nthird countries may require or induce the TSOs controlled by them, or by persons of those third\ncountries, not to comply with their existing legal obligations, including those mentioned by Russia.\n36. Russia further contests that foreign governments may have incentives to take measures that\nhave the effect of undermining the EU's SoS policies. The European Union, however, has shown\nwhy this is mo re than \"mere speculation\". First, Russia does not contest the obvious fact that, in\nprinciple, each Member will give priority to its own interests, including its SoS interests. Second,\nfrom this it can be inferred that whenever there is a conflict between the EU's SoS and the\ninterests of another Member, including that Member's own SoS, the government of that other\nMember will have an incentive to take actions that may undermine the EU's SoS. Indeed, the\nEuropean Union has provided examples of this, such a s the interruption of gas supplies to Ukraine\nin 2006 and 2009. Third, the European Union has described several scenarios where the interests\nof other Members will come into conflict with the European Union's interest in ensuring its own SoS\nof gas and whe re those other Members will have a clear incentive to take measures that\nundermine the EU's SoS policies. Such measures may include requirements or inducements to the\nTSOs controlled by them or by their nationals to disregard legal obligations imposed by E U law\nwith a view to ensuring SoS or to act in a manner which is the foreign government's interest, but\nnot in the TSO's own commercial interest. The various scenarios described by the European Union\nare hypothetical but, nonetheless, realistic and credible.\n3.1.2 The SoS certification requirement is necessary to achieve its policy\nobjective\n37. Russia contends, in essence, that the SoS certification requirement is not necessary to\nensure SoS because the threats to SoS which it seeks to address are already sufficiently addressed\nby other legal obligations imposed on all TSOs under the Third Energy Package. As explained\nabove, in making this argument Russia fails to recognise the source of the threats which the\nmeasure seeks to address.\n38. Russia has propo sed two alternative measures. The first proposed alternative (what Russia\ncalls a \"blocking statute\") would manifestly fail to address the threats to SoS identified by the\nEuropean Union. Russia's second proposed alternative is that the European Union appl ies \"the\nsame set of requirements to all applicants\". Russia has specified that its preference would be that\nthe European Union did not apply the SoS certification requirement to any applicant. Bu this is not\na genuine alternative measure. Instead, it amounts to the absence of any measure and, therefore,\nwould make no contribution to the EU's SoS. As a further sub-alternative, Russia suggests that the\nEuropean Union could apply the contested measure to all the applicants. However, the TSOs\ncontrolled by the EU Member States, or by their nationals, do not pose comparable threats to SoS.\nFor that reason, it would be manifestly unnecessary and unreasonable to apply the contested\nmeasure to those TSOs.\n\n- B-47 -\n\n3.2 ARTICLE II:1 OF THE GATS\n3.2.1 De jure claim (Russia's claim 16)\n39. This claim is addressed against the Gas Directive as such and, more specifically, against the\nSoS certification requirement stipulated in Article 11 of the Gas Directive. The EU Member States\nhave no discretion in order to decide whether or not to apply that requirement. In view of that, the\ndifference in treatment invoked by Russia falls outside the scope of Article II:1 GATS. In the\nalternative, such difference in treatment would in any event be justified by Article V GATS. In the\nfurther alternative, the European Union submits that the difference in treatment invoked by Russia\nwould be justified under Article XIV(a) GATS for the same reasons as the difference in treatment\ninvoked by Russia in support of its claim with regard to the third cou ntry certification measure\nunder Article XVII GATS.\n3.2.2 De facto claim (Russia's claim 17)\n40. The claim of de facto discrimination developed by Russia in its first submission was based on\na comparison between the treatment accorded to Gaz -System and the allegedly more favourable\ntreatment accorded to service suppliers of other Members in respect of the SoS certification\nrequirement in Article 11 of the Gas Directive. The European Union has shown that Gaz -System is\na Polish service supplier. In any event, the European Union ha s shown that Gaz -System was not\naccorded less favourable treatment.\n4. CLAIMS RELATING TO INFRASTRUCTURE EXEMPTIONS\n4.1 RUSSIA'S CLAIM UNDER ARTICLE X:3(A) OF THE GATT 1994 (CLAIM 21)\n41. Russia's claim under Article X:3(a) of the GAT T is in part outside the terms of reference of\nthe Panel. In addition, the requirements of Article X:1 are not met. Russia has not explained, let\nalone proven, the effects on the sale, distribution and transportation of natural gas that it ascribes\nto the exemption for new major infrastructure. Moreover, Russia uses Article X:3(a) to challenge\nthe OPAL exemption decision, which is an individual decision.\n42. As regards the substance of the claim, Russia did not demonstrate that the European Union\nhas failed to administer the infrastructure exemption measure in a uniform, impartial or\nreasonable manner. The OPAL decision is perfectly in line with the criteria set out in Article 22(1)\nof Directive 2003/55/EC, which was applicable at the time. The conditions at tached to the OPAL\nexemption are also perfectly in line with previous Commission practice, in particular the exemption\ndecisions concerning various sections of the Nabucco pipeline. They are furthermore in line with\nand very similar to the conditions subse quently attached to the TAP exemption. The conditions\nattached to the OPAL decision are by no means exceptional. On the contrary, capacity caps\nimposed on undertakings holding a dominant position on the relevant gas markets are rather\nstandard conditions, as specified in the Commission's Explanatory Note.\n43. Russia singles out two decisions exempting LNG facilities where the Commission found no\nneed to impose similar capacity caps. It deliberately omits that, for example in the case of the\nDutch LNG terminal Gate, such conditions were indeed imposed. Russia compares the situation of\nGazprom to that of exporters of Azeri gas or exporters of LNG without taking its analysis any\nfurther. However, as is made clear in Article 36(1)(a) and (e) of Directive 2009/73 /EC, the\ninvestment must enhance competition in gas supply and the exemption must not be detrimental to\ncompetition. In the light of those requirements, the position of each exporter on relevant markets\nwithin the EU must be taken into consideration before granting an exemption or defining\nappropriate conditions for the use of infrastructure promoted by those exporters. The origin of the\nnatural gas or LNG imported in the EU through the new infrastructure is, however, irrelevant for\nthat purpose.\n44. Nothing in the European Union 's administration of the infrastructure exemption measure\nseeks to reduce imports of Russian gas or the supply of Russian pipeline transport services. The\nfirst criterion listed in Article 36 of the EU Directive for granting an exemp tion is that the\ninvestment in new major gas infrastructure must enhance competition in gas supply and enhance\nsecurity of supply. The objectives of increasing competition and security of supply in the EU gas\n\n- B-48 -\n\nmarkets are quite different from the objective identified by Russia in its attempt to assemble a\nclaim of violation of Article X:3(a) of the GATT 1994. That attempt must fail.\n4.2 RUSSIA'S CLAIM UNDER ARTICLE I:1 OF THE GATT 1994 (CLAIM 22)\n45. Russia has failed to demonstrate how a measure encouraging the construction of new\ninfrastructure, which is designed to create new opportunities for gas of all sources to compete on\nthe EU markets, restricts the competitive opportunities for Russian gas as compared to foreign gas\nof other sources.\n46. The allege d different treatment of the NEL and Gazelle pipelines does not restrict the\nopportunities for Russian gas to compete on the EU markets. There are objective reasons for\nconsidering TAP an \"interconnector\" as defined in the EU Directive and for concluding t hat NEL did\nnot meet that definition. Moreover, TAP is not reserved for exclusive use by Azeri gas, the\nconditions imposed guarantee that gas from other sources is provided access to TAP.\n47. The European Union reiterates that the exemptions granted to Gaz elle and TAP do not\naccord to gas from other Members an advantage that is not immediately and unconditionally\nextended to Russian gas transported via NEL. Russia 's claim under Article I:1 of the GATT must\ntherefore be rejected.\n4.3 RUSSIA'S CLAIM UNDER ARTICLE I:1 OF THE GATT 1994 (CLAIM 23)\n48. A careful comparison between the conditions imposed on the OPAL exemption and those\nimposed on other exemption decisions, namely those on Gazelle, TAP, Nabucco and Poseidon,\naccount taken of different objective circ umstances, do not show a violation of Article I:I of the\nGATT. Russia's claim must fail.\n4.4 RUSSIA'S CLAIM UNDER ARTICLE I:1 OF THE GATT 1994 (CLAIM 24)\n49. For the purpose of obtaining an exemption, LNG facilities are not treated differently from\nother new major gas infrastructure. The origin of the LNG using a particular facility plays no role in\nthe EU Directive or in individual exemption decisions.\n50. Russia has not demonstrated how the exemption granted to the Dragon and South Hook\nLNG facilities have conferred an advantage to \"like\" gas of certain origins that were not extended\nimmediately and unconditionally to Russian natural gas flown through NEL and OPAL. Its claim\nmust be rejected.\n4.5 RUSSIA'S CLAIM UNDER ARTICLE II:1 OF THE GATS (CLAIM 25)\n51. Neither Article 36 of Directive 2009/73/EC, nor Article 22 of Directive 2003/55/EC before it,\ndraw any distinctions based on the origin of the supplier of pipeline transport services.\n52. The claim of de facto discrimination is not supported by the facts . The terms of each\nindividual exemption decision that was adopted under the EU Directive is justified by the\nspecificities of each infrastructure project and of the gas markets concerned in each case. Because\nthe Directive requires the competent national authorities and the Commission to examine the\nstructure and conditions of competition on the relevant gas markets prior to granting an\nexemption, they must take account of the identity of the undertaking supplying pipeline transport\nservices to the extent necessary for determining the position they hold on those markets.\nHowever, the origin of the undertaking supplying pipeline transport services has no bearing\nwhatsoever on the analysis that must be conducted for granting an exemption and for deciding to\nimpose any conditions.\n53. Russia failed to prove that the infrastructure exemption measure discriminates against\nRussian pipeline transport services supplied via NEL and OPAL and against Russian service\nsuppliers.\n\n- B-49 -\n\n4.6 RUSSIA'S CLAIM UNDER ARTICLE I:1 OF T HE GATT 1994 IN RESPECT OF UPSTRE AM PIPELINE\nNETWORKS (CLAIM 26)\n54. The European Union contests the basis for this claim, which is Russia 's erroneous assertion\nthat the Directive provides an \"as such\" exemption to upstream pipeline networks.\n55. The rules in respect of upstream pipeline networks apply regardless of the origin of the gas.\nNot all gas flown through upstream pipeline networks owned or operated by Norwegian gas\nsuppliers is necessarily gas of Norwegian origin. Third parties could access those upstream\npipelines pursuant to Article 34 of Directive 2009/73/EC.\n56. The specific rules in the EU Directive applying to upstream pipeline networks do not grant to\nnatural gas of other Members, imported through upstream pipeline networks, an advantage n ot\nextended immediately and unconditionally to like Russian gas sold on the EU market through NEL\nand OPAL. Russia has not demonstrated how the rules on upstream pipeline networks grant a\ncompetitive advantage to gas of Norwegian origin to the detriment of Russian gas. Its claim is\nunfounded and should be rejected.\n4.7 RUSSIA'S CLAIM UNDER ARTICLE XI:1 OF THE GATT 1994 (CLAIM 28)\n57. Russia argues that the capacity cap and gas release conditions imposed by the Commission\non OPAL constitute quantitative restrictions in violation of Article XI:1 of the GATT 1994\n58. The European Union stresses that bookings of OPAL capacities by undertakings unrelated to\nGazprom are not restricted in any way by the conditions attached by the Commission to the OPAL\nexemption de cision. Unrelated undertakings may perfectly use OPAL to transport Russian gas\nproduced by Gazprom, including gas intended for resale on the Czech market. In fact, as is clear\nfrom its wording, the contested condition imposing a capacity cap only restricts the supply of\npipeline transmission services by those undertakings found to be dominant on the Czech gas\nmarkets. It does not restrict the quantities or volume of gas that may be imported from Russia.\n59. The capacity cap seeks only to prevent Gazprom and RWE Transgas from entrenching their\ndominant position on the Czech gas markets through their activities as suppliers of pipeline\ntransmission services on OPAL. The origin of the gas is irrelevant for the purpose of applying the\n50% cap on the booking of O PAL capacities by undertakings dominant on the Czech gas markets.\nNothing in the exemption decision prevents Gazprom from allowing unrelated undertakings to book\nthe remaining OPAL capacities, thereby increasing the overall volumes of Russian natural gas\nimported into the EU via Nordstream and OPAL\n60. By arguing that the conditions attached to the OPAL exemption constitute quantitative\nrestrictions prohibited by Article XI:1 of the GATT 1994, Russia is implicitly arguing that the\nabsence of an exemption fr om generally applicable obligations would constitute a quantitative\nrestriction on imports as well. That conclusion is surely unwarranted. Article XI:1 forbids measures\nthat restrict imports of foreign products. It does not forbid measures that allow imports of products\nfrom various sources and foster competition on the market of the importing Member.\n61. Moreover, the conditions attached to the OPAL exemption do not have either an indirect\nlimiting effect on imports arriving from Russia. The test devised b y the panel in Colombia – Ports\nof Entry refers to measures that create uncertainties and affect investment plans, restrict market\naccess or make importation prohibitively costly. The conditions at issue do not give rise to\nuncertainties and are not design ed to increase costs affecting the price of Russian gas. In any\nevent, Russia has not demonstrated such effects.\n62. Therefore, Russia's claim under Article XI:1 of the GATT 1994 is entirely without merit and\nshould be rejected.\n\n- B-50 -\n\n5. CLAIMS RELATING TO THE TEN – E MEASURE\n5.1 ARTICLE II:1 OF THE GATS\n63. Russia's claim that the TEN – E measure discriminates de jure against Russian services and\nservice suppliers is manifestly unfounded. The origin of the promoter of a project is not among the\nselection criteria and plays no role whatsoever in the designation of PCIs. There is nothing in the\nTEN – E measure that excludes, either directly or indirectly, the projects promoted by Russian\nsuppliers of transmission services from being designated as a PCI. This is con firmed beyond doubt\nby the fact that, in practice, many designated PCIs, including numerous PCIs in the BEMIP Gas\ncorridor, have been promoted by Russian service suppliers.\n64. The TEN – E measure does not discriminate de facto against Russian service sup pliers or\nservices. Russia's de facto claim is entirely based on the assumption that the TEN – E measure\ndiscriminates against imports of Russian gas. This is not true. But, even assuming ad arguendo\nthat Russia's assumption were correct, it would not fol low that the TEN – E measure discriminates\nde facto against Russian service suppliers or services. The TSOs controlled by EU persons very\noften operate infrastructures that are used exclusively or mainly to transmit imported gas,\nincluding to a large exten t Russian gas. The European Union has provided numerous examples of\nsuch infrastructures. Conversely, TSOs controlled by persons of third countries operate\ninfrastructure used in part to transmit EU gas originating in the European Union.\n65. Russia has now here addressed this argument and evidence. Instead, Russia relies on the\nsingle case of [[South Stream]] as evidence of the alleged de facto discrimination. Even if Russia's\nallegation with regard to [[South Stream]] were correct (quod non), that would not be sufficient to\nshow that the TEN – E measure \"as such\" is discriminatory. In any event, the non -designation of\n[[South Stream]] as a PCI was the outcome of the impartial application of a comprehensive set of\nobjective selection criteria. Russia's allegations to the contrary misrepresent the relevant facts and\nare wholly unfounded.\n5.2 ARTICLES III:4 AND I:1 OF THE GATT 1994\n66. Russia's claims of de jure discrimination rely, almost exclusively, on the mere fact that the\ndefinition of the BEMIP Gas corrid or refers to the objective of ending the dependency on a \"single\nsupplier\". However, this objective does not lead to de jure discrimination against Russian gas. The\nvarious priority corridors have been defined so as to cover in a balanced manner all the ma in\npotential sources of supply of gas within and around the European Union, as well as the supply\nneeds of all EU Member States. For obvious geographical reasons, it is inevitable that not each\ncorridor (and not each infrastructure within each corridor) wi ll contribute to facilitate the\ntransmission or storage of gas from each and every potential source of supply to an identical\nextent. It would be manifestly unreasonable to assess the existence of discrimination by\nconsidering in isolation each of the prio rity corridors, such as the BEMIP Gas Corridor. For\nhistorical reasons, Estonia, Latvia and Lithuania are already adequately connected to sources of\ngas supply in Russia. Those connections were built by, or with the support of, the Russian\nauthorities or t heir predecessors. For the same historical reasons, those three EU Member States\nwere, until recently, totally isolated from other EU Member States and sources of gas supply. One\nof the objectives of the BEMIP Gas corridor priority is to remedy this defici ency by ensuring\nadequate connections with the other EU Member States. Those connections will not distort market\nopportunities in favour of domestic gas (or of gas from other third countries) and to the detriment\nof Russian gas. Rather, they will contribute to achieve greater equality of competitive opportunities\nfor gas from all potential sources. Moreover, while the BEMIP Gas corridor priority is not aimed at\nduplicating the existing connections between Russia and each of the EU Member States concerned,\nthe projected infrastructures within the scope of the BEMIP Gas corridor will benefit as well Russian\ngas by facilitating its storage and further transmission to other EU Member States.\n67. The TEN – E measure does not discriminate de facto, either between Russian gas and EU gas\nor between Russian gas and gas from any third country. All PCIs can be used for gas from all\nsources, including Russian gas, and in practice many PCIs are likely to be used for Russian gas,\nsometimes to a very large extent.\n\n- B-51 -\n\n68. For t he above reasons, the European Union submits that the TEN – E measure is fully\nconsistent with Articles III:4 and I:1 of the GATT. Nonetheless, the European Union also has\nshown in the alternative that, in any event, the TEN - E measure would be justified under the\nexception provided for in Article XX (j) GATT. Russia complains that the European Union has not\nmet its burden of demonstrating that the quantity of available supply of gas from both domestic\nand imported sources is insufficient to meet the EU de mand. This allegation is baseless: the\nEuropean Union has provided ample evidence showing that in the recent past there have been\nmajor disruptions of the supply of imports of gas, which have led to serious shortages within the\nEuropean Union. Russia has not disputed that evidence. Furthermore, in 2014 both the EU Member\nStates and ENTSO – Gas carried out \"stress tests\" involving the modelling of the effects of various\nsupply disruption scenarios. Those tests showed that a major disruption of gas supplies ( such as a\ncomplete halt of Russian gas imports to the European Union or a disruption of Russian gas imports\nthrough the Ukrainian transit route) would cause serious shortages in the European Union, and in\nparticular in the Eastern EU Member States. Again, Russia has not contested this evidence.\n69. Instead, Russia bases its objections on the fact that in its second written submission the\nEuropean Union did not address expressly two of the factors mentioned by the Appellate Body in\nIndia – Solar Cells, namely the volume of exports of domestic gas and the purchasing power of the\nEU consumers of gas. However, Russia has given no indication of how, in view of the particularities\nof this case, the two factors which it has singled out could contradict or detract f rom the evidence\nof risk of shortages submitted by the European Union.\n70. Russia further argues that the TEN – E measure is not \"essential\" for ensuring the\n\"distribution\" of gas because there is a less trade-restrictive alternative. According to Russia, if the\nselection criteria which it regards as discriminatory were removed from the TEN – E measure, the\nresulting alternative measure would make a greater contribution to the objective of ensuring the\ndistribution of gas in the European Union. The EU disag rees. The resources (both administrative\nand financial) which the European Union can make available under the TEN – E measure are\nnecessarily limited. For that reason, it is essential to ensure that the available resources are used\nwhere they are most need ed and, for that purpose, to define adequate priorities in the TEN – E\nmeasure. In the absence of the selection criteria to which Russia objects, the European Union\nwould have to accord equal priority to projects that duplicate already existing infrastructures. Such\nduplicate infrastructures would not contribute to reducing the risks of shortage resulting from the\ndisruption of a source of supply because they would be vulnerable to the very same risks of\ndisruption as the existing infrastructures. Moreover, such duplicate infrastructures would consume\nresources that could otherwise be used to support infrastructure to bring gas from alternative\nsources of supply. Thus, Russia's alternative measure would diminish the overall contribution of\nthe TEN – E measure to the objective of ensuring SoS.\n\n- C-1 -\n\nANNEX C\nARGUMENTS OF THE THIRD PARTIES\nContents Page\nAnnex C-1 Executive summary of the arguments of Colombia C-2\nAnnex C-2 Executive summary of the arguments of India C-3\nAnnex C-3 Executive summary of the arguments of Japan C-6\nAnnex C-4 Executive summary of the arguments of Ukraine C-10\n\n- C-2 -\n\nANNEX C-1\nEXECUTIVE SUMMARY OF THE ARGUMENTS OF COLOMBIA\n1. Colombia has an special interest with regards to the determinations in the present case in\nrespect to the likeness test under GATS Articles II:1 and XVII:1, due to its recent developments.1\n2. The Russian Federation submits that the unbundling requirements which pretend the legal\nand functional separation of gas production and gas supply are inconsiste nt with EU 's obligations\nunder GATS articles II:1 and XVII:1.\n3. Colombia sees that a core issue in the present dispute is the definition of LNG services and\nservices suppliers, given that in Russia 's view LNG services and suppliers are in competitive\nrelationship with natural gas transported through pipelines. While the UE considers that LNG\nservices and suppliers are not within the meaning of \"pipeline transport services and suppliers \"\ndue to their \"nature and characteristics\" that involve the liquefactio n and regasification of natural\ngas and do not involve transport, whereas pipeline transport services carry the natural gas from\none point to another.2\n4. Colombia would like to call the Panels attention with regards to the likeness test and\nespecially wit h regards to the \"presumption of likeness \" approach, given that in the present\ndispute there is disagreement between Russia and the EU with regards to the likeness of LNG\nservices and LNG suppliers in respect to pipeline transport services and service suppliers.\n5. In its written submission Russia claims that the presumption of \"likeness\" should apply to\nthe de facto claims, as those related to government exemptions explained above. 3 Colombia notes\nthat this issue has not been clarified by previous Panel 's or AB reports, however, Colombia recalls\nthat in Argentina – Financial Services the AB noted that \"measures allowing the application of a\npresumption of \"likeness\" will typically be measures involving a de jure distinction between\nproducts of different origin.\"4\n6. In Colombia 's opinion, the expression \"typically\" used by the AB does not preclude the\npossibility to extent such presumption of likeness to de facto claims, whenever in their\nassessments a Panel bears in mind that \"determination of likeness unde r GATS for such a\npresumption would be more limited, and may often involve greater complexity in trade in services.\nNonetheless, this does not render the presumption approach inapplicable in trade in services.\"5\n7. In conclusion \"likeness\" may be presumed where the complainant demonstrates that the\nmeasure at issue makes a distinction between services and service suppliers based exclusively on\norigin. However, the analysis of whether or not a distinction is based exclusively on origin is more\ncomplex in the context of trade in services.\n8. In Colombia's opinion t he assessment of likeness of services should not be undertaken in\nisolation from considerations relating to the service suppliers, and, conversely, the assessment of\nlikeness of service suppliers sho uld not be undertaken in isolation from considerations relating to\nthe likeness of the services they provide.6\n\n1 Appellate Body Report, Argentina – Financial Services.\n2 EU's First Written Submission, para. 286.\n3 Russia's First Written Submission, paras. 249-251\n4 Appellate Body Report, Argentina – Financial Services, para. 6.36\n5 Appellate Body Report, Argentina – Financial Services, para. 6.38\n6 Appellate Body Report, Argentina – Financial Services, para. 6.29\n\n- C-3 -\n\nANNEX C-2\nEXECUTIVE SUMMARY OF THE ARGUMENTS OF INDIA\nI. INTRODUCTION\nMr. Chairperson, members of the Panel, representatives of Parties and Thi rd Parties and\nSecretariat.\n1. India has joined as a third party in this dispute to provide its views on the systemic issues\narising for interpretation under the General Agreement on Trade in Services (GATS) under this\ndispute. India takes no position on t he merits of the claims that are based on the particular facts\nof this dispute.\n2. India's views in this oral statement are limited to three specific issues under GATS, arising in\nthe context of interpretation of scheduled commitments; Article VI:1; and th e scope and\ninterpretation of market access limitations specified under Article XVI:2. India will also be\naddressing some of the questions raised in the indicative list of advance questions from the Panel\nto the third parties.\nII. INTERPRETATION OF SCHEDULED COMMITMENTS UNDER GATS\n3. Central to this dispute is the interpretation of EU 's commitments with regard to \"Pipeline\nTransport\" under its Schedule of Specific Commitments. This needs to be interpreted in view of the\n1993 Scheduling Guidelines issued by the GATT Secretariat on 3 September 1993. 1 These\nGuidelines constitute an important interpretive tool for WTO jurisprudence. In US-Gambling,2 the\nAppellate Body has noted that the 1993 Scheduling Guidelines constitute \"supplementary means of\ninterpretation\" under Article 32(d) of the Vienna Convention on the Law of Treaties. The Panel in\nMexico-Telecoms3 considered that \"substantial interpretative weight can be given to the\nsupplementary documents\" that includes the Scheduling Guidelines.\n4. In this context , it is important to bear in view Paragraph 16 of the Scheduling Guidelines,\nwhich states in the relevant part that: \"The legal nature of a schedule as well as the need to\nevaluate commitments, require the greatest possible degree of clarity in the descrip tion of each\nsector or sub -sector scheduled. In general the classification of sectors and sub -sectors should be\nbased on the Secretariat's revised Services Sectoral Classification List. 4 Each sector contained in\nthe Secretariat list is identified by the co rresponding Central Product Classification (CPC) number.\nWhere it is necessary to refine further a sectoral classification, this should be done on the basis of\nthe CPC or other internationally recognised classification (e.g. Financial Services Annex). The most\nrecent breakdown of the CPC, including explanatory notes for each sub -sector, is contained in the\n\n5. In holding that the 1993 Scheduling Guidelines constitute \"supplementary means \" under\nArticle 32(d) of the Vienna Convention, the Appellate Body noted that the guidelines \"…provided a\ncommon language and structure which, although not obligatory, was widely used and relied\nupon.\"7\n6. The 1993 Scheduling Guidelines expressly refer to the UN Provisional CP C as cited above.\nMembers are allowed to complement this system of classification, but the text of the Scheduling\n\n India's third-party statement serves as the executive summary of its arguments.\n1 Scheduling of Initial Commitments in Trade in Services: Expl anatory Note, MTN.GNS/W/164,\n3 September 1993\n2 Appellate Body Report, US – Gambling, paras. 196-207.\n4 Document MTN.GNS/W/120, dated 10 July 1991\n5 Statistical Papers Series M No. 77, Provisional Central Product Classification, Department of\nInternational Economic and Social Affairs, Statistical Office of the United Nations, New York, 1991.\n6 Scheduling of Initial Commitments in Trade in Services: Expl anatory Note, MTN.GNS/W/164,\n3 September 1993, para. 16\n7 Appellate Body Report, US-Gambling, para. 204\n\n- C-4 -\n\nGuidelines makes it clear that it is incumbent upon the Member scheduling a commitment to draw\nit in a way as to avoid any ambiguity. For this purpose, Paragraph 16 of the Guidelines clarifies\nthat where a Member finds that it is not possible to make a reference to the CPC classification, it\nshould give a sufficiently detailed definition to avoid any ambiguity as to the scope of the\ncommitment.8\n7. The Panel has raised a question on whether the UN Central Product Classification Version 2.1\nof 20159 is relevant for the purpose of interpreting commitments contained in GATS Schedules in\nlight of Articles 31 and 32 of the Vienna Convention.10\n8. In India's view, there is no automatic substitution of UN CPC Provisional Classification by the\nUN CPC Version 2.1 of 2015. Both W/120 and the 1993 Scheduling Guidelines, refer to the UN CPC\nProvisional Classification. In fact, the Provisional CPC had been sup erseded in 1998 by UN CPC\nVer. 1. The 2001 Scheduling Guidelines developed by the Committee on Specific Commitments,\nwhich was a revision of the 1993 Scheduling Guidelines, however, continued to refer to the\nProvisional CPC, rather than the CPC Ver.1. 11 The reason for this appears to be because the\nunderstanding of Members for scheduling, and the use of the Services Classification\nList (W/120),12 continued to be the Provisional CPC Classification, even in 2001.\n9. It is also instructive to note that while a nalyzing the interpretive value of the 2001\nScheduling Guidelines, the Appellate Body in US-Gambling held that the subsequent versions of\nthe Scheduling Guidelines were intended to enable more precise scheduling of future\ncommitments, but were not relevant with regard to the interpretation of existing commitments.13\nIn India's view, the same principle would hold with regard to versions of the CPC subsequent to UN\nCPC Provisional Classification, including CPC Version 2.1, which may be relevant for future\ncommitments, or as and when they are specifically used to describe a commitment. However, the\ninterpretation of existing commitments needs to be undertaken in view of CPC Provisional\nClassification.\n10. There are also significant differences in the structure and content of UN CPC Provisional\nClassification and CPC Version 2.1. Not every classification under the Provisional CPC has a\ncorresponding match in the CPC Version 2.1. Using CPC Version 2.1 classification to interpret a\nMember's commitments that have re lied on the CPC Provisional classification, would therefore\nopen the door for interpretational ambiguities.\nIII. ISSUES RELATING TO ARTICLE XVI:2 OF THE GATS\n11. The form and content of a measure scheduled under Article XVI:2 of GATS is another issue\nfor consideration. India would like to underscore in this regard that any measure that is scheduled\nunder a Member 's Market Access commitments, pertains to measures affecting the supply of\nservices. In this regard, it has been noted in EC-Bananas III, that the disciplines of the GATS\nwould cover any measure bearing upon conditions of competition in supply of a service, regardless\nof whether the measure directly governs or indirectly affects the supply of the service.14\n12. The 1993 Scheduling Guidelines, while e xplaining the ambit of measures to be scheduled\nunder Article XVI:2 of the GATS, notes that \"The list is exhaustive and includes measures which\nmay also be discriminatory according to the national treatment standard (Article XVII) [...] \"15 This\n\n8 Scheduling of Initial Commitments in Trade in Services: Expl anatory Note, MTN.GNS/W/164,\n3 September 1993, para. 16\n9 Statistical Papers Series M No. 77, Ver 2.1, Central Product Classification Version 2.1, Department of\nInternational Economic and Socia l Affairs, Statistics Division, United Nations, New York, 2015,\nST/ESA/STAT/SER.M/77/Ver.2.1\n10 European Union And Its Member States – Certain Measures Relating To The Energy Sector (DS476),\nAdvance Questions From The Panel To The Third Parties Before The Third-Party Session At The First\nSubstantive Meeting, 26 August 2016, para. 5\n11 Guidelines for the Scheduling of Specific Commitments under the General Agreement on Trade in\nServices (GATS), March, 2001\n12 MTN.GNS/W/120, dated 10 July 1991, Note by the Secretariat \"Services Sectoral Classification List\".\n13 Appellate Body Report, US-Gambling, para. 193\n14 Panel Report, EC-Bananas III, para. 7.281\n15 Scheduling of Initial Commitments in Trade in Services: Expl anatory Note, MTN.GNS/W/164,\n3 September 1993, para. 4\n\n- C-5 -\n\nclearly implies that a market access restriction which falls within the types of measures listed in\nArticle XVI:2 (a) to (f), may or may not be discriminatory. The relevant test to be applied by the\nPanel is therefore whether the restriction specified falls within th e type of measure listed under\nArticle XVI:2.\nIV. ISSUES RELATING TO INTERPRETATION OF ARTICLE VI OF THE GATS\n13. This is the first dispute which offers an opportunity for the interpretation of Article VI:1 of\nthe GATS. This provision establishes the general obligation of Members to ensure that all measures\nof general application affecting trade in services are administered in a reasonable, objective, and\nimpartial manner, in sectors where specific commitments have been undertaken. Article VI:1 of\nthe GATS is based on the terms of Article X:1 read with Article X:3(a) of the GATT 1994.\n14. In the context of Article X:1 of the GATT 1994, the terms \"of general application\" has been\ninterpreted to mean that \"the actions in question would have to have a significa nt impact on the\noverall administration of the law, and not simply on the outcome of a single case in question.\"16\n15. The obligation under Article X:3(a) of the GATT 1994 requires administration of \"laws,\nregulations, judicial decisions and administrative rulings\" in a uniform, impartial and reasonable\nmanner. In this regard, the Panel in Argentina-Hides and Leather has observed that the\nexamination under this provision should refer to the \"real effect that a measure might have on\ntraders operating in the commercial world \" explaining that this \"can involve an examination of\nwhether there is a possible impact on the competitive situation due to the alleged partiality,\nunreasonableness or lack of uniformity\".17\n16. The Panel has raised a question with regard to applicability of Article VI:1 of the GATS on\nthe administration of measures of general application, as against the substantive content of those\nmeasures.\n17. Without commenting on the merits of the dispute, India would like to draw the attention of\nthis Panel to the panel 's observation in Argentina-Hides and Leather that even the substance of a\nmeasure may be challenged under this provision if the measure in question is administrative in\nnature. It noted that \"If the substance of a rule could not be chal lenged, even if the rule was\nadministrative in nature, it is unclear what could ever be challenged under Article X. \" The panel\nexplained that there is no requirement in Article X:3(a) of the GATT 1994 that it apply only to\n\"unwritten\" rules, and that such an interpretation would be contrary to that provision's own\nlanguage linking it to Article X:1 of the GATT 1994.18\n18. In India's view, this principle would need to be appropriately applied to the interpretation of\nArticle VI:1 of the GATS in relation to the facts of this dispute.\nV. CONCLUSION\n19. This dispute addresses important interpretive issues under GATS which would benefit from\nfurther clarification in light of the present dispute. India respectfully requests the Panel to\nconsider its views on the interpretive issues set out above. We thank the Panel for providing this\nopportunity.\n\n16 Panel Report, US – Hot-Rolled Steel, para. VII.4\n17 Panel Report, Argentina-Hides and Leather, para 11.77\n18 Panel Report, Argentina-Hides and Leather, paras. 11.70-11.71\n\n- C-6 -\n\nANNEX C-3\nEXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN\nI. GATS ARTICLE XVI\n1. GATS Article XVI:2 applies only with respect to the specific measures that are expressly\ndefined in subparagraphs (a) -(f) and would not apply to measures that indirectly result in the\nmarket access limitations listed under Article XVI:2.1\n2. With regard to GATS Article XVI:2(a), it must be assessed whether a measure specifically\nlimits the number of service suppliers \"in the form of\" any of the elements specified under\nsubparagraph (a), or regulates only the operations which the service suppliers may conduct\nthrough examining the measure 's structure, design and architecture. 2 In this case, as the\nmeasures seek to regulate the vertical structure of a service supplier and the operations of the\nservice supplier or other companies in its Vertically Integrated Undertaking, it would be difficult to\nfind that the measure specifically limits the number of service suppliers, \"in the form of\"\nestablishing a \"monopoly\" or \"exclusive service supplier\".\n3. With regard to GATS Article XVI:2(e), the term \"types of legal entity\" can only be properly\ninterpreted as the corporate form of the entity itself, and not t he broader structure of the group of\ncompanies, or the assignment of ownership or control. The unbundling measures in this case\nconcern the combination of services that a group of companies having a certain vertical structure\ncan provide, regardless of the corporate form of the individual companies themselves, and thus\nwould not be inconsistent with subparagraph (e).\n4. With regard to GATS Article XVI:2(f) , t he use of the term \"foreign\" to qualify \"capital\"\nindicates clearly that subparagraph (f) is not con cerned with all limitations on capital participation,\nbut rather is specifically concerned with limitations tied to the fact that the capital originates\noutside of the Member adopting the limitation. Also, subparagraph (f) specifies only two specific\ntypes of limitations: a maximum percentage limit on foreign shareholding and/or the total value of\nforeign investment. As t he unbundling measures in this case apply equally to all investors,\ndomestic or foreign , and do not impose a maximum percentage limit on e ither foreign\nshareholding or foreign investment, they do not constitute a violation of subparagraph (f).\nII. GATS ARTICLES II and XVII\n5. Japan considers that the analyses required for the \"likeness\" and \"no less favourable\ntreatment\" under GATS Article I I must take into consideration certain regulatory aspects of the\nunbundling measures.\n6. First, with respect to service sectors related to energy, certain regulatory objectives such as\nensuring effective competition and a stable and reliable supply are rel evant for the analysis of\n\"likeness\". For example, under the criteria for analyzing \"likeness\" which include (i) the\ncharacteristics and (ii) consumer preferences, 3 consumer preference will distinguish between\nservices and service suppliers on whether the energy is supplied stably and reliably, and stable\nand reliable supply is one of the required characteristics for services and service suppliers\ncompeting in the energy sector.\n\n1 Panel Report, Argentina – Financial Services, para. 7.418. (footnote omitted)\n2 See Ibid. paras. 7.421, 7.428.\n3 Ibid. para. 6.32. See also, e.g., Appellate Body Report, Argentina – Financial Services, paras. 6.63-\n6.64 (which found that whether access to the tax information of foreign suppliers, which reflects the regulatory\nobjective alleged by Argentina , affected the competitive relationship should be taken into consideration in\nassessing Argentina's arguments concerning the presumption of \"likeness\"); and Appellate Body Report, EC –\nAsbestos, paras. 121-126 (which took into consideration the element of human health risk – a reflection of the\npolicy objective of the measure – in assessing the consumers ' preference criteria under the \"likeness\"\nrequirement of Article III:4 of GATT 1994).\n\n- C-7 -\n\n7. Second, regulatory aspects can and should be taken into consideration when d etermining\nwhether the measure modifies the conditions of competition as part of the analysis of \"no less\nfavourable treatment\". While the Appellate Body in Argentina - Financial Services rejected a two-\nstep legal test for \"less favourable treatment\" that would take regulatory aspects into\nconsideration separately from the examination of the measure's detrimental impact on the\nconditions of competition,4 it also clarified that \"[evidence relating to the regulatory aspects] might\nbe taken into account […] as an integral part of a panel's analysis of whether the measure at issue\nmodifies the conditions of competition to the detriment of like services or service suppliers of any\nother Member\". 5 Measures that increase sound, fair and effective competition in a Member's\nmarket cannot be said to modify the conditions of competition to the detriment of foreign services\nor service suppliers and constitute discrimination prohibited under Article II.\n8. In the service area of energy production, supply and transmission , sound, fair and effective\ncompetition does not typically exist when, due to a natural monopoly, existing suppliers can\narbitrarily or abusively distort or control the supply of the energy or can invest the windfall profit\ngained in the service market to another service, thereby achieving an advantageous position in the\nsecond service supply as well. When a measure is taken to remove or modify such a distortion in\nenergy supply, to the extent necessary to ensure sound, fair and effective competition and a stable\nand reliable energy supply , such modification of the conditions of competition should not be\nregarded as discrimination prohibited under Article II.\n9. Additionally, Japan would like to highlight certain points from the Appellate Body's rejection\nof the two-step analysis in Argentina – Financial Services. First, the prior disputes regarding GATS\nArticles II and XVII did not discuss a particular legitimate regulatory objective that is not provided\nunder the explicit exceptions of GATS (such as Article XIV). Second, this finding was an obiter\ndictum.6 Lastly, while the Appellate Body already rejected the same analysis under Article III:4 of\nGATT 1994 in EC – Seal,7 there are arguments supporting a more flexible interpretation of Article\nIII:4 considering, inter alia, the same \"less favourable treatment\" language with Article 2.1 of the\nTBT Agreement.\n10. Japan is also of the view that the arguments developed above in the context of GATS Article\nII with respect to \"likeness\" and \"no less favourable treatment\", taking into account national policy\nobjectives, also apply to GATS Article XVII.\n11. Finally, with regard to Russia's argument that seemingly implies that the EU should not have\nallowed its member states to choose from certain options, each with a di fferent level of\nunbundling, to implement the unbundling measure , Japan considers that, to the extent each of\nmultiple model options is consistent with the GATS, it shall be cautiously assessed whether a\nmeasure allowing such GATS-consistent options is yet inconsistent with the GATS.\nIII. ARTICLES I AND III of GATT 199\n12. With respect to its claims related to Articles I and III of GATT 1994, Russia has yet to\nelaborate on how such alleged differential treatment between service suppliers has led to less\nfavourable treatment accorded to goods from Russia, in comparison with like products from the EU\nand other WTO Members.\nIV. ARTICLE X:3(a) of GATT 1994\n13. Article X:3(a) of GATT 1994 shall cover general application of rules affecting unidentified\nnumber of economic operators, but not the specific \"application\" of such regulations in each case.\nIn other words, a misapplication of a regulation in a single case does not constitute a violation of\nArticle X:3(a), if not with evidence that the same misapplication arises in a widespread manner, to\nthe extent it establishes or revises a principle or criteria in future cases.\n14. The precedents have found that: (i) with regard to \"administer\" requirement under\nArticle X:3(a), \" [a Member 's actions in a single instance ] in question would have to have a\n\n4 Appellate Body Report, Argentina – Financial Services, para. 6.106. See also paras. 6.111 and 6.125 -\n6.126. Ibid. para. 6.127. (emphasis original)\n6 Ibid. para. 6.83.\n7 Ibid. paras. 6.119-6.121 (citing EC – Seal (AB), paras. 5.87-5.88, 5.90, 5.101 and 5.121-5.125).\n\n- C-8 -\n\nsignificant impact on the overall administration of the law , and not simply on the outcome in this\nsingle case in question\" 8; and (ii) with regard to \"of general application\" requirement under\nArticle X:1, \"[such requirement] should extend to administrative rulings in individual cases where\nsuch rulings establish or revise principles or criteria applicable in future cases\".9 10\nV. GATS ARTICLE VI\n15. The jurisprudence of Article X:3(a) of GATT 1994 may prove informative i n interpreting\nGATS Article VI:1. The panel of China – Raw Materials11 implies that a lack of any standards or\nguidelines might also lead to administration of the measure in a manner that is not reasonable,\nimpartial or objective which constitutes the violation of GATS Article VI:1.\n16. On the other hand, it should be cautiously assessed whether the measure actually lacks any\ndefinition, guidelines or standards in the Member 's municipal law . The respondent may establish\nthe existence of the guidance or standards based on other relevant domestic regulations, including\nadministration practices, that provide for an appropriate safeguard to prevent the measures from\nbeing administered in an unreasonable, non-objective or partial manner.12\nVI. GATS ARTICLE XIV\n(A) GATS Article XIV(a)\n17. As the coverage of \"public order\" of GATS Article XIV(a) is not unlimited , the condition\nprovided in footnote 5 of Article XIV(a) (i.e., whether \"a genuine and sufficiently serious threat is\nposed to one of the fundamental inte rests of society\") should be satisfied. It should also be noted\nthat the \"necessity\" analysis of GATS A rticle XIV(a) necessarily requires clear identification of the\nspecific fundamental interest that the measures allegedly protect. Thus, a Member invoking\nArticle XIV(a) must elaborate and describe what the specific fundamental interest of society under\nthreat is, how the threat \"is posed\" to one of the fundamental interests of society, and why the\nthreat is genuine and sufficiently serious to that interest.\n18. With the EU's argument that \"Third Country Certification \" with a requirement of Security of\nSupply (SOS) is justified under Article XIV(a), Japan does not disagree that disruption of SoS of\nenergy may, under certain circumstances, cause a threat to \" public order\" or a fundamental\ninterest of society. However, Japan notes that SoS cannot be regarded as a single national policy\nobjective or the fundamental interest of society in and of itself for the purpose of\nGATS Article XIV(a). This is because ensuring SoS is a means or tool to achieve various higher\npolicy objectives, some of which appear to constitute \"public morals\" or \"public orders\", while\nothers does not.\n(B) GATS Article XIV(c)\n19. With regard to Article XIV(c), the Panel in US-Gambling held that \"the measure for which\njustification is sought must \"enforce\" \"obligations\" contained in the laws and regulations. 13 \"To\nsecure compliance with\" i.e., \"to enforce\" the underlying laws and regulations is not merely to be\nconsistent with the underlying laws or regulations , but requires that the measures to \"'prevent\nactions that would be illegal under the laws or regulations' at issue.\"14 Also, Japan does not believe\n\n8 Panel Report, US – Hot-Rolled Steel, para. 7.268. (emphasis added)\n9 Panel Report, Japan – Film, para. 10.388. (emphasis added) See also Appellate Body Re port, EC –\nPoultry, para. 111 (which found that \"Article X does not deal with specific transactions, but rather with rules 'of\ngeneral application'\"(emphasis added)).\n10 See also Panel Report, US – Stainless Steel (Korea), para. 6.50 (which found that \"[the WTO dispute\nsettlement system] was not …intended to function as a mechanism to test the consistency of a Member 's\nparticular decisions or rulings with the Member's own domestic law and practice; this is a function reserved for\neach Member 's domestic judicial system, and a function WTO panels would be particularly ill -suited to\nperform\".).\n11 Panel Report, China – Raw Materials, para. 7.752.\n12 See Panel Report, China – Raw Materials, para. 7.777.\n13 US-Gambling (Panel) para.6.538\n14 India – Solar Cells (Panel) (para. 7.328) citing GATT Panel Report, EEC – Parts and Components ,\npara. 5.15.\n\n- C-9 -\n\nthat \"enforce\" would extend to the case where a government secures its own compliance with WTO\nobligations.\n20. Japan also understands that EU directives cannot impose obligations on services or service\nsuppliers without transpositions by each EU member state. In the sectors involved in this case, the\nEU made commitment in the name of each EU member state, not EU itself. This appears to confirm\nthat an EU directive itself cannot be GATS -inconsistent with regard to the commitments. However,\nin light of the EU's argument that the implementing measures by each EU member can be justified\nby GATS A rticle XIV(c) as it is intended to secure compliance with an EU -wide directive. Such\ndirective by its nature cannot be GATS -inconsistent. This interpretation could unreasonably create\na loophole to circumvent GATS -commitments by EU member states. Japan is also concerned\nwhether EU directives and EU Member's national law that transposes such directives are not in\nrelation of \"an obligation and its enforcement\" as foreseen under subparagraph (c).\n(C) Preference for GATS Articles II and XVII\n21. While the policy objective of ensuring the competition in the energy sector may be taken\ninto consideration under GATS Article XIV(a), this may lead to the unreasonable conclusion that\nthe unbundling measure can be justified under GATS but not under GATT 1994, as \"public order\"\ndoes not appear in Article XX(a) of GATT 1994 . We consider that this objective would be more\nsuitable to be considered under GATS Articles II and XVII by taking a harmonious and consistent\ninterpretation of NT/MFN under GATT 1994 and GATS , in light of their same purpose (i.e., equality\nof opportunity to compete) and design and the same text.\n\n- C-10 -\n\nANNEX C-4\nEXECUTIVE SUMMARY OF THE ARGUMENTS OF UKRAINE\nI. CRITICAL ISSUES RELATED TO CLAIMS OF THE RUSSIAN FEDERATION\nREGARDING THE UNBUNLDING MEASURE\n1. Ukraine observe that the intention of Directive 2009/73/EC of the European Parliament and\nof the Council of 13 July 2009 (hereinafter – \"the Directive\"), is that the unbundling requirements\napply equally to private and public entities. 1 Article 9(6) of the Directive is designed specifically to\nensure that the principle of non-discrimination between different types of property is respected.2\n2. Ukraine notes that the Russian Federation does not explain or provide any solid evidence or\njustification that the un bundling measure affects the internal sale, distribution or use of natural\ngas in order to establish if a measure at issue violates Article III:4 of the GATT 1994. Ukraine also\nobserves that the Russian Federation does not provide any sufficient evidence i n order\nto consider that the difference in the organizational aspects of three unbundling models do impact\n\"the equality of opportunities \" between gas from the Russian Federation and gas from\nthe European Union.\n3. In Ukraine's view, the unbundling measure does not affect trade in goods under Articles I:1\nand III:4 of the GATT 1994 including that the Russian Federation failed to show existing of\ndiscrimination under these articles of the GATT 1994. In particular, three unbundling models may\nnot have a \"detrimental impact \" on the competitive opportunities for gas from the Russian\nFederation, and does not modify the equality of competitive opportunities between imported\nproducts.\nII. CRITICAL ISSUES RELATED TO CLAIMS OF THE RUSSIAN FEDERATION\nREGARDING THE THIRD COUNTRY CERTIFICATION MEASURES\n4. Ukraine observes that the Russian Federation 's claims in the Panel Request concern the\nunbundling measure, exemption for upstream pipeline network and LNG and TEN -E measure with\nrespect to Article III:4 of the GATT 1994, on the other hand the claim regarding the third country\ncertification measure under Article III:4 of the GATT 1994 was not included into the Panel Request\nby the Russian Federation.\n5. While the Russian Federation states that the third country certificat ion measure has\na detrimental impact on the conditions of competitions for imported natural gas of other WTO\nMembers3, it does not demonstrate on how exactly such measure exerts this effect.\nIII. CRITICAL ISSUES RELATED TO CLAIMS OF THE RUSSIAN FEDERATION\nREGARDING THE INFRASTRUCTURE EXEMPTION MEASURE\n6. As Ukraine noted in its Third Party Written Submission, the \"infrastructure exemption\nmeasure\" grants an \"advantage\" when it creates \"more favorable competitive opportunities \" or\naffects the commercial relationship between products of different origin.\n7. Ukraine observes that while stating that the infrastructure exemption measure detrimentally\nimpacts the \"equality of competitive opportunities \" between the Azeri gas and gas from the\nRussian Federation in the European Union, the Russian Federation does not provide any facts or\narguments regarding how the equality of opportunities of Azeri gas and gas from the Russian\nFederation are affected.\n8. It is highly doubtful that the infrastructure exemption measure may possess characteristics\nof differentiation between natural gas of different origin, so that the test under Article I:1 of the\nGATT 1994 could be met.\n\n1 Recital (20) of Directive 20009/73/EC.\n2 Recital (2) of Directive 2009/73/EC.\n3 FWS RF, para 502.\n\n- C-11 -\n\n9. Ukraine also considers that the Russian Federation has wrongly applied Article XXVIII of the\nGATS b y designating NEL GT and OPAL GT as \"commercial presence \" of Russian 's company\nGazprom in Germany.\n10. Ukraine observes that in case of the commercial presence the \"place of constitution\" by itself\nis not sufficient. In order to capture the foreign nature of a subsidiary and to ensure that its\nactivities are cornered by the GATS, it is required that the entity be either \"owned\" or \"controlled\"\nby person of another WTO Member (by a Member where the parent company is established).4\n11. Finally, in Ukraine 's v iew, the Russian Federation failed both to provide and demonstrate\nevidentiary material and proofs per the claim and the existence of all complained violations.\n\n- D-1 -\n\nANNEX D\nPRELIMINARY RULINGS BY THE PANEL\nContents Page\nAnnex D-1 First Preliminary Ruling by the Panel (conclusions), 9 May 2016 D-2\nAnnex D-2 Second Preliminary Ruling by the Panel (conclusions), 10 November 2016 D-3\n\n- D-2 -\n\nANNEX D-1\nFIRST PRELIMINARY RULING BY THE PANEL (CONCLUSIONS)\n1 BACKGROUND\n1.1. On 18 March 2016, the European Un ion submitted to the Panel a request for a preliminary\nruling to the effect that certain measures contained in the Russian Federation's (Russia) request\nfor the establishment of a panel (panel request) 1 raise new matters that were not covered by\nRussia's request for consultations (consultations request)2 and are, therefore, outside the Panel's\nterms of reference. More specifically, the European Union asked the Panel to rule that the\n\"Capacity Allocation Measures\" (CA measures) and the \"Projects of Common In terest Measures\"\n(PCI measures) contained in, respectively, Sections II and III of Russia's panel request\nimpermissibly expanded the scope of the dispute, thereby changing its essence. 3 The European\nUnion also asked the Panel to issue its ruling as soon as possible and, in any event, before the\ndate on which Russia is required to file its first written submission.4\n1.2. Russia submitted its response to the European Union's request for a preliminary ruling on\n18 April 2016. In its response, Russia opposed the Eur opean Union's request and asked the Panel\nto find that the CA measures and the PCI measures were identified in the consultations request\nand, therefore, are properly within the Panel's terms of reference.5\n1.3. The Panel provided third parties with an opportun ity to comment on the European Union's\npreliminary ruling request. Only Colombia and Ukraine submitted comments on 25 April 2016.\n1.4. Pursuant to the timetable adopted on 31 March 2016, the Panel committed to indicate, on\n9 May 2016, how it would dispose of the European Union's request for a preliminary ruling. Having\ncarefully considered the European Union's request, the response by Russia, and the comments of\nthe aforementioned third parties, and taking into account the European Union's request that the\nPanel rule on its request before Russia files its first written submission, the Panel has decided to\ncommunicate its conclusions on the European Union's request today, 9 May 2016. More detailed\nreasons in support of these conclusions will be provided as soon as possible and, in any event, no\nlater than the date of the issuance of the Interim Report. This approach of issuing a prompt\ndecision followed by the panel's reasoning at a later date has been followed by other panels6 and is\ntaken in the interest of efficiency of proceedings.\n1.5. A copy of this Ruling will be transmitted to the third parties for information.\n2 PRELIMINARY RULING OF THE PANEL (CONCLUSIONS)\n2.1. The Panel finds that the matters contained in Sections II (CA measures) and III (PCI\nmeasures) of Russia's panel request are sufficiently identified in the consultations request and that\nthe inclusion of these matters in Russia's panel request did not expand the scope or change the\nessence of the dispute . The Panel concludes, therefore, that those matters fall within its terms of\nreference.\n2.2. Finally, we note that these conclusions, together with the reasons supporting them, will\nbecome an integral part of our Final Report, subject to any change that may be necessary in the\nlight of comments received from the parties during the interim review.\n\n1 WT/DS476/2.\n2 WT/DS476/1.\n3 European Union's request for a preliminary ruling, paras. 2 and 4.\n4 European Union's request for a preliminary ruling, para. 43.\n5 Russia's response to the European Union's request for a preliminary ruling, para. 1.\n6 See, for instance, Panel Reports, Canada – Renewable Energy / Canada – Feed in Tariff Program,\n\n- D-3 -\n\nANNEX D-2\nSECOND PRELIMINARY RULING BY THE PANEL (CONCLUSIONS)\n1 BACKGROUND\n1.1. On 28 October 2016, the European Union requested the Panel to issue a preliminary ruling to\nthe effect that certain of Russia's claims, or their parti cular aspects, are outside the Panel's terms\nof reference. The European Union's terms of reference objections that form the basis of this\nrequest were provided in two stages.\n1.2. Initially, i n it s first written submission, the European Union raised six terms o f reference\nobjections concerning Russia's first written submission. 1 In its comments on Russia's response to\nPanel question Nos. 5 and 17, the European Union submitted further objections. 2 These objections\nconcerned Russia's Claims 1 through 3, 7, 9 throu gh 18, 21, 27, and 29 through 31, or particular\naspects of such claims, as referred to in Russia's response to Panel question No. 5.3 On that\noccasion, the European Union also reiterated its six original terms of reference objections.\n1.3. The Panel provided Ru ssia with the opportunity to respond to the European Union's original\nsix terms of reference objections, as well as the European Union's further objections. 4 In its\ncomments on the European Union's comments, Russia agreed with the European Union that Claim\n18 was outside the Panel's terms of reference and indicated that it would no longer pursue Claim\n18 as part of these proceedings. 5 Russia, however, contested the European Union's objections\nconcerning the rest of Russia's claims, arguing that they were wi thin t he Panel's terms of\nreference.\n1.4. In its communication of 28 October 2016, the European Union requested the Panel to issue a\npreliminary ruling on the objections raised by the European Union sufficiently in advance of the\ndate for the filing of the part ies' second written submissions and to indicate the date on which the\nPanel intended to rule on its objections. On the same day, the Panel issued a communication to\nthe parties indicating that it would decide on how it would dispose of the European Union's terms\nof reference objections no later than on 14 November 2016. In the same communication, the\nPanel conveyed its decision not to consider the European Union's terms of reference objection\nconcerning Russia's Claim 18.6\n1.5. Having carefully considered the E uropean Union's request, and guided by the considerations\nof due process and efficiency of panel proceedings, the Panel has decided to communicate its\nconclusions on the European Union's request today, 10 November 2016. More detailed reasons in\nsupport of these conclusions will be provided in due course and, in any event, no later than the\ndate of the issuance of the Interim Report.\n\n1 European Union's first written submission, paras. 421-422, 546-551, 553-556, 567-570, 578-581, and\n617-618.\n2 European Union's comments on Russia's response to Panel question Nos. 5 and 17.\n3 Throughout this preliminary ruling, the Panel refers to Russia's claims as provided in Russia's response\nto Panel question No. 5.\n4 See Panel question No. 17 and Russia's comments on the European Union's comments on Russia's\nresponse to Panel question Nos. 5 and 17.\n5 Russia's comments on the European Union's comments on Russia's response to Panel question Nos. 5\nand 17.\n6 The relevant part of the Panel's communication reads as follows:\nFurthermore, the Panel takes this opportunity to acknowledge the agreement of the Russian Federation,\nin paragraph 7 of its comments on the European Union's comments, with the European Union's contention that\n\"Claim 18\" does not fall within the Panel's terms of reference and the statement of the Russian Federation that\nit is no longer pursuing this claim. In light of this, the Panel does not consider it necessary to rule on the terms\nof reference objection raised by the European Union in relation to this claim in paragraphs 60 through 62 of its\ncomments.\n\n- D-4 -\n\n2 PRELIMINARY RULING OF THE PANEL (CONCLUSIONS)\n2.1. The Panel affirms its decision not to rule on the terms of reference objection raised by the\nEuropean Union in relation to Russia's Claim 18 communicated to the parties on 28 October 2016.7\nThe Panel's conclusions regarding the rest of the European Union's terms of reference objections\nare provided below.\n2.2. The Panel considers that th e following claims by Russia fall outside the Panel's terms of\nreference: Claims 7, 9, and 11; alternative \"as applied\" Claims 29 through 31; Claim 16, as\ndeveloped in paragraphs 449 through 454 of Russia's first written submission; and Claim 27. The\nPanel, however, wishes to clarify that it is not ruling that Russia's Claim 16, as described in the\nfirst full paragraph on the third page of Russia's panel request,8 falls outside its terms of reference.\nThe Panel also clarifies that Russia may advance in thes e proceedings its Claims 6, 8, and 10, 9 as\nwell as the remaining aspects of its Claims 29 through 31, in accordance with its panel request and\nas subsequently confirmed in its first written submission.\n2.3. The Panel finds the following claims by Russia to be w ithin its terms of reference: Claims 12\nthrough 14; and Claim 21. The Panel confirms its understanding that the measure challenged by\nRussia's Claim 21 is described on page 4 of Russia's panel request as follows:\nThe Russian Federation also considers that the OPAL gas release requirement also\nviolates Article X:3(a) of GATT 1994. Specifically, by imposing the 3 bcm gas release\nrequirement under the conditions described above only on imported Russian gas, but\nnot third -country gas transported through pipel ines subject to other exemption\ndecisions, the EU has failed to administer the infrastructure exemption provisions in\nthe Directive and the SEP in a uniform, impartial and reasonable manner, including\nwith regard to the sale, distribution and transportation of natural gas.\nThe Panel thus finds that Russia's Claim 21, as described above, is within its terms of\nreference.\n2.4. The Panel takes note of Russia's clarification that its challenge under Article XVI of the GATS\nis directed at the laws of Croatia, Hungar y and Lithuania implementing the unbundling\nrequirements of Directive 2009/73/EC. The Panel thus understands that Directive 2009/73/EC is a\nrelevant legal instrument, although not a challenged measure in respect of Russia's Claims 1\nthrough 3. The Panel th erefore does not consider it necessary to address the European Union's\nconcerns in relation to these claims.\n2.5. To ensure an objective assessment of the matter before it , the Panel refrains from providing\na definitive ruling at this stage of the proceedings o n the European Union's terms of reference\nobjections regarding Russia's Claims 10, 15 and 17, and confirms the following:\n In light of Russia's clarifications, the Panel will not consider Lithuania' s grant of\npriority to natural gas supplied by Litgas UAB t hrough the Klaipeda LNG Terminal and the\nsupply agreement between Litgas and Statoil as challenged measures in respect of Claim\n10. The Panel, however, declines to rule at this stage of the proceedings on whether\nRussia's reference to Lithuania's grant of priority to natural gas supplied by Litgas UAB\nthrough the Klaipeda LNG Terminal and the supply agreement between Litgas and Statoil\nin its first written submission constitutes a separate claim that falls outside the Panel's\nterms of reference.10\n\n7 As set out in the Panel's communication of 28 October 2016. See above fn 6.\n8 WT/DS476/2.\n9 Subject to the Panel's clarification in para. 2.5 below and to any subsequent decision the Panel may\ntake in relation to the European Union's objections regarding Russia's Claim 10.\n10 In light of the Panel's finding in para. 2.2 above that Russia's Claim 11 falls outside its terms of\nreference, the Panel does not consider it necessary to rule on the European Union's objections concerning\nRussia's reference to Lithuania's grant of priority to natural gas supplied by Litgas UAB through the Klaipeda\nLNG Terminal and the supply agreement between Litgas and Statoil in its first written submission in the context\nof this claim.\n\n- D-5 -\n\n The Panel further declines to rule at this stage of the proceedings on whether Articles\n20(5) and 29(4)(3) of Lithuania's Law on Natural Gas and Article 123 of Hungary's Gas Act\nare within its terms of reference in respect of Russia's Claim 15.\n In light of Russia's clarifications, the Panel will not consider the Commission's\ncertification opinions regarding TIGF and DESFA as challenged measures in respect of\nClaim 17. The Panel, however, declines to rule at this stage of the proceedings on whether\nRussia's reference to these two opinions in its first written submission constitutes a\nseparate claim that falls outside the Panel's terms of reference.\n2.6. The Panel takes this opportunity to invite further views and clarifications from the parties on\nthe scope and nature of Russia's Claims 10, 15 and 17 in their second written submissions.\n2.7. Finally, the Panel notes that these conclusions, together with the reasons supporting them,\nwill become an integral part of its Final Report, subject to any change that may be necessary in\nthe light of comments received from the parties during the interim review."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.863905"}}},{"rowIdx":7791,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ08_Report_Of_Panel_00.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ08_Report_Of_Panel_00.pdf"},"doc_sequence":{"kind":"number","value":8,"string":"8"},"doc_type":{"kind":"string","value":"Report_Of_Panel"},"doc_type_raw":{"kind":"string","value":"Panel Report"},"doc_class":{"kind":"string","value":"PANEL_REPORT"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":0,"string":"0"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR COMMUNICATION FROM THE APPELLATE BODY"},"date":{"kind":"string","value":"21 November 2018"},"header_codes":{"kind":"string","value":"WT/DS476/8"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING\nTO THE ENERGY SECTOR\nCOMMUNICATION FROM THE APPELLATE BODY\nThe following communication, dated 20 November 2018, from the Chair of the Appellate Body to the\nChair of the Dispute Settlement Body, is being circulated to Members.\n\nI am writing pursuant to Article 17.5 of the Understanding on Rules and Procedures Governing the\nSettlement of Disputes (DSU), which states that, as a general rule, the Appellate Body will circulate its\nReport no later than 60 days after the appellant has formally notified the Dispute Settlement Body\n(DSB) of its decision to appeal. Article 17.5 further states that when the Appellate Body considers that\nit cannot provide its Report within 60 days, \"it shall inform the DSB in writing of the reasons for the\ndelay together with an estimate of the period within which it will submit its Report. In no case shall\nthe proceedings exceed 90 days.\"\n\nThe European Union notified the DSB on 21 September 2018 of its decision to appeal certain issues of\nlaw covered in the Panel Report and legal interpretations developed by the Panel in this case. As\na result, the 60-day period expires on 20 November 2018. The Appellate Body is not able to circulate\nits Report by that date.\n\nThe Appellate Body is also not able to circulate its report within the 90-day timeframe provided for\nin the last sentence of Article 17.5 of the DSU. In this respect, we refer to the size of the Panel record\nand the complex issues appealed. We further note that in view of the backlog of appeals pending with\nthe Appellate Body at present, the overlap in the composition of all divisions resulting in part from the\nreduced number of Appellate Body Members, together with the shortage of staff in the Appellate Body\nSecretariat, Division Members can currently spend only very little time preparing for this appeal. It will\nnot be possible for the Division to focus on the consideration of this appeal and for it to be fully staffed\nfor some time.\n\nAs soon as we know more precisely when the division can schedule the hearing in this appeal, we will\ninform the participants and DSB Members."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:36.864719"}}},{"rowIdx":7792,"cells":{"folder_number":{"kind":"string","value":"476"},"case_number":{"kind":"string","value":"476"},"original_filename":{"kind":"string","value":"DS476_SEQ09_Report_Of_Panel_01.pdf"},"new_filename":{"kind":"string","value":"DS476_SEQ09_Report_Of_Panel_01.pdf"},"doc_sequence":{"kind":"number","value":9,"string":"9"},"doc_type":{"kind":"string","value":"Report_Of_Panel"},"doc_type_raw":{"kind":"string","value":"REPORT OF THE PANEL"},"doc_class":{"kind":"string","value":"PANEL_REPORT"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":1,"string":"1"},"case_title":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR REPORT OF THE PANEL BCI DELETED, AS INDICATED [***]"},"date":{"kind":"string","value":"10 August 2018"},"header_codes":{"kind":"string","value":"WT/DS476/R"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['Russia']"},"respondent":{"kind":"string","value":"['EU']"},"third_parties":{"kind":"string","value":"['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia']"},"dispute_stage":{"kind":"string","value":"Panel"},"agreements_cited":{"kind":"string","value":"Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS)"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 27 November 2018\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by the Russian Federation\nOn 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating to the energy sector through the so-called “Third Energy Package” Directives, Regulations, implementing legislation and decisions.\nThe Russian Federation claims that the measures are inconsistent with the European Union's obligations under:\nOn 11 May 2015, the Russian Federation requested the establishment of a panel. At its meeting on 19 June 2015, the DSB deferred the establishment of a panel.\n\nPanel and Appellate Body proceedings\nAt its meeting on 20 July 2015, the DSB established a panel. Brazil, China, India, Japan, Ukraine and the United States reserved their third-party rights. Subsequently, Colombia, Korea and Saudi Arabia also reserved their third‑party rights.\nOn 22 February 2016, the Russian Federation requested the Director-General to compose the panel. On 7 March 2016, the Director-General composed the panel.\nOn 18 August 2016, the Chairperson of the panel informed the DSB that it expected to issue its final report to the parties in May 2017, in accordance with the timetable adopted after consultation with the parties. On 4 April 2017, the Chair of the panel informed the DSB that, due to the complexity of the dispute and the large volume of evidence, the panel expected to issue its final report to the parties no later than the end of 2017, in accordance with the revised timetable adopted after consultation with the parties.\nOn 10 August 2018, the panel report was circulated to Members."},"page_count":{"kind":"number","value":376,"string":"376"},"clean_text":{"kind":"string","value":"EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES\nRELATING TO THE ENERGY SECTOR\nREPORT OF THE PANEL\nBCI DELETED, AS INDICATED [***]\n\nLIST OF ANNEXES\nANNEX A\nWORKING PROCEDURES OF THE PANEL\nContents Page\nAnnex A-1 Working Procedures of the Panel A-2\nAnnex A-2 Additional Working Procedures on BCI A-7\nANNEX B\nARGUMENTS OF THE PARTIES\nRUSSIA\nContents Page\nAnnex B-1 First part of the executive summary of the arguments of Russia B-2\nAnnex B-2 Second part of the executive summary of the arguments of Russia B-17\nEUROPEAN UNION\nContents Page\nAnnex B-3 First part of the executive summary of the arguments of the European Union B-26\nAnnex B-4 Second part of the executive summary of the arguments of the European Union B-41\nANNEX C\nARGUMENTS OF THE THIRD PARTIES\nContents Page\nAnnex C-1 Executive summary of the arguments of Colombia C-2\nAnnex C-2 Executive summary of the arguments of India C-3\nAnnex C-3 Executive summary of the arguments of Japan C-6\nAnnex C-4 Executive summary of the arguments of Ukraine C-10\nANNEX D\nPRELIMINARY RULINGS BY THE PANEL\nContents Page\nAnnex D-1 First Preliminary Ruling by the Panel (conclusions), 9 May 2016 D-2\nAnnex D-2 Second Preliminary Ruling by the Panel (conclusions), 10 November 2016 D-3\n\nEXHIBITS FREQUENTLY CITED IN THIS REPORT\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\nEU-1 Regulation (EC) No. 715/2009 of the European Parliament and of the\nCouncil of 13 July 2009 on conditions for access to the natural gas\ntransmission networks and repealing Regulation (EC) No. 1775/2005\n(Text with EEA relevance), OJ L 211/36 of 14.8.2009\nEU-3 Regulation (EU)\nNo. 1391/2013\nCommission Delegated Regulation (EU) No. 1391/2013 of 14 October\n2013, amending Regulation (EU) No. 347/2013 of the European\nParliament and of the Council on guidelines for trans-European energy\ninfrastructure as regards the Union list of projects of common interest,\nOJ L 349/28 of 21.12.2013\nEU-4 TEN-E Regulation Regulation (EU) No. 347/2013 of the European Parliament and of the\nCouncil of 17 April 2013 on guidelines for trans-European energy\ninfrastructure and repealing Decision No. 1364/2006/EC and amending\nRegulations (EC) No. 713/2009, (EC) No. 714/2009 and (EC) No.\n715/2009 (Text with EEA relevance), OJ L 115/39 of 25.4.2013\nEU-5 Directive 2009/73/EC Directive 2009/73/EC of the European Parliament and of the Council of 13\nJuly 2009 concerning common rules for the internal market in natural gas\nand repealing Directive 2003/55/EC (Text with EEA relevance),\nOJ L 211/94 of 14.8.2009\nEU-6 Regulation (EC)\nNo. 713/2009\nRegulation (EC) No. 713/2009 of the European Parliament and of the\nCouncil of 13 July 2009 establishing an Agency for the Cooperation of\nEnergy regulators (Text with EEA relevance), OJ L 211/1 of 14.8.2009\nEU-10/\nRUS-4\n Directive 2003/55/EC of the European Parliament and of the Council of 26\nJune 2003 concerning common rules for the internal market in natural gas\nand repealing Directive 98/30/EC, OJ L 176/57 of 15.7.2003\nEU-15/\nRUS-38\nW/120 Services Sectoral Classification List, Note by the Secretariat,\nMTN.GNS/W/120 (10 July 1991)\nEU-16/\nRUS-37\n Schedule of Specific Commitments of Croatia, GATS/SC/130\n(22 December 2000)\nEU-17/\nRUS-36\n Schedule of Specific Commitments of Hungary, GATS/SC/40 (15\nApril 1994)\nEU-19/\nRUS-35\n Schedule of Specific Commitments of Lithuania, GATS/SC/133\n(21 December 2001)\nEU-24 Oxford English Dictionary Online, definition of \"service, n.1\"\nhttp://www.oed.com/view/Entry/176678?rskey=JSiVqR&result=1&isAdva\nnced=false#eid (accessed 1 July 2016)\nEU-26 US Department of Transportation, Pipeline & Hazardous Materials Safety\nAdministration, \"Stakeholder Communications: Natural Gas Pipeline\nSystems\"\nhttps://primis.phmsa.dot.gov/comm/NaturalGasPipelineSystems.htm\n(accessed 1 July 2016)\nEU-27 MIT Study on the Future of Natural Gas, Chapter 6, \"Infrastructure\", pp.\n131-146, available at:\nhttp://energy.mit.edu/research/future-natural-gas/ (accessed 3 August\n2017)\nEU-28 NaturalGas.org, \"Natural Gas – From Wellhead to Burner Tip\"\nhttp://naturalgas.org/naturalgas/ (accessed 3 August 2017)\nEU-29 US Energy Information Administration, Natural Gas Transmission Path\nhttp://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipe\nline/transpath_fig.html (accessed 1 July 2016)\nEU-32 HS Chapter 27 Harmonized Commodity Description and Coding System, Chapter 27,\navailable at: www.wcoomd.org (accessed 3 August 2017)\nEU-34 CPC 2.1 code 65131 CPC Ver.2.1 code 65131, Detailed structure and explanatory notes, United\nNations Statistics Division, Classifications Registry\nhttp://unstats.un.org/unsd/cr/registry/regcs.asp?Cl=31&Lg=1&Co=65131\n(accessed 1 July 2016)\n\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\nEU-37 CPC 2.1 code 67990 CPC Ver.2.1 code 67990, Detailed structure and explanatory notes, United\nNations Statistics Division, Classifications Registry\nhttp://unstats.un.org/unsd/cr/registry/regcs.asp?Cl=31&Lg=1&Co=67990\n(accessed 1 July 2016)\nEU-40 Working Party on Domestic Regulation, Informal Note by the Secretariat,\n\"Examples of measures to be addressed by Disciplines under GATS Article\nVI:4\", JOB(02)/20/Rev.10 (31 January 2005)\nEU-41 Hungary's Gas Act Hungary's Act XL of 2008 on Natural Gas Supply – In Force on 31 March\n2012 (extracts of an unofficial consolidated version incorporating\nGovernment Decree No. 19/2009 (I.30.) on the implementation of the Act\non Natural Gas Supply)\nEU-42/\nRUS-19\nCommission\nInterpretative Note\non the Unbundling\nRegime\nCommission Staff Working Paper, Interpretative Note on Directive\n2009/72/EC Concerning Common Rules for the Internal Market in\nElectricity and Directive 2009/73/EC Concerning Common Rules for the\nInternal Market in Natural Gas – The Unbundling Regime\n(22 January 2010)\nEU-51 Commission opinion\non the certification of\nEnerginet.dk\nCommission Opinion of 9 January 2012 pursuant to Article 3(1) of\nRegulation (EC) No. 715/2009 and Article 10(6) of Directive 2009/73/EC\n– Denmark – Certification of Energinet.dk (gas), C(2012) 88 final\nEU-52 Commission opinion\non the certification of\nGTS\nCommission Opinion of 1 July 2013 pursuant to Article 3(1) of Regulation\n(EC) No. 715/2009 and Article 10(6) of Directive 2009/73/EC – the\nNetherlands - Certification of Gas Transport Services B.V., C(2013) 4205\nfinal\nEU-53/\nRUS-53\nCommission opinion\non the certification of\nMGT\nCommission Opinion of 17 February 2015 pursuant to Article 3(1) of\nRegulation (EC) No. 715/2009 and Article 10(6) of Directive 2009/73/EC\n– Hungary – Certification of Magyar Gáz Tranzit Zrt., C(2015) 1046 final\nEU-54/\nRUS-50\nCommission opinion\non the certification of\nAmber Grid\nCommission Opinion of 23 March 2015 pursuant to Article 3(1) of\nRegulation (EC) No. 715/2009 and Article 10(6) of Directive 2009/73/EC\n– Lithuania – Amber Grid, C(2015) 2135\nEU-67 Decision of the\nFrench NRA on the\ncertification of TIGF\nDecision of the French Commission for the Regulation of Energy (CRE) of\n4 June 2014 on the certification of Transport et Infrastructures Gaz\nFrance (TIGF)\nEU-68 Decision of the Greek\nNRA on the\ncertification of DESFA\nDecision of the Greek Regulatory Authority for Energy (RAE) of 25\nSeptember 2014 on the certification of the Hellenic Transmission System\nOperator (DESFA)\nEU-69 Decision of the Polish\nNRA on the\ncertification\nof Gaz-System\nDecision of 19 May 2015 of the Polish Energy Regulatory Office (ERO) on\nthe certification of Gazociągów Przesyłowych Gaz-System Spółka Akcyjna\n(Gaz-System) in connection with its function as the transmission system\noperator on the Polish section of the Yamal-Western Europe pipeline\nEU-70 International Energy Agency, Energy supply security: Emergency\nResponse of IEA Countries 2014 (OECD/IEA 2014)\nEU-71 United Nations Economic Commission for Europe, Emerging Global Energy\nSecurity Risks, No. 36 (2007), pp. 8-9\nEU-73 Regulation (EU)\nNo. 994/2010\nRegulation (EU) No. 994/2010 of the European Parliament and of the\nCouncil of 20 October 2010 concerning measures to safeguard security of\ngas supply and repealing Council Directive 2004/67/EC (Text with EEA\nrelevance), OJ L 295/1 of 12.11.2010\nEU-93 R. Adlung, P. Morrison, M. Roy and W. Zhang, \"FOG in GATS\nCommitments – Boon or Bane?\", Staff Working Paper ERSD-2011-04,\nWorld Trade Organization, Economic Research and Statistics Division\n(31 March 2011)\nEU-101 Commission Merger\nJurisdictional Notice\nCommission Consolidated Jurisdictional Notice under Council Regulation\n(EC) No. 139/2004 on the control of concentrations between\nundertakings, 2008/C 95/01\nEU-104 Commission Decision of 31 March 2011 on China National Bluestar/Elkem\nnotification pursuant to Article 4 of Council Regulation No. 139/2004,\nCase COMP/M.6082\nEU-106 Commission Decision of 19 May 2011 on DSM/Sinochem/JV notification\npursuant to Article 4 of Council Regulation (EC) No. 139/2004, Case\nCOMP/M.6113\n\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\nEU-110 Shareholdings in TSOs in the European Union (BCI)\nEU-131 Resolution of the Government of the Russian Federation No. 1017 of 5\nOctober 2012 on measures implementing Decree of the President of the\nRussian Federation No. 1285 of 11 September 2012\nEU-143 Commission's\ncomments to the\nGate Terminal\nexemption decision\nCommission's comments of 26 March 2007 to the Decision of the Dutch\nMinistry of Economic Affairs of 23 November 2006 No. G/2006/01 on the\nexemption of the Gate Terminal project from certain parts of the Gas\nDirective 2003/55\nEU-146 Eurostat statistics on production, imports, exports and consumption of\ngas in the European Union between 2011 and 2015\nEU-155 Hungary's Gas Act Hungary's Gas Act XL of 2008, including the amendments made after\n31 May 2012\nEU-166 US Department of Transportation, Pipeline & Hazardous Materials Safety\nAdministration, \"Stakeholder Communications: Natural Gas Processing\nPlants\"\nhttps://primis.phmsa.dot.gov/comm/FactSheets/FSNaturalGasProcessingP\nlants.htm (accessed 23 March 2017)\nEU-190 Eurostat statistics on\nnatural gas supplies\nand consumption\nEurostat statistics on natural gas supplies to the European Union and\nmember States by partner, volume and share between 2006 and 2015,\nand gross inland consumption of natural gas in the EU member States\nbetween 2006 and 2015\nRUS-2 Regulation (EU)\nNo. 2016/89\nCommission Delegated Regulation (EU) No. 2016/89 of 18 November\n2015 amending Regulation (EU) No. 347/2013 of the European Parliament\nand of the Council as regards the Union list of projects of common\ninterest, OJ L 19/1 of 27.1.2016\nRUS-5 Communication from the Commission to the European Parliament and the\nCouncil, European Energy Security Strategy, COM(2014) 330 final,\n(28 May 2014)\nRUS-6 Regulation (EC) No. 1775/2005 of the European Parliament and of the\nCouncil of 28 September 2005 on conditions for access to the natural gas\ntransmission networks (Text with EEA relevance), OJ L 289/1\nof 3.11.2005\nRUS-7 Decision No. 1364/2006/EC of the European Parliament and of the Council\nof 6 September 2006 laying down guidelines for trans-European energy\nnetworks and repealing Decision 96/391/EC and Decision\nNo. 1229/2003/EC, OJ L 262/1 of 22.9.2006\nRUS-8 Commission Staff Working Document Accompanying Commission\nDelegated Regulation (EU) No. 2016/89 of 18 November 2015 amending\nRegulation (EU) No. 347/2013 of the European Parliament and of the\nCouncil as regards the Union list of projects of common interest,\nSWD(2015) 247 of 18.11.2015\nRUS-10 Commission decision\non the exemption of\nthe TAP pipeline\nCommission Decision of 16 May 2013 on the exemption of the Trans\nAdriatic Pipeline from the requirements on third party access, tariff\nregulation and ownership unbundling laid down in Articles 9, 32, 41(6),\n41(8) and 41(10) of Directive 2009/73/EC, C(2013) 2949\nRUS-22 Lithuania's Law on\nImplementation\nLaw of the Republic of Lithuania of 30 June 2011 No. XI-1565 on the\nImplementation of the Law Amending the Law on Natural Gas\nRUS-27 Commission\nExplanatory Note on\nNew Infrastructure\nExemptions\nCommission Staff Working Document on Article 22 of Directive\n2003/55/EC Concerning Common Rules for the Internal Market in Natural\nGas and Article 7 of Regulation (EC) No. 1228/2003 on Conditions for\nAccess to the Network for Cross-border Exchanges in Electricity – New\nInfrastructure Exemptions, SEC(2009) 642 final (6 May 2009)\nRUS-28 Sprague Natural Gas Glossary,\nhttp://www.spragueenergy.com/natgas/additional-resources/glossary\n(accessed 10 May 2016)\nRUS-29 H. R. Williams and C. J. Myers (eds.), Manual of Oil and Gas Terms, 15th\nedn (LexisNexis, 2012) (selected pages)\nRUS-30 A. Goldthau, \"The Geopolitics of Natural Gas: The Politics of Natural Gas\nDevelopment in the European Union\", Harvard University's Belfer Center\n\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\n& Rice University's Baker Institute Center for Energy Studies,\n(October 2013)\nRUS-32 United Nations Economic Commission for Europe, Study on Current Status\nand Perspectives for LNG in the UNECE Region (UN 2013)\nRUS-41 UNECE glossary for\ntransport statistics\nIllustrated Glossary for Transport Statistics, Chapter D, \"Pipeline\nTransport\", 4th edn (UNECE 2009), pp. 97-103\nRUS-42 Commission Decision of 20 November 2013 on the state aid to Klaipedos\nNAFTA – LNG Terminal (SA.36740 (2013/NN)), C(2013) 7884 final\nRUS-45 Croatia's Gas Market\nAct\nCroatia's Gas Market Act (Official Gazette 28-472/2013, 14-299/2014)\nRUS-46 Croatia's Act on the\nRegulation of Energy\nActivities\nCroatia's Act on the Regulation of Energy Activities of 25 October 2012\nRUS-47 Hungary's Gas Act Chapter III of Hungary's Act XXIX of 2011 on the Amendment of\nRegulations Relating to Energy Supply amending Hungary's Act XL of\n2008 on Natural Gas Supply\nRUS-57 Commission opinion\non the certification of\nTAP AG\nCommission Opinion of 28 January 2016 pursuant to Article 3(1) of\nRegulation (EC) No. 715/2009 and Article 10(6) of Directive 2009/73/EC\n– Italy - Greece - Certification of TAP AG, C(2016) 538 final\nRUS-59 Commission opinion\non the certification of\nGaz-System I\nCommission Opinion of 9 September 2014 pursuant to Article 3(1) of\nRegulation (EC) No 715/2009 and Article 10(6) and 11(6) of Directive\n2009/73/EC – Poland - Certification of Gaz-System as the operator of the\nPolish section of the Yamal-Europe Pipeline, C(2014) 6463\nRUS-61 BNetzA decision on\nthe exemption of the\nOPAL and NEL\npipelines\nRuling of the German Federal Network Agency for Electricity, Gas,\nTelecommunications, Post and Railways (BNetzA) of 25 February 2009 on\nthe Application for Exemption from the Regulation by OPAL NEL Transport\nGmbH (Case ref. BK7-08-009)\nRUS-66 Final views of the UK\nNRA on the\nexemption of the\nDragon LNG facility\nFinal Views of the UK Office of Gas and Electricity Markets (Ofgem) on the\ndraft application by Dragon LNG Ltd for an exemption from the Regulated\nThird Party Access provisions of the Gas Directive for the Milford Haven\nLNG import terminal (June 2004)\nRUS-68 Final views of the UK\nNRA on the\nexemption of the\nSouth Hook LNG\nfacility\nFinal Views of the UK Office of Gas and Electricity Markets (Ofgem) on the\napplication by South Hook LNG Terminal Company Ltd (SHTCL) (owned by\nQatar Petroleum and ExxonMobil) under section 19C of the Gas Act 1986\nfor an exemption from section 19D of the Gas Act 1986 for the entire\nproposed capacity of its LNG import facility at Milford Haven\n(November 2004)\nRUS-73 Commission opinion\non the certification of\nGaz-System II\nCommission Opinion of 19 March 2015 pursuant to Article 3(1) of\nRegulation (EC) No. 715/2009 and Article 10(6) and 11(6) of Directive\n2009/73/EC – Poland – Certification of Gaz-System as the operator of the\nPolish section of Yamal-Europe Pipeline\nRUS-81 Commission decision\non the exemption of\nthe Gazelle pipeline I\nCommission Decision of 20 May 2011 on the exemption of the Gazelle\npipeline from the requirements on third party access and tariff regulation\nlaid down in Articles 32, 33, 34, 41(6), 41(8) and 41(10) of Directive\n2009/73/EC, C(2011) 3424\nRUS-82 Commission decision\non the exemption of\nthe OPAL pipeline\nCommission Decision of 12 June 2009 on the exemption of the OPAL\npipeline from the requirements on third party access and tariff regulation\nlaid down in Articles 18, 25(2), 25(3) and 25(4) of Directive 2003/55/EC,\nK(2009) 4694, SG-Greffe (2009)D/3322\nRUS-83 Commission decision\non the exemption of\nthe Austrian section\nof the Nabucco\npipeline\nCommission Decision of 8 February 2008 on the exemption of the\nAustrian section of the Nabucco pipeline from the requirements on third\nparty access and tariff regulation laid down in Articles 18, 25(2), 25(3)\nand 25(4) of Directive 2003/55/EC, CAB D(2008)142\nRUS-84 Commission decision\non the exemption of\nthe Bulgarian section\nof the Nabucco\npipeline\nCommission Decision of 20 April 2009 on the exemption of the Bulgarian\nsection of the Nabucco pipeline from the requirements on third party\naccess and tariff regulation laid down in Articles 18, 25(2), 25(3) and\n25(4) of Directive 2003/55/EC, CAB D(2009)\n\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\nRUS-85 Commission decision\non the exemption of\nthe Romanian section\nof the Nabucco\npipeline\nCommission Decision of 23 June 2009 on the exemption of the Romanian\nsection of the Nabucco pipeline from the requirements on third party\naccess and tariff regulation laid down in Articles 18, 25(2), 25(3) and\n25(4) of Directive 2003/55/EC, C(2009)\nRUS-86 Commission decision\non the exemption of\nthe Poseidon pipeline\nCommission Decision of 22 May 2007 on the exemption of the Poseidon\npipeline from the requirements on third party access laid down in Articles\n18, 20, 25(2), 25(3) and 25(4) of Directive 2003/55/EC, SG-Greffe(2007)\nD/203046\nRUS-87 Commission decision\non the exemption of\nthe Gazelle pipeline II\nCommission Decision of 1 December 2011 on the exemption of the\nGazelle pipeline from the requirement of ownership unbundling laid down\nin Article 9 of Directive 2009/73/EC, C(2011) 8777\nRUS-91 [***] (BCI)\nRUS-92 [***] (BCI)\nRUS-94 [***] (BCI)\nRUS-97 Final Joint Opinion of the Energy Regulators on TAP AG's Exemption\nApplication\nRUS-101 Letter from the UK\nNRA regarding the\nCommission decision\non the exemption of\nthe Dragon LNG\nfacility\nLetter of 11 April 2005 from the UK Office of Gas and Electricity Markets\n(Ofgem) to All Interested Parties regarding the European Commission\ndecision on Ofgem's decision to grant Dragon LNG Ltd (Dragon) an\nexemption under section 19C(5) of the Gas Act 1986 from the application\nof section 19D of the Gas Act\nRUS-102 Letter from the UK\nNRA regarding the\nCommission decision\non the exemption of\nthe South Hook LNG\nfacility\nLetter of 11 February 2005 from the UK Office of Gas and Electricity\nMarkets (Ofgem) to All Interested Parties regarding the European\nCommission decision on Ofgem's decision to grant South Hook LNG\nTerminal Company Ltd (SHTCL) and Grain LNG Ltd (GLNG) an exemption\nunder section 19C(5) of the Gas Act 1986 from the application of section\n19D of the Gas Act\nRUS-109 Energy Infrastructure\nBlueprint\nCommunication from the Commission to the European Parliament, the\nCouncil, the European Economic and Social Committee and the Committee\nof the Regions, \"Energy infrastructure priorities for 2020 and beyond – A\nBlueprint for an integrated European energy network\" COM(2010) 677\n(17 November 2010)\nRUS-\n115bis\n Letter of 8 May 2014 from the Permanent Mission of the European Union\nto the WTO regarding Russia's request for consultations\nRUS-116 UK House or Lords\nReport\nUK House of Lords, Select Committee on European Communities, Seventh\nReport on the Amended Proposal for a European Parliament and Council\nDirective concerning common rules for the internal market in natural gas\n(18 November 1997)\nhttps://publications.parliament.uk/pa/ld199798/ldselect/ldeucom/035vii/e\nc0701.htm (accessed 15 September 2017)\nRUS-119 Commission Proposal\nfor the Directive\nEuropean Commission, Proposal for a Directive of the European\nParliament and of the Council amending Directive 2003/55/EC concerning\ncommon rules for the internal market in natural gas, COM(2007) 529\nfinal, 2007/0196 (COD) (19 September 2007)\nRUS-122 European Commission Fact Sheet, Intergovernmental agreements in\nenergy (16 February 2016)\nRUS-129 \"Prime Minister: Construction of Terminal Increases\",\nhttps://lrv.lt/en/news/prime-minister-construction-ofterminal-increases-\nbr-energy-independence-and-reduces-gas-prices\nRUS-130 Draft Decision of the Government of the Republic of Lithuania \"On\nApproval of the Concept of the Amendment of the Law on Natural Gas of\nthe Republic of Lithuania\", (23 March 2010), (unofficial translation)\nRUS-132 Baltic Business News, \"Kubilius: Gazprom's influence on Lithuania must\ndecrease\", (online, 13 September 2010)\nRUS-133 Seimas of the Republic of Lithuania, 6th (Spring) Session, Evening's\nPlenary Session No. 346, Verbatim Report, 28 June 2011 (unofficial\ntranslation)\nRUS-134 Seimas of the Republic of Lithuania, 6th (Spring) Session, Evening's\n\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\nPlenary Session No. 347, Verbatim Report, 30 June 2011 (unofficial\ntranslation)\nRUS-135 ICIS, \"Incumbent opposes Lithuanian grid unbundling decision\", (online,\n20 May 2010)\nRUS-\n136rev\nLithuania's Law on\nNatural Gas\nLaw of the Republic of Lithuania of 10 October 2000 No. VIII-1973 on\nNatural Gas\nRUS-138 V. Žinios, \"Interview: Interview with Andrius Kubilius, Lithuania's Prime\nMinister by Rytas Staselis\", Business News, (Vilnius, 6 September 2010)\n(unofficial translation)\nRUS-139 Baltic News Service, \"Energy Minister: Gazprom, Lithuania's Govt Pursue\nDifferent Interests With Building of Gas Pipeline to Klaipedia\", (Vilnius, 22\nSeptember 2009)\nRUS-140 Baltic News Service, \"Govt Asks Lithuanian Gas' Top Execs to Resign\",\n(Vilnius, 8 February 2011)\nRUS-141 Elta, \"Prime Minister Armed For Negotiations With Gazprom\", (online, 8\nSeptember 2011) (unofficial translation)\nRUS-142 Ministry of Energy of the Republic of Lithuania: \"Ministry of Energy\nappeals to court to launch legal investigation of the operations of AB\nLietuvos Dujos\", 17 March 2011\nRUS-147 European Commission, PowerPoint Presentation on North-South\nInterconnections in Central-Eastern Europe – The South-Eastern European\nsubgroup in electricity and gas (15 February 2012)\nRUS-151 Decision of the Government of the Republic of Croatia of 3 October 2016\non Appointing the Supplier on the Wholesale Gas Market\nRUS-152 Croatia's Gas Market Act (2007), Article 10\nRUS-154 OECD Economic Outlook No. 73, Chapter 7, \"Foreign direct investment\nrestrictions in OECD countries\" (OECD 2003)\nRUS-155 World Bank, Investing Across Borders 2010, pp. 7 - 20\nRUS-157 Commission decision\non BP/ Chevron/ Eni/\nSonangol/ Total/ JV\nconcentration\nCommission Decision of 16 May 2012 on BP/ Chevron/ Eni/ Sonangol/\nTotal/ JV notification pursuant to Article 4 of Council Regulation No.\n139/2004, Case No COMP/M.6477\nRUS-166 Energy Council, Memo/08/127, (27 February 2009)\nRUS-167 V. Pakalkaite, \"Lithuania's Strategic Use of EU Energy Policy Tools: A\nTransformation of Gas Dynamics\" (2016), paper NG111, Oxford Institute\nfor Energy Studies\nRUS-170 EurActiv, \"EU unveils plan to dismantle big energy firms\", (online, 20\nSeptember 2007)\nRUS-171 Shepherd and Wadderburn LLP, \"Full ownership unbundling: no way or\nthe third way\", Lexology, (online, 7 August 2008)\nRUS-172 Wikileaks, Public Library of US Diplomacy, Cable of 7 November 2007\n\"Grand Coalition Opposes European Union Commission's Unbundling\nDirectives\"\nRUS-173 EurActiv, \"Eight EU states oppose unbundling, table 'third way'\", (online,\n1 February 2008)\nRUS-174 E. Chow, \"France, Germany Propose End-Run Around Unbundling\",\nLaw360, (online, 29 January 2008)\nRUS-175 EurActiv, \"Commission rebuffs Franco-German energy proposals\", (online,\n15 February 2008)\nRUS-176 I. Wissenbach, \"EU Commission sets strict terms on unbundling\", Reuters,\n(Brussels, 25 April 2008)\nRUS-177 V. Horváth, \"Compromise in sight on energy liberalization\", EurActiv,\n(online, 16 May 2008)\nRUS-178 Wikileaks, Public Library of US Diplomacy, Cable of 31 October 2008\n\"Outlook for the EU's Third Energy Package\"\nRUS-179 R. Goldirova, \"Parliament rejects full gas company unbundling\",\nEuobserver, (online, 10 July 2008)\n\nPanel\nExhibit\nShort title (where\napplicable)\nFull title\nRUS-180 S. Stefanini, \"EU Backs a Compromise on Gas Unbundling\", Law360,\n(online, 9 July 2008)\nRUS-181 P. Newton, \"EU institutions agree unbundling terms for energy networks\",\nUtility Week, (online 8 April 2009)\nRUS-184 The UK Department for Trade and Industry, Consultation Document,\nImplementation of those provisions of Directive 98/30/EC of the European\nParliament and of the Council of 22 June 1998 concerning the common\nrules for the internal market in natural gas which relate to access to\nupstream pipeline networks (March 2000)\nRUS-188 K. Gluger, M. Liebensteiner, and S. Schmitt, Vienna University of\nEconomics and Business, \"Assessing the Economies of Scope from Vertical\nIntegration: Evidence from European Electricity Utilities\", PowerPoint\nPresentation at IAEE Conference held in New York on 18 June 2014\nRUS-189 Shareholding of TSOs before and after the Third Package\nRUS-194 Inland Sales of Natural Gas in the European Union in 2014\nhttp://www.eurogas.org/uploads/2016/flipbook/statistical-report-\n2015/index.html#p=6 (accessed 3 August 2017)\nRUS-195 European Commission Memo \"Clean Power for Transport – Frequently\nAsked Questions\", Memo/13/24 (24 January 2013)\nRUS-196 Norway Pipelines Map\nRUS-197 Gassco AS, the Norwegian Ministry of Petroleum and Energy, List of gas\npipelines on the Norwegian continental shelf\nRUS-204 Gassco, Europipe II\nhttps://www.gassco.no/en/our-activities/pipelines-and-\nplatforms/europipe-II/ (accessed 25 February 2017)\nRUS-206 [***] (BCI)\nRUS-214 European Commission, EU Energy in Figures: Statistical Pocketbook 2016,\npp. 26 and 65\nRUS-217 [***] (BCI)\nRUS-218 [***] (BCI)\nRUS-220 [***] (BCI)\nRUS-221 [***] (BCI)\nRUS-246 European Commission Press Release, \"Gas markets: Commission\nreinforces market conditions in revised exemption decision on OPAL\npipeline\" (28 October 2016)\nRUS-251 Wikipedia, \"Vertical Integration\"\nhttps://en.wikipedia.org/wiki/Vertical_integration#Problems_and_benefits\n(accessed 11 May 2017)\nRUS-252 Neil Kokemuller, \"The Advantages of a Vertical Integration Strategy\"\nhttp://smallbusiness.chron.com/advantages-vertical-integration-strategy-\n20987.html (accessed 3 August 2017)\nRUS-260 NaturalGas.org, \"Processing Natural Gas\"\nhttp://naturalgas.org/naturalgas/processingng/ (accessed 11 May 2017)\nRUS-266 Gassco, Kollsnes Gas Processing Plant\nRUS-268 Gas Strategies\nindustry glossary\nGas Strategies, Industry Glossary (excerpts)\nhttp://www.gasstrategies.com/industry-glossary (accessed 3 August\n2017)\nRUS-270 University of Texas at Austin, Petroleum Extension Service, A Dictionary\nfor the Oil and Gas Industry, 2nd edn (Austin, Texas 2011), p. 165\nRUS-271 UNECE LNG Study United Nations Economic Commission for Europe, Study on Current Status\nand Perspectives for LNG in the UNECE Region (UN 2013), Chapter 2,\nFigure 1: Illustrations of LNG and Pipeline Value Chains, p. 2\n\nCASES CITED IN THIS REPORT\nShort title Full case title and citation\nArgentina – Financial Services Appellate Body Report, Argentina – Measures Relating to Trade in Goods and\nServices, WT/DS453/AB/R and Add.1, adopted 9 May 2016\nArgentina – Financial Services Panel Report, Argentina – Measures Relating to Trade in Goods and Services,\nWT/DS453/R and Add.1, adopted 9 May 2016, as modified by Appellate Body\nReport WT/DS453/AB/R\nArgentina – Hides and Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and\nthe Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16\nFebruary 2001, DSR 2001:V, p. 1779\nArgentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of\nGoods, WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted 26\nJanuary 2015\nArgentina – Import Measures Panel Reports, Argentina – Measures Affecting the Importation of Goods,\nWT/DS438/R and Add.1 / WT/DS444/R and Add.1 / WT/DS445/R and Add.1,\nadopted 26 January 2015, as modified (WT/DS438/R) and upheld\n(WT/DS444/R / WT/DS445/R) by Appellate Body Reports WT/DS438/AB/R /\nWT/DS444/AB/R / WT/DS445/AB/R\nAustralia – Apples Appellate Body Report, Australia – Measures Affecting the Importation of\nApples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010,\nDSR 2010:V, p. 2175\nAustralia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of\nSalmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p.\n3327\nBrazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft,\nWT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1161\nBrazil – Desiccated Coconut Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut,\nWT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, p. 167\nBrazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded\nTyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527\nBrazil – Retreaded Tyres Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres,\nWT/DS332/R, adopted 17 December 2007, as modified by Appellate Body\nReport WT/DS332/AB/R, DSR 2007:V, p. 1649\nCanada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive\nIndustry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR\n2000:VI, p. 2985\nCanada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry,\nWT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by Appellate\nBody Report WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, p. 3043\nCanada – Dairy (Article 21.5 –\nNew Zealand and US II)\nAppellate Body Report, Canada – Measures Affecting the Importation of Milk\nand the Exportation of Dairy Products – Second Recourse to Article 21.5 of\nthe DSU by New Zealand and the United States, WT/DS103/AB/RW2,\nWT/DS113/AB/RW2, adopted 17 January 2003, DSR 2003:I, p. 213\nCanada – FIRA GATT Panel Report, Canada – Administration of the Foreign Investment\nReview Act, L/5504, adopted 7 February 1984, BISD 30S/140\nCanada – Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals,\nWT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449\nCanada – Periodicals Panel Report, Canada – Certain Measures Concerning Periodicals,\nWT/DS31/R and Corr.1, adopted 30 July 1997, as modified by Appellate\nBody Report WT/DS31/AB/R, DSR 1997:I, p. 481\nCanada – Provincial Liquor\nBoards (EEC)\nGATT Panel Report, Canada – Import, Distribution and Sale of Alcoholic\nDrinks by Canadian Provincial Marketing Agencies, L/6304, adopted\n22 March 1988, BISD 35S/37\nCanada – Provincial Liquor\nBoards (US)\nGATT Panel Report, Canada – Import, Distribution and Sale of Certain\nAlcoholic Drinks by Provincial Marketing Agencies, DS17/R, adopted\n18 February 1992, BISD 39S/27\n\nShort title Full case title and citation\nCanada – Wheat Exports and\nGrain Imports\nAppellate Body Report, Canada – Measures Relating to Exports of Wheat and\nTreatment of Imported Grain, WT/DS276/AB/R, adopted 27 September\n2004, DSR 2004:VI, p. 2739\nChile – Alcoholic Beverages Appellate Body Report, Chile – Taxes on Alcoholic Beverages,\nWT/DS87/AB/R, WT/DS110/AB/R, adopted 12 January 2000, DSR 2000:I, p.\n281\nChile – Alcoholic Beverages Panel Report, Chile – Taxes on Alcoholic Beverages, WT/DS87/R,\nWT/DS110/R, adopted 12 January 2000, as modified by Appellate Body\nReport WT/DS87/AB/R, WT/DS110/AB/R, DSR 2000:I, p. 303\nChina – Electronic Payment\nServices\nPanel Report, China – Certain Measures Affecting Electronic Payment\nServices, WT/DS413/R and Add.1, adopted 31 August 2012, DSR 2012:X, p.\n5305\nChina – HP-SSST (Japan) /\nChina – HP-SSST (EU)\nAppellate Body Reports, China – Measures Imposing Anti-Dumping Duties on\nHigh-Performance Stainless Steel Seamless Tubes (\"HP-SSST\") from Japan /\nChina – Measures Imposing Anti-Dumping Duties on High-Performance\nStainless Steel Seamless Tubes (\"HP-SSST\") from the European Union,\nWT/DS454/AB/R and Add.1 / WT/DS460/AB/R and Add.1, adopted 28\nOctober 2015\nChina – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of\nVarious Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R /\nWT/DS398/AB/R, adopted 22 February 2012, DSR 2012:VII, p. 3295\nColombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry,\nWT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 2535\nColombia – Textiles Appellate Body Report, Colombia – Measures Relating to the Importation of\nTextiles, Apparel and Footwear, WT/DS461/AB/R and Add.1, adopted 22\nJune 2016\nColombia – Textiles Panel Report, Colombia – Measures Relating to the Importation of Textiles,\nApparel and Footwear, WT/DS461/R and Add.1, adopted 22 June 2016, as\nmodified by Appellate Body Report WT/DS461/AB/R\nDominican Republic – Import\nand Sale of Cigarettes\nAppellate Body Report, Dominican Republic – Measures Affecting the\nImportation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19\nMay 2005, DSR 2005:XV, p. 7367\nDominican Republic – Import\nand Sale of Cigarettes\nPanel Report, Dominican Republic – Measures Affecting the Importation and\nInternal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified\nby Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p. 7425\nEC – Asbestos Appellate Body Report, European Communities – Measures Affecting\nAsbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5\nApril 2001, DSR 2001:VII, p. 3243\nEC – Bananas III Appellate Body Report, European Communities – Regime for the\nImportation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25\nSeptember 1997, DSR 1997:II, p. 591\nEC – Bananas III Panel Reports, European Communities – Regime for the Importation, Sale and\nDistribution of Bananas, WT/DS27/R/ECU (Ecuador) / WT/DS27/R/GTM,\nWT/DS27/R/HND (Guatemala and Honduras) / WT/DS27/R/MEX (Mexico) /\nWT/DS27/R/USA (US), adopted 25 September 1997, as modified by Appellate\nBody Report WT/DS27/AB/R, DSR 1997:II, p. 695 to DSR 1997:III, p. 1085\nEC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping\nMeasures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R,\nadopted 28 July 2011, DSR 2011:VII, p. 3995\nEC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products\n(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,\nDSR 1998:I, p. 135\nEC – Hormones Panel Reports, EC Measures Concerning Meat and Meat Products (Hormones),\nWT/DS48/R/CAN (Canada) / WT/DS26/R/USA (US), adopted 13 February\n1998, as modified by Appellate Body Report WT/DS26/AB/R, WT/DS48/AB/R,\nDSR 1998:II, p. 235 / DSR 1998:II, p. 699\nEC – Poultry Appellate Body Report, European Communities – Measures Affecting the\nImportation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July\n1998, DSR 1998:V, p. 2031\n\nShort title Full case title and citation\nEC – Poultry Panel Report, European Communities – Measures Affecting the Importation\nof Certain Poultry Products, WT/DS69/R, adopted 23 July 1998, as modified\nby Appellate Body Report WT/DS69/AB/R, DSR 1998:V, p. 2089\nEC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the\nImportation and Marketing of Seal Products, WT/DS400/AB/R /\nWT/DS401/AB/R, adopted 18 June 2014, DSR 2014:I, p. 7\nEC – Seal Products Panel Reports, European Communities – Measures Prohibiting the\nImportation and Marketing of Seal Products, WT/DS400/R and Add.1 /\nWT/DS401/R and Add.1, adopted 18 June 2014, as modified by Appellate\nBody Reports WT/DS400/AB/R / WT/DS401/AB/R, DSR 2014:II, p. 365\nEC – Selected Customs Matters Appellate Body Report, European Communities – Selected Customs Matters,\nWT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791\nEC – Selected Customs Matters Panel Report, European Communities – Selected Customs Matters,\nWT/DS315/R, adopted 11 December 2006, as modified by Appellate Body\nReport WT/DS315/AB/R, DSR 2006:IX, p. 3915\nEC – Trademarks and\nGeographical Indications (US)\nPanel Report, European Communities – Protection of Trademarks and\nGeographical Indications for Agricultural Products and Foodstuffs, Complaint\nby the United States, WT/DS174/R, adopted 20 April 2005, DSR 2005:VIII,\np. 3499\nEC and certain member States\n– Large Civil Aircraft\nAppellate Body Report, European Communities and Certain Member States –\nMeasures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1\nJune 2011, DSR 2011:I, p. 7\nEC and certain member States\n– Large Civil Aircraft\nPanel Report, European Communities and Certain Member States – Measures\nAffecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as\nmodified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685\nEEC – Animal Feed Proteins GATT Panel Report, EEC – Measures on Animal Feed Proteins , L/4599,\nadopted 14 March 1978, BISD 25S/49\nEEC – Minimum Import Prices GATT Panel Report, EEC – Programme of Minimum Import Prices, Licences\nand Surety Deposits for Certain Processed Fruits and Vegetables , L/4687,\nadopted 18 October 1978, BISD 25S/68\nEU – Biodiesel (Argentina) Appellate Body Report, European Union – Anti-Dumping Measures on\nBiodiesel from Argentina, WT/DS473/AB/R and Add.1, adopted 26 October\n2016\nGuatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding\nPortland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998,\nDSR 1998:IX, p. 3767\nIndia – Additional Import\nDuties\nAppellate Body Report, India – Additional and Extra-Additional Duties on\nImports from the United States, WT/DS360/AB/R, adopted 17 November\n2008, DSR 2008:XX, p. 8223\nIndia – Agricultural Products Panel Report, India – Measures Concerning the Importation of Certain\nAgricultural Products, WT/DS430/R and Add.1, adopted 19 June 2015, as\nmodified by Appellate Body Report WT/DS430/AB/R\nIndia – Autos Panel Report, India – Measures Affecting the Automotive Sector,\nWT/DS146/R, WT/DS175/R, and Corr.1, adopted 5 April 2002, DSR 2002:V,\np. 1827\nIndia – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and\nAgricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998,\nDSR 1998:I, p. 9\nIndia – Solar Cells Appellate Body Report, India – Certain Measures Relating to Solar Cells and\nSolar Modules, WT/DS456/AB/R and Add.1, adopted 14 October 2016\nJapan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages,\nWT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996,\nDSR 1996:I, p. 97\nJapan – Alcoholic Beverages II Panel Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/R,\nWT/DS10/R, WT/DS11/R, adopted 1 November 1996, as modified by\nAppellate Body Report WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR\n1996:I, p. 125\n\nShort title Full case title and citation\nJapan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of\nApples, WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, p.\n4391\nJapan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access\nMemories from Korea, WT/DS336/R, adopted 17 December 2007, as\nmodified by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, p. 2805\nJapan – Semi-Conductors GATT Panel Report, Japan – Trade in Semi -Conductors, L/6309, adopted\n4 May 1988, BISD 35S/116\nKorea – Alcoholic Beverages Appellate Body Report, Korea – Taxes on Alcoholic Beverages,\nWT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, p.\n3\nKorea – Alcoholic Beverages Panel Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/R,\nWT/DS84/R, adopted 17 February 1999, as modified by Appellate Body\nReport WT/DS75/AB/R, WT/DS84/AB/R, DSR 1999:I, p. 44\nKorea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of\nCertain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR\n2000:I, p. 3\nKorea – Various Measures on\nBeef\nAppellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled\nand Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January\n2001, DSR 2001:I, p. 5\nMexico – Anti-Dumping\nMeasures on Rice\nAppellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef\nand Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20\nDecember 2005, DSR 2005:XXII, p. 10853\nMexico – Corn Syrup (Article\n21.5 – US)\nAppellate Body Report, Mexico – Anti-Dumping Investigation of High\nFructose Corn Syrup (HFCS) from the United States – Recourse to Article\n21.5 of the DSU by the United States, WT/DS132/AB/RW, adopted 21\nNovember 2001, DSR 2001:XIII, p. 6675\nPhilippines – Distilled Spirits Appellate Body Reports, Philippines – Taxes on Distilled Spirits,\nWT/DS396/AB/R / WT/DS403/AB/R, adopted 20 January 2012, DSR\n2012:VIII, p. 4163\nRussia – Tariff Treatment Panel Report, Russia – Tariff Treatment of Certain Agricultural and\nManufacturing Products, WT/DS485/R, Corr.1, Corr.2, and Add.1, adopted\n26 September 2016\nThailand – Cigarettes\n(Philippines)\nAppellate Body Report, Thailand – Customs and Fiscal Measures on\nCigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR\n2011:IV, p. 2203\nThailand – Cigarettes\n(Philippines)\nPanel Report, Thailand – Customs and Fiscal Measures on Cigarettes from\nthe Philippines, WT/DS371/R, adopted 15 July 2011, as modified by\nAppellate Body Report WT/DS371/AB/R, DSR 2011:IV, p. 2299\nUS – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain\nCorrosion-Resistant Carbon Steel Flat Products from Germany,\nWT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p.\n3779\nUS – Carbon Steel Panel Report, United States – Countervailing Duties on Certain Corrosion-\nResistant Carbon Steel Flat Products from Germany, WT/DS213/R and\nCorr.1, adopted 19 December 2002, as modified by Appellate Body Report\nWT/DS213/AB/R, DSR 2002:IX, p. 3833\nUS – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain\nHot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted\n19 December 2014, DSR 2014:V, p. 1727\nUS – Carbon Steel (India) Panel Report, United States – Countervailing Measures on Certain Hot-Rolled\nCarbon Steel Flat Products from India, WT/DS436/R and Add.1, adopted 19\nDecember 2014, as modified by Appellate Body Report WT/DS436/AB/R,\nDSR 2014:VI, p. 2189\nUS – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production\nand Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, DSR\n2012: XI, p. 5751\n\nShort title Full case title and citation\nUS – Clove Cigarettes Panel Report, United States – Measures Affecting the Production and Sale of\nClove Cigarettes, WT/DS406/R, adopted 24 April 2012, as modified by\nAppellate Body Report WT/DS406/AB/R, DSR 2012: XI, p. 5865\nUS – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application\nof Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR\n2009:III, p. 1291\nUS – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling\n(COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July\n2012, DSR 2012:V, p. 2449\nUS – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL)\nRequirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as\nmodified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R,\nDSR 2012:VI, p. 2745\nUS – COOL (Article 21.5 –\nCanada and Mexico)\nPanel Reports, United States – Certain Country of Origin Labelling (COOL)\nRequirements – Recourse to Article 21.5 of the DSU by Canada and Mexico,\nWT/DS384/RW and Add.1 / WT/DS386/RW and Add.1, adopted 29 May\n2015, as modified by Appellate Body Reports WT/DS384/AB/RW /\n\nUS – Corrosion-Resistant Steel\nSunset Review\nAppellate Body Report, United States – Sunset Review of Anti-Dumping\nDuties on Corrosion-Resistant Carbon Steel Flat Products from Japan,\nWT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3\nUS – Corrosion-Resistant Steel\nSunset Review\nPanel Report, United States – Sunset Review of Anti-Dumping Duties on\nCorrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/R,\nadopted 9 January 2004, as modified by Appellate Body Report\nWT/DS244/AB/R, DSR 2004:I, p. 85\nUS – Countervailing and Anti-\nDumping Measures (China)\nAppellate Body Report, United States – Countervailing and Anti-Dumping\nMeasures on Certain Products from China, WT/DS449/AB/R and Corr.1,\nadopted 22 July 2014, DSR 2014:VIII, p. 3027\nUS – Countervailing Measures\n(China)\nAppellate Body Report, United States – Countervailing Duty Measures on\nCertain Products from China, WT/DS437/AB/R, adopted 16 January 2015\nUS – FSC (Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for \"Foreign Sales\nCorporations\" – Recourse to Article 21.5 of the DSU by the European\nCommunities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, p.\n55\nUS – FSC (Article 21.5 – EC) Panel Report, United States – Tax Treatment for \"Foreign Sales\nCorporations\" – Recourse to Article 21.5 of the DSU by the European\nCommunities, WT/DS108/RW, adopted 29 January 2002, as modified by\nAppellate Body Report WT/DS108/AB/RW, DSR 2002:I, p. 119\nUS – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border\nSupply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April\n2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)\nUS – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of\nGambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as\nmodified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797\nUS – Gasoline Appellate Body Report, United States – Standards for Reformulated and\nConventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p.\n3\nUS – Gasoline Panel Report, United States – Standards for Reformulated and Conventional\nGasoline, WT/DS2/R, adopted 20 May 1996, as modified by Appellate Body\nReport WT/DS2/AB/R, DSR 1996:I, p. 29\nUS – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain\nHot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August\n2001, DSR 2001:X, p. 4697\nUS – Hot-Rolled Steel Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled\nSteel Products from Japan, WT/DS184/R, adopted 23 August 2001 modified\nby Appellate Body Report WT/DS184/AB/R, DSR 2001:X, p. 4769\n\nShort title Full case title and citation\nUS – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of\nFresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,\nWT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p.\n4051\nUS – Malt Beverages GATT Panel Report, United States – Measures Affecting Alcoholic and Malt\nBeverages, DS23/R, adopted 19 June 1992, BISD 39S/206\nUS – Offset Act (Byrd\nAmendment)\nAppellate Body Report, United States – Continued Dumping and Subsidy\nOffset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January\n2003, DSR 2003:I, p. 375\nUS – Offset Act (Byrd\nAmendment)\nPanel Report, United States – Continued Dumping and Subsidy Offset Act of\n2000, WT/DS217/R, WT/DS234/R, adopted 27 January 2003, as modified by\nAppellate Body Report WT/DS217/AB/R, WT/DS234/AB/R, DSR 2003:II, p.\n489\nUS – Oil Country Tubular\nGoods Sunset Reviews\nAppellate Body Report, United States – Sunset Reviews of Anti-Dumping\nMeasures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R,\nadopted 17 December 2004, DSR 2004:VII, p. 3257\nUS – Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry\nfrom China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p. 1909\nUS – Section 337 Tariff Act GATT Panel Report, United States Section 337 of the Tariff Act of 1930 ,\nL/6439, adopted 7 November 1989, BISD 36S/345\nUS – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp\nand Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR\n1998:VII, p. 2755\nUS – Shrimp (Article 21.5 –\nMalaysia)\nAppellate Body Report, United States – Import Prohibition of Certain Shrimp\nand Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia,\nWT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6481\nUS – Shrimp (Thailand) / US –\nCustoms Bond Directive\nAppellate Body Report, United States – Measures Relating to Shrimp from\nThailand / United States – Customs Bond Directive for Merchandise Subject\nto Anti-Dumping/Countervailing Duties, WT/DS343/AB/R / WT/DS345/AB/R,\nadopted 1 August 2008, DSR 2008:VII, p. 2385 / DSR 2008:VIII, p. 2773\nUS – Shrimp II (Viet Nam) Appellate Body Report, United States – Anti-Dumping Measures on Certain\nShrimp from Viet Nam, WT/DS429/AB/R, and Corr.1, adopted 22 April 2015\nUS – Stainless Steel (Korea) Panel Report, United States – Anti-Dumping Measures on Stainless Steel\nPlate in Coils and Stainless Steel Sheet and Strip from Korea, WT/DS179/R,\nadopted 1 February 2001, DSR 2001:IV, p. 1295\nUS – Stainless Steel (Mexico) Appellate Body Report, United States – Final Anti-Dumping Measures on\nStainless Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008, DSR\n2008:II, p. 513\nUS – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the\nImportation, Marketing and Sale of Tuna and Tuna Products,\nWT/DS381/AB/R, adopted 13 June 2012, DSR 2012:IV, p. 1837\nUS – Tuna II (Mexico) Panel Report, United States – Measures Concerning the Importation,\nMarketing and Sale of Tuna and Tuna Products, WT/DS381/R, adopted 13\nJune 2012, as modified by Appellate Body Report WT/DS381/AB/R, DSR\n2012:IV, p. 2013\nUS – Tuna II (Mexico) (Article\n21.5 – Mexico)\nAppellate Body Report, United States – Measures Concerning the\nImportation, Marketing and Sale of Tuna and Tuna Products – Recourse to\nArticle 21.5 of the DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted 3\nDecember 2015\nUS – Tuna II (Mexico) (Article\n21.5 – Mexico)\nPanel Report, United States – Measures Concerning the Importation,\nMarketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of\nthe DSU by Mexico, WT/DS381/RW, Add.1 and Corr.1, adopted 3 December\n2015, as modified by Appellate Body Report WT/DS381/AB/RW\nUS – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton,\nWT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3\n\nShort title Full case title and citation\nUS – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven\nWool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,\nand Corr.1, DSR 1997:I, p. 323\nUS – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing and\nSunset Reviews, WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p.\n3\nUS – Zeroing (Japan) (Article\n21.5 – Japan)\nAppellate Body Report, United States – Measures Relating to Zeroing and\nSunset Reviews – Recourse to Article 21.5 of the DSU by Japan,\nWT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441\n\nABBREVIATIONS FREQUENTLY USED IN THIS REPORT\nAbbreviation Description\nAmber Grid AB Amber Grid\nBcm Billion cubic meters\nBEMIP Baltic Energy Market Interconnection Plan\nBNetzA Bundesnetzagentur\nCEE Central East European\nCNG Compressed natural gas\nCommission European Commission\nCPC 1991 United Nations Provisional Central Product Classification\nCPC 2.1 2015 United Nations Central Product Classification\nDESFA Hellenic Gas Transmission System Operator S.A.\nDirective Directive 2009/73/EC\nDSB Dispute Settlement Body\nDSU Understanding on Rules and Procedures Governing the Settlement\nof Disputes\nEngie Engie S.A.\nEC European Communities\nEU European Union\nGATS General Agreement on Trade in Services\nGATT 1994 General Agreement on Tariffs and Trade 1994\nGRTgaz GRTgaz S.A.\nGTS Gat Transport Services B.V.\nHEP Hrvatska elektroprivreda d.d\nHS Harmonized Commodity Description and Coding System of the\nWorld Customs Organization\nISO Independent system operator\nITO Independent transmission operator\nLietuvos dujos AB Lietuvos dujos\nLitgas Litgas UAB\nLNG Liquefied natural gas\nLSO LNG system operator\nm3/a Cubic meters per annum\nMGT Magyar Gáz Tranzit Zrt.\nMVM Magyar Villamos Művek Zrt.\nNEL pipeline Nordeuropäische Erdgasleitung\nNEL GT NEL Gastransport GmbH\nNETRA pipeline Norddeutsche Erdgas Transversale Pipeline System\nNIC NABUCCO Gas Pipeline International GmbH\nNRA National regulatory authority\nNSI North-South Gas Interconnections\nOfgem UK Office of Gas and Electricity Markets\nOPAL pipeline Ostsee-Pipeline-Anbindungsleitung\nOPAL GT OPAL Gastransport GmbH & Co. KG\nOU Ownership unbundling\nSCM Agreement Agreement on Subsidies and Countervailing Measures\nSEP Second Energy Package\nSGC Southern Gas Corridor\nSOCAR State Oil Company of the Azerbaijan Republic\nSoS Security of energy supply\nTAP pipeline Trans-Adriatic Pipeline\nTAP AG Trans-Adriatic Pipeline AG\nTBT Agreement Agreement on Technical Barriers to Trade\nTEP Third Energy Package\nTEN-E Trans-European Networks for Energy\nTIGF Transport et Infrastructures Gaz France S.A.\nTPA Third-party access\nTRIMs Agreement Agreement on Trade-Related Investment Measures\nTSO Transmission system operator\n\nAbbreviation Description\nUNECE United Nations Economic Commission for Europe\nUPN Upstream pipeline network\nVienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May\n1969, 1155 UNTS 331; 8 International Legal Materials 679\nVIU Vertically integrated undertaking\nWTO World Trade Organization\n\n1 INTRODUCTION\n1.1 Complaint by Russia\n1.1. On 30 April 2014, the Russian Federation (Russia) requested consultations with the European\nUnion and its member States pursuant to Articles 1 and 4 of the Understanding on Rules and\nProcedures Governing the Settlement of Disputes (DSU) , the General Agreement on Trade in\nServices (GATS) and the General Agreement on Tariffs and Trade 1994 (GATT 1994) with respect\nto the measures and claims set out below.1\n1.2. Consultations were held on 23 through 24 June 2014 and on 10 July 2014.\n1.2 Panel establishment and composition\n1.3. On 11 May 2015, Russia requested the establishment of a panel pursuant to Article 6 of the\nDSU, Article XXIII of th e GATS , and Article XXIII of the GATT 1994 with standard terms of\nreference.2 At its meeting on 20 July 2015, the Dispute Settlement Body (DSB) established a panel\npursuant to the request of Russia in document WT/DS 476/2, in accordance with Article 6 of th e\nDSU.3\n1.4. The Panel's terms of reference are the following:\nTo examine, in the light of the relevant provisions of the covered agreements cited by\nthe parties to the dispute, the matter referred to the DSB by the Russian Federation in\ndocument WT/DS476/2 and to make such findings as will assist the DSB in making\nthe recommendations or in giving the rulings provided for in those agreements.4\n1.5. On 22 February 2016, Russia requested the Director-General to determine the composition of\nthe panel, pursuant to Article 8.7 of the DSU. On 7 March 20165, the Director-General accordingly\ncomposed the Panel as follows:\nChairperson: Mr Felipe Lopeandía\n\nMembers: Mr Jose-Victor Chan-Gonzaga\n Mr Marco Tulio Molina Tejeda\n\n1.6. Brazil, the People's Republic of China (China) , Colombia, India, Japan, the Republic of Korea\n(Korea), the Kingdom of Saudi Arabia (Saudi Arabia), Ukraine and the United States notified their\ninterest in participating in the Panel proceedings as third parties.\n1.3 Panel proceedings\n1.3.1 General\n1.7. After consultation with the parties, the Panel adopted its Working Procedures 6 and timetable\non 31 March 2016 . The Panel modified its Working Procedures on 19 May 2016 and its timetable\non 30 September 2016 and 23 March 2017 after consultation with the parties.\n1.8. The Panel received a written submission from Russia on 17 May 2016 and from the European\nUnion on 11 July 2016, and sent advance questions before holding its first substantive meeting\n\n1 See Russia's request for consultations, WT/DS476/1. Russia's request for consultations (consultations\nrequest) was also made pursuant to Articles 4.1, 7.1 and 30 of the Agreement on Subsidies and Countervailing\nMeasures (SCM Agreement) and Article 8 of the Agreement on Trade-Related Investment Measures (TRIMs\nAgreement) with respect to potential inconsistencies with those agreements.\n2 Russia's request for the establishment of a panel (panel request), WT/DS476/2. Russia's panel request\ndid not make reference to any provisions of the SCM Agreement or the TRIMs Agreement.\n3 WT/DSB/M/365.\n4 WT/DS476/3.\n5 The Director-General's deadline for appointing the panelists was extended due to unforeseen\ncircumstances and after having notified the parties.\n6 See the Panel's Working Procedures in Annex A-1.\n\nwith the parties on 5 through 7 September 2016. A session with the third parties to ok place on\n6 September 2016.\n1.9. After the first substantive meeting, the Panel sent the parties questions to be answered in\nwriting. Russia also sent written questions to the European Union following the first substantive\nmeeting. The parties' responses to a ll such questions were received on 12 October 2016. The\nparties submitted their second written submissions on 21 November 2016. The Panel sent advance\nquestions before holding its second substantive meeting with the parties on 28 February and 1\nMarch 2017. The Panel sent additional questions in writing after the second substantive meeting,\nas did both parties. The parties' responses to all such questions were received on 30 March 2017\nand the parties commented on each other's responses on 3 May 2017.7, 8\n1.10. On 16 May 2017, the Panel issued the descriptive part of its Report to the parties. The Panel\nissued its Interim Report to the parties on 8 August 2017. The Panel issued its Final Report to the\nparties on 24 October 2017.\n1.11. In these panel proceedings, certain filings were made outside of the deadlines prescribed by\nthe Working Procedures adopted by the Panel. 9 The Panel stresses the importance of all parties\nand third parties adhering to the time -limits for filing documents, in the interests of fairness and\nthe orderly conduct of panel proceedings.\n1.3.2 Additional Working Procedures on Business Confidential Information (BCI)\n1.12. At Russia's request and after consultations with both parties , the Panel adopted, on\n5 April 2016, additional working procedures for the protection of BCI.10\n1.3.3 Preliminary rulings\n1.13. In a communication of 18 March 2016, the European Union requested the Panel to make a\npreliminary ruling before the date for the filing of the parties' first written submissions, clarifying\nwhether certain matters in Russia's panel request were identified in Russia's c onsultations request\nwithin the meaning of Article 4.4 of the DSU . At the invitation of the Panel, Russia provided a\nresponse in writing on 18 April 2016. All third parties were also invited to comment on the\nEuropean Union 's request by 25 April 2016 . Colombia and Ukraine availed themselves of this\npossibility. The Panel communicated its conclusions in writing to the parties and the third parties\non 9 May 2016, indicating that the more detailed reasons in support of its conclusions would be\nprovided no later than the date of the issuance of the Interim Report. The Panel's full decision\nregarding the European Union's first request for a preliminary ruling is set out in section 7 of this\nReport.\n\n7 During the course of the proceedings, both parties requested extensions for several deadlines provided\nfor in the timetable. The dates set out in paragraphs 1.8 and 1.9 reflect extensions granted by the Panel\nfollowing such requests.\n8 In addition to the steps set out in paragraphs 1.8 and 1.9, the Panel posed several supplementary\nquestions, on 14 October 2016, 21 October 2016, 9 December 2016 and 10 May 2017, pursuant to\nparagraph 11 of its Working Procedures.\n9 The hard copies of the European Union's first written submission were not received by the 17:00\ndeadline specified in paragraph 24 of the Panel's Working Procedures and certain hard copies of Exhibit EU-70\nto the European Union's first written submission were not received by the deadline specified in the Panel's\ntimetable. The European Union explained that this delay was caused by printing problems due to the size of\nthese documents. Furthermore, the hard copies and electronic copies of the European Union's closing\nstatement at the second meeting of the Panel were not received by the deadline specified in paragraph 14(a)\nof the Panel's Working Procedures. In response to a complaint by Russia and at the Panel's invitation, the\nEuropean Union submitted that it had provided \"brief remarks\" at the end of the second meeting of the Panel\nand that the Working Procedures \"do not provide for the possibility to file ad hoc comments on the closing\nstatements\". The European Union nonetheless provided a written version of its remarks, which it could not\n\"guarantee … provides a complete and exact transcription\". (European Union's communication of\n10 March 2017). Following a complaint by Russia concerning the accuracy of the written version of the\nEuropean Union's closing remarks, the Panel invited both parties to review the relevant parts of the recordings\nof the second meeting of the Panel, after which the European Union provided, on 3 May 2017, a \"transcript\" of\nits closing remarks. (European Union's communication of 3 May 2017).\n10 See Additional Working Procedures on BCI in Annex A-2.\n\n1.14. In its first written submission of 11 July 2016 and in its comments on Russia's response s to\nquestions by the Panel following the first substantive meeting of 21 October 2016 , the European\nUnion requested the Panel to clarify whether certain m atters in Russia's first written submi ssion\nand response s to questions by the Panel were identified in Russia's panel reques t within the\nmeaning of Article 6.2 of the DSU. At the invitation of the Panel, Russia provided a response in\nwriting on 27 October 2016. In a communication of 28 October 2016, the European Union\nrequested that the Panel make a preliminary ruling on this matter before the date for the filing of\nthe parties' second written submissions. On 10 November 2016, t he Panel communicated its\nconclusions on a number of the terms of reference objections raised by the European Union to the\nparties, indicating that the more detailed reasons in support of its conclusions would be provided\nno later than the date of the issuance of the Interim Report. The Panel declined to rule , at that\nstage of the proceedings, on certain of the terms of reference objections raised by the European\nUnion. The Panel's full decision regarding all terms of reference objections raised by the European\nUnion in its second request for a preliminary ruling is set out in section 7 of this Report.\n2 FACTUAL ASPECTS\n2.1 Introduction\n2.1. This dispute concerns certain measures that regulate the natural gas sector and facilitate the\ndevelopment of natural gas infrastructure within the European Union . This section of the Report\nbegins by briefly describing the background of the relevant legal and regulatory instruments of the\nEuropean Union and its member S tates that give rise to the challenged measures. The relevant\naspects of each of the measures are then described in detail.\n2.2. The Third Energy Package is a set of legal acts and regulatory ins truments that the European\nUnion enacted in 2009 to reform its internal market in natural gas. 11 As regards the natural gas\nmarket, the main component of the T hird Energy Package is contained in Directive 2009/73/EC of\nthe European Parliament and of the Cou ncil of 13 July 2009 concerning common rules for the\ninternal market in natural gas and repealing Directive 2003/55/EC (the Directive).12\n2.3. The Directive establishes common rules for the European Union's internal market in \"natural\ngas, including LNG [liquefied natural gas ]\".13 It repeals Directive 2003/55/EC of the European\nParliament and of the Council of 26 June 2003 concerning common rules for the internal market in\nnatural gas and repealing Directive 98/30/EC , which formed part of the Second Energy Packag e\n(SEP).14 The rules relate to the organization and functioning of the natural gas sector, access to\nthe market, the criteria and procedures applicable to the granting of authorizations for\ntransmission, distribution, supply and storage of natural gas and t he operation of systems. 15 The\nDirective requires EU member States to \"bring into force the laws, regulations and administrative\nprovisions necessary to comply with [it] by 3 March 2011\".16 It also requires EU member States to\n\n11 Russia's first written submission, para. 25; and European Union's first written submission, paras. 19-\n21. The Third Energy Package also reforms the European Union's internal market in electricity, but that aspect\nis not challenged in this dispute. This dispute is limited to the components of the Third Energy Package which\nregulate the natural gas market.\n12 Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning\ncommon rules for the internal market in natural gas and repealing Directive 2003/55/EC (Text with EEA\nrelevance), OJ L 211/94 of 14.8.2009, (Directive 2009/73/EC), (Exhibit EU-5). Other components of the Third\nEnergy Package are Regulation (EC) No. 715/2009 of the European Parliament and of the Council of 13 July\n2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No.\n1775/2005 (Text with EEA relevance), OJ L 211/36 of 14.8.2009, (Exhibit EU-1); Regulation (EC) No.\n713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the\nCooperation of Energy regulators (Text with EEA relevance), OJ L 211/1 of 14.8.2009, (Regulation (EC) No.\n713/2009), (Exhibit EU-6); and Regulation (EU) No. 994/2010 of the European Parliament and of the Council of\n20 October 2010 concerning measures to safeguard security of gas supply and repealing Council Directive\n2004/67/EC (Text with EEA relevance), OJ L 295/1 of 12.11.2010, (Regulation (EU) No. 994/2010), (Exhibit\nEU-73). (Russia's panel request, p. 5; and Russia's first written submission, para. 26).\n13 Directive 2009/73/EC, (Exhibit EU-5), Article 1(2).\n14 Directive 2009/73/EC, (Exhibit EU-5), Article 53.\n15 Directive 2009/73/EC, (Exhibit EU-5), Article 1(1).\n16 Directive 2009/73/EC, (Exhibit EU-5), Article 54. The date from which EU member States are required\nto apply Article 11 is, however, 3 March 2013. (Ibid.)\n\nensure that national regulatory authorities ( NRAs) are appropriately empowered to ensure\ncompliance with the requirements under the Directive.17\n2.4. A related element of the European Union's energy policy is the Trans -European Networks for\nEnergy measure (TEN-E measure), which complements t he requirements of the Third Energy\nPackage by facilitating investments in infrastructure with cross -border impacts. 18 The main\ncomponent of the TEN-E measure is Regulation (EU) No. 347/2013 of the European Parliament and\nof the Council of 17 April 2013 on guidelines for Trans -European energy infrastructure and\nrepealing Decision No . 1364/2006/EC and amending Regulations (EC) No . 713/2009, (EC)\nNo. 714/2009 and (EC) No . 715/2009 (TEN-E Regulation) . Recital 8 of this Regulation explains\nthat:\nDespite the fact that … Directive 2009/73/EC … provides for an internal market in\nenergy, the market remains fragmented due to insufficient interconnections between\nnational energy networks and to the suboptimal utilisation of existing energy\ninfrastructure.\nTo address this fragmentation, the TEN-E Regulation \"lays down rules for the timely development\nand interoperability of trans-European energy networks\".19\n2.5. The TEN -E Regulation repeals and replaces the pre -existing TEN -E framework in Decision\nNo. 1364/2006/EC of the Euro pean Parliament and of the Council of 6 September 2006 laying\ndown guidelines for trans -European energy networks and repealing Decision 96/391/EC and\nDecision No. 1229/2003/EC. It has been amended twice : in October 2013, through Commission\nDelegated Regula tion (EU) No . 1391/2013 of 14 October 2013, amending Regulation (EU)\nNo. 347/2013 of the European Parliament and of the Council of 17 April 2013 on guidelines for\ntrans-European energy infrastructure as regards the Union list of projects of common interest , and\nthen in November 2015, through Commission Delegated Regulation (EU) 2016/89 of\n18 November 2015 amending Regulation (EU) No . 347/2013 of the European Parliament and of\nthe Council as regards the Union list of projects of common interest . We refer to these legal\ninstruments, collectively, as the \"TEN -E measure\" and expand on the details of this measure\nbelow.\n2.2 The measures at issue\n2.2.1 Introduction\n2.6. Russia's challenge against the Directive is directed at several separate, distinct measures\nstemming from this instrument. Russia furthermore challenges some of these measures as\ncontained in the national implementing laws of Croatia, Hungary and Lithuania . Russia also\nchallenges the TEN -E measure contained in the EU legal ins truments described herein. For\npurposes of this Report, the measures at issue can be categorized as follows:\n\n17 Directive 2009/73/EC, (Exhibit EU-5), Article 41(4). This includes, at minimum, the power to:\n(a) issue binding decisions on natural gas undertakings; (b) carry out investigations into the functioning of the\ngas markets and impose any necessary and proportionate measures to promote effective competition and\nensure the proper functioning of the market; (c) require any information from natural gas undertakings\nrelevant for the fulfilment of its tasks; (d) impose effective, proportionate and dissuasive penalties on natural\ngas undertakings not complying with their obligations; and (e) appropriate rights of investigations and relevant\npowers of instructions for dispute settlement concerning certain obligations under the Directive.\n18 Commission Staff Working Document Accompanying Commission Delegated Regulation (EU) No.\n2016/89 of 18 November 2015 amending Regulation (EU) No. 347/2013 of the European Parliament and of the\nCouncil as regards the Union list of projects of common interest, SWD(2015) 247 of 18.11.2015, (Exhibit RUS-\n8), p. 12.\n19 Regulation (EU) No. 347/2013 of the European Parliament and of the Council of 17 April 2013 on\nguidelines for trans-European energy infrastructure and repealing Decision No. 1364/2006/EC and amending\nRegulations (EC) No. 713/2009, (EC) No. 714/2009 and (EC) No. 715/2009 (Text with EEA relevance), OJ L\n115/39 of 25.4.2013, (Exhibit EU-4).\n\nNo. Short Title\n\n1 Unbundling measure\n\n2 Public body measure20\n\n3 LNG measure\n\n4 Infrastructure exemption measure\n\n5 Upstream pipeline networks measure\n\n6 Third-country certification measure\n\n7 TEN-E measure\n\n2.2.2 The unbundling measure\n2.7. The unbundling measure provides rules on the separation, i.e. \"unbundl ing\", of\n\"undertaking[s] performing any of the functions of production or supply\" , on the one hand, and\n\"transmission system operator[s] or [] transmission system[s]\" , on the other hand. 21 These rules\nare applicable to vertically integrated undertakings (VIUs), defined in the Directive as:\n[A] natural gas undertaking or a group of natural gas undertakings where the same\nperson or the same persons are entitled, directly or indirectly, to exercise control, and\nwhere the undertaking or group of undertakings perform at l east one of the functions\nof transmission, distribution, LNG or storage, and at least one of the functions of\nproduction or supply of natural gas[.]22\n2.8. Such VIUs are generally required to unbundle \"undertaking[s] performing any of the\nfunctions of production or supply\" from \"transmission system operator[s] or [] transmission\nsystem[s]\". The specific r ules for such unbundling depend on the applicable unbundling model,\ndescribed below.\n2.9. Russia challenges the unbundling measure in the Directive as well as in the national\nimplementing laws of Croatia, Hungary and Lithuania.\n2.2.2.1 The unbundling measure in the Directive\n2.10. To achieve unbundling, the Directive requires EU member States to implement the\nownership unbundling model (OU model). In addition, it allows EU member States to implement ,\nunder certain conditions, the independent system operator model (ISO model) or the independent\ntransmission operator model (ITO model), or both.23\n2.11. Under the OU model, the same natural or legal person or persons cannot exercise control or\nany right, directly or indirectly, over a natural gas production or supply undertaking as well as a\nnatural gas transmission system or transmission system operator (TSO). 24 These rights include\n\"the power to exercise voting rights\"25; \"the power to appoint members of the supervisory board,\nthe administrative board or bodies legally representing the undertaking\" 26; or \"the holding of a\nmajority share\".27 Furthermore, the same person c annot serve as a member of the supervisory\n\n20 Russia refers to it as the \"government exemption measure\", whereas the European Union refers to it\nas the \"public body specification\". (See, e.g. Russia's first written submission, paras. 233, 248, 269, 272, 275,\n277 and 280; and European Union's first written submission, paras. 225, 226 and 228). For purposes of this\nReport, this measure is referred to as the \"public body measure\".\n21 Directive 2009/73/EC, (Exhibit EU-5), Article 9(1)(b).\n22 Directive 2009/73/EC, (Exhibit EU-5), Article 2(20).\n23 Directive 2009/73/EC, (Exhibit EU-5), Article 9(8).\n24 Directive 2009/73/EC, (Exhibit EU-5), Article 9(1)(b).\n25 Directive 2009/73/EC, (Exhibit EU-5), Article 9(2)(a).\n26 Directive 2009/73/EC, (Exhibit EU-5), Articles 9(1)(c) and 9(2)(b).\n27 Directive 2009/73/EC, (Exhibit EU-5), Article 9(2)(c).\n\nboard, the administrative board or of bodies legally representing a natural gas production or\nsupply undertaking as well as a transmission system or a TSO. 28 Under the OU model, the TSO is\nalso the transmission system owner.29\n2.12. The optional additional models – the ISO and ITO models – are available only if, as of\n3 September 2009, the transmission system already belonged to a VIU.30\n2.13. Under the ISO model, a VIU own s a transmission system network, but the operator of the\ntransmission system must be an independent entity, also referred to as the independent system\noperator (ISO).31\n2.14. The operator of the transmission system, i.e. the TSO or the ISO, is responsible for granting\nand managing third-party access to the transmission system, including the collection of ac cess\ncharges and other payments; for operating, maintaining and dev eloping the transmission system;\nand for the investment planning for this system.32\n2.15. This operator must (i) comply with the rules on ownership unbundlin g in Article s 9(1)(b),\n(c), and (d) of the Directive 33; (ii) demonstrate that it has at its disposal the required financial,\ntechnical, physical, and human resources to carry out the tasks of transmission 34; (iii) undertake\nto comply with a ten -year network development plan monitored by the relevant NRA 35; and (iv)\ndemonstrate its ability to comply with Regulation (EC) No. 715/2009, including the cooperation of\nTSOs at European and regional level.36\n2.16. Article 15 of the Directive, entitled \"Unbundling of transmiss ion system owners and storage\nsystem operators\", requires that:\nA transmission system owner, where an independent system operator has been\nappointed, and a storage system operator which are part of vertically integrated\nundertakings shall be independent at least in terms of their legal form, organisation\nand decision making from other activities not relating to transmission, distribution and\nstorage.37\n2.17. For transmission system owners, this requires, at a minimum, that:\n(a) persons responsible for the management of the transmission system owner … shall\nnot participate in company structures of the integrated natural gas undertaking\n\n28 Directive 2009/73/EC, (Exhibit EU-5), Article 9(1)(d).\n29 Directive 2009/73/EC, (Exhibit EU-5), Article 9(1)(a), stating that \"each undertaking which owns a\ntransmission system acts as a transmission system operator\".\n30 Directive 2009/73/EC, (Exhibit EU-5), Article 9(8). We note that Russia at times refers to the TAP\ninfrastructure exemption decision, which allowed Trans-Adriatic Pipeline AG (TAP AG) to operate as an \"'ad hoc'\nITO\" despite not belonging to a VIU on 3 September 2009. (Russia's first written submission, paras. 332-334;\nand second written submission, para. 227). The possibility of providing exemptions to the rules on unbundling,\nthird-party access, and tariff regulation requirements under the infrastructure exemption measure is described\nbelow in section 2.2.5 and is not addressed further in the context of the unbundling measure. Furthermore, we\nnote that Article 9(9) of the Directive also allows another unbundling model for TSOs belonging to a VIU on\n3 September 2009. Under this model, EU member States may derogate from the rules in the OU model, the\nISO model and the ITO model provided that \"there are arrangements in place which guarantee more effective\nindependence of the transmission system operator than the provisions of Chapter IV [concerning the ITO\nmodel]\" on 3 September 2009. (Directive 2009/73/EC, (Exhibit EU-5), Article 9(9)). See also European Union's\nfirst written submission, p. 8, fn 11). However, Russia does not rely on or refer to this model in challenging the\nunbundling measure in the Directive and the European Union has clarified that Article 9(9) has not been\napplied or relied on by any entity seeking certification. (European Union's response to Panel question No. 37,\npara. 69). This model is hence not relevant for the Panel's assessment of the unbundling measure's WTO\nconsistency and is therefore not addressed further.\n31 Directive 2009/73/EC, (Exhibit EU-5), Articles 9(8)(a) and 14.\n32 Directive 2009/73/EC, (Exhibit EU-5), Article 14(4).\n33 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(a). See also para. 2.11 above.\n34 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(b).\n35 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(c).\n36 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(e).\n37 Directive 2009/73/EC, (Exhibit EU-5), Article 15(1).\n\nresponsible, directly or indirectly, for the day -to-day operation of the production and\nsupply of natural gas;\n(b) appropriate measures shall be taken to ensure that the professional interests of\npersons responsible for the management of the transmission system owner … are\ntaken into account in a manner that ensures that they are capable of acti ng\nindependently;\n…\n(d) the transmission system owner … shall establish a compliance programme, which\nsets out measures taken to ensure that discriminatory conduct is excluded, and\nensure that observance of it is adequately monitored.38\n2.18. Furthermore, the transmission system owner must: (i) provide the relevant cooperation and\nsupport to the ISO 39; (ii) finance the investments decided on by the ISO and approved by the\nrelevant NRA, or agree to financing by any other interested party, including the ISO itself 40; (iii)\nprovide for the coverage of liability relating to the transmission system network assets, excluding\nliability relating to the tasks of the ISO 41; and (iv) provide guarantees to facilitate financing of any\ntransmission system network expansions, except where it has agreed to financing by any other\ninterested party.42\n2.19. When the ISO model is applied, certain aspects of the owner's and the ISO's activities and\nrelationship are subject to monitoring or approval by the NRA of the relevant EU member State.\nThe NRA shall (a) monitor the owner's and the ISO's compliance w ith the requirements of\nArticle 14 of the Directive 43 and their \"relations and communications\" 44; (b) \"approve contracts\nand act as a dispute settlement authority\" between the two in respect of comp laints in relation to\nthe ISO's obligations under the Directive 45; (c) approve the investment planning and the multi -\nannual network development plan of the ISO 46; (d) ensure that network access tariffs collected by\nthe ISO include remuneration for the owner 47; and (e) have the powers to carry out unannounced\ninspections at the premises of the owner and the ISO.48\n2.20. Under the ITO model, a VIU is required to establish an independent transmission operator\n(ITO), which owns and operates the transmission system. 49 Under this model, t he VIU owns the\nITO.50 Chapter IV of the Directive contains rules specific to the ITO model, including those\ndescribed below.\n2.21. Pursuant to Article 17(1) of the Directive, ITOs \"shall be equipped with all human, technical,\nphysical and financi al resources necessary for fulfilling their obligations under [the] Directive and\ncarrying out the activity of gas transmission \".51 As further provided by Article 17(1) of the\nDirective, assets that are necessary for the activity of gas transmission, includ ing the transmission\nsystem, shall be owned by the ITO; and personnel necessary for the activity of gas transmission,\nincluding the performance of all corporate tasks, shall be employed by the ITO.52 Under\n\n38 Directive 2009/73/EC, (Exhibit EU-5), Article 15(2).\n39 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(a).\n40 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(b). Article 14(5)(b) goes on to state that:\nThe relevant financing arrangements shall be subject to approval by the regulatory authority. Prior to\nsuch approval, the regulatory authority shall consult the transmission system owner together with other\ninterested parties.\n41 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(c).\n42 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(d).\n43 Directive 2009/73/EC, (Exhibit EU-5), Article 41(3)(a).\n44 Directive 2009/73/EC, (Exhibit EU-5), Article 41(3)(b).\n45 Directive 2009/73/EC, (Exhibit EU-5), Articles 41(3)(b) and 41(11).\n46 Directive 2009/73/EC, (Exhibit EU-5), Article 41(3)(c).\n47 Directive 2009/73/EC, (Exhibit EU-5), Article 41(3)(d).\n48 Directive 2009/73/EC, (Exhibit EU-5), Article 41(3)(e).\n49 Directive 2009/73/EC, (Exhibit EU-5), Articles 9(8)(b) and 17(1)(a) and Chapter IV. Under the ITO\nmodel, the operator of the transmission system is referred to as the independent transmission operator (ITO)\nor the TSO.\n50 Directive 2009/73/EC, (Exhibit EU-5), Article 9(8)(b).\n51 Directive 2009/73/EC, (Exhibit EU-5), Article 17(1).\n52 Directive 2009/73/EC, (Exhibit EU-5), Articles 17(1)(a) and 17(1)(b).\n\nArticle 17(1)(c) of the Directive, leasing of perso nnel and rendering of services, to and from any\nother parts of the VIU, is prohibited. The ITO may, however, render services to the VIU as long as\n(i) the provision of those services does not discriminate between system users, is available to all\nsystem users on the same terms and conditions and does not restrict, distort or prevent\ncompetition in production or supply; and (ii) the terms and conditions of the provision of those\nservices are approved by the relevant NRA. Article 17(1)(d) also provides that, \"without prejudice\nto the decisions of the Supervisory Body under Article 20\", appropr iate financial resources for\nfuture investment projects and/or for the replacement of existing assets shall be made available to\nthe TSO in due time by the VIU following an appropriate request from the TSO.53\n2.22. Article 13 of the Directive sets out the general tasks of a TSO as, among others:\n\"operat[ing], maintain[ing] and develop[ing] under economic conditions secure, reliable and\nefficient transmission … facilities \"54, \"refrain[ing] from discriminating between system users or\nclasses of system users, particul arly in favour of its related undertakings\" 55, and \"provid[ing] …\nsufficient information\" to \"any other transmission system operator, any other storage system\noperator, any other LNG system operator and/or any distribution system operator\" 56 as well as\n\"system users\". 57 Article 17(2) of the Directive provides that the activity of gas transmission\nperformed by the ITO \"shall include at least the following tasks in addi tion to those listed in\nArticle 13\":\n(a) the representation of the transmission system operator a nd contacts to third\nparties and the regulatory authorities;\n(b) the representation of the transmission system operator within the European\nNetwork of Transmission System Operators for Gas (ENTSO for Gas);\n(c) granting and managing third -party access on a non -discriminatory basis\nbetween system users or classes of system users;\n(d) the collection of all the transmission system related charges including access\ncharges, balancing charges for ancillary services such as gas treatment,\npurchasing of services (balancing costs, energy for losses);\n(e) the operation, maintenance and development of a secure, efficient and\neconomic transmission system;\n(f) investment planning ensuring the long -term ability of the system to meet\nreasonable demand and guaranteeing security of supply;\n(g) the s etting up of appropriate joint ventures, including with one or more\ntransmission system operators, gas exchanges, and the other relevant actors\npursuing the objective to develop the creation of regional markets or to\nfacilitate the liberalisation process; and\n(h) all corporate services, including legal services, accountancy and IT services.58\n2.23. Article 18 of the Directive requires that, \"without prejudice to the decisions of the\nSupervisory Body under Article 20\", the ITO must have \"effective decision -making right s,\nindependent from the vertically integrated undertaking, with respect to assets necessary to\noperate, maintain or develop the transmission system\" 59 and \"the power to raise money on the\ncapital market\".60 The remainder of Article 18 of the Directive provides for the following rules:\n\n53 Directive 2009/73/EC, (Exhibit EU-5), Article 17(1)(d).\n54 Directive 2009/73/EC, (Exhibit EU-5), Article 13(1)(a).\n55 Directive 2009/73/EC, (Exhibit EU-5), Article 13(1)(b).\n56 Directive 2009/73/EC, (Exhibit EU-5), Article 13(1)(c).\n57 Directive 2009/73/EC, (Exhibit EU-5), Article 13(1)(d).\n58 Directive 2009/73/EC, (Exhibit EU-5), Article 17(2).\n59 Directive 2009/73/EC, (Exhibit EU-5), Article 18(1)(a).\n60 Directive 2009/73/EC, (Exhibit EU-5), Article 18(1)(b).\n\n2. The transmission system operator shall at all times act so as to ensure it has the\nresources it needs in order to carry out the activity of transmission properly and\nefficiently and develop and maintai n an efficient, secure and economic transmission\nsystem.\n3. Subsidiaries of the vertically integrated undertaking performing functions of\nproduction or supply shall not have any direct or indirect shareholding in the\ntransmission system operator. The trans mission system operator shall neither have\nany direct or indirect shareholding in any subsidiary of the vertically integrated\nundertaking performing functions of production or supply, nor receive dividends or\nany other financial benefit from that subsidiary.\n4. The overall management structure and the corporate statutes of the transmission\nsystem operator shall ensure effective independence of the transmission system\noperator in compliance with this Chapter. The vertically integrated undertaking shall\nnot d etermine, directly or indirectly, the competitive behaviour of the transmission\nsystem operator in relation to the day to day activities of the transmission system\noperator and management of the network, or in relation to activities necessary for the\npreparation of the ten -year network development plan developed pursuant to\nArticle 22.\n5. In fulfilling their tasks in Article 13 and Article 17(2) of this Directive, and in\ncomplying with Article 13(1), Article 14(1)(a), Article 16(2), (3) and (5), Article 18( 6)\nand Article 21(1) of Regulation (EC) No 715/2009, transmission system operators\nshall not discriminate against different persons or entities and shall not restrict, distort\nor prevent competition in production or supply.\n6. Any commercial and financial relations between the vertically integrated\nundertaking and the transmission system operator, including loans from the\ntransmission system operator to the vertically integrated undertaking, shall comply\nwith market conditions. The transmission system opera tor shall keep detailed records\nof such commercial and financial relations and make them available to the regulatory\nauthority upon request.\n7. The transmission system operator shall submit for approval by the regulatory\nauthority all commercial and financ ial agreements with the vertically integrated\nundertaking.\n8. The transmission system operator shall inform the regulatory authority of the\nfinancial resources, referred to in Article 17(1)(d), available for future investment\nprojects and/or for the replacement of existing assets.\n9. The vertically integrated undertaking shall refrain from any action impeding or\nprejudicing the transmission system operator from complying with its obligations in\nthis Chapter and shall not require the transmission system oper ator to seek\npermission from the vertically integrated undertaking in fulfilling those obligations.\n10. An undertaking which has been certified by the regulatory authority as being in\ncompliance with the requirements of this Chapter shall be approved and designated as\na transmission system operator by the Member State concerned. The certification\nprocedure in either Article 10 of this Directive and Article 3 of Regulation (EC)\nNo 715/2009 or in Article 11 of this Directive shall apply.61\n2.24. For the ITO model, the Directive also requires the establishment of a Supervisory Body of\nthe ITO.62 Article 20 of the Di rective sets out, in relevant part, the following provisions concerning\na Supervisory Body of the ITO:\n\n61 Directive 2009/73/EC, (Exhibit EU-5), Article 18.\n62 Directive 2009/73/EC, (Exhibit EU-5), Article 20.\n\n1. The transmission system operator shall have a Supervisory Body which shall be in\ncharge of taking decisions which may have a significant impact on the value of the\nassets of the shareholders within the transmission system operator, in particular\ndecisions regarding the approval of the annual and longer -term financial plans, the\nlevel of indebtedness of the transmission system operator and the amount of\ndividends distributed to shareholders. The decisions falling under the remit of the\nSupervisory Body shall exclude those that are related to the day to day activities of\nthe transmission system operator and management of the network, and in relation to\nactivities necessary for the preparation of the ten -year network development plan\ndeveloped pursuant to Article 22.\n2. The Supervisory Body shall be composed of members representing the vertically\nintegrated undertaking, members representing third party share holders and, where\nthe relevant legislation of a Member State so provides, members representing other\ninterested parties such as employees of the transmission system operator.63\n2.25. Furthermore, pursuant to Article 19 of the Directive, the Supervisory Body is i n charge of\n\"[d]ecisions regarding the appointment and renewal, working conditions including remuneration,\nand termination of the term of office, of the persons responsible for the management and/or\nmembers of the administrative bodies of the transmission system operator\".64 The identity of, and\nthe conditions governing the term, the duration and the termination of office of , the persons\nnominated by the Supervisory Body for appointment or renewal as persons responsible for the\nexecutive management and/or as members of the administrative bodies of the TSO, and the\nreasons for any proposed decision must be notified to the relevant NRA. Such nominations become\nbinding if the relevant NRA does not raise objections, within three weeks, in cases where \"doubts\narise as to the professional independence of a nominated person\" or \"in the case of premature\ntermination of a term of office, doubts exist regarding the justification of such premature\ntermination\".65 These rules also apply to at least half of the members of the Supervisory Body\nminus one and the rules concerning premature termination apply to all such members.66\n2.26. For persons responsible for the management of the ITO and members of the administrative\nbodies a number of rules apply to secure their independence : (a) these persons cannot exercise\nany professional position or responsibility, interest or business relationship, either directly or\nindirectly, with any part of the VIU (other than the ITO) or its controlling shareholders during a\nperiod of three years before their appointment67, during their appointment68, or during a period of\nfour years after termination of their appointment 69; (b) these persons and other employees of the\nITO cannot hold an interest in or receive any financial benefit, directly or indire ctly, from any part\nof the VIU other than the ITO or receive remuneration depending on activities or results of the\nVIU70; and (c) these persons shall be guaranteed \"[e]ffective rights of appeal to the regulatory\nauthority … against premature terminations o f their term of office\". 71 The same rules apply to at\nleast half of the members of the Supervisory Body minus one.72\n2.27. When the ITO model is applied, certain aspects of the ITO's and the VIU's activities and\nrelationship are subject to monitoring and/or approv al by the NRA of the relevant EU member\nState. The NRA shall (i) issue penalties for discriminatory behaviour in favour of the VIU 73; (ii)\nmonitor communications74 as well as commercial and financial relations75 between the ITO and the\n\n63 Directive 2009/73/EC, (Exhibit EU-5), Articles 20(1) and 20(2).\n64 Directive 2009/73/EC, (Exhibit EU-5), Article 19(1).\n65 Directive 2009/73/EC, (Exhibit EU-5), Article 19(2).\n66 Directive 2009/73/EC, (Exhibit EU-5), Article 20(3).\n67 Directive 2009/73/EC, (Exhibit EU-5), Article 19(3). This rule only applies to the majority of the\npersons responsible for the management and/or members of the administrative bodies of the ITO. The\nremaining persons shall not have exercised \"management or other relevant activity in the vertically integrated\nundertaking for a period of at least six months before their appointment\". (Directive 2009/73/EC, (Exhibit EU-\n5), Article 19(8)).\n68 Directive 2009/73/EC, (Exhibit EU-5), Article 19(4).\n69 Directive 2009/73/EC, (Exhibit EU-5), Article 19(7).\n70 Directive 2009/73/EC, (Exhibit EU-5), Article 19(5).\n71 Directive 2009/73/EC, (Exhibit EU-5), Article 19(6).\n72 Directive 2009/73/EC, (Exhibit EU-5), Article 20(3).\n73 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(a).\n74 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(b).\n75 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(d).\n\nVIU; (iii) act as dispute settlement authority between the VIU and the ITO in respect of the latter's\nobligations under the Directive 76; (iv) approve all commercial and financial agreements between\nthe VIU and the ITO, on the condition that they comply with market conditions 77; (v ) request\njustification from the VIU in relation to notifications by the compliance officer concerning\ninvestment decisions78; (vi) carry out inspections on the premises of the VIU and the ITO 79; and\n(vii) assign all or specific tasks of the ITO to an appoin ted independent system operator under the\nISO model in case of a persistent breach by the ITO of its obligations under the Directive.80\n2.28. Under the Directive, derogations from the rules on unbundling are permitted for certain EU\nmember States. More particular ly, Article 49 allows EU member States \"not directly connected to\nthe interconnected system of any other Member State and having only one main external supplier\"\nto derogate from, among others, the rules on unbundling and specifies that these rules \"shall not\napply to Estonia, Latvia and/or Finland until any of those Member States is directly connected to\nthe interconnected system of any Member State other than Estonia, Latvia, Lithuania and\nFinland\".81 Similarly, EU member States \"qualifying as an emergent market, which, because of the\nimplementation of this Directive, would experience substantial problems\" are permitted to\nderogate from, among others, the rules on unbundling.82 The Directive also specifies that the rules\non unbundling do not apply to Cyprus, Luxembourg and Malta.83\n2.2.2.2 The unbundling measure in the national implementing laws of Croatia, Hungary,\nand Lithuania\n2.29. Croatia has implemented the rules on unbundling in the Directive through its Gas Market\nAct, which allows all three unbundling models. 84 The OU model is implemented through Article 14\nof the Gas Market Act and the ISO and ITO models are implemented through Articles 15 through\n17 and Articles 18 through 22 of the Gas Market Act, respectively.\n2.30. Hungary has implemented the rules on unbundling in th e Directive through its Gas Act,\nwhich also allows all three unbundling models. 85 The OU model is implemented through\nSection 121/H, the ISO model is implemented through Section 121/I, and the ITO model is\nimplemented through Sections 121/B through 121/G of this Act. In addition, Russia refers to\nSection 120/A(3)(b)86 and Section 123(4) of Hungary's Gas Act .87, 88 Both parties have submitted\n\n76 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(c).\n77 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(e).\n78 Directive 2009/73/EC, (Exhibit EU-5), Articles 21(4) and 41(5)(f). The compliance officer is appointed\nby the Supervisory Body, subject to the approval of the relevant NRA, and is generally in charge of monitoring\nthe implementation of the compliance programme; annually reporting on measures taken in accordance with\nthis programme to the relevant NRA; reporting to the Supervisory Body and issuing recommendations on the\ncompliance programme and its implementation; notifying the NRA of any substantial breaches of the\nprogramme; and reporting to the NRA on any commercial or financial relations between the VIU and the ITO.\n(Directive 2009/73/EC, (Exhibit EU-5), Articles 21(2) and 21(3)).\n79 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(g).\n80 Directive 2009/73/EC, (Exhibit EU-5), Article 41(5)(h).\n81 Directive 2009/73/EC, (Exhibit EU-5), Article 49(1).\n82 Directive 2009/73/EC, (Exhibit EU-5), Article 49(2).\n83 Directive 2009/73/EC, (Exhibit EU-5), Article 49(6).\n84 Croatia's Gas Market Act (Official Gazette 28-472/2013, 14-299/2014), (Croatia's Gas Market Act),\n(Exhibit RUS-45).\n85 Hungary's Act XL of 2008 on Natural Gas Supply – In Force on 31 March 2012 (extracts of an\nunofficial consolidated version incorporating Government Decree No. 19/2009 (I.30.) on the implementation of\nthe Act on Natural Gas Supply), (Hungary's Gas Act) (Exhibit EU-41); Hungary's Gas Act XL of 2008, including\nthe amendments made after 31 May 2012, (Hungary's Gas Act), (Exhibit EU-155); and Chapter III of\nHungary's Act XXIX of 2011 on the Amendment of Regulations Relating to Energy Supply amending Hungary's\nAct XL of 2008 on Natural Gas Supply, (Hungary's Gas Act), (Exhibit RUS-47). The multiple exhibits are a\nresult of the existence of a separate Hungarian legislation amending the original Act and disagreements\nbetween the parties regarding the accuracy of the translation.\n86 Russia's first written submission, paras. 227-228. Section 120/A is entitled \"Common Unbundling\nRules Relating to Vertically Integrated Natural Gas Companies\" and provides, in relevant parts, that \"the\nsystem operator – other than the authorized operator of the regulated natural gas market and transmission\nsystem operators – may not acquire any share in any other authorized operator engaged in activities other\nthan his own activities, which are subject to authorization under this Act\". See Hungary's Gas Act (Exhibits EU-\n155/RUS-47).\n87 Russia's first written submission, paras. 227-228. Section 123(4) provides as follows:\n\ntheir own translations of Hungary's national implementing law as exhibits, and disagree on the\ntranslation of certain provisions and the completeness of the submitted exhibits.89 The implications\nof these disagreements will be addressed in the Panel's findings, as appropriate.\n2.31. Lithuania has implemented the rules on unbundling in the Directive through Articles 40 and\n41 of its Law on Natural Gas 90, which al low only the OU model . Moreover, Russia refers to\nLithuania's Law Implementing the Law Amending the Law on Natural Gas ( Lithuania's Law on\nImplementation)91, which lays down \"the procedure and principles of implementation of the Law on\nNatural Gas\", including the unbundling requirement contained in Chapter Eight of the Law on\nNatural Gas .92 Article 2.2 of the Law on Implementation requires \"non -compliant natural gas\nundertakings\" to choose between two different procedures in orde r to ensure compliance with the\nunbundling requirement, namely the \"control reform procedures\", and the \"reorganisation\nprocedures\", defined respect ively in Articles 3 and 4 of Lithuania's Law o n Implementation.\nPursuant to Article 3.1, non -compliant natur al gas undertakings may seek compliance with the\nunbundling requirement \"by reforming the control of an undertaking on their own initiative\", which\n\"shall be effected through transactions (transfer of assets or shares, assignment of rights, transfer\nof shareholders' rights, shareholders' agreement, increasing or decreasing of the authorised capital\nor any other) made in accordance with the proce dure established in paragraph 2 [of Article 3 ]\".\nArticle 3.2 stipulates, inter alia, that non-compliant gas undertakings \"must obtain the approval of\nthe Commission\" before entering into a transaction \"which causes or may cause change\n(emergence, ceasing, decrease or increase) of control defined in Article 41 of the Law on Natural\nGas\".\n2.2.3 The public body measure i n the national implementing laws of Croatia, Hungary,\nand Lithuania\n2.32. Russia challenges the public body measure in the national implementing laws of Croatia,\nHungary, and Lithuania, which transpose Article 9(6) of the Directive . This Article states as\nfollows:\nFor the implementation of this Article, where the person referred to in points (b), (c)\nand (d) of paragraph 1 [of Article 9] is the Member State or another public body, two\nseparate public bodies exercising control over a transmission system operator o r over\na transmission system on the one hand, and over an undertaking performing any of\n\nAny company that is involved in the extraction of natural gas, the production of electricity, or in\nthe supply of natural gas or electricity, and any shareholders exercising control in such\ncompanies may not acquire any share – directly or indirectly – in a transmission system operator\nwhere such share constitutes entitlement to exercise control. The acquisition of shares in a\ntransmission system operator, or in a controlling shareholder thereof, where such share\nconstitutes entitlement to exercise control is subject to the Office's prior approval as well. This\nprovision shall have no bearing on the provision contained in Subsection (1) of Section 121/B.\nSee Hungary's Gas Act (Exhibits EU-155/RUS-47). The text of Section 123(4) in those two exhibits is\nidentical. This provision is referred to as \"Section 194\" in paragraph 227 of Russia's first written submission\nand Exhibit RUS-47.\n88 Russia also identifies Section 117(1) of Hungary's Gas Act. (Russia's response to Panel question No.\n165, para. 69 (citing Hungary's Gas Act, (Exhibit RUS-47), pp. 37-38)).\n89 With respect to the accuracy of the translations, the European Union submitted corrections to the\ntranslations of Sections 120/A and 121/H in Exhibit RUS-47 and offers its own Exhibit EU-41 as an accurate\ntranslation. (European Union's first written submission, para. 229; and response to Panel question No. 2,\npara. 17). Russia accepted the translations of these Sections in Exhibit EU-41. (Russia's response to Panel\nquestion No. 145, para. 1). With respect to the completeness of the submitted exhibits, the European Union\nargued that the text of Section 123 in Exhibit RUS-47, while not fundamentally different in meaning from the\ntext in Exhibits EU-41 and EU-155, is incomplete because it omits Section 123(2). (European Union's first\nwritten submission, paras. 548 and 552; and response to Panel question Nos. 2 and 163, paras. 16 and 35,\nrespectively). Russia submitted that its own translation of Section 123 in Exhibit RUS-47 is more accurate than\nthose provided by the European Union. (Russia's response to Panel question Nos. 145 and 163, paras. 2 and\n60-65).\n90 Law of the Republic of Lithuania of 10 October 2000 No. VIII-1973 on Natural Gas, (Lithuania's Law\non Natural Gas), (Exhibit RUS-136rev).\n91 Law of the Republic of Lithuania of 30 June 2011 No. XI-1565 on the Implementation of the Law\nAmending the Law on Natural Gas, (Lithuania's Law on Implementation), (Exhibit RUS-22).\n92 Lithuania's Law on Implementation, (Exhibit RUS-22), Article 1(1).\n\nthe functions of production or supply on the other, shall be deemed not to be the\nsame person or persons.93\n2.33. Croatia has implemented this provision through Article 14(6) of its Gas Market Act, Hungary\nhas implemented it through Section 121/H (4) of its Gas Act, and Lithuania has implemented it\nthrough Article 41(5) of its Law on Natural Gas. The table below reproduces these provisions:\n\nCroatia94\n\nHungary95\n\nLithuania96\n\nTwo separate public authorities\nthat control the transmission\nsystem operator or the\ntransmission system and that\ncontrol the energy undertaking\nperforming any of the activities of\nproduction, trade or supply and\nthe activity of the production of\nnatural gas shall not be\nconsidered the same person or\npersons within the meaning of\n[the relevant ownership\nunbundling provisions of the Gas\nMarket Act].\n\nThe obligation set out in [the\nrelevant ownership unbundling\nprovisions of the Gas Act] shall be\ndeemed to be fulfilled in a\nsituation where economic\noperators defined by law acting in\nthe name of Hungary or other\npublic bodies exercising control\nover a transmission system\noperator or over a transmission\nline on the one hand, and over a\ncompany performing any of the\nfunctions of production or supply\nof natural gas on the other.\n\nWhere the person referred to in\n[the relevant ownership\nunbundling provisions of the Law\non Natural Gas] is a member\nState or another public body, two\nseparate public bodies exercising\ncontrol over a transmission\nsystem operator or over a\ntransmission system on the one\nhand, and over an undertaking\nperforming any of the functions of\nproduction or supply on the\nother, shall be deemed not to be\nthe same person or persons.\n\n2.2.4 The LNG measure\n2.34. Russia challenges the LNG measure in the Directive. Article 2(11) of the Directive defines an\n\"LNG facility\" as \"a terminal which is used for the liquefaction of natural gas or the importation,\noffloading, and re-gasification of LNG\". An \"LNG system operator\" is \"a natural or legal person who\ncarries out the function of liquefaction of natural gas, or the importation, offloading, and re -\ngasification of LNG and is responsible for operating a LNG facility\".97\n2.35. According to Article 2(3) of the Directive, \"trans mission\" involves the transport of natural\ngas through a high-pressure pipeline network. According to Article 2(4) of the Directive, a TSO is a\nnatural or legal person who carries out the function of transmission and is responsible for\noperating the transm ission system. As LNG facilities and L NG system operator s do not fall within\nthe scope of \"transmission system\" and the definition of a TSO , respectively, they are not subject\nto the unbundling requirements of the Directive applicable to transmission syste ms and TSOs. LNG\nsystem operator s are subject to the rules on third -party access prescribed by Article 32 of the\nDirective.98\n2.2.5 The infrastructure exemption measure\n2.36. Article 36 of the Directive provides that two categories of infrastructure \"may, upon request,\nbe exempted, for a defined period of time\" from generally applicable rules such as: rules regarding\nunbundling; rules regarding third-party access to transmission and distribution systems, LNG\nfacilities, storage facilities and upstream pipeline networks; and rules regulating terms, conditions,\ntariffs and methodologies for access to these.99 The first category i s \" [m]ajor new gas\n\n93 Directive 2009/73/EC, (Exhibit EU-5), Article 9(6).\n94 Croatia's Gas Market Act, (Exhibit RUS-45), Article 14(6).\n95 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 121/H(4). Despite initial disagreement, the\nparties have subsequently both agreed to the translation of Section 121/H(4). (Russia's response to Panel\nquestion No. 2, para. 10; and European Union's first written submission, para. 229).\n96 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 41(5).\n97 Directive 2009/73/EC, (Exhibit EU-5), Article 2(12).\n98 Directive 2009/73/EC, (Exhibit EU-5), Article 32(1). This Article explicitly mentions LNG facilities.\n99 Directive 2009/73/EC, (Exhibit EU-5), Article 36(1) (referring to Articles 9, 32-34, 41(6), 41(8), and\n41(10)). This Article corresponds to Article 22 of Directive 2003/55/EC, which was part of the Second Energy\nPackage. Although the versions of the measure enacted in the different Directives differ slightly, the language\n\ninfrastructure, i.e. interconnectors, LNG and storage facilities \"100; the second category is\n\"significant increases of capacity in existing infrastructure and … modifications of such\ninfrastructure which enable the development of new sources of gas supply\".101\n2.37. Infrastructure falling within one of these two categories may only be exempted \"under the\nfollowing conditions\" as provided in Article 36(1) of the Directive:\n(a) the investment must enhance competition in gas supply and enhance security of\nsupply;\n(b) the level of risk attached to the investment must be such that the investment\nwould not take place unless an exemption was granted;\n(c) the infrastructure must be owned by a natural or legal person which is separate at\nleast in terms of its legal form from the system operators in whose systems that\ninfrastructure will be built;\n(d) charges must be levied on users of that infrastructure; and\n(e) the exemption must not be detrimental to competition or the effective functioning\nof the internal market in natural gas, or the efficient functioning of the regulated\nsystem to which the infrastructure is connected.\n2.38. While the decision initially lies with the relevant NRA, it must be notified to the Commission,\nwhich can require the NRA to withdraw or amend its original decision. 102 Article 36( 10) of the\nDirective states that the Commission may adopt guidelines for the application of these condi tions.\nThe Commission has not thus far adopted such guidelines.\n2.39. Article 36 also directs the NRA to consider imposing, on a case -by-case basis, conditions\nregarding the scope103 and duration of the exemption and non -discriminatory access to the\ninfrastructure, taking into account the additional capacity to be built or the modification of existing\ncapacity, the time horizon of the project, and national circumstances.104\n2.40. Pursuant to this provision, the Commission and the NRAs have issued a number of decisions\nregarding infrastructure exemption requests . The parties refer to those relating to: the Ostsee-\nPipeline-Anbindungsleitung ( OPAL pipeline )105, the Nordeuropäische Erdgasleitung (NEL\npipeline)106, the Gazelle pipeline 107, the Trans-Adriatic Pipeline ( TAP pipeline )108, the Nabucco\n\nconcerning the criteria for granting an exemption is identical. The Panel's references to Article 36 of the\nDirective generally subsume its predecessor, Article 22 of Directive 2003/55/EC.\n100 Directive 2009/73/EC, (Exhibit EU-5), Article 36(1). Article 2(17) of the Directive defines an\n\"interconnector\" as \"a transmission line which crosses or spans a border between Member States for the sole\npurpose of connecting the national transmission systems of those Member States.\"\n101 Directive 2009/73/EC, (Exhibit EU-5), Article 36(2).\n102 Directive 2009/73/EC, (Exhibit EU-5), Article 36(9).\n103 See Directive 2009/73/EC, (Exhibit EU-5), Article 36(6), which states that \"[a]n exemption may\ncover all or part of the capacity of the new infrastructure, or of the existing infrastructure with significantly\nincreased capacity\".\n104 Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning\ncommon rules for the internal market in natural gas and repealing Directive 98/30/EC, OJ L 176/57 of\n15.7.2003, (Exhibits EU-10/RUS-4), Article 22(3)(b).\n105 Ruling of the German Federal Network Agency for Electricity, Gas, Telecommunications, Post and\nRailways (BNetzA) of 25 February 2009 on the Application for Exemption from the Regulation by OPAL NEL\nTransport GmbH (Case ref. BK7-08-009), (BNetzA decision on the exemption of the OPAL and NEL pipelines),\n(Exhibit RUS-61); and Commission Decision of 12 June 2009 on the exemption of the OPAL pipeline from the\nrequirements on third party access and tariff regulation laid down in Articles 18, 25(2), 25(3) and 25(4) of\nDirective 2003/55/EC, K(2009) 4694, SG-Greffe (2009)D/3322, (Commission decision on the exemption of the\nOPAL pipeline), (Exhibit RUS-82). The Commission infrastructure exemption decisions in OPAL and NEL are\ncontained in the same document, but are referred to as separate decisions in our Report for purposes of clarity.\n106 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82).\n107 Commission Decision of 20 May 2011 on the exemption of the Gazelle pipeline from the requirements\non third party access and tariff regulation laid down in Articles 32, 33, 34, 41(6), 41(8) and 41(10) of Directive\n2009/73/EC, C(2011) 3424, (Commission decision on the exemption of the Gazelle pipeline I), (Exhibit RUS-\n81); and Commission Decision of 1 December 2011 on the exemption of the Gazelle pipeline from the\n\npipeline109, the Poseidon pipeline110, the Dragon LNG facility111, the South Hook LNG facility112, and\nthe Gate Terminal LNG facility.113\n2.41. While the parties refer to Article 36 of the Directive and the listed decisions , the precise\nnature and relevant aspects of the measure differ for each of Russia's claims. We address this in\nour findings below.\n2.2.6 The upstream pipeline networks measure\n2.42. Russia challenges the upstream pipeline networks measure in the Directive. An \"upstream\npipeline network\" is defined in Article 2(2) of the Directive as:\n[A]ny pipeline or network of pipelines operated and/or constructed as part of an oil or\ngas production project, or used to convey natural gas from one or more such projects\nto a processing plant or terminal or final coastal landing terminal[.]114\n2.43. According to Article 2(3) of the Directive, \"transmission\" means \"the transport of natural\ngas through a network, which mainly contains high -pressure pipelines, other than an upstream\npipeline network and other than the part of high-pressure pipelines primarily used in the context of\nlocal distribution of natural gas, with a view to its delivery to customers, but not including\nsupply\".115 As the transport of natural gas through an upstream pipeline network does not fall\n\nrequirement of ownership unbundling laid down in Article 9 of Directive 2009/73/EC, C(2011) 8777,\n(Commission decision on the exemption of the Gazelle pipeline II), (Exhibit RUS-87).\n108 Commission Decision of 16 May 2013 on the exemption of the Trans Adriatic Pipeline from the\nrequirements on third party access, tariff regulation and ownership unbundling laid down in Articles 9, 32,\n41(6), 41(8) and 41(10) of Directive 2009/73/EC, C(2013) 2949, (Commission decision on the exemption of\nthe TAP pipeline), (Exhibit RUS-10).\n109 Commission Decision of 8 February 2008 on the exemption of the Austrian section of the Nabucco\npipeline from the requirements on third party access and tariff regulation laid down in Articles 18, 25(2), 25(3)\nand 25(4) of Directive 2003/55/EC, CAB D(2008)142, (Commission decision on the exemption of the Austrian\nsection of the Nabucco pipeline), (Exhibit RUS-83); Commission Decision of 20 April 2009 on the exemption of\nthe Bulgarian section of the Nabucco pipeline from the requirements on third party access and tariff regulation\nlaid down in Articles 18, 25(2), 25(3) and 25(4) of Directive 2003/55/EC, CAB D(2009), (Commission decision\non the exemption of the Bulgarian section of the Nabucco pipeline), (Exhibit RUS-84); and Commission\nDecision of 23 June 2009 on the exemption of the Romanian section of the Nabucco pipeline from the\nrequirements on third party access and tariff regulation laid down in Articles 18, 25(2), 25(3) and 25(4) of\nDirective 2003/55/EC, C(2009), (Commission decision on the exemption of the Romanian section of the\nNabucco pipeline), (Exhibit RUS-85). No English translation was made available for the Commission's Decision\non the exemption of the Hungarian part of the Nabucco pipeline. (Russia's first written submission, para. 631,\nfn 826).\n110 Commission Decision of 22 May 2007 on the exemption of the Poseidon pipeline from the\nrequirements on third party access laid down in Articles 18, 20, 25(2), 25(3) and 25(4) of Directive\n2003/55/EC, SG-Greffe(2007) D/203046, (Commission decision on the exemption of the Poseidon pipeline),\n(Exhibit RUS-86).\n111 Final Views of the UK Office of Gas and Electricity Markets (Ofgem) on the draft application by\nDragon LNG Ltd for an exemption from the Regulated Third Party Access provisions of the Gas Directive for the\nMilford Haven LNG import terminal (June 2004), (Final views of the UK NRA on the exemption of the Dragon\nLNG facility), (Exhibit RUS-66); and Letter of 11 April 2005 from the UK Office of Gas and Electricity Markets\n(Ofgem) to All Interested Parties regarding the European Commission decision on Ofgem's decision to grant\nDragon LNG Ltd (Dragon) an exemption under section 19C(5) of the Gas Act 1986 from the application of\nsection 19D of the Gas Act, (Letter from the UK NRA regarding the Commission decision on the exemption of\nthe Dragon LNG facility), (Exhibit RUS-101).\n112 Final Views of the UK Office of Gas and Electricity Markets (Ofgem) on the application by South Hook\nLNG Terminal Company Ltd (SHTCL) (owned by Qatar Petroleum and ExxonMobil) under section 19C of the Gas\nAct 1986 for an exemption from section 19D of the Gas Act 1986 for the entire proposed capacity of its LNG\nimport facility at Milford Haven (November 2004), (Final views of the UK NRA on the exemption of the South\nHook LNG facility), (Exhibit RUS-68); and Letter of 11 February 2005 from the UK Office of Gas and Electricity\nMarkets (Ofgem) to All Interested Parties regarding the European Commission decision on Ofgem's decision to\ngrant South Hook LNG Terminal Company Ltd (SHTCL) and Grain LNG Ltd (GLNG) an exemption under section\n19C(5) of the Gas Act 1986 from the application of section 19D of the Gas Act, (Letter from the UK NRA\nregarding the Commission decision on the exemption of the South Hook LNG facility), (Exhibit RUS-102).\n113 Commission's comments of 26 March 2007 to the Decision of the Dutch Ministry of Economic Affairs\nof 23 November 2006 No. G/2006/01 on the exemption of the Gate Terminal project from certain parts of the\nGas Directive 2003/55, (Commission's comments to the Gate Terminal exemption decision), (Exhibit EU-143).\n114 Directive 2009/73/EC, (Exhibit EU-5), Article 2(2).\n115 Directive 2009/73/EC, (Exhibit EU-5), Article 2(3). (emphasis added)\n\nwithin the definition of \"transmission\", upstream pipeline networks and upstream pipeline network\noperators do not fall within the scope of a \"transmission system\" and the definition of a \"TSO\",\nrespectively. Consequently, upstream pipeline networks and upstream pipelin e network operators\nare not subject to the rules of the Directive applicable to TSOs, including those on unbundling and\ntariff regulation. The operators of upstream pipeline networks are also not subject to the rules on\nthird-party access under Article 32 of the Directive.\n2.44. For upstream pipeline networks, Article 34, entitled \"Access to upstream pipeline networks\",\nprovides that member States shall take the necessary measures to ensure that natural gas\nundertakings and eligible customers are able to obtain access to upstream pipeline networks,\nexcept for the parts of those networks and facilities that are used for local production at the site of\na field where the gas is produced. According to Article 34(2), such access is provided in a manner\ndetermined by t he relevant EU member State, applying \"the objectives of fair and open access,\nachieving a competitive market in natural gas and avoiding any abuse of a dominant position,\ntaking into account security and regularity of supplies, capacity which is or can re asonably be\nmade available, and environmental protection\".116\n2.2.7 The third-country certification measure\n2.45. Russia challenges the third-country certification measure in the Directive and in the national\nimplementing laws of Croatia, Hungary and Lithuania.\n2.2.7.1 The third-country certification measure in the Directive\n2.46. Article 11 of the Directive is entitled \"Certification in relation to third countries\" and\nprovides, in relevant parts, as follows:\n1. Where certification is requested by a transmission system owner or a transmission\nsystem operator which is controlled by a person or persons from a third country or\nthird countries, the regulatory authority shall notify the Commission.\nThe regulatory authority shall also notify to the Commission without delay any\ncircumstances that would result in a person or persons from a third country or third\ncountries acquiring control of a transmission system or a transmission system\noperator.\n2. The transmission system operator shall notify to the regulatory authority any\ncircumstances that would result in a person or persons from a third country or third\ncountries acquiring control of the transmission system or the transmission system\noperator.\n3. The regulatory authority shall adopt a draft decision on the certification of a\ntransmission system operator within four months from the date of notification by the\ntransmission system operator. It shall refuse the certification if it has not been\ndemonstrated:\n(a) that the entity concerned complies with the requirements of Article 9; and\n\n116 Directive 2009/73/EC, (Exhibit EU-5), Article 34(2). This provision further states:\nThe following matters may be taken into account:\n(a) the need to refuse access where there is an incompatibility of technical specifications which\ncannot reasonably be overcome;\n(b) the need to avoid difficulties which cannot reasonably be overcome and could prejudice the\nefficient, current and planned future production of hydrocarbons, including that from fields of\nmarginal economic viability;\n(c) the need to res pect the duly substantiated reasonable needs of the owner or operator of the\nupstream pipeline network for the transport and processing of gas and the interests of all other\nusers of the upstream pipeline network or relevant processing or handling faciliti es who may be\naffected; and\n(d) the need to apply their laws and administrative procedures, in conformity with Community\nlaw, for the grant of authorisation for production or upstream development.\n\n(b) to the regulatory authority or to another competent authority designated by the\nMember State that granting certification will not put at risk the security of\nenergy supply of the Member State and the Community. In considering that\nquestion the regulatory author ity or other competent authority so designated\nshall take into account:\n(i) the rights and obligations of the Community with respect to that third country\narising under international law, including any agreement concluded with one\nor more third countries to which the Community is a party and which\naddresses the issues of security of energy supply;\n(ii) the rights and obligations of the Member State with respect to that third\ncountry arising under agreements concluded with it, insofar as they are in\ncompliance with Community law; and\n(iii) other specific facts and circumstances of the case and the third country\nconcerned.\n4. The regulatory authority shall notify the decision to the Commission without delay,\ntogether with all the relevant information with respect to that decision.\n5. Member States shall provide for the regulatory authority or the designated\ncompetent authority referred to in paragraph 3(b), before the regulatory authority\nadopts a decision on the certification, to request an opinion from the Commission on\nwhether:\n(a) the entity concerned complies with the requirements of Article 9; and\n(b) granting certification will not put at risk the security of energy supply to the\nCommunity.\n…\n7. When assessing whether the control by a person or persons from a third country or\nthird countries will put at risk the security of energy supply to the Community, the\nCommission shall take into account:\n(a) the specific facts of the case and the third country or third countries concerned;\nand\n(b) the rights and obligations of the Community with respect to that third country\nor third countries arising under international law, including an agreement\nconcluded with one or more third countries to which the Community is a party\nand which addresses the issues of security of supply.\n…\n9. Nothing in this Article shall affect the right of Member States to exercise, in\ncompliance with Community law, national legal controls to protect legitimate public\nsecurity interests.\n10. The Commission may adopt Guidelines setting out the details of the procedure to\nbe followed for the application of this Article.117\n2.2.7.2 The third -country certification measure in the national implementing law s of\nCroatia, Hungary and Lithuania\n2.47. Croatia has implemented the rules on third-country certification through Article 24 of its Gas\nMarket Act, Hungary ha s implemented them through Secti on 128/A of its Gas Act, and Lithua nia\n\n117 Directive 2009/73/EC, (Exhibit EU-5), Article 11.\n\nhas implemented them through Article 29 of its Law on Natural Gas . The table below reproduces\nthe relevant text of these provisions:\nCroatia118\n\nHungary119\n\nLithuania120\n\n(1) The certification procedure\ninitiated based on the request for\ncertification submitted by the\nowner of the transmission system\nor transmission system operator\ncontrolled by a person or persons\nfrom a third country or third\ncountries shall be subject to the\nprovision of Article 23 of this Act,\nwith the following differences\nstated in this article.\n\n(2) The Agency shall without delay\ninform the Ministry and the\nEuropean Commission and submit\na proposal of its decision on:\n\n1. the request for certification\nsubmitted by the owner of the\ntransmission system or\ntransmission system operator\ncontrolled by a person or persons\nfrom a third country or third\ncountries and\n\n2. all circumstances that may\nresult in a person or persons from\na third country or third countries\ntaking control of the transmission\nsystem or the transmission system\noperator.\n…\n\n(4) The Ministry shall determine if\nthe Agency's issuing of the\ncertificate would endanger the\nsecurity of energy supply of the\nRepublic of Croatia and the\nEuropean Union and shall deliver\nits opinion to the Agency within 60\ndays of Agency's notification.\n\n(1) By way of derogation from the\ncertification procedure referred to\nin Section 128, the Office shall\nopen certification procedures\nrelating to the third countries\nspecified in this Section in the\nfollowing cases:\n\na) upon receipt of notice from the\ntransmission system operator\nunder Subsection (2);\n\nb) upon receipt of the request\nspecified in Paragraph a) of\nSubsection (3); or\n\nc) upon receipt of information\nspecified in Paragraph b) of\nSubsection (3).\n\n…\n\n(4) The Office shall refuse to\ncertify compliance with unbundling\nrequirements in certification\nprocedures involving third\ncountries, if the party acquiring\ncontrol fails to verify:\n\n…\n\nb) that the certificate, if granted,\nwill not jeopardize the security of\nthe supply of natural gas –\nincluding the security of the\nsupply of natural gas in the\nEuropean Union …\n\n1. Where the issue of a licence is\nrequested by a transmission\nsystem operator which is\ncontrolled by a person or persons\nfrom a third country or third\ncountries, the Commission shall\nnotify the European Commission.\nThe Commission shall also notify to\nthe European Commission any\nother circumstances that would\nresult in a person or persons from\na third country or third countries\nacquiring control of a transmission\nsystem or a transmission system\noperator.\n\n…\n\n4. Having regard to the opinion of\nthe European Commission, if any,\nthe Commission shall adopt a final\ndecision on the designation of a\ntransmission system operator\nwithin a period of two months after\nthe day when the opinion of the\nEuropean Commission was\nreceived or should have been\nreceived, but was not delivered.\nThe Commission shall designate an\noperator provided that it\ndemonstrates that:\n\n…\n\n2) such designation will not put\nat risk energy supply and the\nsecurity of such supply of the\nRepublic of Lithuania, another\nMember State or the European\nUnion.\n\n2.48. Russia also challenges certain \"additional\" provisions of the national laws of Hungary , and\nLithuania, namely Sections 123(5) and 123(6) of Hungary's Gas Act, as well as Articles 20(5) and\n29(4)(3) of Lithuania's Law on Natural Gas.121\n\n118 Croatia's Gas Market Act, (Exhibit RUS-45), Article 24.\n119 Hungary's Gas Act, (Exhibits EU-155/RUS-47 and EU-41), Article 128/A. Despite initial disagreement,\nRussia agrees with the translation of Article 128/A provided in Exhibit EU-41, but notes that the provisions of\nHungary's Gas Act should be referred to as \"Sections\" rather than \"Articles\". (Russia's response to Panel\nquestion No. 145, para. 3). For reasons of convenience, we refer to the provisions of Hungary's Gas Act as\n\"Sections\" in our Report.\n120 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 29. Despite initial disagreement, the\nEuropean Union agrees with the English translation of Article 29 contained in Exhibit RUS-136rev. (European\nUnion's response to Panel question No. 145, para. 1).\n121 Russia describes Section 123 of Hungary's Gas Act as imposing \"additional\" conditions that apply on\ntop of the conditions stipulated in Article 128/A of Hungary's Gas Act. (Russia's first written submission, para.\n431). Russia refers to Article 20(5) of Lithuania's Law on Natural Gas as \"yet another discriminatory provision\",\nhaving previously described the provisions of Article 29 of Lithuania's Gas Act. (Russia's first written\nsubmission, para. 440). Article 29(4)(3) is described by Russia as setting forth \"an entirely different\nrequirement\" not closely corresponding to Article 11 of the Directive. (Russia's response to Panel question No.\n\n2.49. Sections 123(5) and 123(6) of Hungary's Gas Act provide as follows:\n(5) The Office 's resolution granting consent is required for the execution of any\ntransaction that would allow a person or persons from a third country or third\ncountries to acquire control over a transmission system operator or the controlling\nshareholder of a transmission system operator.\n(6) The Office may refuse to grant approval or render its approval conditional for the\ntransactions referred to in Subsections (2) and (5) above and in Subsection (1) of\nSection 122, if they are deemed to pose any potential threat to the security of natural\ngas supply, to public safety, to the enforcement of compliance with energy policy\nobjectives, to the discharge of activities subject to authorization under this Act, or the\nregulations for determining the price of transmission, stor age and distribution\nservices, and universal services, and the regulations for determining the quality of\nsuch services, furthermore, if the execution of such transactions would infringe upon\nthe pre-emption right notified to the Office according to Subsection (8).122\n2.50. Article 20 of Lithuania's Law on Natural Gas is entitled \"Licences and Certificates in the\nNatural Gas Sector\", with the relevant part of Article 20(5) stating that:\nLicences for transmission, distribution, storage and liquefaction shall be iss ued to a\nlegal entity established in the Republic of Lithuania or a unit of a legal entity or other\norganisation of another Member State established in the Republic of Lithuania.123\n2.51. The relevant part of Article 29(4)(3) of Lithuania's Law on Natural Gas reads as follows:\nThe Commission shall designate an operator provided that it demonstrates that:\n…\n3) legitimate public security interests are protected.124\n2.2.8 The TEN-E measure\n2.52. The TEN -E measure stems from the provisions of the TEN -E R egulation that set out the\ncriteria for the designation of certain infrastructure projects as \"projects of common interest\"\n(PCIs), lay out the regulatory framework to facilitate their timely implementation and provide them\nwith certain incentives.125\n2.53. Article 2(4) of the TEN-E Regulation defines a PCI as a project necessary to implement the\nenergy infrastructure priority corridors and areas set out in Annex I of the Regulation, and which is\npart of the Union list of PCIs (Union list) . The Union list is established by the Commission in t he\nform of an Annex to the TEN -E Regulation, every two years, on the basis of the regional lists of\nproposed PCIs adopted by twelve Regional Groups. 126 The first Union list was adopted in 2013127\nand the second Union list was adopted in 2015.128\n\n3, para. 15(b)). Following Russia's descriptions, we refer to Sections 123(5) and 123(6) of Hungary's Gas Act\nand Articles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas collectively as \"additional\" conditions. The\nEuropean Union argues that Russia's challenges to these \"additional\" conditions are outside the scope of this\nPanel's terms of reference because they do not implement the rules on third-country certification in the\nDirective. This issue is addressed in section 7.2.2.3.2 of our findings below.\n122 Hungary's Gas Act, (Exhibit EU-155), Section 123; and Hungary's Gas Act, (RUS-47), Section 194.\nDespite initial disagreement, both parties have subsequently submitted exhibits with identical translations of\nSection 123 of Hungary's Gas Act (Exhibits EU-155/RUS-47).\n123 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 20(5).\n124 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 29(4). The European Union originally\nprovided its own translation of the Article but agrees with the translation in Exhibit RUS-136rev. (European\nUnion's first written submission, para. 559; and European Union's response to Panel question No. 145).\n125 TEN-E Regulation, (Exhibit EU-4), Article 1(2).\n126 TEN-E Regulation, (Exhibit EU-4), Article 3.\n127 Commission Delegated Regulation (EU) No. 1391/2013 of 14 October 2013, amending Regulation\n(EU) No. 347/2013 of the European Parliament and of the Council on guidelines for trans-European energy\n\n2.54. To be designated as a PCI (and be included in the Union list), an infrastructure project must\nmeet two sets of criteria: a set of criteria common for all infrastructure projects falling within the\nscope of the TEN -E Regulation (general criteria), and a set of cr iteria specific to projects\ndeveloping a particular group of energy infrastructure categories (specific criteria). The general\ncriteria are set out in Article 4(1) of the Regulation as follows:\n(a) the project is necessary for at least one of the energy infrastructure priority\ncorridors and areas;\n(b) the potential overall benefits of the project, assessed according to the\nrespective specific criteria in paragraph 2, outweigh its costs, including in the\nlonger term; and\n(c) the project meets any of the following criteria:\n(i) involves at least two Member States by directly crossing the border of two or\nmore Member States;\n(ii) is located on the territory of one Member State and has a significant cross -\nborder impact as set out in Annex IV.1;\n(iii) crosses the border of at least one Member State and a European Economic\nArea country.129\n2.55. To fall within the scope of the TEN -E Regulation, a project must develop infrastructure\nfalling under the energy infrastructure categories in electricity, gas, oil, and carbon dioxide set out\nin Annex II of the TEN -E Regulation 130, as well as fall within the \"energy infrastructure priority\ncorridors and areas\" defined in Annex I of the TEN -E Regulation. 131 The \"energy infrastructure\npriority corridors and areas\" are the geographical areas around which the Union lists \"cluster\" the\nPCIs.132 The priority corridors and areas for projects developing energy infrastructure categories\nconcerning gas133 are defined in Annex I.2 of the TEN-E Regulation as follows:\n2. PRIORITY GAS CORRIDORS\n(5) North-South gas interconnections in Western Europe ( 'NSI West Gas '): gas\ninfrastructure for North -South gas flows in Western Europe to further diversify\nroutes of supply and for increasing short-term gas deliverability.\nMember States concerned: Belgium, Denmark, France, Germany, Ireland, Italy,\nLuxembourg, Malta, the Netherlands, Portugal, Spain, the United Kingdom;\n\ninfrastructure as regards the Union list of projects of common interest, OJ L 349/28 of 21.12.2013, (Regulation\n(EU) No. 1391/2013), (Exhibit EU-3).\n128 Commission Delegated Regulation (EU) No. 2016/89 of 18 November 2015 amending Regulation\n(EU) No. 347/2013 of the European Parliament and of the Council as regards the Union list of projects of\ncommon interest, OJ L 19/1 of 27.1.2016, (Regulation (EU) No. 2016/89), (Exhibit RUS-2).\n129 TEN-E Regulation, (Exhibit EU-4), Article 4(1).\n130 This dispute is limited to the components of the TEN-E measure that pertain to projects developing\ninfrastructure concerning natural gas.\n131 TEN-E Regulation, (Exhibit EU-4), Articles 4(1) and 4(2)(b).\n132 See, e.g. Regulation (EU) No. 2016/89, (Exhibit RUS-2), pp. 13-19.\n133 Annex II.2 of the TEN-E Regulation provides that the energy infrastructure categories concerning gas\ninclude the following:\n(a) transmission pipelines for the transport of natural gas and bio gas that form part of a\nnetwork which mainly contains high -pressure pipelines, excluding high -pressure pipelines used\nfor upstream or local distribution of natural gas;\n(b) underground storage facilities connected to the above -mentioned high -pressure gas\npipelines;\n(c) reception, storage and regasification or decomp ression facilities for liquefied natural gas\n(LNG) or compressed natural gas (CNG);\n(d) any equipment or installation essential for the system to operate safely, securely and\nefficiently or to enable bi -directional capacity, including compressor stations[ .] (TEN -E\nRegulation, (Exhibit EU-4), Annex II.2)\n\n(6) North-South gas interconnections in Central Eastern and South Eastern Europe\n('NSI East Gas'): gas infrastructure for regional connections between and in the\nBaltic Sea region, the Adriatic and Aegean Seas, the Eastern Mediterranean Sea\nand the Black Sea, and for enhancing diversification and security of gas supply.\nMember States concerned : Austria, Bulgaria, Croatia , Cyprus, Czech Republic,\nGermany, Greece, Hungary, Italy, Poland, Romania, Slovakia, Slovenia;\n(7) Southern Gas Corridor ( 'SGC'): infrastructure for the transmission of gas from\nthe Caspian Basin, Central Asia, the Middle East and the Ea stern Mediterranean\nBasin to the Union to enhance diversification of gas supply.\nMember States concerned : Austria, Bulgaria, Croatia , Czech Republic, Cyprus,\nFrance, Germany, Hungary, Greece, Italy, Poland, Romania, Slovakia, Slovenia;\n(8) Baltic Energy Marke t Interconnection Plan in gas ( 'BEMIP Gas '): gas\ninfrastructure to end the isolation of the three Baltic States and Finland and\ntheir dependency on a single supplier, to reinforce internal grid infrastructures\naccordingly, and to increase diversification a nd security of supplies in the Baltic\nSea region.\nMember States concerned: Denmark, Estonia, Finland, Germany , Latvia,\nLithuania, Poland, Sweden.134\n2.56. In addition to meeting the general criteria, projects developing energy infrastructure\ncategories concerning gas must \"contribute significantly to at least one of the following specific\ncriteria\", as laid out in Article 4(2)(b), namely:\n(i) market integration, inter alia through lifting the isolation of at least one Member\nState and reducing energy infrastructure bo ttlenecks; interoperability and\nsystem flexibility;\n(ii) security of supply, inter alia through appropriate connections and diversification\nof supply sources, supplying counterparts and routes;\n(iii) competition, inter alia through diversification of supply sources, supplying\ncounterparts and routes;\n(iv) sustainability, inter alia through reducing emissions, supporting intermittent\nrenewable generation and enhancing deployment of renewable gas.135\n2.57. When the Regional Group s, referred to in paragraph 2.53 above, assess whether projects\nfulfil the general and specific criteria, they shall give \"due consideration\" to (a) the urgency of each\nproposed project to meet energy policy targets of market integration, inter alia , through lifting\nisolation, competition, sustainability and security of supply; (b) the number of member States\naffected by each project, whilst ensuring e qual opportunities for projects involving peripheral\nmember States; (c) the contribution to territorial cohesion ; and (d) complementarity with other\nproposed projects.136 In addition, the assessment shall be in accordance with the indicators set out\nin Annex IV.2 through 5 of the Regulation.137\n2.58. The TEN -E Regulation provides three types of incentives to projects designated as PCIs.\nFirst, Chapter III of the TEN -E Regulation provides for more streamlined administrative processing\nof the applications relating to such projects. In particular, Article s 7(2) and 7(3) of the TEN -E\nRegulation require all authorities to \"ensure that the most rapid treatment legally possible is given\nto the [] files [related to PCIs]\" and that PCIs shall be \"allocated the status of the h ighest national\n\n134 TEN-E Regulation, (Exhibit EU-4), Annex I.2. (footnote omitted)\n135 TEN-E Regulation, (Exhibit EU-4), Article 4(2)(b).\n136 TEN-E Regulation, (Exhibit EU-4), Article 4(4).\n137 TEN-E Regulation, (Exhibit EU-4), Article 4(3).\n\nsignificance possible and be treated as such in permit granting processes\", if such a status exists\nin national law.\n2.59. Second, Chapter IV of the TEN -E Regulation contains provisions on the cost allocation of\ncross-border investments between member States and the granting of certain other regulatory\ntreatment incentives. In particular, Article 12 provides that efficiently incurred project investment\ncosts are to be borne by the relevant operators of the transmission infrastructure or project\npromoters of the member States to which the project provides a net positive impact, as well as the\nprincipal of including such costs in tariffs. 138 In turn, Article 13 envisages that member States and\nNRAs shall ensure that \"appropriate incentives\", including those relating to tariffs, are granted to a\ngas-related PCI where a project promoter incurs higher risks for the development, construction,\noperation or maintenance of such project compared to the risks normally incurred by a comparable\ninfrastructure project.139\n2.60. The third type of incentive is the availability of financing, in accordance with Chapter V of\nthe TEN-E Regulation. Gas-related PCIs are eligible for financial assistance in the form of grants for\nstudies and financial instruments.140 Pursuant to Article 14(2) of the TEN-E Regulation, gas-related\nPCIs that meet additional criteria – commercially unviable projects that significantly improve\nsecurity of supply, solidarity or innovation, and that received a cross -border cost allocation\ndecision pursuant to Article 12 – are also eligible for financial assistance in the form of grants for\nworks.\n3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS\n3.1. In its first written submission, Russia requests the Panel to find that the European Union and\nits member States have violated their obligations under the following provisions:\n Article XVI:2(e) of the GATS, because the unbundling measures of Croatia,\nHungary and Lithuania restrict or require specific types of legal entity or joint\nventure through which a service supplier may supply a service;\n Article XVI:2(a) of the GATS, because Croatia and Lithuania, in implementing\ntheir unbundling measures, have each, in effect, adopted a prohibited\nquantitative limitation in the form of a monopoly or exclusive service supplier;\n Article XVI:2(f) of the GATS, because Croatia, Hungary and Lithuania each\nimpose prohibited limitations on the participation of foreign capital in terms of\nmaximum percentage limit on foreign shareholding;\n Article XVII:1 of the GATS, because Croatia, Hunga ry and Lithuania's\ngovernment exemption measures, adopted pursuant to Article 9(6) of the\nDirective, arbitrarily exempt government -controlled pipeline transport services\nand service suppliers from the unbundling requirements, thus modifying the\nconditions of competition to the detriment of like Russian services and service\nsuppliers, resulting in less favorable treatment on both a de jure and de facto\nbasis;\n Article II:1 of the GATS, because the unbundling measure under the Directive,\nby enabling Member Sta tes to select from among the unbundling models, de\nfacto, modifies the conditions of competition in the EU market to the detriment\nof Russian services and service suppliers, compared to like services and service\nsuppliers of other Members, thus resulting in less favorable treatment;\n Article III:4 of the GATT 1994, because the unbundling measure under the\nDirective, by enabling Member States to select from among the unbundling\nmodels, de facto, modifies the conditions of competition in the EU market to the\ndetriment of imported Russian natural gas, compared to like domestic gas,\n\n138 TEN-E Regulation, (Exhibit EU-4), Articles 12(1) and 12(4).\n139 TEN-E Regulation, (Exhibit EU-4), Article 13(1); and Directive 2009/73/EC, (Exhibit EU-5),\nArticle 41(8).\n140 TEN-E Regulation, (Exhibit EU-4), Article 14(1).\n\nresulting in less favorable treatment;\n Article I:1 of the GATT 1994, because the unbundling measure under the\nDirective, by enabling Member States to select from among the unbundling\nmodels, de facto , grants an advantage to imported natural gas of other\nMembers not accorded immediately and unconditionally to like Russian gas,\nresulting in less favorable treatment;\n Article I:1 of the GATT 1994, because the Directive accords natural gas of other\nMembers imported through LNG facilities and upstream pipeline networks an\nadvantage not extended immediately and unconditionally to like Russian gas;\n Article III:4 of the GATT 1994, because the Directive accords imported Russian\nnatural gas less favorable treatment than domestic natural gas transported\nthrough upstream pipeline networks;\n Article XVII:1 of the GATS, because Croatia, Hungary and Lithuania's third -\ncountry certification measures accord other Members' pipeline transport\nservices and s ervice suppliers de jure less favorable treatment than like\ndomestic services and service suppliers;\n Article II:1 of the GATS, because the third -country certification measure under\nthe Directive accords Russian pipeline transport services and service suppl iers\nless favorable treatment than like services and service suppliers of other\nMembers, on both a de jure and de facto basis;\n Article III:4 of the GATT 1994, because the third -country certification measure\nunder the Directive accords other Members' natura l gas less favorable\ntreatment than like domestic gas;\n Article VI:1 of the GATS, because Croatia, Hungary and Lithuania do not\nadminister their third -country certification measures in a reasonable, objective\nand impartial manner;\n Article VI:5 of the GATS, because Croatia, Hungary and Lithuania's third -\ncountry certification measures nullify or impair their specific commitments in a\nmanner inconsistent with the criteria of Article VI:4 of the GATS;\n Article X:3(a) of the GATT 1994, because the European Union's administration\nof the infrastructure exemption measure is not uniform, impartial or reasonable,\nas applied by the Commission in its OPAL infrastructure exemption decision,\nand in comparison to i ts Gazelle, TAP, Nabucco and Poseidon infrastructure\nexemption decisions;\n Article I:1 of the GATT 1994, because the infrastructure exemption measure, as\nimplemented to deny the NEL exemption, grants an advantage to other\nMembers' imported natural gas, inc luding like Azeri gas to be transported and\nsold on the EU market via TAP, not extended immediately and unconditionally\nto Russian gas transported via NEL;\n Article I:1 of the GATT 1994, because the infrastructure exemption measure, as\nimplemented to deny t he [sic] impose more restrictive conditions on the OPAL\nexemption, grants an advantage to other Members' imported natural gas not\nextended immediately and unconditionally to Russian gas transported via OPAL;\n Article I:1 of the GATT 1994, because the infrastructure exemption measure, as\nimplemented to deny the NEL exemption and to impose more restrictive\nconditions on the OPAL exemption, grants an advantage to other Members'\nnatural gas imported, transported and sold on the EU market through LNG\nfacilities;\n\n Article II:1 of the GATS, because the infrastructure exemption measure, as\nimplemented by the Commission, modified the conditions of competition in the\nEU market, resulting in less favorable treatment being accorded to the Russian\npipeline transport service supplier and its services supplied through NEL GT and\nOPAL GT than the treatment accorded to like services and service suppliers of\nother Members;\n Article I:1 of the GATT 1994, because the Directive grants natural gas of other\nMembers imported thro ugh upstream pipeline networks an advantage not\nextended immediately and unconditionally to like Russian gas transported and\nsold on the EU market via NEL and OPAL;\n Article II:1 of the GATS, because the Directive accords pipeline transport\nservices and service suppliers of other Members whose services are supplied via\nupstream pipeline networks more favorable treatment than accorded to like\nRussian services and service suppliers via NEL and OPAL;\n Article XI:1 of the GATT 1994, because the OPAL exemption dec ision, pursuant\nto the infrastructure exemption measure, institutes two quantitative restrictions\non the importation of natural gas from Russia;\n Article II:1 of the GATS, because the TEN -E measure accords Russian pipeline\ntransport services and service sup pliers less favorable treatment than like\nservices and services suppliers of other Members;\n Article III:4 of the GATT 1994, because the TEN -E measure accords imported\nRussian natural gas less favorable treatment than like domestic gas transported\nand sold on the EU market; and\n Article I:1 of the GATT 1994, because the TEN -E measure grants other\nMembers' natural gas an advantage not extended immediately and\nunconditionally to like Russian natural gas.141\n3.2. In its second written submission, Russia requests the P anel to find that the European Union\nand its member States have violated their obligations under the following provisions:\n Claim 1 – Article XVI:2(e) of the GATS, because the unbundling measures of\nCroatia, Hungary and Lithuania restrict or require specifi c types of legal entity\nor joint venture through which a service supplier may supply a service;\n Claim 2 – Article XVI:2(a) of the GATS, because Croatia and Lithuania, in\nimplementing their unbundling measures, have each, in effect, adopted a\nprohibited quantitative limitation in the form of a monopoly or exclusive service\nsupplier;\n Claim 3 – Article XVI:2(f) of the GATS, because Croatia, Hungary and Lithuania\neach impose prohibited limitations on the participation of foreign capital in\nterms of maximum percentage limit on foreign shareholding;\n Claim 4 – Article XVII:1 of the GATS, because Article 9(6) of the Directive, \"as\nsuch\", arbitrarily exempts government -controlled pipeline transport services\nand service suppliers from the unbundling requirements, thus modifying the\nconditions of competition to the detriment of like Russian services and service\nsuppliers, resulting in less favourable treatment as evidenced by the Croatian,\nHungarian and Lithuanian government exemption measures;\n Claim 5 – Article XVII:1 of the GATS, because Article 9(6) of the Directive, \"as\napplied\" in Croatia's, Hungary's and Lithuania's government exemption\nmeasures, arbitrarily exempt government -controlled pipeline transport services\n\n141 Russia's first written submission, para. 810. (emphasis omitted)\n\nand service suppliers from the unbundling requireme nts, thus modifying the\nconditions of competition to the detriment of like Russian services and service\nsuppliers, resulting in less favourable treatment;\n Claim 6 – Article II:1 of the GATS, because the unbundling measure under the\nDirective, by enabling M ember States to select from among the unbundling\nmodels, de facto, modifies the conditions of competition in the EU market to the\ndetriment of Russian services and service suppliers, compared to like services\nand service suppliers of other Members, thus re sulting in less favorable\ntreatment;\n Claim 8 – Article III:4 of the GATT 1994, because the unbundling measure\nprovided for in the Directive, by enabling Member States to select from among\nthe unbundling models, \"as such\", modifies the conditions of competi tion in the\nEU market to the detriment of imported Russian natural gas, compared to like\ndomestic gas, resulting in less favourable treatment;\n Claim 10 – Article I:1 of the GATT 1994, because the unbundling measure\nunder the Directive, by enabling Member S tates to select from among the\nunbundling models, de facto, \"as such\", grants an advantage to imported\nnatural gas of other Members not accorded immediately and unconditionally to\nlike Russian gas, resulting in less favourable treatment;\n Claim 12 and 13 – Article I:1 of the GATT 1994, because the Directive accords\nnatural gas of other Members imported through LNG facilities and upstream\npipeline networks an advantage not extended immediately and unconditionally\nto like Russian gas;\n Claim 14 – Article III:4 of the GATT 1994, because the Directive accords\nimported Russian natural gas less favorable treatment than domestic natural\ngas transported through upstream pipeline networks;\n Claim 15 – Article XVII:1 of the GATS, because Croatia, Hungary and\nLithuania's third-country certification measures accord other Members' pipeline\ntransport services and service suppliers de jure less favorable treatment than\nlike domestic services and service suppliers;\n Claim 16 – Article II:1 of the GATS, because the third -country certification\nmeasure under Article 11 of the Directive, \"as such\", accords Russian pipeline\ntransport services and service suppliers less favorable treatment than like\nservices and service suppliers of other Members;\n Claim 17 – Article II:1 of the GATS, because the third -country certification\nmeasure under Article 11 of the Directive, \"as such\" by several Member States,\naccords Russian pipeline transport services and service suppliers less favorable\ntreatment than like services and service suppliers of other Members;\n Claim 19 – Article VI:1 of the GATS, because Croatia, Hungary and Lithuania do\nnot administer their third -country certification measures in a reasonable,\nobjective and impartial manner;\n Claim 20 – Article VI:5(a) of the GATS, because Croatia, Hungary and\nLithuania's third -country certification measures nullify or impair their specific\ncommitments in a manner inconsistent with the criteria of Article VI:4 of the\nGATS;\n Claim 21 – Article X:3(a) of the GATT 1994, because the European Union's\nadministration of the infrastructure exemption measure is not uniform, impartial\nor reasonable, as applied by the Commission in its OPAL infrastructure\nexemption decision, and in comparison to its Gazelle, TAP, Nabucco and\nPoseidon infrastructure exemption decisions;\n\n Claim 22 – Article I:1 of the GATT 1994, because the infrastructure exemption\nmeasure, as implemented to deny the NEL exemption, grants an advantage to\nother Members' imported natural gas, including like Azeri gas to be transported\nand sold on the EU market via TAP, not extended immediately and\nunconditionally to Russian gas transported via NEL;\n Claim 23 – Article I:1 of the GATT 1994, because the infrastructure exemption\nmeasure, as implemented to deny the [sic] impose more restrictive conditions\non the OPAL exemption, grants an advantage to other Members' imported\nnatural gas not extended immediately and unconditionally to Russian gas\ntransported via OPAL;\n Claim 24 – Article I:1 of the GATT 1994, because the infrastructure exemption\nmeasure, as im plemented to deny the NEL exemption and to impose more\nrestrictive conditions on the OPAL exemption, grants an advantage to other\nMembers' natural gas imported, transported and sold on the EU market through\nLNG facilities;\n Claim 25 – Article II:1 of the GA TS, because the infrastructure exemption\nmeasure, as implemented by the Commission, modified the conditions of\ncompetition in the EU market, resulting in less favorable treatment being\naccorded to the Russian pipeline transport service supplier and its ser vices\nsupplied through NEL GT and OPAL GT than the treatment accorded to like\nservices and service suppliers of other Members;\n Claim 26 – Article I:1 of the GATT 1994, because the Directive grants natural\ngas of other Members imported through upstream pipe line networks an\nadvantage not extended immediately and unconditionally to like Russian gas\ntransported and sold on the EU market via NEL and OPAL;\n Claim 28 – Article XI:1 of the GATT 1994, because the OPAL exemption\ndecision, pursuant to the infrastructur e exemption measure, institutes two\nquantitative restrictions on the importation of natural gas from Russia;\n Claim 29 – Article II:1 of the GATS, because the TEN -E measure accords\nRussian pipeline transport services and service suppliers less favorable\ntreatment than like services and services suppliers of other Members;\n Claim 30 – Article III:4 of the GATT 1994, because the TEN -E measure accords\nimported Russian natural gas less favorable treatment than like domestic gas\ntransported and sold on the EU market; and\n Claim 31 – Article I:1 of the GATT 1994, because the TEN -E measure grants\nother Members' natural gas an advantage not extended immediately and\nunconditionally to like Russian natural gas.142\n3.3. In its first written submission, the European Union reques ts that the Panel reject Russia's\nclaims in this dispute in their entirety and to find that the challenged measures are consistent with\nthe obligations of the European Union and its member States under the provisions of the WTO\nagreements. More particularly:\nWith regard to unbundling, the European Union requests the Panel to find that:\n the implementation of the unbundling requirement in the domestic laws of\nCroatia, Hungary and Lithuania does not violate the commitments under Article\nXVI of the GATS in res pect of these countries because the challenged measure\n\n142 Russia's second written submission, para. 487. The numbering used by Russia in its second written\nsubmission originates from its reply to Panel question No. 5, in response to which the European Union raised a\nnumber of terms of reference objections. With the exception of the Panel's preliminary ruling concerning these\nterms of reference objections, the numbering assigned by Russia will not be used further in this Report.\n\ndoes not qualify as a prohibited market access restriction under sub -paragraphs\n(e), (a) or (f) of Article XVI of the GATS, and would in any event be justified\nunder Article XIV (a) and (c) of the GATS;\n the implementation of the public body specification in Article 9(6) of Directive\n2009/73 in Croatia, Hungary and Lithuania violates neither de jure nor de facto\nthe national treatment obligation in Article XVII of the GATS, and would in any\nevent be justified under Article XIV (c) of the GATS;\n the unbundling measure does not violate the most favoured nation treatment\nobligation in Article II:1 of the GATS since it does not discriminate between\npipeline transport service suppliers from different third countries;\n the unbundling measure does not violate the national treatment obligation in\nArticle III:4 of the GATT 1994 since it does not accord Russian natural gas less\nfavourable treatment than like domestic gas;\n the unbundling measure does not violate the mo st favoured nation treatment\nobligation in Article I:1 of the GATT 1994 since it does not accord third -\ncountries' natural gas an advantage not extended immediately and\nunconditionally to like Russian gas and, furthermore, Russia's new claim\nregarding the alleged priority buying by Litgas from Statoil through the Klaipeda\nLNG Terminal is outside the Panel's terms of reference;\n Directive 2009/73/EC does not violate Article I:1 of the GATT 1994 because it\ndoes not accord natural gas of other third countries im ported through LNG\nfacilities and upstream pipeline networks an advantage not extended to Russian\ngas;\n Directive 2009/73/EC does not violate Article III:4 of the GATT 1994 because it\ndoes not accord Russian gas treatment less favourable than like domestic gas\ntransported via upstream pipeline networks.\nWith regard to third country certification , the European Union requests the Panel to\nfind that:\n the SoS certification requirement, as transposed in the domestic laws of\nCroatia, Hungary and Lithuania, is justified under Article XIV (a) of the GATS.\n the alleged additional certification requirements provided for in the domestic\nlaws of Croatia, Hungary and Lithuania are outside the Panel's terms of\nreference and/or are not inconsistent with Article XVII of t he GATS because\nthey do not accord less favourable treatment to Russian services or service\nsuppliers than to like services or service suppliers of those EU Member States.\n the SoS certification requirement is not inconsistent, either de iure or de facto,\nwith Article II:1 of the GATS because it does not accord less favourable\ntreatment to Russian services or service suppliers than to like services or\nservice suppliers of other countries. In any event, the alleged difference in\ntreatment would be justified under Article XIV (a) of the GATS. In addition,\nRussia's de facto claims are partly outside the Panel's terms of reference.\n Russia's claim that this measure violates Article III:4 of the GATT is outside the\nPanel's terms of reference. In any event the meas ure is not inconsistent with\nArticle III:4 of the GATT because it does not afford less favourable treatment to\nRussian gas than to EU gas.\n the administration of the SoS certification requirement by Croatia, Hungary and\nLithuania is not inconsistent with Article VI:I of the GATS.\n the SoS certification requirement, as transposed in the domestic laws of\n\nCroatia, Hungary and Lithuania, is not inconsistent with Article VI:5 of the\nGATS.\nWith regard to the infrastructure exemption measure , the European Union req uests\nthe Panel to find that:\n the European Union's administration of the infrastructure exemption measure is\nnot inconsistent with Article X:3(a) of the GATT 1994;\n the infrastructure exemption measure, as implemented to deny the NEL\nexemption, is not inconsistent with Article I:1 of the GATT 1994 because it does\nnot grant to other Members' imported natural gas, including like Azeri gas to be\ntransported and sold on the EU market via TAP, an advantage not extended\nimmediately and unconditionally to Russian gas transported via NEL;\n the infrastructure exemption measure is not inconsistent with Article I:1 of the\nGATT 1994 because it does not impose more restrictive conditions on the OPAL\nexemption or grants an advantage to other Members' imported natural gas no t\nextended immediately and unconditionally to Russian gas transported via OPAL;\n the infrastructure exemption measure is not inconsistent with Article I:1 of the\nGATT 1994 because it does not grant an advantage to other Members' natural\ngas imported, transported and sold on the EU market through LNG facilities;\n the infrastructure exemption measure, as implemented by the Commission, is\nnot inconsistent with Article II:1 of the GATS, because it does not result in less\nfavorable treatment being accorded to the Russian pipeline transport service\nsupplier and its services supplied through NEL GT and OPAL GT than the\ntreatment accorded to like services and service suppliers of other Members;\n the Directive is not inconsistent with Article I:1 of the GATT 1994, becau se it\ndoes not grant natural gas of other Members imported through upstream\npipeline networks an advantage not extended immediately and unconditionally\nto like Russian gas transported and sold on the EU market via NEL and OPAL;\n the Directive is not inconsi stent with Article II:1 of the GATS, because it does\nnot accord pipeline transport services and service suppliers of other Members\nwhose services are supplied via upstream pipeline networks more favorable\ntreatment than accorded to like Russian services an d service suppliers via NEL\nand OPAL;\n the infrastructure exemption measure is not inconsistent with Article XI:1 of the\nGATT 1994, because the OPAL exemption decision does not institute two\nquantitative restrictions on the importation of natural gas from Russia.\nWith regard to projects of common interest, the European Union requests the Panel to\nfind that:\n the TEN – E measure is not inconsistent, either de iure or de facto , with\nArticle II:1 of the GATS or with Articles III:4 and I:1 of the GATT because the\nselection of PCIs does not afford less favourable treatment to Russian TSOs or\nto Russian Gas than to like service providers or gas of the European Union or of\nother countries, respectively.143\n3.4. In its second written submission, the European Union requests t hat the Panel reject Russia's\nclaims in this dispute in their entirety.144\n\n143 European Union's first written submission, paras. 841-844. (emphasis original)\n144 European Union's second written submission, para. 437.\n\n4 ARGUMENTS OF THE PARTIES\n4.1. The arguments of the parties are reflected in their executive summaries, provided to the\nPanel in accordance with paragraph 19 of the Working Procedures adopted by the Pan el (see\nAnnexes B-1, B-2, B-3 and B-4).\n5 ARGUMENTS OF THE THIRD PARTIES\n5.1. The arguments of Colombia, India 145, Japan and Ukraine are reflected in their executive\nsummaries, provided in accordance with paragraph 20 of the Working Procedures adopted by the\nPanel (see Annexes C -1, C -2, C -3 and C-4). Brazil, China, Korea, Saudi Arabia and t he United\nStates did not submit written or oral arguments to the Panel.\n6 INTERIM REVIEW\n6.1. On 8 August 2017, the Panel issued its Interim Report to the parties. On 11 September 2017,\nboth parties submitted written requests for the Panel to review aspects of the Interim Report. On\n25 September 2017, the European Union submitted comments on Russia's requests for review.\nRussia did not submit any comments on the European Union's requests for review by the deadline\nprovided for in the Panel's timeline and subsequently confirmed that it did not have any such\ncomments.146 Neither party requested an interim review meeting.\n6.2. In accordance with Articl e 15.3 of the DSU, this section of the Report addresses the parties'\nrequests for review of the Report made at the interim review stage. We discuss the parties'\nrequests for substantive modifications below, in sequence according to the sections and\nparagraphs to which the requests pertain. In addition to the substantive requests discussed below,\nvarious editorial and drafting improvements were made to the Report, including those requested\nby the parties.\n6.3. In addressing the parties' requests for substantive modifications below, we are mindful of the\nspecific scope, nature and purpose of interim review. With respect to the scope of our review, we\nobserve that Article 15.2 of the DSU, and paragraph 21 of the Panel's Working Procedures, provide\nparties with an o pportunity to request the Panel \"to review precise aspects of the interim report\".\nPrevious panels have declined to expand the scope of interim review beyond that provided for in\nArticle 15.2 of the DSU and have accordingly circumscribed their revi ew to ad dress only those\nrequests related to \"precise aspects\" of the interim report. 147 With respect to the nature and\npurpose of our review, it is well -established that interim review is not an appropriate stage for the\nparties to raise new arguments or submit new evidence not previously presented before a panel;\nnor is it an appropriate stage for the parties to re -argue their case on the basis of the arguments\nalready put before a panel.148\n6.4. In light of the considerations stated above, we will review our Interim Repo rt only in light of\nthe parties' requests that relate to its \"precise aspects\". We will not accept requests amounting to\na party's attempt to re-argue its case.149\n6.5. As an additional observation of a general nature particularly relevant for the present case, we\nwould like to note that, in the \"Findings\" section of the Report, we summarize the parties'\n\n145 Following the WTO Secretariat's enquiry, India confirmed that its third-party statement will serve as\nthe executive summary of its arguments.\n146 See Russia's communication of 26 September 2017.\n147 Panel Reports, Brazil – Taxation, paras. 6.7-6.8; Japan – Alcoholic Beverages II, para. 5.2; Australia\n4.2; Canada – Continued Suspension, paras. 6.16-6.17; US – Continued Suspension, paras. 6.17-6.18; and\nIndia - Agricultural Products, para. 6.5.\n148 Appellate Body Reports, EC – Sardines, para. 301; and EC – Selected Customs Matters, para. 259.\nSee also Panel Reports, Japan – DRAMs (Korea), para. 6.2; US – Poultry (China), para. 6.32; India –\nAgricultural Products, para. 6.5; India – Solar Cells, para. 6.24; Russia – Pigs, paras. 6.6-6.7; US – Zeroing\n149 In following this approach, we also address the general concern expressed in the European Union's\ncomments on Russia's request for review of the Interim Report, that \"in several instances, Russia engages in\nextensive re-argumentation of its claims\". (European Union's comments on Russia's request for review of the\nInterim Report, para. 1).\n\narguments in the manner and to the extent necessary and appropriate to capture our\nunderstanding for the purposes of our own assessment and reasoning. We underli ne that we have\ndone this on the basis of a comprehensive and holistic reading of the parties' submissions. The\nparties' arguments are summarized in their own words in the executive summaries annexed to the\nFinal Report. In any event, we emphasize that the disputing parties are responsible for presenting\ntheir arguments in a clear manner. A panel is not expected to \"divine\" a claim or a defence if a\nparty merely submits allegations without relating them to legal arguments.150\n6.6. Finally, we are mindful of the Ap pellate Body's request that, when redacting information\ndesignated as BCI by a party, \"a panel must make efforts to ensure that the public version of its\nreport circulated to all Members of the WTO is understandable\". 151 In this dispute, the parties\ndesignated a certain amount of information provided to the Panel as BCI. Moreover, during the\ninterim review, Russia requested that certain additional information, which had not been initially\nsubmitted as containing BCI, be identified as such in the final report.152 While we have made every\neffort to ensure that the public version of our Report will be understandable, we also considered it\nappropriate to protect all the information designated by the parties as BCI.\n6.7. The numbering of some of the paragraphs an d footnotes in the Final Report has changed\nfrom the numbering in the Interim Report. The discussion below refers to the numbering in the\nInterim Report and, where it differs, includes the corresponding numbering in the Final Report.\n6.8. Pursuant to the DSU, a ll panel proceedings remain confidential until the Panel Report is\ncirculated to WTO Members. Paragraph 23 of the Panel's Working Procedures states that \"[t]he\ninterim report, as well as the final report prior to its official circulation, shall be kept str ictly\nconfidential and shall not be disclosed.\" The confidential nature of the Interim Report was explicitly\nreiterated when it was transmitted to the parties on 8 August 2017. On 18 October 2017, Russia\nmade the Panel aware of a publicly available webcast from a meeting in the European Parliament\nwhere certain elements of the confidential Interim Report were referred to. 153 In its response of\n19 October 2017, the European Union expressed its regret and indicated that it had taken steps to\nhave the relevant p arts of the webcast removed from public viewing. 154 The Panel wishes to\nemphasize its disappointment and concern that the confidentiality of the Interim Report was not\nrespected, and notes the subsequent steps taken by the European Union to address the disclosure.\n6.1 Factual aspects\n6.9. Russia requests that a section be added to paragraph 2.7, essentially seeking to clarify that\nthe term VIU \"was adopted by the EU for use in the Directive and related legal instruments\" and\nthat this is \"not a commonly used term in the natural gas sector\". 155 The European Union opposes\nRussia's request, arguing that the term VIU is commonly used and that it would be \"incorrect to\nsuggest that it is somehow designed for the purpose of this dispute or the [] Directive.\"156\n6.10. We note that paragraph 2.7 quotes the Directive's definition of a VIU and clearly states that\nit is derived therefrom. We do not believe that it is necessary for us to venture into a discussion of\nwhether, and if so how, the term VIU is \"commonly used\" and we therefore decline to add the\nsection proposed by Russia. We have, however, mod ified the language of paragraph 2.7 in a\nmanner that reflects some of the language used by Russia in its request.\n6.11. Russia requests the addition of a sentence to paragraph 2.38 as follows: \"The Commission\nhas thus far failed to adopt any such guidelines\".157 The European Union disagrees and submits the\nsentence Russia proposes is irrelevant for the description of the measure. 158 While we have not\nused the exact language request ed by Russia, we consider it useful to reflect the fact that the\n\n150 Appellate Body Report, US – Gambling, para. 140.\n151 Appellate Body Report, Japan – DRAMs, para. 279.\n152 Russia's request for review of the Interim Report, para. 247.\n153 Russia's communication of 18 October 2017.\n154 European Union's comments on Russia's communication of 18 October 2017.\n155 Russia's request for review of the Interim Report, para. 4.\n156 European Union's comments on Russia's request for review of the Interim Report, para. 2.\n157 Russia's request for review of the Interim Report, para. 8.\n158 European Union's comments on Russia's request for review of the Interim Report, para. 3.\n\nCommission has not thus far adopted such guidelines , and we have modified paragraph 2.38\naccordingly.\n6.12. Russia submits that footnote 116 to paragraph 2.44 , which describes Article 34 of the\nDirective, should quote directly from the Directive. 159 Russia further submits that the Panel should\nnote here that Article 34 of the Directive has never been applied. 160 The European Union disagrees\nthat this latter addition should be made, because it considers that it is factually incorrect.161\n6.13. With respect to Russia's request to quote the text of Article 34 of the Directive, we\nrephrased footnote 116 in light of Russia's comment. With respect to its comment regarding the\napplication of Article 34, this request i s, in our view, tantamount to an attempt to re -litigate\narguments already put before us, which we do not consider appropriate at the interim review\nstage.\n6.2 Introduction\n6.14. Russia submits that the Panel's comment in footnote 154 (footnote 283 in this Report)\nconcerning Russia's use of the labels \" de facto \", \"de jure\" , \"as such\" and \"as applied\" is\nsuperfluous and does not add to the explanation provided by the Panel in t he sentence preceding\nthat footnote. Russia hence requests that the footnote be removed. 162 The European Union\ndisagrees, submitting that the concern expressed in that footnote is a relevant one which the\nEuropean Union also expressed on multiple occasions d uring the proceedings. 163 The European\nUnion suggests that the Panel could add to this footnote that it shared the same concern.\n6.15. As explained below in paragraph 7.13 and footnote 283, Russia's use of the labels \" de\nfacto\", \"de jure\", \"as such\" and \"as applied\" in relation to its claims contributed to our impression\nthat the precise nature and content of some of the challe nged measures, and claims against them,\nwere not always clear or consistent. We must therefore decline Russia's request to remove\nfootnote 154. We also decline to introduce the European Union's suggested addition.\n6.3 General issues related to Russia's claims under the GATS\n6.16. With respect to footnote 434 to paragraph 7.250 (footnote 563 of this Report) , the\nEuropean Union requests the Panel to indicate that Russia's claim regarding the unbundling\nmeasure in the national implementing laws of Hungary did not involve a claim of inconsistency\nwith Article XVI:2(a) of the GATS. 164 The European Union further requests that the same\nmodification be made with respect to paragraph 7.288.165 We have decided to accommodate the\nEuropean Union's request and have modified footnote 434 and paragraph 7.288 accordingly. In\naddition, we have made a similar clarification in paragraph 7.585.\n6.17. Russia submits that the \"Introduction\" to Section 7. 4.1 mischaracterizes in several key\nrespects Russia's position regarding the services at issues. Russia argues that, \"[i]n addition, …\nthese and related mischaracterizations in the [Interim Report] lead the Panel to\" an incorrect\nconclusion with respect to the services at issue in paragraph 7.285. Russia agrees that pipeline\ntransport services encompass the transportation of natural gas, but disagrees with the definition of\nthe covered services adopted by the Panel. Russia is of the view that \"this misappre hension of the\nscope of the covered services impacts various other aspects of the Panel's [Interim Report],\nleading to incorrect findings in those respects as well\". Russia encourages the Panel to more\nclosely adhere to the definition of the services propo sed by Russia, as the complainant, in the\nPanel's Final Report.166 The European Union disagrees with Russia's general comments on the\nPanel's analysis relating to the definition of the services at issue in Section 7.4 of the Interim\nReport. For the European Union, the Panel did not misrepresent Russia's position regarding that\ndefinition and correctly examined the meaning of the words of the relevant Schedules in\n\n159 Russia's request for review of the Interim Report, para. 10.\n160 Russia's request for review of the Interim Report, para. 10.\n161 European Union's comments on Russia's request for review of the Interim Report, para. 4.\n162 Russia's request for review of the Interim Report, para. 11.\n163 European Union's comments on Russia's request for review of the Interim Report, para. 5.\n164 European Union's request for review of the Interim Report of the Panel, para. 1.\n165 European Union's request for review of the Interim Report of the Panel, para. 4.\n166 Russia's request for review of the Interim Report of the Panel, paras. 12-13.\n\naccordance with the rules of interpretation of the Vienna Convention. The European Union requests\nthat Russia's comments be dismissed.167\n6.18. We recall that the limited function of the interim review stage is to consider specific and\nparticular aspects of the Interim Report, and not to reopen arguments and evidence already put\nbefore the Panel. 168 It appears to us that Russia's general comments on Section 7.4.1 do not\nrequire a specific response by the Panel, but would call on us to engage in a new analysis of\narguments and evidence on the record. We must therefore decline Russia's request.\n6.19. Russia submits that the last sentence of paragraph 7.252 mischaracterizes in several\nrespects Russia's position in paragraphs 96 and 97 of Russia's first written submission. Russia\nargues that the main premise of Russia's explanation regarding this topic, in part icular in the\nopening sentence of paragraph 96 of its first written submission, was that \"broadly defining the\ncovered services … is consistent with the 'Subject matter and scope' of the Directive\". Russia\nsubmits that it never stated \"that its proposed de finition of the services at issue is consistent with\nthe 'Subject matter and scope' of the Directive\". Russia requests that the Panel revise the last\nsentence of paragraph 7.252 by adding the phrase \"as set forth in Article 1 of the Directive\", as\nfollows: \"Russia submits that its proposed definition of the services at issue is consistent with the\n'Subject matter and scope' of the Directive, as set forth in Article 1 of the Directive, although\nRussia takes issue with certain definitions contained in the Dir ective\".169 The European Union\ndisagrees with Russia disputing the Panel's description of Russia's position. The European Union\nargues that Russia repeatedly stressed that \"pipeline transport services\" should be \"broadly\"\ndefined. According to the European U nion, the quote from Russia's first written submission\nindicates undeniably that the \"broad definition\" argued for by Russia would, in its view, be\n\"consistent with the 'subject matter and scope' of the Directive\".170\n6.20. We recall that our findings do not aim to fully reproduce the parties' arguments as\npresented in their submissions, but summarize such arguments to the extent necessary to\nfacilitate our own analysis and assessment. Nonetheless, we have rephrased the last sentence of\nparagraph 7.252 in order to accommodate Russia's request.\n6.21. Russia submits that paragraph 100 of Russia's first written submission does not support the\nproposition contained in the first sentence of paragraph 7.253. Russia argues that, in paragraph\n100 of its first written submission, Russia used \"transmission\" as an adjective to describe the\nrelevant industry segment, while, in the first sentence of paragraph 7.253, the Panel used that\nword as a noun. According to Russia, this difference is not immaterial. 171 The European Union\nsubmits that the reasoning behind Russia's request is entirely missing. For the European Union,\nthe Panel has correctly described Russia's position and the use of \"transmission\" as a noun or as\nan adjective does not alter the meaning of what Russia has stated, nor the Panel's\nparaphrasing.172\n6.22. We recall that our findings do not aim to fully reproduce the parties' arguments as\npresented in their submissions, but summarize such arguments to the extent necessary to\nfacilitate our own analysis and assessment. We note tha t Russia does not explain why, in its view,\nusing the word \"transmission\" as a noun rather than as an adjective makes a material difference in\nthe first sentence of paragraph 7.253, and does not make any specific proposal to modify that\nsentence. Like the European Union, we are of the view that using the word \"transmission\" as a\nnoun rather than as an adjective does not modify the gist of Russia's arguments as summarized in\n\n167 European Union's request for review of the Interim Report of the Panel, para. 6.\n168 See, for instance, Panel Reports, Japan – Alcoholic Beverages II, para. 5.2; Australia – Salmon,\n– Continued Suspension, paras. 6.16-6.17; US – Continued Suspension, paras. 6.17-6.18; India - Agricultural\n169 Russia's request for review of the Interim Report of the Panel, para. 14 (quoting Russia's first written\nsubmission, para. 96).\n170 European Union's comments on Russia's request for review of the Interim Report, para. 15 (quoting\nRussia's second written submission, para. 75).\n171 Russia's request for review of the Interim Report, paras. 15-16 (quoting Russia's first written\nsubmission, para. 100). We note that the last sentence of paragraph 16 of Russia's request for review appears\nto be unfinished.\n172 European Union's comments on Russia's request for review of the Interim Report, para. 8.\n\nparagraph 7.253 of the Interim Report. For these reasons, we do not find it necessary to modify\nthe first sentence in paragraph 7.253.\n6.23. Russia submits that, in the last sentence of paragraph 7.253 , the Panel blurred together\nconcepts contained in paragraphs 101 and 102 of Russia's first written submission. According to\nRussia, it is accura te that, in paragraph 101 of its first written submission, Russia quoted several\naspects of the ordinary dictionary definition of \"supply\", \"within which Russia stated that all\nservices related to the supply of natural gas, including its transmission, are included\". Russia\nfurther argues that, in paragraph 102 of its first written submission, it stated that \"[i]f anything,\nthe entire gas market can be thought of as a 'supply system'\". According to Russia, by blurring\nthese concepts together in the last sent ence of paragraph 7.253, the Panel mischaracterized\nRussia's position regarding the meaning of \"supply\" in the context of the covered services, \"natural\ngas pipeline transport services\", and in the natural gas industry generally. 173 The European Union\nsubmits that the Panel's description of Russia's position is correct and that Russia has consistently\nargued for the gas market as a \"supply system\". The European Union recalls that Russia objected\nto the unbundling measure, which requires separation of transmis sion interests, on the one hand,\nand production and/or supply interests, on the other. The European Union also notes that Russia\nexplicitly argued that, in its view, pipeline transport services must be viewed to be \"part of a\ncontinuum\".174\n6.24. We recall that o ur findings do not aim to fully reproduce the parties' arguments as\npresented in their submissions, but summarize such arguments to the extent necessary to\nfacilitate our own analysis and assessment. We note that, while taking issue with the Panel's\nsummary of Russia's arguments in the last sentence of paragraph 7.253, Russia does not make\nany specific proposal to modify that sentence. In any event, taking into account Russia's comment,\nwe have modified the last sentence of paragraph 7.253, as follows : \"Ref erring to dictionary\ndefinitions of the term 'supply', Russia argues that all services related to the supply of natural gas,\nincluding its transmission, fall within these broad definitions . and Russia further argues that the\nentire gas market can be thought of as a 'supply system'.\"\n6.25. Russia submits that it \"has identified several concerns\" with the Panel's conclusions\nconcerning the services at issue, in paragraphs 7.285 and 7.263 . According to Russia, such\nconclusions \"are not consistent with the evidence i n the record\".175 We note that Russia's general\ncomment appears to challenge the manner in which the Panel assessed the evidence on record.\nWe recall the limited function of the interim review and that it is not acceptable for parties to re -\nargue their case during the interim review stage.\n6.26. Russia submits that it has never stated that it intended the services at issue to include the\n\"production\" of natural gas. 176 The European Union submits that, as demonstrated by Russia's\nresponse to Panel question No. 155, Ru ssia did consider that pipeline transport services include\n\"production\" of natural gas and, therefore, Russia's objection should be dismissed. 177 We note\nthat, while taking issue with the Panel's assessment of Russia's position, Russia does not identify a\nspecific paragraph (or paragraphs) of the Interim Report which, in its view, should be modified. We\nfurther note that, in explaining its understanding of the notions of \"supply\" and \"supply services\"\nin the course of this dispute, Russia made various statements which can reasonably be understood\nas indicating that, for Russia, such notions include the production of natural gas .178 Hence, we\nmust decline Russia's objection.\n\n173 Russia's request for review of the Interim Report, para. 17 (quoting paragraphs 101 and 102 of\nRussia's first written submission).\n174 European Union's comments on Russia's request for review of the Interim Report, para. 9 (quoting\nRussia's response to Panel question No. 155, para. 10).\n175 Russia's request for review of the Interim Report, para. 19.\n176 Russia's request for review of the Interim Report, para. 20.\n177 European Union's comments on Russia's request for review of the Interim Report, para. 9 (quoting\nRussia's response to Panel question No. 155, para. 10, where Russia stated, inter alia: \"[b]ut for its\ndiscriminatory unbundling measure, the EU would not question the existence of supply services. VIUs in the\nEU, as in other countries, would still own and control all of the necessary assets for the production, supply and\ntransmission of natural gas, including the transmission system.\")\n178 See, for instance, Russia's response to Panel question No. 62, para. 288 (\"The main components of\nthe 'supply' of natural gas as a 'service' include services that overlap with natural gas production, as well as\nservices related to the sale of natural gas\"); response to Panel question No. 155, para. 1 (\"A producer is, by\n\n6.27. Russia questions the accuracy of the Panel finding, in paragraph 7.309, that \"Russia does\nnot present specific arguments to the effect that the ordinary meaning of 'pipeline transport\nservices' would include the notions of 'supply' and 'supply services'\". 179 We note that Russia does\nnot cite the submission(s) where Russia would have made specific arguments to the effect that the\nordinary meaning of \"pipeline transport services\" includes the notions of \"supply\" and \"supply\nservices\". In our view, paragraph 7.309 accurately reflects Russia's arguments. Therefore, we\ndecline Russia's objection.\n6.4 The unbundling measure\n6.28. The European Union requests that the Panel add another section to the description of its\narguments on the issue of whether to assess the Directive's unbundling measure within each EU\nmember State or throughout the EU territory in paragraph 7.378. The requested section\nessentially denotes the European Union's position that \"the Directive is not a 'genuine cause' for\nany alleged de facto discrimination\" since it does not \"require[] the Member States to exercise the\ndiscretion to choose between implementing OU only or also the other models in one or the other\nmanner\".180\n6.29. Since our findings touch upon the notion that the assessment of a challenged measure 's\nWTO consistency must be based on effects that are attributable to, i.e. have a genuine relationship\nwith, that measure, we consider it useful to include the European Union's position on this matter.\nWe have, however, not considered it necessary to inclu de the full section requested by the\nEuropean Union. Instead, we have added a single sentence to paragraph 7.378, which aims at\ncapturing the essence of the European Union's position.\n6.30. Russia requests the Panel to \"revise its findings\" in paragraphs 7.381 through 7.383 that\nthe unbundling measure challenged by Russia under Article II:1 of the GATS and Articles I:1 and\nIII:4 of the GATT 1994 is that contained in the Directive, and to conclude instead that th e\nchallenged measure is a \"single measure\" consisting of the unbundling measure in the Directive as\nwell as the implementing legislation of each of the EU member States. 181 The European Union\nsubmits that the Panel should reject Russia's request, arguing tha t Russia has not provided\nevidence that a \"single measure\" exists, nor that such a measure is \"attributable to the EU\".182\n6.31. We note that our decision to first determine exactly what measure Russia is challenging was\nprompted by the lack of clarity and consist ency concerning this matter in Russia's vari ous\nsubmissions. In its request for review of the Interim Report, Russia acknowledges that it initially\nfocused on the unbundling measure in the Directive and subsequently altered its focus \"[u]pon\nreviewing the EU's arguments\".183 Russia then goes on to \"briefly trace the history of how Russia\ncharacterized the unbundling measure in this proceeding\" in order to support its view that the\nchallenged measure is a \"single measure\" consisting of the unbundling measure i n the Directive as\nwell as the implementing legislation of each of the EU member States. 184 Russia thus appears to\nbe seeking to clarify the nature of the challenged measure at the interim review stage, and on this\nbasis requests us to revise our findings. I n our view, this request is tantamount to an attempt to\nre-litigate arguments already put before us, which we do not consider appropriate at the interim\nreview stage.\n6.32. In any event and as further described in paragraphs 7.381 through 7.383, our conclusion\nthat the challenged measure consists of the unbundling measure in the D irective is based on \"an\noverall reading of Russia's panel request and the submissions provided by Russia throughout these\nproceedings\". This overall reading already takes into account the various characterizations referred\nto by Russia in its request for review. We see nothing in Russia's request that would cause us to\n\ndefinition, a supplier of natural gas. When it sells that gas, of course a good is sold and supplied, as the EU\nsays. In so doing, however, a gas supplier, which may well also be a producer, also supplies the market with\npipeline transport services.\"); and response to Panel question No. 155, para. 10 (quoted by the European\nUnion in its comments on Russia's request for review of the Interim Report, para. 9, see previous footnote).\n179 Russia's request for review of the Interim Report, para. 21.\n180 European Union's request for review of the Interim Report, para. 7 (quoting European Union's\nresponse to Panel question No. 171(c), para. 72).\n181 Russia's request for review of the Interim Report, paras. 22-30.\n182 European Union's comments on Russia's request for review of the Interim Report, para. 10.\n183 Russia's request for review of the Interim Report, paras. 24-25.\n184 Russia's request for review of the Interim Report, paras. 26-29.\n\nquestion or revise our overall reading nor the ensuing conclusion. We therefore reject Russia's\nrequest.\n6.33. The European Union requests that another sentence be added to paragraph 7.392,\nrepeating parts of the arguments that the European Union requested to have included in\nparagraph 7.378.185\n6.34. We recall that we have granted the European Union 's request concerning paragraph 7.378\nby introducing a sentence aimed at capturing the European Union's argument that \"the Directive is\nnot a 'genuine cause' for any alleged de facto discrimination\" since it does not \"require[] the\nMember States to exercise the discretion to choose between implementing OU only or also the\nother models in one or the other manner\". 186 We do not believe that a repetition of this argument\nlater on in the same section of our Report serves to clarify the European Union's position further or\nto otherwise improve our Report, and we therefore reject the European Union's request.\n6.35. Russia requests the Panel to \"reconsider its determination\" in footnote 681 to\nparagraph 7.426 (footnote 813 of this Report) that the example of the \"'ad hoc' ITO\" TAP AG is not\nrelevant for the assessment of the unbundling measure's consistency with Article II:1 of the GATS\nas it pertains to the infrastructure exemption measure rather than the unbundling measure. 187\nRussia alternatively requests that we should \"better explain\" our decision not to accord weight to\nthe example of TAP AG. 188 The European Union criticizes Russia for seeking to conflate \"clearly\ndistinct measures when making arguments\" and submits that Russia's request should therefore be\nrejected.189\n6.36. In our view, Russia does not appear to be questioning the factual accuracy of our finding\nthat TAP AG is not an ITO pursuant to the unbundling measure but an \"' ad hoc' ITO\" pursuant to\nthe infrastructure exemption measure. Rather, Russia appears to be arguing that we should\nnonetheless reconsider our decision not to accord weight to this example in the context of\nassessing the WTO consistency of the unbundling measure. In our view, this amounts to an\nattempt by Russia to re -litigate arguments already put before us, and we therefore reject Russia's\nrequest. In order to accommodate Russia's alternative request, we have how ever provided further\nexplanation of our reasoning in footnote 681 to paragraph 7.426.\n6.37. Russia requests that the Panel modify the characterization of Russia's posit ion concerning\nthe issue of whether the assessment under Article II:1 of the GATS should focus on VIUs or TSOs\nin paragraph 7.429190, whereas the European Union cons iders that Russia's position has been\ncorrectly described in paragraph 7.429 and that the characterization therein should not be\nmodified.191\n6.38. We note that Russia does not specify what precise aspects of paragraph 7.429 it requests to\nhave modified or how it prefers to have its position characterized. In i ts request, Russia states\nthat:\nRussia argued that the activity of supplying a service \"by a service supplier of one\nMember, through commercial presence in the territory of any other Member,\" in the\nwords of Article I:2(c) of the GATS, necessitates the inv olvement of both entities, the\n\"service supplier\" in the exporting country and the \"commercial presence\" (which also\nis a service supplier), in the supply of that service.192\n6.39. Russia does not provide a reference for this argument but goes on to quote a statem ent\nfrom its second written submission that \"in Member States that permit only the OU model, such as\nLithuania, a VIU is required to divest its assets and is restricted from maintaining anything more\n\n185 European Union's request for review of the Interim Report, para. 10. See also para. 6.28 above.\n186 See paras. 6.28-6.29 above.\n187 Russia's request for review of the Interim Report, paras. 31-36.\n188 Russia's request for review of the Interim Report, para. 36.\n189 European Union's comments on Russia's request for review of the Interim Report, para. 11.\n190 Russia's request for review of the Interim Report, paras. 37-40.\n191 European Union's comments on Russia's request for review of the Interim Report, para. 13.\n192 Russia's request for review of the Interim Report, para. 38.\n\nthan a limited, minority ownership interest in the TSO.\"193 In its request, Russia therefore appears\nto be suggesting that its position is similar to the conclusion we ultimately reach on this matter:\nnamely that the assessment of GATS claims concerning mode 3 may involve looking at both the\ncommercial presence i n the importing Member (in the present dispute, TSOs) and the natural or\njuridical persons in the exporting Member, supplying services through that commercial presen ce\n(in the present case, VIUs). 194 We, however, have difficulties locating this position in a ny part of\nRussia's prior submissions. In light of this, we do not believe it would be appropriate to suggest, in\nour findings, that Russia's position throughout the proceedings was that which is now being\npresented in its request for review of the Interim Report.\n6.40. At the same time, we agree with Russia that paragraph 7.429 presents Russia's position as\na \"contrast\" to that of the European Union. 195 This approach was prompted by the European\nUnion's criticism of Russia's position and we find it useful to rephrase paragraph 7.429 to reflect\nthis aspect. As a consequence of this change, we have made minor adjustments to the\ncharacterization of the European Union's position in paragraph 7.430.\n6.41. Russia disagrees with the Panel's finding in paragraph 7.443 that \"[b]ased on the evidence,\nwe understand that the TSOs pointed to by Russia as constituting a commercial presence take the\nform of juridical persons rather than, inter alia , branches or r epresentative offices.\" Russia\nrequests the Panel to delete this finding and consequently \"reanalyze the entire commercial\npresence issue as set forth in paragraphs 7.443 through 7.451 of the [Interim Report]\".\nAlternatively, Russia requests that the Panel provide \"some explanation, including citation to actual\nevidence in the record, supporting this finding\".196 The European Union disagrees, pointing out that\n\"[n]one of the TSO's that Russia referred to in the proceedings is a branch or representative office\"\nand that Russia \"does not seek to demonstrate otherwise, and cannot do so\".197\n6.42. In our view, Russia's request that we delete our finding and \"reanalyze the entire\ncommercial presence issue\" amounts to an attempt to re-litigate the case, which is not appropriate\nat the interim review stage. In any event, and as pointed out by th e European Union, Russia has\nprovided no argumentation or evidence in these proceedings relating to the supply of services\nthrough the commercial presence of TSOs , which take the form of branches or representative\noffices. In light of this, as well as the fact that it is for Russia as the complaining party to make a\nprima facie case, we have difficulties understanding how we would \"reanalyze the entire\ncommercial presence issue\" in respect of branches or representative offices. We therefore reject\nRussia's request.\n6.43. With respect to Russia's alternative request that we provide \"some explanation, includi ng\ncitation to actual evidence i n the record\", we note that Russia's position on this matter was not\nclear throughout the proceedings. For this reason, we had to rely on inferences in making our\nfinding. In order to provide further clarity for the basis of our finding, and to accommodate\nRussia's alternative request, we have inserted footnote 826 to paragraph 7.443, explaining these\ninferences.\n6.44. Russia requests that the Panel modify paragraph 7.478 and footnote 74 0 hereto\n(footnote 873 in this Report) by \"tak[ing] account of th[e] evidence\" and \"provid[ing] its reasoning\nin response to th[e] argument\" provided by Russia in response to Panel question No. 179\nconcerning the competitive opportunities for pipeline transport service suppliers that are not VIUs\nunder the different unbundling models. 198 More particularly, Russia points to the arguments or\n\"evidence\" con cerning the p ublic body measure 199 and those concerning the notion that \"for\npurposes of the ITO model, natural or legal persons that are not a VIU are legally prohibited from\nsupplying pipeline transport services in the EU.\" 200 The European Union criticizes Russia for\npointing to a measure that is distinct from the unbundling measure, the public body measure, and\n\n193 Russia's request for review of the Interim Report, para. 39 (quoting Russia's second written\nsubmission, para. 209).\n194 See para. 7.440 below.\n195 Russia's request for review of the Interim Report, para. 39.\n196 Russia's request for review of the Interim Report, paras. 41-42.\n197 European Union's comments on Russia's request for review of the Interim Report, para. 14.\n198 Russia's request for review of the Interim Report, paras. 43-47.\n199 Russia's request for review of the Interim Report, para. 45.\n200 Russia's request for review of the Interim Report, paras. 46-47 (quoting Russia's response to Panel\nquestion No. 179, para. 157).\n\nsubmits that Russia has been \"unable to demonstrate with evidence that 'natural or legal persons\nthat are not a VIU are legally prohibited from supplying pipeline transport services in the EU'.\" The\nEuropean Union therefore submits that Russia's request be rejected.201\n6.45. With respect to Russia's request that we \"take account of this evidence\", we note that we\nhave already taken into account the two lines of argumentation or \"evidence\" referred to by Russia\nbut did not consider these relevant to Russia's claim under Article II:1 of the GATS against the\nunbundling measure. Insofar as Russia is requesting that we reconsider the we ight given to these\ntwo lines of argumentation or \"evidence\", this request amounts to an attempt to re -litigate\narguments already put before us, which is not appropriate at the interim review stage. With\nrespect to Russia's request that we \"provide [our] reasoning in response to this arg ument\", we\nnote that footnote 740 to paragraph 7.478 already contains reasoning in support of our decision\nnot to accord weight to the arguments provided by Russia in response to Panel question No. 179.\nWhile it is not clear what precise aspects of this reasoning Russia takes issue with, we have\nattempted to accommodate Russia's request by clarifying parts of the reasoning herein.\n6.46. Russia requests that the Panel modif y paragraphs 7.479 and 7.480, which address certain\nadditional arguments submitted by Russia in response to Panel question No. 172(a) concerning the\nalleged less favourable treatment of pipeline transport service suppliers under the OU model in\ncomparison with the ITO model. 202 Russia's request appears to concern two of the three \"points\"\nraised by Russia in its response, namely \"the inherent commercial and logistical competitive\nadvantages associated with vertical integration\" 203 and the arguments provided in response to\nPanel qu estion No. 183(a) \"with regard to the different treatment and competitive advantage\naccorded to domestic or imported gas by VIUs subject to the ITO model\". 204 Russia requests that\nthe Panel \"take this evidenc e into account\" and \"provide its reasoning in resp onse to these\nargument[s]\".205 In respect of the former point, Russia also requests that we delete the \"repeated\nreference to a 'sim ple internet search'\", which is , in Russia's view, superfluous. 206 The European\nUnion submits that \"what Russia labels as 'evide nce', constitute mere unsubstantiated and general\nallegations.\"207\n6.47. We note that all three additional points raised by Russia in response to Panel question\nNo. 172(a) are addressed in paragraphs 7.479 and 7.480 and footnote 745 hereto (footnote 880 in\nthis Report), including those mentioned by Russia in its request for review. These were, however,\nfound not to have been substantiated by Russia or not to be relevant for our assessment of\nRussia's claim under Artic le II:1 of the GATS. Inso far as Russia is requesting that we reconsider\nthe relevance or persuasiveness of these points, this request amounts to an attempt to re -litigate\narguments already put before us, which is not appropriate at the interim review stage. In order to\naddress Rus sia's concerns regarding the adequacy of our reasoning, we have provided further\ndetails and references to Russia's response in paragraphs 7.479 and 7.480 and footnote 745\nhereto. With respect to Russia's more specific request that we delete the references to a \"simple\ninternet search\", we note that this is a d irect quote from Russia's response to Panel question No.\n172(a), which we see no reason to delete.\n6.48. Footnote 748 to paragraph 7.482 (footnote 883 in this Report) concerns Russia's contention\nthat the objective of the unbundling measure is to reduce reliance on imported Russian natural gas\nor Russian pipeline transport servi ces or service suppliers . Russia submits that this footnote\nincludes \"only a very small fraction of the evidence put forward by Russia on this issue\" and\nrequests that we take into account additional arguments and evidence, listed by Russia in its\nrequest for review.208 The European Union has not provided comments on this request.\n6.49. We note that the arguments and evidence concerning the European Union's alleged\nobjectives are provided at a variety of places in Russia's submissions, and not always in connection\nwith Russia's claim against the unbundling measure under Article II:1 of the GATS, rendering it\ndifficult to determine which arguments and evidence to address in the context of this claim.\n\n201 European Union's comments on Russia's request for review of the Interim Report, para. 15.\n202 Russia's request for review of the Interim Report, paras. 48-57.\n203 Russia's request for review of the Interim Report, paras. 49-52.\n204 Russia's request for review of the Interim Report, paras. 53-56.\n205 Russia's request for review of the Interim Report, para. 57.\n206 Russia's request for review of the Interim Report, fn 31.\n207 European Union's comments on Russia's request for review of the Interim Report, para. 16.\n208 Russia's request for review of the Interim Report, paras. 58-63.\n\nIndeed, some of the arguments and evidence listed by Russi a in its request for review do not\nappear to concern the unbundling measure at all. 209 Nonetheless, and in order to ensure the\ncompleteness of our findings, we have provided further details and references to R ussia's various\nsubmissions in footnote 748.\n6.50. Russia requests that the Panel specify which examples are encompassed by the reference to\n\"the above -mentioned examples\" in paragraph 7.487.210 The European Union ha s not provided\ncomments on this request. We consider that the specification requested by Russia provides\nadditional clarity and have made the necessary modification to paragraph 7.487.\n6.51. Paragraphs 7.496 through 7.508 concern four exampl es of TSOs, which Russia relies on in\narguing that \"only TSOs controlled by the Russian VIU were required to undergo ownership\nunbundling\", and the issue of whether the Russian VIU Gazprom can be considered to have\nsupplied pipeline transport services thro ugh the commercial presence of these TSOs, within the\nmeaning of the GATS. Russia appears to make two separate requests in this regard:\n6.52. First, Russia requests that the Panel \"set[] forth its own legal interpretation of the key term\n'legally direct' in GATS Article XXVIII(n)(ii)\" and \"respond[ ] to Russia's interpretation of this\nterm\".211 The European Union criticizes Russia for seeking to \"re-argue its claims\" and submits that\nnothing in Russia's request \"alters the correctness of the Panel's findings.\"212\n6.53. When addressing Russia's request, we begin by noting that it is well -established practice\nthat panels need not address all arguments submitted by the parties to a dispute. In the current\ndispute, we did not consider it necessary to determine, in the abstract, the meaning of the term\n\"legally direct\", which forms part of the definition of \"control\" under Article XXVIII(n)(ii) of the\nGATS. Indeed, we specifically found that the concept of \"control\" is a matter to be as sessed on a\ncase-by-case basis.213 In accordance with this approach, we instead address this issue in respect\nof the evidence relied on by Russia. We do not believe that a further discussion of the concepts of\n\"control\" or \"legally direct\", in the abstract, would provide further clarity or serve to resolve issues\nraised by Russia's claim under Article II:1 of the GATS. We therefore reject Russia's request.\n6.54. Second, Russia criticizes the Panel for not \"according sufficient weight\" to the evidence\nsubmitted by Russia concerning the [*** ] for four TSOs and requests that the Panel should do so\nor \"[a]t the very least … properly respond to Russia's arguments concerning this evidence\". 214 The\nEuropean Union criticizes Russia for seeking to \"re -argue its claims\" and submits that nothing in\nRussia's request \"alters the correctness of the Panel's findings.\"215\n6.55. We note that, while we have not found it necessary to address Russia's more general\nassertions concerning Gazprom's level of control over the four TSOs, we have considered all\narguments provided by Russia in relation to the evidence submitted by it, namely the [***] for the\nfour TSOs. In sofar as Russia is requesting that we reconsider the weight of this evidence or the\npersuasiveness of its arguments, this request amounts to an attempt to re -litigate evidence and\narguments already put before us, which is not appropriate at the interim r eview stage. In order to\naccommodate Russia's concerns regarding the adequacy of our reasoning, we have provided\nfurther details when presenting Russia's arguments in paragraph 7.500 and when addressing these\nin paragraph 7.501 . We have, however, not included or addressed certain new arguments raised\nby Russia in its request for review216, as interim review is not the appropriate forum for presenting\nnew arguments.\n6.56. Footnote 784 to paragraph 7.498 (footnote 919 in this Report) explains that the European\nUnion was provided an opportunity to com ment on new pieces of evidence submitted by Russia in\nits comments on the European Union's responses to the Panel's questions following the second\n\n209 See, e.g. Russia's request for review of the Interim Report, para. 60 (citing Russia's first written\nsubmission, paras. 6-7 concerning the TEN-E measure and the possibilities for certain pipelines of being\nconsidered projects of common interest)\n210 Russia's request for review of the Interim Report, para. 64.\n211 Russia's request for review of the Interim Report, paras. 66-67.\n212 European Union's comments on Russia's request for review of the Interim Report, para. 17.\n213 See para. 7.470 below.\n214 Russia's request for review of the Interim Report, para. 67.\n215 European Union's comments on Russia's request for review of the Interim Report, para. 17.\n216 Russia's request for review of the Interim Report, para. 72.\n\nmeeting, but did not avail itself of this opportunity in respect of certain pieces of new evidence.\nThe Europ ean Union requests that the relevant part of its communication be quoted in this\nregard.217 We consider the requested addition useful as it clarifies that the European Union actively\ndeclined to comment on certain pieces of the new evidence, and we have ther efore included the\nquote in footnote 784.\n6.57. The European Union requests that the Panel add another section to the description of its\nposition on the issue of whether the unbundling measure in the Directive falls within the scope of\nArticle III:4 of the GATT 1994 in paragraph 7.526. More particularly, the European Union requests\nthe inclusion of certain arguments concerning the lack of a relationship between \"the origi n of the\npipeline service supplier with the origin of the gas flowing through the pipeline\", submitted by the\nEuropean Union in the context of arguing that imported Russian natural gas is not accorded less\nfavourable treatment under the unbundling measure.218\n6.58. In paragraph 7.526, we explain that the European Union has pointed to there being \"no link\nbetween the origin of the gas that flows through a pipeline and the ori gin of the service supplier\"\nin the context of arguing that the unbundling measure does not fall within the scope of Article III:4\nof the GATT 1994. We also explain that we consider this argument misplaced and better addressed\nin the context of considering whether there is less favourable treatment of imported Russian\nnatural gas in comparison with that of domestic EU natural gas. We do not believe that the\ninclusion of arguments submitted by the European Union in the context of arguing that imported\nRussian natural gas is not accorded less favourable treatment under the unbundling measure\nwould provide further clarification. We therefore reject the European Union's request.\n6.59. Russia suggests several revisions of the Panel's likeness analysis in the context of Russia's\nclaims under Articles I:1 and III:4 of the GATT 1994 in sections 7.5.1.4.2.2 and 7.5.1.4.3.2 .219\nRussia specifically requests that the Panel \"should clarify its view\" on whether natural gas includes\nLNG, and \"preferably near the outset of the final report\".220 Russia also considers that the Panel\nshould examine the like products issue regarding LNG at this point in its analysis, because this is\nthe first claim reached by the Panel concerning natural gas. 221 The European Union did not provide\nany comments regarding Russia's requests.\n6.60. We note that, in the course of our likeness analysis regarding LNG and natural gas in\nsection 7.7.2.2.2, we rejected Russia's contention that LNG and natural gas are one and the same\nproduct. However, in order to make it cle ar that we do not consider natural gas and LNG as one\nand the same product in the context of our analysis of Russia's claims against the unbundling\nmeasure, we supplement paragraphs 7.532 and 7.574 with additional reasoning. We further\nconsider that paragraphs 7.531, 7.532 and 7.574 set out in sufficient detail the reasons for our not\naddressing the likeness issue regarding LNG and natural gas in the context of the unbundling\nmeasure. Therefore, we decline Russia's request that the Panel examine the like product issue\nregarding LNG at this point in our analysis.\n6.61. Russia further requests that the Panel delete certain sentences from paragraph 7.529,\nwhich, in Russia's view, mischaracterize Russia's position and the evidence on the record. 222 We\ndisagree with Russia that anything in paragraph 7.529 mischaracterizes Russia's position or the\nevidence on the record. We also recall that we only summarize the parties' arguments the extent\nnecessary and appropriate to capture our understanding for the purposes of our own assessment\nand reasoning .223 Russia's arguments are summarized in its own words in the executive\nsummaries annexed to the Final Report. For these reasons, we decline Russia's request.\n6.62. Paragraphs 7.537 and 7.538 set out the arguments o f the parties and the approach of the\nPanel in assessing whether the unbundling measure accords less favourable treatment to imported\nRussian natural gas in violation of Article III:4 of the GATT 1994. More particularly,\nparagraph 7.538 sets out the two issues raised by the parties' argumentation:\n\n217 European Union's request for review of the Interim Report, para. 12.\n218 European Union's request for review of the Interim Report, para. 13.\n219 Russia's request for review of the Interim Report, paras. 76-84 and 104-107.\n220 Russia's request for review of the Interim Report, paras. 82 and 104.\n221 Russia's request for review of the Interim Report, para. 83.\n222 Russia's request for review of the Interim Report, para. 84.\n223 See para. 6.5 above.\n\n(a) whether Russia has demonstrated that natural gas is accorded less favourable\ntreatment under the OU model in compari son with that accorded to natural has under\nthe ISO model and/or the ITO models; and (b) if so, whether Russia has\ndemonstrated that the unbundling measure in the Directive accords less favourable\ntreatment to imported Russian natural gas than that accorde d to domestic EU natural\ngas by \"enabling\" EU member States to choose between implementing only the OU\nmodel or implement the ISO and/or the ITO models in addition to the OU model in\nrespect of transmission systems that belonged to a VIU on 3 September 2009.\n6.63. In the immediately following paragraph, it is explained that the first of these issues involves\nan assessment of \"whether the OU model 'modifies the conditions of competition in the relevant\nmarket to the detriment' of natural gas in comparison with the ISO and/or the ITO models.\" Russia\nappears to make two separate requests concerning these paragraphs.\n6.64. First, Russia requests that the Panel modify \" its description of the issue s and order of\nanalysis in p aragraph 7.538\", arguing that it should instead consider (a) whether the unbundling\nmeasure \"provides differential treatment to (or 'draws regulatory distinctions between') imported\nRussian gas transported via pipelines of the R ussian VIU, Gazprom, which was required to adopt\nthe OU model in certain Member States … when compared with the treatment provided by the\nunbundling measure to like domestic gas transported via pipelines of VIUs that were allowed in\nother Member States to adopt the less restrictive ITO model\"; and (b) \"whether this differential\ntreatment (or these 'regulatory distinctions') modifies the conditions of competition, i.e., results in\na detrimental impact on the 'equality of competitive opportunities,' for Russi an gas in the EU\nmarket compared to like domestic gas\". 224 The European Union submits that the Panel's approach\nfor determining less favourable treatment under Article III:4 of the GATT 1994 comports with WTO\njurisprudence and that Russia \"seems to have difficulties in understanding the legal standard that\napplies in WTO discrimination cases\".225\n6.65. The Appellate Body has clarified that Article III:4 of the GATT is concerned with treatment\nthat modifies the competitive conditions for goods, not formal differences in the treatment of\ngoods226 and that it does not \"preclud e any regulatory distinctions between products that are\nfound to be like, as long as treatment accorded to the group of imported products is no less\nfavourable than that accorded to the group of like domestic products.\" 227 In our view, the\n\"description of the issues\" in paragraphs 7.538 and 7.539 reflects this prior WTO jurispr udence as\nwell as the particularities of the parties' argumentation in the case before us. These elements are\nlikewise reflected in the \"order of analysis\" in paragraph 7.538. More particularly, this order\nreflects the fact that it is not necessary to consider whether the unbundling measure de facto\ndiscriminates or draws regulatory distinctions between imported Russian natural gas and domestic\nEU natural gas in resp ect of the applicable unbundling model(s) insofar as the competitive\nopportunities of natural gas are not modified under the different unbundling models. We therefore\nsee no reason to modify our \"description of the issues and order of analysis\", and hence reject\nRussia's request.\n6.66. Second, Russia appears to repeat its request that the unbundling measure be characterized\nas a \"single measure\" consisting of the unbundling measure in the Directive as well as the\nimplementing legislation of each of the EU member States.228 In this regard, the European Union\nrecalls its position that Russia has not demonstrated the existence of a so -called \"single measure\",\nnor that \"such (non -existent) 'single measure'\" could be attributed to the European Union. 229 We\nhave already rejected the same request, in pa ragraphs 6.30 through 6.32 above, and continue to\ndo so for purposes of our findings under Article III:4 of the GATT 1994.\n6.67. Russia requests that the Panel delete, from paragraph 7.540, the sentence: \"We note that\nRussia's argumentation concerning the specific alleged competitive advantages under the ISO and\nthe ITO models has not been entirely clear throughout these procee dings.\" In Russia's view, this\n\n224 Russia's request for review of the Interim Report, paras. 87-88. (emphasis original)\n225 European Union's comments on Russia's request for review of the Interim Report, para. 18.\n226 Appellate Body Report, Korea – Various Measures on Beef, para. 137. See also Appellate Body\nReports, EC – Seal Products, para. 5.101 (referring to Appellate Body Reports, US – Clove Cigarettes,\n227 Appellate Body Report, US – Clove Cigarettes, para. 193. (emphasis original)\n228 Russia's request for review of the Interim Report, para. 89.\n229 European Union's comments on Russia's request for review of the Interim Report, para. 19.\n\nsentence \"does not clarify or contribute to the Panel's analysis\". 230 The European Union argues\nthat this sentence is correct and should be maintained, pointing out that it \"shared [the Panel's]\nconcern throughout the proceedings\".231\n6.68. In our view, the initial characterization of Russia's arguments in paragraph 7.540 as\n\"unclear\" is useful as it serves to explain our approach in the subsequent paragraphs. We\ntherefore reject Russia's request.\n6.69. Paragraphs 7.541 through 7.568 contain the Panel's findings concerning the alleged\ncompetitive advantages under the ISO and the ITO models , relied on by Russia in its claim under\nArticle III:4 of the GATT 1994. Russia requests that we \"rev isit\" the finding in paragraph 7.542\nthat \"Article III:4 of the GATT 1994 prohibits less favourable treatment of goods only and does not\nrefer to less favourable treatment of producers\" and the finding that Russia therefore must\ndemonstrate that the treatment of VIUs under the ISO and ITO models \"translates into a\ncompetitive advantage for the natural gas produced or supplied by the VIU\". As support, Russia\ncites certain prior cases in which the treatment of prod ucers or suppliers of goods was taken into\naccount in finding that a challenged measure falls within the scope of Article III:4 of the\nGATT 1994 or that it accords less favourable treatment to imported goods in violation of this\nprovision. Russia also requests that we revisit our \"additional findings and overall conclusion\nregarding Russia's claim against the unbundling measure under GATT Article III:4\" and that \"[t]he\nsame holds for Russia's claim against this measure under Article I:1.\" 232 The European Union has\nnot provided comments on this request.\n6.70. We cannot agree with Russia's reading of our finding in paragraph 7.542 as suggesting that\nwe will not take account of the treatment accorded to producers or suppl iers of natural gas, such\nas VIUs, under the ISO or the ITO models. Rather, we specify that this will be taken into account\ninsofar as Russia has demonstrated that this \"translates into a competitive advantage for the\nnatural gas produced or supplied by th e VIU\". We see no divergence between this approach and\nthat taken by the Appellate Body and prior panels in the jurisprudence cited by Russia. We\ntherefore decline to \"revisit\" our findings in paragraphs 7.541 through 7.568.\n6.71. In addition to the request addressed immediately above, Russia also submits certain\ncomments regarding paragraphs 7.541 through 7.568 concerning interpretation of municipal law\nand the need for a holistic analysis in this regard.233 We have, however, not been able to discern\nany request for review in respect of such comments, let alone requests for review of precise\naspects of the Interim Report. We further note that the issue of interpretation of municipal law was\nnot raised by any party or addressed in our findings in paragraphs 7.541 through 7.568. We\ntherefore do not address these comments further.\n6.72. With respect to the Panel's findings in paragraphs 7.581 and 7.582, Russia requests that the\nPanel take into account certain evidence, including the evidence concerning Lithuania's grant of\npriority to natural gas supplied by Litgas through the Klaipeda LNG Terminal and the five-year deal\nbetween Statoil and Litgas.234 The European Union did not comment on Russia's request.\n6.73. We note that we have already assessed the relevance and weight of the evidence presented\nby Russia, which i s reflected in paragraphs 7.581 and 7.582. We thus understand Russia to\nrequest that the Panel engages in a reassessment of this evidence. As noted above, interim review\nis not an appropriate stage for a party to re -argue its case.235 Therefore, we do not find Russia's\nrequest acceptable.\n6.74. The European Union requests the Panel to add, at the end of paragraphs 7.607 and 7.618 ,\nthe phrase: \"and that no other service suppliers can access the market\". 236 We note that the\n\n230 Russia's request for review of the Interim Report, para. 90.\n231 European Union's comments on Russia's request for review of the Interim Report, para. 20.\n232 Russia's request for review of the Interim Report, paras. 96-103 (referring to Appellate Body\nReports, EC – Seal Products, para. 1.4; and Panel Reports, Mexico – Taxes on Soft Drinks, paras. 8.112-8.113;\n233 Russia's request for review of the Interim Report, paras. 91-96.\n234 Russia's request for review of the Interim Report, paras. 109-113.\n235 See para. 6.3 above.\n236 European Union's request for review of the Interim Report, paras. 16 and 18.\n\nEuropean Union does n ot explain the reason for inserting this additional phrase. We do not\nconsider that the phrase requested by the European Union contributes to clarifying our reasoning\nand we therefore decline the European Union's request.\n6.75. Russia submits that, when setting out its analysis of Russia's claim under Article XVI:2(a) of\nthe GATS concerning Lithuania's law implementing the unbundling measure, the Panel found, in\nparagraph 7.618, that \"this evidence consists of a narrative of the Commission Opinion with no\nestablished path showing that it is rooted in a legal text\". According to Russia, the Panel's analysis\nis insufficient and results in the conclusion that only de jure monopoly service suppliers established\nby law (and not de facto) would qualify as a monopoly supplier of a service under Article XXVIII(h)\nof the GATS. Russia requests the Panel to revisit and reconsider this analysis. 237 The European\nUnion does not provide comments on this request.\n6.76. In our view, Russia's request for the Panel to \"revisit and reconside r\" its allegedly\n\"insufficient\" analysis challenges the manner in which the Panel assessed the evidence on record\nand amounts to an attempt by Russia to re-argue its case, which, as explained, is not acceptable\nat the interim review stage. We also disagree with Russia's argument that the Panel's assessment\nof a specific piece of evidence submitted by Russia in support of its claim \"results in\" the general\nconclusion proposed by Russia. Our findings on Russia's claim against Lithuania's national\nimplementing law under Article XVI:2(a) of the GATS are based on an overall analysis or Russia's\nargumentation and evidence presented in th e course of these proceedings. We therefore decline\nRussia's request.\n6.77. With respect to paragraph 7.640, the European Union suggests the Panel add a footnote\nreferring to paragraph 105 of the European Union's first written submission at the end of the third\nsentence.238 We do not find it appropriate to add, at the end of that sentence, a footnote referring\nto arguments made by the European Union in paragraph 105 of its first written submission.\nNevertheless, taking into account the European Union's request, we included footnote 1119 at the\nend of the first sentence of paragraph 7.640 since this sentence quotes arguments by the\nEuropean Union. This new footnote refers to paragraph 99 of the European Union's first written\nsubmission, where these particular arguments are found.\n6.5 The public body measure\n6.78. In respect of paragraph 7.764, the European Union requests that the Panel add, after the\nwords \"as the national laws in question impl ement Article 9(6) of the Directive,\" the phrase: \"and\nbecause the member States' national regulatory authorities rely on the Commission's opinion to\nmake their own assessment\". 239 The European Union also requests that the Panel supplement\nparagraph 7.820 with an additional summary of the European Union's arguments.240 The European\nUnion, however, does not explain what value these changes would have for the Fina l Report. We\nfurther note that the European Union does not provide any reference to its arguments that the\nmember States' national regulatory authorities \"rely on the Commission's opinion to make their\nown assessment\". We also observe that there is already a reference to the European Union's\nconfirmation that there have been no instances where a TSO controlled by a public body from a\nthird country sought the application of Article 9(6) of Directive or the corresponding national\nimplementing provisions in footnote 1229 to paragraph 7.820 (footnote 1367 in this Report). In\nlight of these considerations, we do not find the requested additions useful and therefore declin e\nthe European Union's requests.\n6.6 The LNG measure\n6.79. Russia requests that the Panel reconsider its finding in section 7.7.2.2.2 that Russia has not\ndemonstrated that natural gas imported from Russia and LNG imported from other countries are\nlike products with in the meaning of Article I:1 of the GATT 1994. 241 In the event the Panel does\nnot reverse its like product finding in its Final Report, Russia urges the Panel to assume that\nnatural gas imported in the form of LNG and via pipelines are like products and, on that basis,\n\n237 Russia's request for review of the Interim Report, para. 114.\n238 European Union's request for review of the Interim Report, para. 20.\n239 European Union's request for review of the Interim Report, para. 24.\n240 European Union's request for review of the Interim Report, para. 25.\n241 Russia's request for review of the Interim Report, para. 118.\n\ncomplete its analysis under Article I:1 of the GATT 1994, including whether (a) the LNG measure\nconfers an \"advantage, favour, privilege, or immunity\" on a product originating in the territory of\nany country and (b) that the advantage so accor ded is not extended \"immediately\" and\n\"unconditionally\" to imported Russian natural gas.242\n6.80. The European Union considers that Russia's comments seek to \"reargue issues\" relating to\nthe LNG measure.243 According to the European Union, once the Panel has found t hat the products\nare not like products, the Panel is not required to continue and \"examine further the consistency of\nthe LNG measure with Article I:1\". 244 The European Union therefore submits that Russia's request\nin respect of the Panel's analysis of the LNG measure must be rejected.245\n6.81. We decline Russia's request that we reconsider our finding that Russia has not\ndemonstrated that natural gas imported from Russia and LNG imported from other countries are\nlike products within the meaning of Article I:1 of th e GATT 1994. Likewise, we do not accept\nRussia's request that we continue our analysis as to whether the LNG measure confers an\nadvantage, favour, privilege, or immunity on a product originating in the territory of any country\nthat is not extended immediat ely and unconditionally to imported Russian natural gas. We note\nthat we have the discretion to address only the issues we deem necessary to resolve a particular\nclaim.246 We are not convinced that continuing our analysis in the abstract, on the basis of the\nhypothetical assumption that LNG and natural gas are like products, will contribute to this end.\n6.82. With respect to the Panel's likeness analysis, Russia also submits that, while the European\nUnion asserted that the use of non -regasified LNG as transport fuel in the European Union is\npossible, the record contains no evidence demonstrating that LNG has actually been used for this\nor any other purpose. 247 On this basis, Russia requests that the Panel should conclude that the\nend-uses of natural gas imported in to the European Union in the form of LNG and other natural\ngas are the same, thus requiring an affirmative competitive relationship finding.248\n6.83. The European Union requests that, in paragraph 7.826, the Panel adds the following text:\n\"The European Union submits that LNG and natural gas are not like products within the meaning of\nArticle I:1 of the GATT 1994.\" 249 Regarding Russia's request, the European Union responds th at,\ncontrary to Russia's claim, there is evidence on the record demonstrating that LNG has actually\nbeen used \"for transport purposes\", and points to Exhibits EU-162 and RUS-195.250\n6.84. While we decline Russia's request, we decided to modify the text of footnotes 1268 and\n1269 (footnotes 1407 and 1408 in this Report) to reflect more fully the basis for our finding in\nparagraphs 7.842 and 7.843 that a certain amount of LNG imported into the European Union is not\nregasified for the purposes of its transportation and supply via pipelines in the European Union,\nand is instead used in i ts liquid form as a transport fuel. We also decided to accommodate the\nEuropean Union's request and supplement paragraph 7.826 with a reference to the European\nUnion's argument.\n6.85. The European Union requests that the Panel refer to its argument that consumers of LNG\npurchase LNG to use it as fuel for ships in paragraph 7.849.251 We observe that paragraph 7.849\nconcerns the consumers' tastes and habits criterion of likeness. We understand the European\nUnion to have argued that LNG can be us ed as a transport fuel, including as a fuel for ships, in\nsupport of its contention that the end -uses of LNG and natural gas are different, rather than that\nthe consumer's tastes and habits regarding LNG and natural gas are different. For this reason, the\nexplicit reference to the European Union's argument that LNG can be used as a transport fuel is\nfound in paragraph 7.848, which deals with the end -uses criterion of likeness. On this basis, we\ndecline the European Union's request.\n\n242 Russia's request for review of the Interim Report, para. 119.\n243 European Union's comments on Russia's request for review of the Interim Report, para. 21.\n244 European Union's comments on Russia's request for review of the Interim Report, para. 22.\n245 European Union's comments on Russia's request for review of the Interim Report, para. 22.\n246 See for instance Panel Report, EU – Poultry Meat (China), para. 6.19 (referring to Appellate Body\nReport, EC – Poultry, para. 135; and Panel Report, India – Solar Cells, para. 7.76).\n247 Russia's request for review of the Interim Report, para. 129.\n248 Russia's request for review of the Interim Report, para. 129\n249 European Union request for review of the Interim Report, para. 26.\n250 European Union's comments on Russia's request for review of the Interim Report, para. 22.\n251 European Union's request for review of the Interim Report, para. 27.\n\n6.86. Russia requests the Panel to address Russia's argument made in response to Panel question\nNo. 109(a), in which Russia referred to the Commission's decision in competition proceedings\nallegedly recognizing that from the perspective of gas buyers there is no distinction between gas\ntransported by pipeline and gas transported as LNG and regasified. 252 The European Union did not\nprovide any comments on Russia's request.\n6.87. Recalling that the purpose of the interim review is not to provide an opportunity for the\nparties to re-argue their case, we decided to accommodate Russia's request and explicitly address\nits argument made in response to Panel question No. 109(a) and with reference to Exhibit RUS -\n157 in two new paragraphs inserted after paragraph 7.850 (paragraphs 7.851 and 7.852 in this\nReport). We also introduced several minor changes of a consequential nature.\n6.7 The upstream pipeline networks measure\n6.88. We note that Russia submits certain new arguments regarding the alleged advantage\ngranted to Norwegian natural gas not p reviously developed in its submissions to the Panel. 253 We\nrecall that interim review is not an appropriate stage for the submission of new arguments. 254\nTherefore, as Russia did not assert these arguments before, we refuse to consider them at this\nstage in the proceedings.\n6.89. Russia further requests that the Panel revise its reasoning in paragraphs 7.1028 through\n7.1039 (paragraphs 7.1030 through 7.1043 in this Report) on whether the upstream pipeline\nnetworks measure creates more favo urable conditions for the transportation of natural gas via\nupstream pipelines than via transmission pipelines. 255 In particular, Russia requests that the Panel\nreview Exhibit RUS -116 in its analysis in paragraphs 7.1030 through 7.1031 (paragraphs 7.1032\nthrough 7.1033 in this Report).256 In Russia's view, the Panel's summary of Russia's arguments in\nparagraph 7.1029 (paragraph 7.1031 in this Report) does not accurately reproduce Russia's\narguments developed in paragraphs 291 and 294 of Rus sia's second written submission.257 Russia\nalso submits that the European Union offered no defence regarding the lack of advantage to\nNorwegian natural gas transported by upstream pipeline networks that are not subject to\nregulated transportation tariffs, and on this basis, requests that th e Panel rectify its finding in\nparagraph 7.1030 and conclude that such an \"exemption\" creates an advantage.258\n6.90. The European Union disagrees with all of Russia's comments with respect to the upstream\npipeline networks measure and considers that Russia seeks to re-argue its case.259 With respect to\nRussia's alleged demonstration of what the \"UPN exemption\" consists of on the basis of Exhibit\nRUS-116260, the European Union submits that Exhibit RUS -116 is a UK document describing\ndiscussions in the UK House of Lords and does not constitute any \"EU admission of any supposed\nobjective of the UPN measure\". 261 The European Union further argues that merely citing some\nwords that are taken out of context does not amount to evidence demonstrating the alleged\ncompetitive advantage for gas of a certain origin.262\n6.91. We decided to partially accommodate Russia's request that the Panel review Exhibit RUS-\n116 in its analysis. While this does nothing but reinforce our view as to the correct outcome of this\nclaim, we supplemented our reas oning with explicit references to Exhibit RUS -116 and Russia's\nallegations based thereon in two new paragraphs after paragraph 7.1038 (paragraphs 7.1041 and\n7.1042 in this Report).\n\n252 Russia's request for review of the Interim Report, para. 130. We note that in its response to Panel\nquestion No. 109(a), Russia referred to \"Regulation (EC) 139/2004 'Merger Procedure' issued by the\nCommission in a competition proceeding in 2012\" rather than the Commission's decision in competition\nproceedings. (Russia's response to Panel question No. 109(a), para.436)\n253 Russia's request for review of the Interim Report, paras. 147-148.\n254 See para. 6.3 above.\n255 Russia's request for review of the Interim Report, paras. 136-170.\n256 Russia's request for review of the Interim Report, para. 144.\n257 Russia's request for review of the Interim Report, para. 146.\n258 Russia's request for review of the Interim Report, para. 151.\n259 European Union's comments on Russia's request for review of the Interim Report, para. 23.\n260 Russia's request for review of the Interim Report, para. 145.\n261 European Union's comments on Russia's request for review of the Interim Report, para. 24.\n262 European Union's comments on Russia's request for review of the Interim Report, para. 24.\n\n6.92. We understand that Russia's concern that the Panel's summary of Russia's arguments in\nparagraph 7.1029 does not accurately reproduce Russia's arg uments relates to the lack of\nreferences to Russia's allegations that the European Union included the upstream pipeline\nnetworks measure to avoid the resulting increases in costs and loss of efficiency to Norwegian gas\nproducers on the basis of Exhibit RUS -116. As we are now explicitly referring to Russia's\nallegations based on Exhibit RUS -116 in a different paragraph, we consider that the summary of\nRussia's arguments provided in paragraph 7.1029, when read in light of Russia's other arguments,\naccurately reflects the gist of Russia's submissions. Therefore, we decline Russia's request for a\nrevision of paragraph 7.1029.\n6.93. We also decline Russia's request that the Panel rectify its finding in paragraph 7.1030 and\nconclude that, because the European Union offe red no defence regarding the lack of advantage to\nNorwegian natural gas transported by upstream pipeline networks that are not subject to\nregulated transportation tariffs, such an \"exemption\" creates an advantage. We recall that it is\nRussia, as the compla inant in these proceedings, and not the European Union, who bears the\nburden of demonstrating that there is an advantage granted to natural gas of any origin within the\nmeaning of Article I:1 of the GATT 1994 that is not extended to like Russian natural ga s. Except\nfor repeatedly alleging that the operators of upstream pipeline networks are \"exempted\" from tariff\nregulation requirements, Russia did not provide any explanation as to how the non -application of\ntariff regulation requirements to the operators o f upstream pipeline networks provides an\nadvantage to natural gas of Norwegian or any other origin. As noted above in paragraph 6.5, a\npanel is not expected to \"di vine\" a claim of WTO inconsistency from the mere alle gations of a\ncomplainant.\n6.94. With respect to the Panel's reasoning in paragraphs 7.1033 through 7.1038\n(paragraphs 7.1035 through 7.1040 in this Report), Russia requests that the Panel clarify the basis\nfor its conclusio n that Russia has not demonstrated that the legal regime of the operators of\nupstream pipeline networks creates more favourable conditions for the transportation of natural\ngas via upstream pipelines than via transmission pipelines. 263 Russia also requests t hat the Panel\n\"rule expressly\" that the European Union has not satisfied its burden of proof to \"demonstrate\nthat, notwithstanding the full control exercised by Norwegian VIUs over their upstream pipeline\nnetworks and the Norwegian -origin gas transported t hrough those upstream pipeline networks,\nArticle 34 nevertheless eliminates the possibility that the UPN exemption results in more\nfavourable conditions for the transportation of that Norwegian gas\".264\n6.95. The European Union submits that it was for Russia to d emonstrate that a competitive\nadvantage was conferred to a product of a certain origin (rather than to a producer) and to\ndemonstrate that Article 34 imposes \"no obligation whatsoever\".265\n6.96. We consider that our reasoning in paragraphs 7.1028 through 7.1039 explains in sufficient\ndetail the basis for our finding that Russia has not demonstrated that the legal regime of the\noperators of upstream pipeline networks creates more favourable conditions for the transportation\nof natural gas via upstream pipelines than via transmission pipelines. Therefore, we decline\nRussia's request for any further clarifications in this regard.\n6.97. Furthermore, we do not find acceptable Russia's request that the Panel \"rule expressly\" that\nthe European Union has not satisfied its burden of proof to \"demonstrate that, notwithstanding the\nfull control exercised by Norwegian VIUs over their upstream pipeline networks and the\nNorwegian-origin gas transported through those upstream pipeline networks, Article 34\nnevertheless eliminates the pos sibility that the UPN exemption results in more favourable\nconditions for the transportation of that Norwegian gas\". 266 We recall that Russia bears the burden\nof demonstrating that the regulation of the operators of upstream pipeline networks under the\nDirective, which includes Article 34 of the Directive, grants an advantage to natural gas of any\norigin that is not extended to natural gas of Russian origin. Therefore, it is for Russia, and not for\nthe European Union, to demonstrate how the application of Art icle 34 of the Directive, instead of\nArticle 32 of the Directive, provides an advantage to natural gas of any origin.\n\n263 Russia's request for review of the Interim Report, para. 156.\n264 Russia's request for review of the Interim Report, para. 159. (emphasis original)\n265 European Union's comments on Russia's request for review of the Interim Report, para. 26.\n266 Russia's request for review of the Interim Report, para. 159.\n\n6.98. With respect to paragraph 7.1037 (paragraph 7.1039 in this Report) , Russia submits that\ncontrary to the Panel' s description, Russia has not argued that the \"obligation\" of Article 34(1) is\nvague and meaningless \"because of the 'matters' listed in Article 34(2)\" but rather that Article 34\nimposes no \"obligation\" and that it is \"vague\" and \"meaningless\" on its face. 267 Russia further\nsubmits that the Panel's statement that Article 34 provides \"an obligation of third -party access to\nupstream pipeline networks\" does not constitute an objective assessment o f the matter before it\nand requests that the Panel address the difference in treatment of upstream pipeline networks\nunder Article 34 of the Directive and transmission pipelines under Article 32 of the Directive in\norder to assess whether it results in more favourable conditions of transportation for natural gas of\nNorwegian origin transported through upstream pipelines, compared to Russian gas transported\nthrough transmission pipelines.268 The European Union does not provide any comments on Russia's\nrequest.\n6.99. In light of Russia's comments, we decided to modify paragraph 7.1037 concerning the\nPanel's description of Russia's arguments. However, we decline Russia's request that the Panel\nprovide any additional analysis regarding the difference in treatment of ups tream pipeline\nnetworks under Article 34 of the Directive and transmission pipelines under Article 32 of the\nDirective. We consider that we have provided sufficient reasons in support of our rejection of\nRussia's arguments that Article 34 of the Directive provides no obligation of third -party access to\nupstream pipelines.\n6.100. Russia also submits, and requests that the Panel confirm, that \"Russia has made a prima\nfacie case that Article 34 is vague, serves no meaningful purpose, and has never been utilized\". 269\nThe European Union did not comment on Russia's request. In l ight of our analysis in\nsection 7.9.2.2.3.1, we decline Russia's request.\n6.101. Russia further requests that the Panel complete its analysis regarding Article 34 under the\nsecond prong of the \"advantage\" test the Panel articulated under Article I:1 of the GATT 1994 and\nexamine whether more favourable conditions for the transportation of natural gas via upstream\npipelines than via transmission pipelines result in more favourable competitive opportunities fo r\nnatural gas of any particular origin.270 The European Union did not comment on Russia's request.\n6.102. We decline Russia's request. We fail to understand how we can meaningfully assess\nwhether more favourable conditions for the transportation of natural gas via upstream pipelines\nthan via transmission pipelines result in more favourable competitive opportunities for natural gas\nof any particular origin without a prior affirmative finding that the upstream pipeline networks\nmeasure does indeed create more favourable conditions for the transportation of natural gas via\nupstream pipelines than via transmission pipelines.\n6.8 The TEN-E measure\n6.103. The European Union requests that the Panel supplement footnote 1916 to\nparagraph 7.1265 (footnote 2065 in this Report ) with additional text reflecting certain of the\nEuropean Union's arguments regarding the criteria used to assess the candidate PCIs. 271 We\ndecide to accommodate the European Un ion's request and modified the text of footnote 1916\n(footnote 2065 in this Report) accordingly.\n6.104. With respect to the Panel's assessment of Russia's claim against the TEN-E measure under\nArticle II:1 of the GATS (section 7.11.4.1.3), Russia requests that the Panel revisit its finding in\nparagraph 7.1427 (paragraph 7.1430 in this Report) that the Panel does not \"consider it necessary\nto make a separate finding on whether the TEN -E measure discriminates against Russian\ninfrastructure projects\". 272 According to Russia, the Panel \"neglects to articulate a clear legal\nstandard\" as to what would constitute a sufficiently close connection between infrastructure\n\"projects\" covered by the TEN -E Regulation and pipeline transport services and service suppli ers\n\n267 Russia's request for review of the Interim Report, para. 164.\n268 Russia's request for review of the Interim Report, para. 165.\n269 Russia's request for review of the Interim Report, para. 168.\n270 Russia's request for review of the Interim Report, para. 169.\n271 European Union's request for review of the Interim Report, para. 30.\n272 Russia's request for review of the Interim Report, para. 173.\n\nwithin the meaning of the GATS.273 Russia submits that the Panel has introduced an additional step\nfor the complainant to fulfil that has no basis in the GATS: after establishing that a measure\naffects trade in services a complainant would now be require d to establish a \"sufficiently close\nconnection\" between a measure and its impact on services or service suppliers. 274 The European\nUnion did not comment on Russia's request.\n6.105. In view of Russia's comments, we revised paragraph 7.1419\n(paragraph 7.1422 in this Report) in order to clarify our reference to \"a sufficiently close\nconnection\" between infrastructure projects covered by the TEN -E R egulation and pipeline\ntransport services and service suppliers covered by the GATS. We also introduced other\nconsequential changes in paragraphs 7.1426 and 7.1427 (paragraphs 7.1429 and 7.1430 in this\nReport). We note that our reasoning in paragraphs 7.1419 through 7.1427 is developed in light of\nthe manner in which Russia chose to pursue its claim against the TEN-E measure under Article II:1\nof the GATS and the specific circumstances of the present case. Based on the analysis conducted,\nwe do not consider that separate findings on whether the TEN -E measure discriminates agai nst\nRussian infrastructure projects would contribute to the resolution of Russia's claim under\nArticle II:1 of the GATS. Therefore, we decline Russia's request that the Panel revisit its decision in\nparagraph 7.1427 not to make a finding on whether the TEN -E measure discriminates against\nRussian infrastructure projects.\n7 FINDINGS\n7.1 Introduction\n7.1.1 Order of analysis\n7.1. As we explain in the descriptive part of this Report, Russia makes claims under the GATS and\nthe GATT 1994 relating to various aspects of a number of measures by the European Union and its\nmember States. Russia considers that certain aspects of each of the challenged measures violate\none or more specific provisions of the GATS and/or the GATT 1994. The provisions invoked by\nRussia under the GATS are Articles II:1, VI:1, VI:5, XVI:2(a), (e) and (f) and XVII. Under the\nGATT 1994, Russia alleges that certain m easures are inconsistent with Articles I:1, III:4, X:3(a)\nand XI:1. More specifically, Russia cha llenges the unbundling measure under Articles II:1\nand XVI(a), (e) and (f) of the GATS and Articles I:1 and III:4 GATT 1994; the public body measure\nunder Arti cle XVII of the GATS; the LNG measure under Article I:1 of the GATT 1994 ; the\ninfrastructure exemption measure under Article II:1 of the GATS and Articles I:1, X:3(a) and XI:1\nof the GATT 1994; the upst ream pipeline networks measure under Articles I:1 and III:4 of the\nGATT 1994; the third-country certification measure under Articles II:1, VI:1, VI:5 and XVII of the\nGATS and the TEN -E measure under Article II:1 of the GATS and Articles I:1 and III:4 of the\nGATT 1994.\n7.2. In its defence, the European Union asserts, inter alia, that certain of its measures, that is, the\nunbundling measure; the public body measure; and the thir d-country certification measure, are\njustified by the exceptions relating to services in Articles V, XIV(a) and/or (c) of the GATS, and\nthat the TEN -E measure is justified under Article XX(j) of the GATT 1994 with regard to claims\nunder that Agreement.\n7.3. The Panel recalls that it has the autonomy to decide on the order of its analysis.275\n\n273 Russia's request for review of the Interim Report, para. 171.\n274 Russia's request for review of the Interim Report, para. 172.\n275 As the panel in Argentina – Financial Services recalled, the Appellate Body recognized this autonomy\nin Canada – Wheat Exports and Grain Imports when it stated that \"[a]s a general principle, panels are free to\nstructure the order of their analysis as they see fit. In so doing, panels may find it useful to take account of the\nmanner in which a claim is presented to them by a complaining Member.\" See Appellate Body Report, Canada\n– Wheat Exports and Grain Imports, para. 126; Panel Report, Argentina – Financial Services, para. 7.67. We\nare mindful that the order we choose may also have an impact on the potential to apply judicial economy when\nmaking our determinations in this case. Panel Report, India – Autos, para. 7.161; Panel Report, Argentina –\nFinancial Services, para. 7.63.\n\n7.4. In our Report, fol lowing this introduction, we first determine the contours of our terms of\nreference, including in respect of two preliminary ruling requests by the Europea n Union and on\nour own motion.\n7.5. Subsequently, we set out the legal standards pursuant to the legal pro visions that we will\nthen apply in our measure -by-measure analysis of Russia's claims and the Euro pean Union's\ndefences, beginning with the unbundling measure, and then turning to the public body measure,\nthe LNG measure, the infrastructure exemption measu re, the upstream pipeline networks\nmeasure, the third-country certification measure and the TEN-E measure.\n7.6. As a significant portion of Russia's claims and the parties' argumentation in this dispute dealt\nwith the GATS, we deemed it appropriate next to set out our understanding of key threshold issues\nrelating to the GATS, that is, the meaning and scope of the services at issue in this dispute and\nwhether Croatia, Hungary and Lithuania have undertaken specific commitments with respect to the\nservices at issue.\n7.7. With respect to the various claims and defences under the GATS and/or GATT 1994 relating\nto each measure, we have opted for the order of analysis that we deemed most suitable given the\nprecise nature o f Russia's challenge against a particular measure a nd in light of parties'\nargumentation. Where appropriate, we offer further observations relating to particular\nconsiderations affecting the order of our analysis in respect of certain specific claims and defences\nbelow.\n7.1.2 Burden of proof\n7.8. The general rule in WTO dispute settlement is that the burden of proof rests upon the party,\nwhether complaining or defending, who asserts the affirmative of a particular claim or defence. 276\nFollowing this principle, the Appellate Body has explained that the complaining party in any given\ndispute should establish a prima facie case of inconsistency of a measure with a provision of the\nWTO covered agreements, before the burden of showing consistency with that provision or\ndefending it under an exception must be assumed by the responding party.277 In other words, \"a\nparty claiming a violation of a provision of the WTO Agreement by another Member must assert\nand prove its claim.\"278\n7.9. A prima facie case is \"one which, in the absence of effective refutation by the defending\nparty, requires a panel, as a matter of law, to rule in favour of the complaining party presenting\nthe prima facie case.\"279 To establish a prima facie case, the party asserting a p articular claim\nmust adduce evidence sufficient to raise a presumption that what is claimed is true. If the\ncomplaining party \"adduces evidence sufficient to raise a presumption that what is claimed is true,\nthe burden then shifts to the other party, who w ill fail unless it adduces sufficient evidence to\nrebut the presumption\".280 In this regard, the Appellate Body has stated that:\n[P]recisely how much and precisely what kind of evidence will be required to establish\nsuch … [presumptions] will necessarily var y from measure to measure, provision to\nprovision, and case to case.281\n7.10. The Appellate Body has also stated that \"[a] complaining party may not simply submit\nevidence and expect the panel to divine from it a claim of WTO -inconsistency. Nor may a\ncomplaining party simply allege facts without relating them to its legal arguments\".282\n7.11. In this dispute, Russia bears the burden of establishing a prima facie case that the\nchallenged measures are inconsistent with the cited provisions of the GATS and/or the GATT 1994.\n\n276 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, 323 at p. 335.\n277 Appellate Body Report, EC – Hormones, para. 104.\n278 Appellate Body Report, US – Wool Shirts and Blouses, p. 16, DSR 1997:I, 323 at p. 337.\n279 Appellate Body Report, EC – Hormones, para. 104.\n280 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, 323 at p. 335. (footnote\nomitted)\n281 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, 323 at p. 335. (footnote\nomitted)\n282 Appellate Body Report, US – Gambling, para. 140.\n\nShould the Panel find that Russia has established its prima facie case, it is for the European Union\nto provide arguments and evidence that are needed to support its rebuttal, and/or its defence, as\nappropriate, under the GATS and/or the GATT 1994.\n7.1.3 General observations\n7.12. At the outset, we wish to point out that, in endeavouring to pinpoint the precise nature,\nscope and subject-matter of, and to properly understand the argumentation in support of, Russia's\nclaims against measures of the European Union, as well as Croatia, Hungary and Lithuania , we\nhave encountered several challenges.\n7.13. First, we have, at times, had the impression that the precise nature and content of some of\nthe challenged measures, and claims against them, were not clear or consistent, or appeared to be\nconflated, throughout the complain ing party's submissions. We have endeavoured to address the\nmeasures, and claims against them, as presented by the complaining party.283\n7.14. Second, we have encountered claims against various aspects of the challenged measures\nunder both the GATS and the GATT 1994 284, accompanied by some argumentation seemingly\nblurring fundamental distinctions between the GATS and the GATT 1994. We note the important\ndifferences between Russia's claims under the GATS and the GATT 1994, t he distinct scope and\nsubject matter of the GATS and the GATT 1994, respectively, and the different nature of the\nspecific obligations contained in each of these agreements. Where the parties appeared to conflate\nor blur their argumentation under these two agreements, we have had to carefully identify and\nconsider relevant argumentation. We wish to underline that, in our assessment of Russia's claims,\nwe have remained mindful of our task and mandate under the DSU in light of the differences that\nexist betwe en Russia's claims under the GATS and the GATT 1994. Notably, whereas our\nassessment of Russia's claims under the GATS focuses on services and service suppliers, our\nassessment of Russia's claims under the GATT 1994 focuses on goods.\n7.15. Third, we are cognizan t that this dispute occurs in the context of certain highly complex\nfactual realities of the natural gas industry, including particularities of the markets for natural gas\nand its transport. We are also aware that certain specificities of that industry, no tably in terms of\ntransport through fixed infrastructure, raise certain challenges in the application of WTO rules.\nHowever, we underline that our duty has been to assess Russia's claims within the confines of\nWTO law.\n7.2 Terms of reference issues\n7.2.1 First request for a preliminary ruling by the European Union\n7.2.1.1 Introduction\n7.16. On 18 March 2016, the European Union submitted a request for a preliminary ruling, asking\nthe Panel to clarify whether the capacity allocation measures and the proje cts of common interest\nmeasures, included in Sections II and III of Russia's panel request, respectively, raise d new\nmatters not covered by Russia's consultations request and, therefore, fell outside the Panel's terms\nof reference.285\n7.17. As explained in paragraph 1.13 above, and in order to ensure the efficiency of the\nproceedings, the Panel decided to issue a prompt preliminary ruling, on 9 May 2016, containing\n\n283 In this respect, we were not always able to follow Russia's labelling of its various claims (e.g. \"de\nfacto\", \"de jure\", \"as such\", \"as applied\").\n284 Each of these agreements has a distinct scope and subject-matter. It is well established that a\nmeasure may be inconsistent with the GATS and the GATT 1994 at the same time: the Appellate Body\nconsiders that obligations under the GATS and the GATT 1994 may coexist and that a measure may fall\nsimultaneously within the scope of both Agreements, even though the specific aspects of the measure that are\nto be examined under each Agreement may differ. (Appellate Body Reports, Canada – Periodicals, p. 18, DSR\n1997:I, 481, at p. 498 (referring to Panel Report, Canada – Periodicals, para. 5.17); and EC – Bananas III,\n285 European Union's first request for a preliminary ruling, paras. 2, 4, and 42.\n\nthe conclusions on the E uropean Union's request, with more detailed reasoning to be provided no\nlater than the date of the issuance of the Interim Report. The issued conclusions are as follows:\nThe Panel finds that the matters contained in Sections II ( [capacity allocation]\nmeasures) and III ([projects of common interest] measures) of Russia's panel request\nare sufficiently identified in the consultations request and that the inclusion of these\nmatters in Russia's panel request did not expand the scope or change the essence of\nthe dispute. The Panel concludes, therefore, that those matters fall within its terms of\nreference.286\n7.18. Following the approach set out in the preliminary ruling of 9 May 2016, we will now address\nthe conclusions that the capacity allocation measures, included in Section II of Russia's panel\nrequest, and the projects of common interest measures, included in Section III of Russia's panel\nrequest, fall within the Panel's terms of reference, in turn, below.\n7.19. Before turning to our reasoning in support of these conclusions, however, we note that,\nfollowing the European Union's first request for a preliminary ruling, both parties refer to the\nchallenged measures in Section III of Russia's panel request as the TEN-E measure rather than the\nprojects of common intere st measures.287 For purposes of consistency throughout this Report, we\nwill use the term \"TEN-E measure\" in our reasoning below as well.\n7.2.1.2 The capacity allocation measures included in Section II of Russia's panel\nrequest\n7.20. Beginning with the capacity allocation measures, included in Section II of Russia's panel\nrequest, we note that Russia has not addressed these further, following the issuance of the Panel's\nconclusions. Furthermore, in response to a question by the Panel, Russia has clarified that it is no\nlonger challenging these measures. 288 In light of this, the European Union does not consider it\nnecessary for the Panel to provide more detailed reasons in support of its conclusion that the\ncapacity allocation measures fall within its terms of reference289, whereas Russia is of the view that\nit would still be relevant for the Panel to provide such reasons.290\n7.21. In considering whether to provide more detailed reasons in support of our conclusion that\nthe capacity allocation measures, included in Section II of Russia's panel request, fall within the\nPanel's terms of reference, we are mindful of the fundamental nature of the terms of reference. As\nclarified by the Appellate Body, they establish the jurisdiction of the panel and serve the due\nprocess objective of providing the parties and third parties notice of the nature of the case. 291 At\nthe same time, we wish to recall that the aim of the dispute settlement mechanism is to \"secure a\npositive solution to a dispute\" 292, and that the \"prompt settlement\" of disputes is essenti al to the\neffective functioning of the WTO.293\n7.22. In this regard , we note that a complaining Member has \"the prerogative to narrow or\nabandon its claims, and thereby reduce the scope of its disagreement and dispute , at any stage of\na proceeding\". 294 In these proc eedings, Russia has exercised its prerogative in a manner that\nreduces the scope of the dispute before this Panel so as not to cover the capacity allocation\nmeasures, included in Section II of Russia's panel request. For this reason, it is no longer\nnecessary to address the capacity allocation measures in order to secure a positive resolution of\nthe dispute before us. In light of this, and bearing in mind the objective of prompt settlement of\n\n286 Preliminary ruling (conclusions) of 9 May 2016, para. 2.1. These conclusions are annexed to and\nform part of the Final Report.\n287 See, e.g. Russia's first written submission, paras. 753-809; and second written submission,\nparas. 441-486; and European Union's first written submission, paras. 806-839 and 844; and second written\nsubmission, paras. 354-436.\n288 Russia's response to Panel question No. 15(a), para. 102.\n289 European Union's response to Panel question No. 15(b), para. 35.\n290 Russia's response to Panel question No. 15(b), para. 103.\n291 Appellate Body Report, US – Carbon Steel, para. 126 (referring to Appellate Body Report, Brazil –\nDesiccated Coconut, p. 20, DSR 1997:1, 167, at p. 186).\n292 Article 3.7 of the DSU.\n293 Article 3.3 of the DSU.\n294 Appellate Body Report, US – Countervailing Measures (China), para. 4.19 (referring to Appellate\nBody Report, Japan – Apples, para. 136). (emphasis added)\n\ndisputes, we do not consider it relevant or appropriate to elabor ate further on the conclusion that\nthese measures fall within the Panel's terms of reference.295\n7.23. Accordingly, we will not provide more detailed reasons in support of the conclusion in our\npreliminary ruling of 9 May 2016 that the capacity allocation measures , included in Section II of\nRussia's panel request, fall within the Panel's terms of reference.\n7.2.1.3 The TEN-E measure included in Section III of Russia's panel request\n7.24. Turning to the TEN -E measure, included in Section III of Russia's panel request, the\nEuropean Union's preliminary ruling request is based on the contention that this Section raises new\nmatters, which were not covered by Russia's consultations request and, according to the European\nUnion, \"expands impermissibly the scope of the dispute, thereby c hanging its essence\".296 For this\nreason, the European Union requests the Panel to issue a preliminary ruling to the effect that \"the\nmatters raised by the Russian Federation in Section[] … III of its Panel Request are not within the\nPanel's terms of reference.\"297\n7.25. The question we must consider is, therefore, whether the matters contained in Section III of\nRussia's panel request are properly before us or whether, as the European Union requests, we\nshould exclude them from our terms of reference on the ground that they were not sufficiently\nidentified in the consultations request. This question involves an examination of the relationship\nbetween Russia's consultations request and its panel request.\n7.26. We start by recalling that, pursuant to Article 7.1 of the DSU, our terms of reference are the\nfollowing:\nTo examine, in the light of the relevant provisions of the covered agreements cited by\nthe parties to the dispute, the matter referred to the DSB by the Russian Federation in\ndocument WT/DS476/2 and to make such findings as will assist the DSB in making\nthe recommendations or in giving the rulings provided for in those agreements.298\n7.27. In this regard, we note that \"Articles 4 and 6 of the DSU … set forth a process by which a\ncomplaining party must request consultations, and consultations must be held, before a matter\nmay be referred to the DSB for the establishment of a panel.\"299\n7.28. Article 4.4 of the DSU sets out the requirements for consultations requests as follows:\nAny request for consultations shall be submitted in writing and shall give the reasons\nfor the request, including identification of the measures at issue and an indication of\nthe legal basis for the complaint.\n7.29. Article 6.2 of the DSU sets out the requirements for panel requests as follows:\nThe request for the establishment of a panel shall be made in writing. It shall indicate\nwhether consultations were held, identify the specific measures at issue and provide a\nbrief summary of the legal basis of the comp laint sufficient to present the problem\nclearly.\n7.30. Both Articles 4.4 and 6.2 of the DSU thus refer to the identification of the measures and the\nlegal basis, or claims, at issue. The Appellate Body has clarified that the measures and claims\n\n295 We note that this approach is consistent with that taken by other panels, which have declined to\nmake preliminary rulings concerning measures that were ultimately not challenged by the complaining\nMember. (See Panel Reports, India – Agricultural Products, paras. 7.107-7.109; and India – Solar Cells,\npara. 7.23).\n296 European Union's first request for a preliminary ruling, para. 2.\n297 European Union's first request for a preliminary ruling, para. 42. See also ibid. para. 4.\n298 WT/DS476/3.\n299 Appellate Body Report, Brazil – Aircraft, para. 131.\n\ntogether constitute the \"matter referred to the DSB\"300, yet emphasized that measures and claims\nare \"distinct and 'should not be confused'\".301\n7.31. In this regard, we note that the European Union requests the Panel to find that \"the matters\nraised by the Russian Federation in Se ction[] … III of its Panel Request are not within the Panel's\nterms of reference\" 302, which could refer to the identification o f measures or claims, or both. We\nnote, however, that all arguments by the European Union concerning Section III of Russia's panel\nrequest relate to whether the TEN -E measure, included in this Section, was identified in Russia's\nconsultations request. For this reason, our assessment below focuses on the identification of the\nmeasure at issue, the TEN -E measure, in Russia's consultatio ns request. Should we find that the\nTEN-E measure does not fall within our terms of reference, it would appear that the claims raised\nby Russia in Section III of its panel request against this measure would also fall outside our terms\nof reference, and hen ce the matters in Section III of Russia's panel request would not be within\nour terms of reference.303\n7.32. We begin our assessment by noting that Article 6.2 requires that a panel request \"identify\nthe specific measures at issue\". Pursuant to Article 4.4 of the DSU, a consultations request shall\ninclude \"identification of the measures at issue\". Hence, while both Articles 6.2 and 4.4 of the DSU\nrefer to the identification of the measures at issue, they impose different requirements. The\nAppellate Body has clarified that:\nThis difference in the language between Articles 4.4 and 6.2 makes it clear that, in\nidentifying the measure at issue, greater specificity is required in a panel request than\nin a consultations request.304\n7.33. The Appellate Body also cautioned panels ag ainst imposing \"too rigid a standard\" of identity\nbetween the scope of the consultations request and the panel request as this would substitute the\nconsultations request for the panel request. 305 According to the Appellate Body, \"the requirement\nunder Article 4.4 to identify the measure at issue cannot be too onerous at this initial step in the\nproceedings … because 'the claims that are made and the facts that are established during\nconsultations do much to shape the substance and the scope of the subsequent panel\nproceedings.'\"306 However, the Appellate Body also recognized that \"consultations – as well as the\nrequest that triggers and precedes them – … play an important role in defining the scope of the\ndispute\"307:\nThe conduct of consultations, as well as the a bility of the parties to engage fully\ntherein, is directly affected by the content of the consultations request. It is this\ndocument that informs the respondent, and the WTO membership, of the nature and\nobject of the challenge raised by the complainant, a nd enables the respondent to\nprepare for the consultations themselves.308\n7.34. Hence, the Appellate Body has also made it clear that the language used in the\nconsultations request should \"sufficiently alert[]\"309 the responding party to the \"nature and object\nof th e challenge raised by the complainant\". 310 According to the Appellate Body, a measure\n\n300 Appellate Body Reports, Guatemala – Cement I, para. 72; US – Carbon Steel, para. 125; Australia –\nApples, para. 416; EC and certain member States – Large Civil Aircraft, para. 639; and China – Raw Materials,\npara. 219. (emphasis original)\n301 Appellate Body Report, Australia – Apples, para. 417 (quoting Appellate Body Report, EC – Selected\nCustoms Matters, para. 132). See also Appellate Body Report, Guatemala – Cement I, para. 69.\n302 European Union's first request for a preliminary ruling, para. 42. (emphasis added) See also ibid.\npara. 4.\n303 We note that a similar approach has been followed in previous disputes. (See, e.g. Panel Report, US\n– Carbon Steel, paras. 8.6-8.12; and Appellate Body Report, US – Carbon Steel, para. 171).\n304 Appellate Body Reports, Argentina – Import Measures, para. 5.9.\n305 Appellate Body Report, US – Upland Cotton, para. 293.\n306 Appellate Body Reports, Argentina – Import Measures, para. 5.12 (quoting Appellate Body Report,\nIndia – Patents (US), para. 94).\n307 Appellate Body Reports, Argentina – Import Measures, para. 5.12.\n308 Appellate Body Reports, Argentina – Import Measures, para. 5.12. (footnote omitted)\n309 Appellate Body Report, US – Zeroing (Japan), para. 95.\n310 Appellate Body Reports, Argentina – Import Measures, para. 5.12.\n\nidentified in the panel request may be found to fall outside the panel's terms of reference if it is\n\"separate and legally distinct\" from the measures identified in the consultations request.311\n7.35. Similarly, it is well -settled that a complaining party may \"not expand the scope of the\ndispute\"312 or change the \"essence\" of that dispute in its panel request. 313 According to the\nAppellate Body, \"when a party alleges that a panel reque st has impermissibly expanded the scope\nof the dispute or changed its essence, ascertaining whether this is so involves scrutinizing the\nextent to which the identified measure at issue and/or the legal claims have evolved or changed\nfrom the consultations request to the panel request \".314 The determination of whether the\nidentification of specific measures in the panel request \"expand[s] the scope\" or modifies the\n\"essence\" of the dispute must be made on a case-by-case basis.315\n7.36. With these observations in mind, we now turn to the question put before the Panel by the\nEuropean Union, namely whether the TEN -E measure was sufficiently identified in Russia's\nconsultations request or whether the inclusion of this measure in Section III of Russia's panel\nrequest \"expand[s] the scope\" or changes the \"essence\" of the dispute. We first examine the panel\nrequest, and then turn to the consultations request.\n7.37. Section III of Russia's panel request includes a narrative part, which describes the TEN -E\nmeasure as follows:\nThe EU h as also enacted regulations establishing \"trans -European energy\ninfrastructure priority corridors and areas,\" including four spec ific \"priority gas\ncorridors.\" The principal regulation, Regulation (EU) No 347/2013, is referred to as the\n\"TEN-E regulation.\" It sets forth criteria for identifying \"projects of common interest\"\nor \"PCIs,\" which are accorded priority status, including within priority gas corridors.\nThe TEN -E regulation provides for the implementation of PCIs, including those\nconcerning natural gas, to be facilitated by \"streamlined and efficient permit granting\nprocedures,\" \"improved regulatory treatmen t\" and EU financial assistance. In\nOctober 2013, the Commission issued an amendment to the TEN -E regulation settin g\nout the initial list of PCIs. These include a number of projects that promote and\nfacilitate the production and transportation of domestic natural gas, as well as the\nimportation and transportation of gas from various third -countries, including\nnumerous LNG projects. However, the list of PCIs excludes any project designed to\nfacilitate the importation or transportat ion of natural gas from Russia. The Russian\nFederation is not aware of any such projects currently under consideration for\ndesignation as a PCI.316\n7.38. Hereafter, Russia's panel re quest lists, as legal instruments through which the TEN -E\nmeasure is enacted and implemented:\nDirective 2009/73/EC [the Directive];\nRegulation (EC) No 715/2009;\nRegulation (EU) No 347/2013 [the TEN-E Regulation];\nCommission Delegated Regulation (EU) No 1391/2013; and\nRegulation (EU) No 1316/2013 of the European Parliament and of the Council of 11\nDecember 2013 establishing the Connecting Europe Facility, amending Regulation\n(EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010,\nOJ L 348, 20.12.2013.\n\n311 Appellate Body Reports, Argentina – Import Measures, para. 5.13.\n312 Appellate Body Report, US – Upland Cotton, para. 293.\n313 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 137-138.\n314 Appellate Body Reports, Argentina – Import Measures, para. 5.13.\n315 Appellate Body Report, US – Shrimp (Thailand) / US – Customs Bond Directive, para. 293.\n316 Russia's panel request, p. 8. (footnote omitted)\n\nas well as any amendments or extensions, any replacement measures, any renewal\nmeasures, any implementing measures, and other related measures of the\nforegoing.317\n7.39. Russia's consultations request does not include separate sections but consists of a narrative\npart, which provides a general description of the measures at issue, namely:\n[C]ertain restrictions and requirements maintained by the EU and implemented within\nits territory by the EU and its Member States, including Croatia, Hungary and\nLithuania, through the so -called \"Third Energy Package\" Directives and Regulations,\nimplementing legislation and decisions of the EU and its Member States and the\nmeasures resulting from participation in the Tr eaty establishing the Energy\nCommunity (hereinafter referred to as \"Third Energy Package\"), and pertaining to, in\nparticular, the unbundling of vertically -integrated undertakings involved in the\nproduction, supply, and transmission of natural gas or electr icity, the discriminatory\ncertification requirements in relation to third countries, and the requirements in\nrespect of granting of access to natural gas and electricity network capacity by\ntransmission service operators.318\n7.40. This is followed by more detailed descriptions of measures that \"[i]n particular, though not\nexclusively …, in the view of the Russian Federation, constitute an infringement\" 319, and a list of\n\"instruments through which the EU and its Member States maintain the above measures\ninclud[ing], but … not limited to\" 36 legal instruments . Three of these 36 legal instruments are\nalso listed in Section III of Russia's panel request, namely the Directive, Regulation (EC)\nNo. 715/2009, and the TEN-E Regulation.320 Russia's consultations request goes on to list:\n[A]ny amendments, supplements, extensions, replacement measures, renewal\nmeasures, related measures, or implementing measures; as well as all other\nimplementing measures of or decisions taken under \"Third Energy Package\" and\nadopted by the EU Member States that have not been identified in the present request\nand for the identification of which the Russian Federation requests the assistance of\nthe European Commission during the consultations, or any such measures referred to\nby either party during the course of the consultations.321\n7.41. The European Union argues that the consultations request makes no reference to the TEN -E\nmeasure. In this regard, the European Union submits that the TEN -E measure does not fall within\nany of the categories of measures menti oned in the consultations request's general description of\nthe measures at issue and that this measure is not part of the Third Energy Package. 322 In the\nEuropean Union's view, the \"mere listing\" of the TEN -E Regulation in Russia's consultations\nrequest, without further specification, is not sufficient to identify the TEN-E measure.323\n7.42. Russia argues that the express reference to the TEN -E Regulation in its consultations\nrequest should be considered sufficient to have identified the TEN -E measure. 324 Russia also\nargues the TEN -E measure is not \"separate and legally distinct\" from the Third Energy Package\nand that the broad scope of the consultations request demonstrates that Russia intended to\nidentify a range of measures related to the energy sector. 325 Furthermore, Russia submits that the\nparties discussed the relevant aspects of the TEN -E measure during their second round of\nconsultations, which, in Russia's view, supports its position that this measure is identified in its\nconsultations request.326\n7.43. In our view, the arguments of the parties raise three issues: (a) whether our assessment of\nthe scope of Russia's consultations request should take into account what was actually discussed\n\n317 Russia's panel request, pp. 8-9.\n318 Russia's consultations request, p. 1.\n319 Russia's consultations request, p. 1.\n320 Russia's consultations request, pp. 2-4.\n321 Russia's consultations request, p. 5.\n322 European Union's first request for a preliminary ruling, paras. 34-35.\n323 European Union's first request for a preliminary ruling, para. 38.\n324 Russia's response to the European Union's first request for a preliminary ruling, paras. 11 and 17.\n325 Russia's response to the European Union's first request for a preliminary ruling, para. 16.\n326 Russia's response to the European Union's first request for a preliminary ruling, para. 9 and fn 21.\n\namong the parties during their consultations; (b) whether the listi ng of the TEN-E Regulation in\nRussia's consultations request is sufficient to identify the TEN -E measure in Section III of Russia's\npanel request; and (c) whether the lack of a description of the TEN-E measure in the narrative part\nof Russia's consultations request entails that this measure is not sufficiently identified.\n7.44. We begin with the issue of whether the actual discussions among the parties during their\nconsultations should impact our assessment of the scope of Russia's consultations request. In this\nregard, we have difficulties understanding Russia's position that the Appellate Body \"has yet to\nrule definit ively on this issue\". 327 In our view, the Appellate Body was explicit in US – Upland\nCotton, when finding that panels should limit their analysis to the written consultations request\nand should not consider what took place during the consultations. In particular, we note that,\naccording to the Appellate Body:\nExamining what took place in the consultations would seem contrary to Article 4.6 of\nthe DSU, which provides that \"[c]onsultations shall be confidential, and without\nprejudice to the rights of any Member in any further proceedings.\" Moreover, it would\nseem at odds with the requirements in Article 4.4 of the DSU that the request for\nconsultations be made in writing and that it be notified to the DSB. In addition, there\nis no public record of what actually transpires during consultations and parties will\noften disagree about what, precisely, was discussed.328\n7.45. We fully concur with this reasoning by the A ppellate Body. In particular, we consider that\nthe confidential character of the consultations and the lack of official record would make it very\ndifficult, if not impossible, for a panel to establish objectively, what the parties said – or did not\nsay – during their consultations. Therefore, we shall not take into consideration what was\ndiscussed by the parties during the consultations held pursuant to Article 4 of the DSU in\ndetermining whether the TEN-E measure in Section III of Russia's panel request is properly within\nthe Panel's terms of reference.\n7.46. With respect to the two other issues raised by the parties' arguments – whether the listing\nof the TEN -E Regulation in Russia's consultations request is sufficient to identify the TEN -E\nmeasure in section III of Russia's panel request and whether the lack of a description of the TEN -E\nmeasure in the narrative part of Russia's consultations request entails that this measure is not\nsufficiently identified – we note that these relate to different elements of Ru ssia's consultations\nrequest, namely its list of legal instruments and its narrative or descriptive part. While we find it\nuseful to address the issues raised by the parties, as they relate to a particular element in Russia's\nconsultations request, we wish to emphasize that our ultimate decision concerning the issue of\nwhether the TEN -E measure was sufficiently identified in Russia's consultations request will be\nbased on a holistic reading of the relevant parts of all elements in Russia's consultations request.\n7.47. Having set out our general approach, we turn now to the issue of whether the listing of the\nTEN-E Regulation in Russia's consultations request is sufficient to identify the TEN -E measure in\nSection III of the panel request.\n7.48. In addressing this issue, we find it useful to examine the content of the TEN-E Regulation\nand compare this with the description of the TEN -E measure in Section III of Russia's panel\nrequest.\n7.49. We note that, pursuant to its title, the TEN -E Regulation contains \"guidelines for trans -\nEuropean energy infrastructure\". Pursuant to its Article 1 (\"Subject matter and scope\"), this\nRegulation \"lays down guidelines for the timely development and interoperability of priority\ncorridors and areas of trans -European energy infrastructure\" 329 and more particularly \"addresses\nthe identification of projects of common interest\" 330, \"facilitates the timely implementation of\nprojects of common interest by streamlining, coordinating more closely, and accelerating permit\ngranting processes and by enhancing pu blic participation\"331, \"provides rules and guidance for the\n\n327 Russia's response to the European Union's first request for a preliminary ruling, fn 21.\n328 Appellate Body Report, US – Upland Cotton, para. 287.\n329 TEN-E Regulation, (Exhibit EU-4), Article 1.1.\n330 TEN-E Regulation, (Exhibit EU-4), Article 1.2(a).\n331 TEN-E Regulation, (Exhibit EU-4), Article 1.2(b).\n\ncross-border allocation of costs and risk-related incentives for projects of common interest\"332, and\n\"determines the conditions for eligibility of projects of common interest for Union financial\nassistance\".333\n7.50. In accordance with the subject matter and scope set out in Article 1, the remainder of the\nTEN-E Regulation is focused on projects of common interest . Chapter II is entitled \"Projects of\ncommon interest\" and sets out procedures to establish lists of projects of common interest, criteria\nfor such projects, and rules on implementation and monitoring of those projects . Chapter III deals\nwith the granting of permits and public participation for projects of common interest . Chapter IV\naddresses the r egulatory treatment of projects of common interest . Chapter V concerns EU\nfinancial assistance for projects of common interest.\n7.51. The TEN -E Regulation thus appears to cover the very aspects described in Section III of\nRussia's panel request regarding the TEN -E measure and the projects of common interest, in\nparticular, the establishment of \"trans -European energy infrastructure priority corridors and\nareas\", \"criteria for identifying 'projects of common interest'\", and the facilitation of such by\n\"'streamlined and efficient permit granting procedures' , 'improved regulatory treatment' and EU\nfinancial assistance\".334\n7.52. In addition to these aspects, we note that Russia's description of the TEN -E measure in\nSection III of its panel request also covers the first list o f projects of common interest, contained\nin Regulation (EU) No. 1391/2013.335 As pointed out by the European Union, this instrument is not\nlisted in Russia's consultations request.336\n7.53. In this regard, however, we note that the first list of projects of common interest was\nadopted pursuant to the TEN-E Regulation337 and constitutes an amendment to this Regulation,\nwhich consists, in its entirety, of an annex with a list of projects of common interest to be added to\nthe TEN-E Regulation.338 The European Union does no t appear to dispute this. 339 Furthermore, we\nnote that Russia's consultations request, following its reference to the TEN -E Regulation, also\nrefers to \"any amendments, supplements, extensions, replacement measures, renewal measures,\nrelated measures, or impl ementing measures\".340 We consider, therefore, that the content of the\nTEN-E measure described in Section III of Russia's panel request, including the first list of projects\nof common interest 341, is covered by the references in the consultations request to the TEN -E\nRegulation and to \"amendments\" and \"supplements\" hereto.342\n\n332 TEN-E Regulation, (Exhibit EU-4), Article 1.2(c).\n333 TEN-E Regulation, (Exhibit EU-4), Article 1.2(d).\n334 Russia's panel request, p. 8. See also para. 7.37 above.\n335 Russia's panel request, p. 8.\n336 European Union's first request for a preliminary ruling, para. 40.\n337 Regulation (EU) No. 1391/2013, (Exhibit EU-3), preamble.\n338 Regulation (EU) No. 1391/2013, (Exhibit EU-3), Article 1. See also Russia's response to the European\nUnion's first request for a preliminary ruling, para. 18.\n339 European Union's first request for a preliminary ruling, para. 40. In this regard, the European Union\nnotes that \"Regulation 1391/2013 supplements Regulation 347/2013 by adding an annex setting out the initial\nlist of PCIs.\" (Ibid.)\n340 Russia's consultations request, p. 5. (emphasis added)\n341 In response to a question by the Panel, Russia has clarified that the TEN-E measure consists of the\nTEN-E Regulation and the first and second lists of projects of common interest, added to that Regulation\npursuant to Regulation (EU) No. 1391/2013 and Regulation (EU) No. 2016/89. (Russia's response to Panel\nquestion No. 5, paras. 52-53). We note that the second list of projects of common interest, contained in\nRegulation (EU) No. 2016/89, had not been adopted at the time of Russia's consultations or panel requests and\nis therefore not listed in either of those. The European Union has not raised any terms of reference issue in this\nregard. In any event, we recall that, similarly to Russia's consultations request, Russia's panel request refers to\n\"any amendments or extensions, any replacement measures, any renewal measures, any implementing\nmeasures, and other related measures of the foregoing\" following its listing of the TEN-E Regulation. (Russia's\npanel request, p. 9). (emphasis added) As with the first list of projects of common interest, the second list of\nprojects of common interest was adopted pursuant to the TEN-E Regulation and constitutes an amendment to\nthis Regulation, which replaces parts of the annex containing the list of projects of common interest.\n(Regulation (EU) No. 2016/89, (Exhibit RUS-2), Article 1). For this reason, we believe that the second list of\nprojects of common interest is also within our terms of reference. (See Appellate Body Report, US – Zeroing\n(Japan) (Article 21.5 – Japan), paras. 112 and 116 for a similar approach).\n342 As pointed out by the European Union, Section III of Russia's panel request also lists another legal\ninstrument, namely Regulation (EU) No. 1316/2013, which is not listed in Russia's consultations request.\n\n7.54. Nonetheless, the European Union does not consider the listing of the TEN-E Regulation in\nthe consultations request sufficient because that Regulation is a \"multipurpose legal vehicle\"\nwhich, in addition to laying down guidelines for projects of common inter est, amends three pre -\nexisting Regulations that are listed in the consultations request but, in the European Union's view,\nare unrelated to projects of common interest.343 According to the European Union, it was therefore\nreasonable to assume that the TEN-E Regulation had been included in the panel request \"only to\nthe extent that it amends Regulations 713/2009, 714/2009 and 715/2009 and not in respect of its\nprovisions concerning the PCIs\".344\n7.55. We have difficulties accepting this argument. The amendments to Regulation (EC)\nNo. 713/2009, Regulation (EC) No. 714/2009 and Regulation (EC) No. 715/2009, enacted by the\nTEN-E Regulation, appear to concern only projects of common interest. 345 In our vie w, the fact\nthat the TEN -E Regulation introduces certain amendments, which are exclusively related to\nprojects of common interest, to other R egulations contained in the consultations request could not\nreasonably lead the European Union to believe that the TEN-E Regulation was listed for purposes\nother than to identify the TEN -E measure and its provisions concerning the projects of common\ninterest.\n7.56. Bearing in mind that the TEN-E Regulation, as amended, covers the aspects of the TEN -E\nmeasure described in Sec tion III of Russia's panel request and does not cover or relate to any\nother measures or instruments except to the extent of amending such in a manner exclusively\nrelated to projects of common interest, the listing of the TEN-E Regulation in the consultati ons\nrequest should have been sufficient to alert the European Union of Russia's intention to seek\nconsultations concerning the TEN-E measure.\n7.57. We turn now to the question of whether, as argued by the European Union, the fact that the\nnarrative part of Russi a's consultations request does not describe the TEN -E measure entails that\nthis measure should not be considered as sufficiently identified in that request.\n7.58. When examining Russia's consultations and panel requests, respectively, it is clear that the\nlatter contains a more detailed description of the TEN -E measure, not found in the consultations\nrequest.\n\n(European Union's first request for a preliminary ruling, para. 41). Russia has not relied on this legal\ninstrument further in its challenge against the TEN-E measure and has clarified that this instrument does not\nform part of the challenged measure. (See, e.g. Russia's response to Panel question No. 5, paras. 52-53). As\nexplained in section 7.2.1.2 above concerning the capacity allocation measures, we do not consider it relevant\nor appropriate to address in further detail instruments that Russia is no longer challenging in these\nproceedings. Importantly, the question before us is not whether Russia's decision not to challenge Regulation\n(EU) No. 1316/2013 served to \"cure\" any potential deficiencies in its consultations request. Rather, we are\nconcluding that it is not necessary for us to address this legal instrument in further detail following the\nclarification, provided by Russia in its written submissions and responses to questions, that this instrument\ndoes not form part of the challenged measure.\n343 European Union's first request for a preliminary ruling, para. 38.\n344 European Union's first request for a preliminary ruling, para. 39.\n345 These amendments are the following: (a) With respect to Regulation (EC) No. 713/2009, Article 20\nof the TEN-E Regulation amends Article 22(1) in order to enable the Agency for the Cooperation of Energy\nRegulators, established under this latter regulation, to collect fees for decisions related to cross border cost\nallocation for projects of common interest; (b) With respect to Regulation (EC) No. 714/2009, Article 21 of the\nTEN-E Regulation amends: (i) Articles 8(3)(a) and 10(a) of Regulation (EC) No. 714/2009 by elaborating the\ncontent of the common network operation tools to ensure coordination of network operations and adding that\nUnion aspects of network planning under the TEN-E Regulation shall be included, if appropriate, in national\ninvestment plans and that it shall be subject to a cost benefit analysis for projects of common interest; (ii)\nArticle 11 of Regulation (EC) No. 714/2009 by adding that the costs in the cost-benefit analysis for projects of\ncommon interest shall be borne by TSOs; (iii) Article 18 of Regulation (EC) No. 714/2009 by allowing the\nCommission to adopt guidelines on the implementation of operational coordination between TSOs at the EU\nlevel; and (iv) Article 23 of Regulation (EC) No. 714/2009 by requiring the rules and general principles\nconcerning mechanisms for control by EU member States of the Commission's exercise of implementing\npowers to apply in certain circumstances; and (c) With respect to the Regulation (EC) No. 715/2009, Article 22\nof the TEN-E Regulation amends: (i) Article 8(10)(a) of Regulation (EC) No. 715/2009 by adding that Union\naspects of network planning under the TEN-E Regulation shall be included, if appropriate, in national\ninvestment plans and that it shall be subject to a cost benefit analysis for projects of common interest; and (ii)\nArticle 11 of Regulation (EC) No. 715/2009 by adding that the costs in the cost-benefit analysis for projects of\ncommon interest shall be borne by TSOs.\n\n7.59. As explained by the Appellate Body, however, a \" precise and exact identity between the\nspecific measures that were the subject of consultations and the specific measures identified in the\nrequest for the establishment of a panel\" is not required 346 because the difference in the language\nbetween Articles 4.4 and 6.2 of the DSU \"makes it clear that, in identifying the measure at issue,\ngreater specificity is required in a panel request than in a consultations request\".347\n7.60. For this reason, we do not con sider the mere inclusion of additional and more specific\nlanguage in Russia's panel request sufficient to conclude that it impermissibly expands the scope\nof the dispute. Instead, we recall that our assessment should focus on the extent to which the\nTEN-E measure has \"evolved\" from measures identified in the consultations request.348\n7.61. In this regard, we are not convinced by Russia's argument that the phrase \"measures …\npertaining to … the requirements in respect of granting of access to natural gas and electri city\nnetwork capacity by transmission service operators\" 349 in the narrative part of Russia's\nconsultations request \"implicates\" the TEN -E measure.350 The description of the TEN -E measure in\nSection III of Russia's panel request clarifies that this measure rel ates to the facilitation of\ninfrastructure promoting and facilitating the production, importation or transportation of natural\ngas.351 We do not consider that the TEN-E measure could properly be categorized as \"requirements\nin respect of granting of access to natural gas … network capacity\".352\n7.62. At the same time, we observe that the description provided in the narrative part of Russia's\nconsultations request contains various phrases indicating a broad coverage of measures. In\nparticular, the use of the expressions \"measures … pertaining to, in particular\" and \"[i]n particular,\nthough not exclusively , the following measures\" 353 plainly demonstrate that the various\ndescriptions of measures in the narrative part of Russia's consultations request were not\nexhaustive and should, in our view, have alerted the European Union to this fact.\n7.63. Furthermore, in arguing that the TEN -E measure was not described in the narrative part of\nRussia's consultations request, the European Union also points to the fact that this measure is not\npart of the Third Energy Package. 354 Russia responds that the TEN -E measure and the Third\nEnergy Package are not \"separate and legally distinct\", but \"share the same underlying legal\nauthorities and policy objectives\" and are \"integrated, legally and operationally\".355\n7.64. In this regard, we note that the European Union does not explain why it does not consider\nthe TEN-E measure a part of the Third Energy Package, nor does the European Union propose a\ndefinition of the Third Energy Package. At the same time, Russia states that \"Directive 2009/73/EC\nand Regulation 715/2009 constitute the TEP for gas\" 356, which could suggest that Russia does not\ndispute the factual accuracy of the European Union's position that the Third Energy Package may\nnot include the TEN-E measure.\n7.65. In any event, we do not consider it necessary to determine the exact content or scope of\nthe Third Energy Package in order to resolve the issue before us. In our view, it was clear from the\nlanguage used in Russia's consultations request that Russia sought consultations with respect to a\nbroad range of measures. In particular, we observe the reference to:\n\"Third Energy Package\" Directives and Regulations, implementing legislation and\ndecisions of the EU and its Member States and the measures resulting from\nparticipation in the Treaty establishing the Energy Community (hereinafter referred to\nas \"Third Energy Package\")[.]357\n\n346 Appellate Body Report, Brazil – Aircraft, para. 132. (emphasis original)\n347 Appellate Body Reports, Argentina – Import Measures, para. 5.9.\n348 Appellate Body Reports, Argentina – Import Measures, paras. 5.13 and 5.26-5.30.\n349 Russia's consultations request, p. 1.\n350 Russia's response to the European Union's first request for a preliminary ruling, para. 44.\n351 Russia's panel request, p. 8.\n352 Russia's consultations request, p. 1. (emphasis added)\n353 Russia's consultations request, p. 1. (emphasis added)\n354 European Union's first request for a preliminary ruling, para. 35.\n355 Russia's response to the European Union's first request for a preliminary ruling, paras. 35-36.\n356 Russia's response to the European Union's first request for a preliminary ruling, para. 17.\n357 Russia's consultations request, p. 1.\n\n7.66. In this passage of its consultations request, Russia thus identifies three groups of measures,\nto which it collectively refers as th e Third Energy Package, namely (a) Third Energy Package\nDirectives and Regulations; (b) implementing legislation and decisions; and (c) the measures\nresulting from participation in the Treaty establishing the Energy Community.\n7.67. Even if considering the Thir d Energy Package in a narrow sense, as covering only the\nDirective and Regulation (EC) No. 715/2009, we note that the TEN -E measure, and in particular\nthe TEN-E Regulation, establishes several explicit links with these instruments. More particularly,\nthe TEN-E Regulation amends Regulation (EC) No. 715/2009 and its purpose is stated as:\nDespite the fact that … Directive 2009/73/EC … provide[s] for an internal market in\nenergy, the market remains fragmented due to insufficient interconnections between\nnational energy networks and to the suboptimal utilisation of existing energy\ninfrastructure.358\n7.68. We further note that the TEN -E Regulation explicitly shares and adds to the definitions\nprovided for in the Directive and in Regulation (EC) No. 715/2009. 359 Moreover, the criteria for\nprojects of common interest, established pursuant to Article 4 of the TEN-E Regulation, refer to the\nobjectives of market integration, security of supply, and competition, which are echoed in the\nDirective.360 As noted by Russia, the Commission has itself stated that \"[t]he TEN -E Regulation\ncomplements the requirements of the Third Energy Package and facilitates investments with cross-\nborder impacts\".361\n7.69. Hence, it appears that the TEN -E measure shares the same po licy objectives as the\nDirective and, as argued by Russia, is integrated \"legally and operationally\" 362 with other\ninstruments, including the Directive and Regulation (EC) No. 715/2009. For this reason, it cannot,\nin our view, be considered \"separate and leg ally distinct\" from the two instruments comprising the\nThird Energy Package in a narrow sense, namely the Directive and Regulation (EC) No. 715/2009.\n7.70. In the above, we have considered both the list of legal instruments and the narrative part of\nRussia's consultations request as well as the parties' arguments as they pertain to these elements.\nWhen assessing the different elements of Russia's consultations request in a holistic manner, we\nare of the view that the TEN -E measure is sufficiently identified and t hat the inclusion of this\nmeasure in Section III of Russia's panel request does not impermissibly expand the scope of the\ndispute or change its essence.\n7.71. We wish to underline that further specification by Russia in its consultation s request would,\nin our v iew, have been useful, and that the listing of a legal instrument, without further\nspecification, may not in all circumstances suffice, in particular, if this legal instrument has a broad\nscope covering aspects other than the challenged measure. Having sai d this, we recall our finding\nthat the TEN -E Regulation and the amendments hereto cover the TEN -E measure described in\nSection III of Russia's panel request and does not cover or relate to any other measures or\ninstruments except to the extent of amending such in a manner exclusively related to projects of\ncommon interest.\n7.72. In light of this, we consider that the explicit listing of the TEN -E Regulation and\namendments hereto should have alerted the European Union to the fact that Russia was seeking\nconsultations with respect to the TEN -E measure. We do not believe that the identification of the\nTEN-E measure, provided by the listing of the TEN -E Regulation and amendments hereto, is\ninvalidated by the lack of an explicit description of this measure in the narr ative part of Russia's\nconsultations request, since the open -ended language of this part plainly informs the European\nUnion that the description is not meant to be exhaustive. Similarly, we recall that the language\n\n358 TEN-E Regulation, (Exhibit EU-4), Recital (8).\n359 TEN-E Regulation, (Exhibit EU-4), Article 2.\n360 Directive 2009/73/EC, (Exhibit EU-5), Recitals (22), (54) and (56); and TEN-E Regulation (Exhibit\nEU-4), Article 4(2)(b).\n361 Russia's response to the European Union's first request for a preliminary ruling, para. 35 (quoting\nCommission Staff Working Document Accompanying Commission Delegated Regulation (EU) No. 2016/89 of 18\nNovember 2015 amending Regulation (EU) No. 347/2013 of the European Parliament and of the Council as\nregards the Union list of projects of common interest, SWD(2015) 247 of 18.11.2015, (Exhibit RUS-8), p. 12).\n362 Russia's response to the European Union's first request for a preliminary ruling, para. 35.\n\nused in the narrative part of Russia's co nsultations request makes it clear that Russia is seeking\nconsultations with respect to a broad range of measures and that, in any event, the TEN -E\nRegulation cannot be considered \"separate and legally distinct\" from the instruments forming part\nof the Thi rd Energy Package in a narrow sense , namely the Di rective and Regulation (EC)\nNo. 715/2009.\n7.73. In conclusion, we are of the view that the TEN-E measure is sufficiently identified in Russia's\nconsultations request, and that the inclusion of this measure in Se ction III of Russia's panel\nrequest does not impermissibly expand the scope of the dispute or change its essence. We\ntherefore find that the matters contained in Section III of Russia's panel request are within our\nterms of reference.\n7.2.2 Second request for a preliminary ruling by the European Union\n7.2.2.1 Introduction\n7.74. The European Union submitted its second request for a p reliminary ruling on\n28 October 2016. That request primarily concerned Russia's response to Panel question No. 5, but\nalso included the initial ter ms of reference objections raised by the European Union in its first\nwritten submission.363\n7.75. In its response to Panel question No. 5, Russia replied to a request by the Panel to clarify\nthe scope and nature of certain of its claims following the first substa ntive meeting with the\nparties.364 Russia's response provided a brief description of each of its claims and references to the\nrelevant pages of its panel request identifying the challenged measures. 365 Russia included in its\nresponse multiple claims, some of which were further subdivided into sub-claims, numbering them\nClaim 1 through Claim 31.366\n7.76. The European Union argued that certain matters included by Russia in its response to Panel\nquestion No. 5 were not covered by its panel request and therefore fell outside the Panel's terms\nof reference.367 Russia agreed with the European Union that its claim under Article III:4 of the\nGATT 1994 against the third -country certification measure in the Directive , referred to in its\nresponse to Panel question No. 5 as Clai m 18 , fell outside the Panel's terms of reference and\nindicated that it would no longer pursue Claim 18 as part of these proceedings.368\n7.77. In light of Russia's statement, on 28 October 2016, the Panel communicated to the parties\nits decision not to consider t he European Union's terms of reference objection concerning Russia's\nClaim 18. As explained above in paragraph 1.14, o n 10 November 2016, the Panel issued its\npreliminary ruling containing conclusions on a number of the terms of reference objections covered\n\n363 European Union’s first written submission, paras. 421-422, 546-551, 553-556, 567-570, 578-581,\nand 617-618.\n364 Panel question No. 5.\n365 Russia's response to Panel question No. 5, paras. 23–53. In its response, Russia referred to certain\npage numbers of its panel request that did not coincide with the page numbers in Russia's panel request\n(WT/DS476/2). Russia subsequently explained that the discrepancy in page numbering stemmed from Russia's\nreliance on its panel request \"as originally submitted to the WTO Secretariat and circulated among the parties\",\nwhich, according to Russia, contained page numbers different from page numbers used in Russia's panel\nrequest contained in document WT/DS476/2. (Russia's comments on the European Union's comments on\nRussia's response to Panel question Nos. 5 and 17, fn 2). All references to Russia's panel request in this Report\nshould be understood to be references to document WT/DS476/2.\n366 These claim numbers are referred to in paragraph 3.2 above. For ease of reference, we refer to\n\"Claims\" with this numbering in this section.\n367 European Union's comments on Russia's response to Panel question Nos. 5 and 17.\n368 Russia's comments on the European Union's comments on Russia's response to Panel question Nos.\n5 and 17, para. 7. In its response to Panel question No. 5, Russia summarized its Claim 18 as follows:\nClaim 18 – GATT Article III:4 (National Treatment): Claim 18 is described in Section XVI of Russia’s\nFWS. It challenges the third-country certification measure \"as such,\" based on the underlying provisions of\nArticle 11 of the Directive. Moreover, Russia characterizes this as an instance of de jure discrimination because\nArticle 11 distinguishes between third-country and domestic applicants for certification based exclusively on\norigin. (Russia's response to Panel question No. 5, para. 44).\n\nby the European Union's second request for a preliminary ruling, while declining to rule at that\nstage in the proceedings on several of those objections.369\n7.78. Our analysis below is structured as follows. First, we provide the reasoning in support of the\nconclusions issued to the parties on 10 November 2016 . We then provide our decision, as well as\nthe reasoning in support of it, on the terms of reference objections on which we declined to rule at\nthat stage in the proceedings.\n7.2.2.2 Reasoning in support of the conclusions issued in the second preliminary ruling\n7.79. In the preliminary ruling issued to the parties on 10 November 2016, the Panel concluded\nthat the following claims by Russia fell outside the Panel's terms of reference: Claims 7, 9, and 11;\nalternative \"as applied\" Claims 29 through 31; Claim 16, as developed in paragraphs 449 through\n454 of Russia's first written submission; and Claim 27. 370 However, the Panel found t hat Russia's\nClaim 21 and its Claims 12 through 14 were within its terms of reference. The Panel did not\nconsider it necessary to address the European Union's concerns in relation to Russia's Claims 1\nthrough 3.\n7.80. In paragraph 1.5 of the preliminary ruling of 10 November 2016, we indicated that the more\ndetailed reasons in support of these conclusions would be provided no later than the date of the\nissuance of the Interim Report. Thus, in accordance with this indication, we provide reasoning in\nsupport of the conclusions contained in this preliminary ruling.\n7.2.2.2.1 Relevant legal provisions and general considerations of the Panel\n7.81. We recall that a panel's terms of reference are governed by the panel request, unless the\nparties agree otherwise. 371 This Panel was establi shed with standard terms of reference. 372\nTherefore, the scope of our review is limited to the examination of the \"matter\" referred to the\nDSB by Russia in its panel request.\n7.82. In order to constitute the \"matter referred to the DSB\" and thus form the basis of a panel's\nterms of reference, a panel request must identify the specific measures at issue and provide the\nlegal basis of the complaint, in accordance with Article 6.2 of the DSU. 373 Furthermore, by\nrequiring a panel request to adhere to certain threshold s tandards of specificity and clarity,\nArticle 6.2 serves the due process objective of notifying the parties and third parties of the nature\nof a complainant’s case in order to enable them to respond accordingly. 374 In US – Carbon Steel,\nthe Appellate Body explained that when faced with an issue relating to the scope of its terms of\n\n369 Our decision on the terms of reference objections on which we declined to rule in the preliminary\nruling of 10 November 2016, as well as the reasons supporting it, are provided in section 7.2.2.3 below.\n370 More detailed descriptions of these claims are provided below in the relevant parts of this section.\n371 Article 7.1 of the DSU. See also Appellate Body Reports, US – Carbon Steel, para. 124; and\nArgentina – Import Measures, para. 5.11.\n372 Document WT/DS476/3 in the relevant part states as follows:\n\n1. At its meeting on 20 July 2015, the Dispute Settlement Bo dy (DSB) established a panel\npursuant to the request of the Russian Federation in document WT/DS476/2, in accordance with\nArticle 6 of the DSU (WT/DSB/M/365).\n\n2. The Panel's terms of reference are the following:\n\n\"To examine, in the light of the relevant provisions of the covered agreements cited by\nthe parties to the dispute, the matter referred to the DSB by the Russian Federation in\ndocument WT/DS476/2 and to make such findings as will assist the DSB in making the\nrecommendations or in giving the rulings provided for in those agreements.\"\n373 Appellate Body Reports, Argentina – Import Measures, para. 5.11. Article 6.2 of the DSU provides as\nfollows:\nThe request for the establishment of a panel shall be made in writing. It shall indicate whether\nconsultations were held, identify the specific measures at issue and provide a brief summary of\nthe legal basis of the complaint sufficient to present the problem clearly. In case the applicant\nrequests the establishment of a panel with other than standard terms of r eference, the written\nrequest shall include the proposed text of special terms of reference.\n374 Appellate Body Reports, Argentina – Import Measures, paras. 5.11 and 5.39.\n\nreference, a panel must scrutinize carefully the panel request to ensure its compliance with both\nthe letter and the spirit of Article 6.2 of the DSU.375\n7.83. In Korea – Dairy, the Appellate Body identified four distinct requirements that a panel\nrequest must meet to comply with Article 6.2. Accordingly, the panel request must: (i) be in\nwriting; (ii) indicate whether consultations were held; (iii) identify the spec ific measures at issue;\nand (iv) provide a brief summary of the legal basis of the complaint sufficient to present the\n\"problem\" clearly.376\n7.84. As the Appellate Body clarified, a panel request's compliance with the requirements of\nArticle 6.2 of the DSU must be demonstrated on its face as it existed at the time of its filing. 377\nThus, any defects in the panel request cannot be \"cured\" by the subsequent submissions of the\nparties.378 However, the Appellate Body also observed that subsequent submissions, such as the\ncomplaining party's first written submission, may be consulted to the extent that they may confirm\nor clarify the meaning of the words used in the panel request.379\n7.85. We consider that, in the present dispute, Russia's panel request meets the first two\nrequirements of Article 6.2. The parties do not disagree that these two requirements are satisfied.\nTherefore, the rest of our analysis is focused on the compliance of Russia's panel request with the\nthird and fourth requirements of Article 6.2. We note that these two requirements are cumulative,\nwhich means that a panel request must satisfy both of them. Moreover, as the Appellate Body\nclarified, they are also distinct requirements that should not be conflated.380\n7.86. In the subsections below, we provide reasons in sup port of our conclusions contained in the\npreliminary ruling of 10 November 2016, as set out above. For ease of reference, the arguments of\nthe parties are summari zed in the subsections that address a particular objection or set of\nobjections. For analytical purposes, we have grouped and examined together the European Union's\nobjections that raise similar issues in respect of one or several claims by Russia.\n7.2.2.2.2 Russia's claims 1 through 3 against the unbundling measure in the national\nimplementing laws of Croatia, Hungary and Lithuania\n7.87. Russia's Claims 1 through 3 challenge the unbundling measures of Croatia, Hungary and\nLithuania under Article XVI(2)(e), (a) and (f), respectively. 381 The European Union expresses its\nconcern that, in its response to Panel question No. 5, Russia referred to the Directive as one of the\nrelevant legal instruments without having identified and connected it with Article XVI of the GATS\nin the panel request. 382 Russia has clarified that, in the context of its Claims 1 through 3, the\nunbundling measures of Croatia, Hungary and Lithuania are the main focus of Russia's market\naccess claims.383\n7.88. We recall that, on the basis of Russia's clarification, we found it unnecessary to rule on the\nEuropean Union's concern in the preliminary ruling of 10 N ovember 2016. We consider that\nRussia's clarification is sufficient to resolve the European Union's concern, and therefore, we do not\nprovide any further reasons for our decision here.\n\n375 Appellate Body Report, US – Carbon Steel, para. 126.\n376 Appellate Body Report, Korea – Dairy, para. 120.\n377 Appellate Body Reports, Argentina – Import Measures, para. 5.42.\n378 Appellate Body Reports, Argentina – Import Measures, para. 5.42 (referring to Appellate Body\nReport, US – Countervailing and Anti-Dumping Measures (China), para. 4.9).\n379 Appellate Body Reports, Argentina – Import Measures, para. 5.42 (referring to Appellate Body\nReports, US – Carbon Steel, para. 127; US – Countervailing and Anti-Dumping Measures (China), para. 4.9).\n380 Appellate Body Report, EC – Selected Customs Matters, para. 130. See also Appellate Body\nReport, Australia – Apples, paras. 417-421.\n381 Russia's response to Panel question No. 5, paras. 24–27.\n382 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 12.\n383 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, paras. 11–12. See also Russia's first written submission, paras. 141–230.\n\n7.2.2.2.3 Russia's claims 12 through 14 against the LNG and upstream pipeline\nnetworks measures\n7.89. Russia's Claim 12 challenges the LNG measure under Article I:1 of the GATT 1994.\nClaims 13 and 14 challenge the upstream pipeline networks measure under Articles I:1 and III:4\nof the GATT 1994, respectively. 384 The European Union contends th at Russia's panel request fails\nto identify and \"plainly connect\" the measures challenged by Claims 12 through 14 with\nArticles I:1 and III:4 of the GATT 1994. 385 The European Union explains that the identification of\nthe challenged measure is absent from th e second full paragraph of page 5 of the panel request\nreferred to by Russia in its response to Panel question No. 5. 386 Russia submits that its panel\nrequest plainly satisfies the requirements of Article 6.2 of the DSU with regard to its claims against\nboth the LNG measure under Article I:1 of the GATT 1994 and the upstream pipeline networks\nmeasure under Articles I:1 and III:4 of the GATT 1994.387\n7.90. We consider that, with regard to Claims 12, 13 and 14, the issue before us is more the\nprecise identification of the relevant part of Russia's panel request, rather than its actual\ncompliance with the requirements of Article 6.2 of the DSU. The relevant part of Russia's panel\nrequest reads as follows:\nFurthermore, the definition of \"transmission\" in the Directive expressly exempts\n\"upstream pipeline networks,\" which are defined separately. The Directive also defines\nthe functions of transmission and LNG as separate from the functions of natural gas\nproduction and supply. The unbundling provisions, in turn, apply on ly to the\ntransmission system and TSO, which must be separated from the production and\nsupply portions of the VIU. Domestic and third -country pipeline transport service\nsuppliers are thus exempt from the unbundling requirements with regard to their\nupstream pipeline networks and LNG facilities. As a result, contrary to the E U's\nobligations under Article I:1 of GATT 1994, natural gas originating in third -countries\nthat is transported and placed on the EU market through either of these types of\ninfrastructure is accorded an advantage, favor, privilege or immunity that is not\nimmediately and unconditionally accorded to natural gas originating in Russia, which\nis transported and placed on the market by pipeline transport service suppliers that\nare subject to the unbundling requirements. Such Russian -origin natural gas is also\naccorded less favorable treatment than domestic natural gas that is transported and\nplaced on the market through upstream pipeline networks, and possibly LNG facilities,\nin a manner inconsistent with Article III:4 of GATT 1994.388\n7.91. Having consulted the above -quoted paragraph, we are satisfied that Russia's panel request\nidentifies the specific measures at issue and provides a brief summary of the legal basis of the\ncomplaint in respect of Claims 12 through 14, in accordance with Article 6.2 of the DSU. We\ntherefore find that Claims 12 through 14 fall within our terms of reference.\n7.2.2.2.4 Russia's claim 16 against the third -country certification measure in the\nDirective\n7.92. Russia's Claim 16 challenges the third-country certification measure under Article II:1 of the\nGATS.389 When developing this claim in its first written submission, Russia argues that the third -\ncountry certification measure distinguishes between services and service suppliers from different\nthird countries.390\n7.93. The European Union objects to the manner in which Russia has developed Claim 16 in its\nfirst written submission, arguing that the difference in t reatment to which Russia refers in its first\nwritten submission constitutes a different \"prob lem\" to the one presented in Russia's panel\n\n384 Russia's response to Panel question No. 5, paras. 38–40.\n385 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 24.\n386 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 25.\n387 Russia's comments on the European Union's comments on Russia's response to Panel question Nos.5\nand 17, paras. 25–26.\n388 Russia's panel request, pp. 4-5.\n389 Russia's response to Panel question No. 5, para. 42.\n390 Russia's first written submission, paras. 449–454.\n\nrequest.391 The European Union adds that the claim described in Russia's panel request raises the\ncrucial issue of whether the difference in treatment invoked by Russia may be justified under\nArticle V of the GATS. 392 The European Union thus requests the Panel to find that Claim 16 is\noutside its terms of reference.393\n7.94. We note that Russia admits that the description of its Claim 16 \"varied\" in its first written\nsubmission from that of the panel request, but maintains, nonetheless, that the brief summary of\nthe legal basis of the complaint with respect to Claim 16 provided in the panel request complies\nwith the requirements of Article 6.2 of the DSU.394\n7.95. The European Union's objection regarding Claim 16 relates to Russia's compliance with the\nfourth requirement of Article 6.2 of the DSU – to provide a brief summary of the legal basis of the\ncomplaint sufficient to present the \"problem\" clearly. We understand that the nature of the\nEuropean Union's objection concerns the iss ue of whether Russia's Claim 16, as developed in its\nfirst written submission, \"matches\" the claim included in Russia's panel request.\n7.96. We recall that, in order to fall within a panel's terms of reference, a claim must be included\nin a panel request in acc ordance with Article 6.2 of the DSU. 395 The fourth requirement of Article\n6.2 concerns the specification of claims in a panel request, stipulating that \" [i]t shall … provide a\nbrief summary of the legal basis of the complaint sufficient to present the proble m clearly\".396 As\nobserved by the Appellate Body, even though the fourth requirement demands only a brief\nsummary of the legal basis of the complaint, the summary must be \"sufficient to present the\nproblem clearly\".397\n7.97. Thus, in our view, the requirement that the summary \"be sufficient to present the problem\nclearly\" sets the benchmark for the provision of \"a brief summary of the legal basis of the\ncomplaint\" in a panel request. We consider that this requirement is also indicative of the purpose\nthat providing \"a brief summary of the legal basis of the complaint\" serves. As can be inferred\nfrom the text of Article 6.2 of the DSU, the purpose of providing this \"summary\" is \"to present the\nproblem clearly\".\n7.98. We consider that the reference to \" the problem\" in Article 6.2 of the DSU indicates a\nparticular legal problem that a complainant is seeking to resolve through recourse to dispute\nsettlement.398 Therefore, in our view, once a complainant has set out in its panel request a brief\nsummary of the legal basis of the complaint that is \"sufficient\" to clea rly present a particular legal\nproblem, a complainant may not assert, in the course of the panel proceedings, a claim t hat\npresents a different legal problem . If a complainant were allowed to do so it would mean that a\npanel could consider claims not included in a panel request – a result that is, in our view,\nmanifestly incompatible with Articles 6.2 and 7.1 of the DSU and the due process objective they\nserve to protect.\n7.99. Bearing these considerations i n mind, we will first determine the problem presented by\nRussia's Claim 16, as developed in its first written submission, and then examin e whether it\npresents the same problem as the one presented in Russia's panel request.\n7.100. Having reviewed the relevant pa rt of Russia's first written submission, we consider that\nRussia's Claim 16, as developed in its first written submission, is sufficiently clear to present the\nfollowing problem : the third -country certification measure allegedly accords more favourable\ntreatment to the services and service suppliers of one group of third countries (those that have\nconcluded certain agreements with the European Union or a member State) than to the services\nand service suppliers of another group of third countries (those that have not concluded certain\n\n391 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 47.\n392 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 49.\n393 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 50.\n394 Russia's response to Panel question No. 17, para. 111; and Russia's comments on the European\nUnion's comments on Russia's response to Panel question Nos. 5 and 17, paras. 46–48.\n395 Appellate Body Reports, China – Raw Materials, para. 219 (referring to Appellate Body Report, US –\nCarbon Steel, para. 125).\n396 Article 6.2 of the DSU.\n397 Appellate Body Report, Korea – Dairy, para. 120.\n398 Article 6.2 of the DSU. (emphasis added)\n\nagreements with the European Union or a member State). 399 We further understand that Russia's\nreference to \"third countries\" in its first written submission means a reference exclusively to those\ncountries that are not EU member States (non-EU countries).400\n7.101. Having determined the problem presented by Russia's Claim 16, as developed in its first\nwritten submission, we proceed to examine whether a brief summary of the legal basis of the\ncomplaint provided in Russia's panel request p resents the same problem . We note that the\nrelevant part of Russia's panel request provides as follows:\nIn addition, pursuant to the Directive, requests for certification by a transmission\nsystem owner or TSO located in one EU Member State, but controlled by a person or\npersons of another Member State, are not subject to the third -country certification\nmeasure. The services and service suppliers of one EU Member State are thus treated\nmore favorably by other Member States than are the services and service sup pliers of\nother third-countries, including Russia. This is despite the fact that the EU and each\nsuch Member State is also a Member of the WTO. The Russian Federation considers\nthis measure to be inconsistent, de jure , with the EU Member States' obligatio ns\nunder Article II:1 of the GATS to accord immediately and unconditionally to services\nand service suppliers of each Member treatment no less favorable than that it accords\nto like services and service suppliers of any other country.401 (underlining added)\n7.102. We observe that the problem presented in Russia's panel request concerns the alleged\nmore favourable treatment accorded by an EU member State to the services and service suppliers\nof other EU member States than to services and service suppliers of third co untries, including\nRussia. In its panel request, Russia also refers to \"third countries\", explicitly distinguishing\nbetween \"Member States\" and \"third countries, including Russia\". We thus understand that the\nreference to \"third countries\" in Russia's panel request covers exclusively non-EU countries.\n7.103. Therefore, having carefully reviewed Russia's panel request and its first written\nsubmission, we consider that Russia's first written submission does not present the same problem\nas its panel request. The pro blem presented by Russia in its first written submission is based on\nthe alleged differential treatment of services and service suppliers originating from different non -\nEU countries. In contrast, as determined abov e, the problem presented by Russia in its panel\nrequest is based on the alleged differential treatment of, on the one hand, services and service\nsuppliers from EU member States and, on the other, services and service suppliers from non -EU\ncountries. Therefore, we consider that Claim 16, as develop ed by Russia in its first written\nsubmission402, falls outside our terms of reference.403\n7.104. However, we do not consider that R ussia's Claim 16, based on the problem presented in\nRussia's panel request, falls outside our terms of reference. In our view, Russia's panel request\nprovides a brief summary of the legal basis of the complaint in accordance with the fourth\nrequirement of Article 6.2 of the DSU, and therefore Russia is not precluded from advancing its\nClaim 16 within the limits of the problem presented in its panel request.\n\n399 Russia's first written submission, paras. 449-454.\n400 Russia distinguishes between the European Union member States and \"third countries\", including in\nthis latter group Iceland, Liechtenstein and Norway. See Russia's first written submission, paras. 450-451.\n401 Russia's panel request, p. 3.\n402 Russia's first written submission, paras. 449-454.\n403 We note that a similar approach was adopted by the panel in US – Carbon Steel (India), where the\npanel found that the arguments advanced by India in its first written submission concerning the issue of\ninitiation by the United States of an investigation despite insufficient evidence fell outside the panel's terms of\nreference because they did not relate to the claims presented in the panel request. The relevant claim\npresented in India's panel request concerned the alleged failure of the United States to initiate or conduct an\ninvestigation to determine the effects of new subsidies included in the administrative reviews. In its\nexamination of the terms of reference objection raised by the United States, the panel reasoned as follows:\nIn our view, by clearly and only stating that an investigation was not initiated or conducted,\nIndia's panel request precludes claims relating to the alleged initiation of an investigation, or the\nmanner in which an investigation was conducted, being included in the scope of the dispute.\n(Panel Report, US – Carbon Steel (India), paras. 1.34 and 1.10–1.43) (emphasis original)\n\n7.2.2.2.5 Russia's claim 21 against the infrastructure exemption measure\n7.105. Russia's Claim 21 challenges the infrastructure exemption measure under Article X:3(a) of\nthe GATT 1994. 404 The European Union requests the Panel to rule that Claim 21 falls outside its\nterms of reference because Russia challenges a new measure, not identified in its panel request,\nand brings a new claim against this non-identified measure.405 According to the European Union, in\nits response to Panel question No. 5, Russia chal lenges the infrastructure exemption measure in\ngeneral, whereas in the fourth full paragraph of page 4 of Russia's panel request, Russia only\nidentified the OPAL gas release requirement as the measure violating Article X:3(a) of the GATT\n1994.406\n7.106. In response to the European Union's objections regarding Claim 21, Russia submits that\nthree paragraphs of its panel request, read together, laid out the basis for this claim. 407 Russia\nexplains that the first two paragraphs introduce the infrastructure exemption meas ure challenged\nby this claim and the third contains the specific claim regarding Article X:3 of the GATT 1994. 408\nRussia further states that it identified the specific measure at issue as \"the infrastructure\nexemption provisions in the Directive and the SEP\".409\n7.107. We understand that the disagreement between the parties concerns the measure\nchallenged by Russia's Claim 21 and its identification in the panel request, under the third\nrequirement of Article 6.2 of the DSU.\n7.108. The Appellate Body has clarified that, unde r the third requirement of Article 6.2, the\nmeasures at issue must be identified with sufficient precision so that what is referred to\nadjudication by a panel may be discerned from the panel request.410\n7.109. The determination of whether a panel request is sufficiently precise requires scrutiny of the\npanel request \"as a whole, and on the basis of the language used\". 411 Accordingly, in our analysis,\nwe are required to scrutinize the text of Russia's panel request, the relevant part of which reads as\nfollows:\nThe Directive further requires Member States to ensure implementation of a system of\nthird-party access (\"TPA\") to the transmission and distribution system and LNG\nfacilities in the EU. 412 The Directive permits \"major new gas infrastructure, i.e.\ninterconnectors, LNG and storage facilities,\" to be exempted from the unbundling, TPA\nand other requirements under certain conditions. The same exemptions are also\npermitted for \"significant increases of capacity in existing infrastructure and to\nmodifications of such in frastructure which enable the development of new sources of\ngas supply.\" 413 The conditions to be examined in assessing such requests permit\nMember States and the Commission significant discretion in determining whether to\ngrant infrastructure exemptions.\nA number of infrastructure exemptions have been granted under these provisions of\nthe Directive. Similar exemptions remain in effect that were previously granted\n\n404 Russia's response to Panel question No. 5, para. 46.\n405 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 64-65.\n406 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 63.\n407 Russia identifies the following paragraphs: the last paragraph on the bottom of p. 3 of the panel\nrequest beginning with the words \"The Directive further requires\", the first full paragraph on p. 4 beginning\nwith the words \"A number of infrastructure exemptions have been granted\" and the paragraph on p. 4\nbeginning with the words \"In addition, requiring that the operator\". See Russia's comments on the European\nUnion's comments on Russia's response to Panel question Nos. 5 and 17, paras. 60–61.\n408 Russia's comments on the European Union's comments on Russia's response to Panel question Nos.\n5 and 17, paras. 61-62.\n409 Russia's comments on the European Union's comments on Russia's response to Panel question Nos.\n5 and 17, para. 63.\n410 Appellate Body Report, US – Continued Zeroing, para. 168.\n411 Appellate Body Reports, Argentina – Import Measures, para. 5.41 (quoting Appellate Body Report,\nEC and certain member States – Large Civil Aircraft, para. 641). See also Appellate Body Reports, China – HP-\nSSST (Japan) / China – HP-SSST (EU), para. 5.13 (quoting Appellate Body Report, EC – Fasteners (China),\npara. 562).\n412 (footnote original) Directive, Article 32.\n413 (footnote original) Directive, Article 36.\n\npursuant to comparable provisions of Directive 2003/55/EC, as part of the SEP. 414 A\nRussian pipel ine transport service supplier controls the Ostseepipeline-\nAnbindungsleitung (\"OPAL\") pipeline. After being categorized as an \"inter -connector,\"\nthe Germany authority granted the OPAL pipeline owners a limited infrastructure\nexemption for capacity used to transport natural gas from Griefswald, where gas\nenters Germany from the Nordstream Pipeline (\"Nordstream\"), to Brandov, where gas\nexits Germany and enters the Czech Republic. However, the Commission imposed a\n50 percent cap on the ability of the Russian supplier operating the OPAL pipeline,\ndescribed as a \"dominant undertaking,\" to acquire exit capacity at the Czech border.\nThe Russian supplier may exceed this cap only by implementing a \"gas release\"\nprogram and selling 3 billion cubic meters (\"bcm\") of its gas annually at a\ngovernment-set, fixed price to competing gas suppliers on the Czech market,\nregardless of what amount of additional capacity is booked by the Russian supplier.\nNo similar gas release requirement was imposed in decisions granting infr astructure\nexemptions concerning pipelines defined as interconnectors and controlled by other\nthird-country suppliers of natural gas and pipeline transport services.\n…\nIn addition, requiring that the operator of the OPAL pipeline adopt the 3 bcm gas\nrelease program has a limiting effect on the volume of Russian gas being imported\ninto the EU market. The measure thus maintains or institutes a de facto restriction on\nimportation, contrary to the requirements of Article XI:1 of GATT 1994. The Russian\nFederation also considers that the OPAL gas release requirement also violates Article\nX:3(a) of GATT 1994. Specifically, by imposing the 3 bcm gas release requirement\nunder the conditions described above only on imported Russian gas, but not third -\ncountry gas tra nsported through pipelines subject to other exemption decisions, the\nEU has failed to administer the infrastructure exemption provisions in the Directive\nand the SEP in a uniform, impartial and reasonable manner, including with regard to\nthe sale, distribution and transportation of natural gas.415\n7.110. We observe that, in the first and second paragraphs of the panel request quoted above,\nRussia describes the provisions of the Directive, as well as the earlier Directive 2003/55/EC,\npermitting infrastructure exemptions. In the second paragraph quoted above, Russia describes the\ninfrastructure exemption granted to OPAL, including the 50% capacity cap and the 3bcm/year gas\nrelease requirement. The third paragraph connects the alleged administration of the infrastructu re\nexemption provisions of both Directives, referring explicitly to both the 50% capacity cap and the\n3bcm/year gas release requirement in the OPAL exemption decision, with the alleged violation of\nArticle X:3(a) of the GATT 1994. Therefore, we consider th at the third paragraph of the panel\nrequest quoted above, when read in the context of the preceding two paragraphs, identifies the\nspecific measure challenged by Russia's Claim 21 and sets the scope of this challenge.416\n7.111. Thus, on the basis of the analysis c onducted, we conclude that Russia's panel request\ncomplies with the third requirement of Article 6.2 of the DSU with respect to its Claim 21.\nConsequently, we find that Russia's Claim 21, as described in the relevant part of its panel\nrequest, falls within our terms of reference.\n7.2.2.2.6 Russia's claim 27 against the infrastructure exemption/upstream pipeline\nnetworks measures\n7.112. In its response to Panel question No. 5, Russia explains that its Claim 27 challenges, under\nArticle II:1 of the GATS, the \"implementation of the infrastructure exemption measure to deny the\n\n414 (footnote original) Directive 2003/55/EC of the European Parliament and of the Council of 26 June\n2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC, Article\n22, OJ L 176, 15.7.2003, pp. 57-78 (\"Directive 2003/55/EC\").\n415 Russia's panel request, pp. 3–4.\n416 As additionally clarified by the Panel in response to the European Union's further concerns raised\nafter the issuance of the preliminary ruling of 10 November 2016. (Communication by the Panel of 9 December\n2016, pp. 1-2).\n\nNEL exemption and impose restrictive conditions on the OPAL exemption, while the Directive\nautomatically exempts UPNs from the unbundling, TPA and tariff regulation requirements\".417\n7.113. The European Union contends that Russia is thus challenging a new measure not identified\nin the panel request. 418 In the European Union's view, Russia's claim is directed against the\nimplementation of the provisions in the Directive relating to upstream pipeline networks. 419 The\nEuropean Union points out that pages 4 and 5 of the panel request, referred to by Russia, discuss\nthe infrastructure exemption decisions, but do not discuss the upstream pipeline networks\nprovisions in the Directive. 420 The European Union also submits that the panel request does not\nprovide a plain connection between the upstream pipeline networks provisions in the Directive and\nArticle II:1 of the GATS. 421 Consequently, for the European Union, Claim 27 is a new claim not\npresented in the panel request.422 The European Union thus requests us to rule that Claim 27 falls\noutside our terms of reference.423\n7.114. Russia responds to the European Union's arguments that the third full paragraph on page 4\nof the panel request describes the infrastructure exemption measure as well as the fact that both\nNEL and OPAL were treated less favourably than other infrastructure projects that were granted\nexemptions.424 Russia explains that, in this paragraph, Russia did not restrict its description of this\nclaim to apply only to pipelines (or LNG facilities) granted exemptions pursuant to the\ninfrastructure exemption measure.425\n7.115. Russia also notes that, in the last paragraph on page 4 of the panel request, it described\nthe automatic exemption granted under the Directive to upstream pipeline netwo rks.426 Russia\nthus submits that, having already discussed the differential treatment accorded under the\nDirective to NEL and OPAL earlier on page 4, in the last paragraph on page 4 of the panel request,\nit intended to include a separate claim (Claim 27) con necting the denial of the NEL exemption and\nthe more restrictive OPAL exemption to the automatic exemptions granted to upstream pipeline\nnetworks under the Directive.427\n7.116. We understand that the European Union's objections concerning Claim 27 raise two issues :\n(a) whether Russia's panel request identifies the specific measure(s) challenged by this claim, in\naccordance with the third requirement of Article 6.2 of the DSU; and (b) whether Russia's panel\nrequest provides a brief summary of the legal basis of the complaint sufficient to present the\n\"problem\" clearly, in accordance with the fourth requirement of Article 6.2 of the DSU.\n7.117. In considering whether Russia's panel request complies with the third requirement of\nArticle 6.2 in respect of Claim 27, we note that the \"specific measures at issue\" to be identified in a\npanel request is the object of the challenge, namely, the measures that are alleged to be causing\nthe violation of an obligation contained in a covered agreement. 428 In other wo rds, the \"measure\nat issue is what is being challenged by the complaining Member\".429\n\n417 Russia's response to Panel question No. 5, para. 50.\n418 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 66.\n419 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 66.\n420 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 66.\n421 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 67.\n422 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 67.\n423 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 68.\n424 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 67.\n425 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 67.\n426 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 68.\n427 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 68.\n428 Appellate Body Reports, Argentina – Import Measures, para. 5.40 (quoting Appellate Body Report,\n429 Appellate Body Report, EC – Selected Customs Matters, para. 130. (emphasis original)\n\n7.118. From Russia's response to Panel question No. 5, we understand that its Claim 27\nchallenges the infrastructure exemption measure. 430 At the same time, we note that, in its\nresponse to Panel question No. 4, Russia states that it included a claim under Article II:1 of the\nGATS \"alleging that the UPN measure provides Russian pipeline transport service suppliers that\nsupply their services via NEL and OPAL less favourable treatment than like services and service\nsuppliers of other Members, whose services are supplied via UPNs\". 431 Thus, from Russia's\nresponse to Panel question No. 4, it would appear that its Claim 27 challenges the upstream\npipeline networks measure.\n7.119. Even though we would welcome and expect more clarity from the complaining party\nregarding the measures it challenges, we do not consider it necessary, nor do we find it fruitful, to\nresolve which measure is challenged by Russia's Claim 27, as summarized in its response to Panel\nquestion No. 5. We note that Russia's panel request identifies both the infrastructure exemption\nmeasure and the upstream pipeline networks measure. The relevant part s of Russia's panel\nrequest read as follows:\nThe Russian Federation considers that, contrary to its obligations under GATS Article\nII:1 in the case of both the OPAL and NEL decisions, the EU accorded Russian services\nand service suppliers less favorable treatment than it accorded to like services and\nservice suppliers of other third -countries pursuant to relevant decisions granting\nexemptions to those suppliers. As a result of these measures, natural gas originating\nin Russia is not accorded immediately and unconditionally any advantage, favor,\nprivilege or immunity granted to natural gas originating in certain third -countries,\ncontrary to the EU's obligations under Article I:1 of GATT 1994.\n…\nFurthermore, the definition of \"transmission\" in the Directive expressly exempts\n\"upstream pipeline networks,\" which are defined separately. The Directive also defines\nthe functions of transmission and LNG as separate from the functions of natural gas\nproduction and supply. The unbundling provisions, in turn, apply only to the\ntransmission system and TSO, wh ich must be separated from the production and\nsupply portions of the VIU. Domestic and third -country pipeline transport service\nsuppliers are thus exempt from the unbundling requirements with regard to their\nupstream pipeline networks and LNG facilities. As a result, contrary to the EU's\nobligations under Article I:1 of GATT 1994, natural gas originating in third -countries\nthat is transported and placed on the EU market through either of these types of\ninfrastructure is accorded an advantage, favor, privil ege or immunity that is not\nimmediately and unconditionally accorded to natural gas originating in Russia, which\nis transported and placed on the market by pipeline transport service suppliers that\nare subject to the unbundling requirements. Such Russian -origin natural gas is also\naccorded less favorable treatment than domestic natural gas that is transported and\nplaced on the market through upstream pipeline networks, and possibly LNG facilities,\nin a manner inconsistent with Article III:4 of GATT 1994.432\n7.120. The first paragraph quoted above identifies the implementation of the infrastructure\nexemption measure in the decisions regarding NEL and OPAL, while the second paragraph\nidentifies the upstream pipeline networks measure. We are thus satisfied that Russia' s panel\nrequest complies with the third requirement of Article 6.2, regardless of whether Russia challenges\nthe infrastructure exemption measure or the upstream pipeline networks measure. We now turn to\nexamine whether Russia's panel request complies with the fourth requirement of Article 6.2.\n7.121. We recall that, as clarified by the Appellate Body in the context of the fourth requirement\nof Article 6.2, a panel request must \"plainly connect the challenged measure(s) with the\n\n430 In its response to Panel question No. 5, Russia stated that Claim 27 \"challenge[s] implementation of\nthe infrastructure exemption measure to deny the NEL exemption and impose restrictive conditions on the\nOPAL exemption\". (Russia's response to Panel question No. 5, para. 50).\n431 Russia's response to Panel question No. 4, para. 21.\n432 Russia's panel request, pp. 4 and 5. The relevant parts of Russia's panel request describing the\ninfrastructure exemption measure are also provided above in para. 7.109.\n\nprovision(s) of the covered agreeme nts claimed to have been infringed\" 433 and \"explain succinctly\nhow or why the measure at issue is considered by the complaining Member to be violating the\nWTO obligation in question\".434\n7.122. In the present case, Russia's panel request must \"plainly connect\" eithe r the infrastructure\nexemption measure or the upstream pipeline networks measure with the alleged violation of\nArticle II:1 of the GATS and provide a \"succinct\" explanation as to how or why either of these\nmeasures is, in Russia's view, causing an inconsistency with Article II:1 of the GATS.\n7.123. Scrutinizing the relevant part of Russia's panel request, we note that the first paragraph\nquoted above \"plainly connects\" the alleged violation of Article II:1 of the GATS with the\ninfrastructure exemption measure. It also explains that the alleged violation of Article II:1 of the\nGATS is caused by a less favourable treatment of services and service suppliers under the NEL and\nOPAL infrastructure exemption decisions than services and service suppliers under other\ninfrastructure exemption decisions.\n7.124. We recall that a claim developed in the course of panel proceedings must present the same\nproblem as the one presented by a brief summary of the legal basis of the complaint in a panel\nrequest, in order for such a claim to f all within a panel's terms of reference, pursuant to\nArticles 7.1 and 6.2 of the DSU. 435 Therefore, in order to decide on whether Russia's Claim 27, as\ndescribed in Russia's response to Panel question No. 5, falls within our terms of reference, we\nmust determine whether it presents the same problem as Russia's panel request.\n7.125. From Russia's response to Panel question No . 5, we understand that the problem\npresented by Russia's Claim 27 concerns allegedly less favourable treatment of services and\nservice suppliers under the NEL and OPAL infrastructure exemption decisions when compared to\nservices and service suppliers subject to the upstream pipeline networks measure.436\n7.126. In our view, this problem is not the same as the problem presented by Russia in its panel\nrequest, which concerns allegedly less favourable treatment of services and service suppliers\nsubject to the NEL and OPAL infrastructure exemption decisions than services and service suppliers\nsubject to other infrastructure exemption decisions.\n7.127. Thus, while the problem presented in Russia's panel request focuses on the comparison of\nthe treatment of services and service suppliers under the NEL and OPAL decisions vis -à-vis the\ntreatment of services and services suppliers subject to the upstream pipeline networks measure,\nthe problem presented in the description of Claim 27 in its response to Panel question No. 5\nfocuses on the comparison of the treatment of services and service suppliers under the NEL and\nOPAL infrastructure exemption decisions vis -à-vis the tre atment of services and service suppliers\nsubject to other infrastructure exemption decisions. Therefore, to the extent Russia's Claim 27\nchallenges the infrastructure exemption me asure, it presents a different problem from the one\npresented by Russia in its panel request and consequently falls outside our terms of reference.\n7.128. Turning to the second paragraph of Russia's panel request quoted above, we observe that\nit \"plainly connects\" the upstream pipeline networks measure with an alleged violation of\nArticles I:1 and III:4 of the GATT 1994. This paragraph explains that the alleged violation of\nArticles I:1 and III:4 of the GATT 1994 stems from a more favourable trea tment of domestic and\nthird-country gas transported and placed on the EU market through upstream pipeline networks\nthan Russian gas transported and placed on the market by service suppliers that are subject to the\nunbundling requirements. However, this paragraph does not mention Article II:1 of the GATS, and\ntherefore, does not \"plainly connect\" the upstream pipeline networks measure with an alleged\nviolation of Article II:1 of the GATS. This means that, to the extent Russia's Claim 27 challenges\nthe upstream pipeline networks measure, this claim falls outside our terms of reference because\n\n433 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 162.\n434 Appellate Body Report, EC – Selected Customs Matters, para. 130. (emphasis original)\n435 See, above paras 7.96- 7.98.\n436 Russia's response to Panel question No. 5, para. 50. We note that, despite stating that its Claim 27\nchallenges the upstream pipeline networks measure instead of the infrastructure exemption measure, Russia's\nresponse to Panel question No. 4 presents the same problem. (Russia's response to Panel question No. 4,\npara. 21).\n\nRussia's panel request fails to provide a brief summary of the legal basis of the complaint with\nrespect to this claim.\n7.129. In view of the foregoing, we conclude that, regar dless of whether Russia's Claim 27\nchallenges the infrastructure exemption measure or the upstream pipeline networks measure, this\nclaim falls outside our terms of reference.\n7.2.2.2.7 Russia's claims 7, 9 and 11 against the unbundling measure in the Directive\n7.130. In its response to Panel question No. 5, Russia included Claims 7, 9 and 11, characterizing\nthese as \"as applied\" claims. These claims concern Russia's challenge against the unbundling\nmeasure under Article II:1 of the GATS and Articles III:4 and I:1 of the G ATT 1994, respectively.\nThey mirror Russia's Claims 6, 8 and 10, characterized as claims of de facto violation, inasmuch as\nthey concern the unbundling measure and allege a violation of the same legal provisions.437\n7.131. The European Union objects to Russia's in clusion of Claims 7, 9 and 11 in its response to\nPanel question No. 5, and requests the Panel to rule that these claims are outside the Panel's\nterms of reference.438 The European Union argues that Russia's panel request fails to identify the\nspecific measures challenged by Claims 7, 9 and 11 and to provide a brief summary of the legal\nbasis of the complaint sufficient to present the problem clearly in respect of these claims. The\nEuropean Union submits that Russia's panel request does not identify the specif ic instance of\napplication of unbundling in Lithuania challenged by Claims 7, 9 and 11 ;439 and fails to describe\nthe problem covered by Claims 7 and 9, namely the comparison of the instance of application of\nunbundling in Lithuania with the instances of appl ication of unbundling in Germany (Claim 7) and\nFrance (Claim 9).440\n7.132. Russia responds that the European Union's arguments regarding Claims 7, 9 and 11 should\nbe rejected. 441 Russia submits that the relevant paragraph on pages 2 through 3 of its panel\nrequest fully describes the specific instance of application of the unbundling measure in Lithuania,\nfrom which \"as applied\" Claim 7 is derived. 442 Therefore, in Russia's view, its panel request meets\nthe requirements of Article 6.2 of the DSU in respect of Claims 7, 9 and 11. Russia adds that it was\nnot required to mention Germany, France or any other EU member State that permits the ISO\nand/or ITO models for the purposes of comparison.443\n7.133. We observe that the European Union argues that Russia's panel request does not me et the\nthird and the fourth requirements of Article 6.2 of the DSU in respect of Russia's Claims 7, 9\nand 11. In our a nalysis, we first determine whether Russia's panel request identifies the specific\nmeasure challenged by this claim, in accordance with th e third requirement of Article 6.2 of the\nDSU. If we conclude that Russia's panel request complies with the third requirement of Article 6.2\nof the DSU, we will examine whether Russia's panel request provides a brief summary of the legal\nbasis of the complaint sufficient to present the problem clearly, in accordance with the fourth\nrequirement of Article 6.2 of the DSU.\n\n437 In its first written submission, Russia explicitly refers to the unbundling measure under the Directive\nas \"enabling\" the European Union member States to draw regulatory distinctions between services, service\nsuppliers and gas from different WTO Members by implementing different unbundling models (Russia's first\nwritten submission, paras. 326, 353, 371, and 810). Russia then argues that the existence of these distinctions\nresults in the violation of Articles II:1 of the GATS and Articles III:4 and I:1 of the GATT 1994. (Russia's first\nwritten submission, paras. 314-316, 326, 361, and 371). These arguments correspond to Russia's Claims 6, 8,\nand 10 summarized in its response to Panel question No. 5. (Russia's response to Panel question No. 5,\nparas. 31-32, 34-35 and 37).\n438 European Union's comments on Russia's response to Panel question Nos. 5 and 17, para. 23.\n439 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 16 and\n19-20.\n440 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 17 and 21.\n441 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, paras. 15-16.\n442 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, paras. 18-19.\n443 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 20.\n\n7.134. Based on Russia's description and summaries of Cla ims 7, 9 and 11 in its response to\nPanel question No. 5, we understand that these claims challenge a specific instance of application\nof unbundling in Lithuania. Consequently, this specific instance of application of unbundling is a\nchallenged measure that must be identified in Russia's panel request in accordance with the third\nrequirement of Article 6.2 of the DSU. In considering whether Russia's panel request identifies this\nspecific measure, we scrutinize the relevant text of Russia's panel request, which reads as follows:\n1. Unbundling, Third -Country Certification and Infrastructure Exemption\nMeasures\nThe Directive requires \"vertically integrated natural gas undertakings\" (\"VIUs\") to\nundergo \"unbundling\" and to separate their transmission system assets , or the\ntransmission system operator (\"TSO\"), from assets relating to production and supply.\nThe Directive grants Member States discretion to select from among three alternative\nunbundling models: ownership unbundling, independent system operator (\"ISO\") , and\nindependent transmission operator (\"ITO\"). Ownership unbundling is the most\nrestrictive model. It precludes the same person or persons from exercising control\nover an undertaking performing any of the functions of production or supply and\nexercising control or any right over the TSO or the transmission system, and vice\nversa. Among the rights that ownership unbundling precludes is the holding of a\nmajority share. The ISO model, in contrast, permits the VIU to retain full ownership of\nthe TSO upon designation of an outside entity, the ISO, to operate the TSO. The ITO\nmodel is even less restrictive and permits VIUs to maintain control and operate the\nTSO through a separate subsidiary.\n…\nIn addition, in certain Member States that have adopted implemen ting legislation\nrequiring ownership unbundling, including Lithuania and Estonia, the Russian supplier\nof pipeline transport services has been required to cede control in the TSO or will be\nrequired to do so in the future on the basis of existing legislati on. In other Member\nStates that permit the ISO and/or ITO models, VIUs that are owned or controlled by a\nperson or persons of other third -countries have been permitted to adopt either of\nthose unbundling models, and thus to maintain ownership and varying degrees of\ncontrol over both the TSO and production or supply portions of the VIU. The Russian\nFederation considers that these measures result in less favorable treatment being\naccorded to pipeline transport services and service suppliers of Russia than t o like\nservices and service suppliers of other third-countries, contrary to the EU's obligations\nunder GATS Article II:1. Moreover, contrary to the requirements of Article I:1 of GATT\n1994, the fact that third -country natural gas suppliers in certain Membe r States have\nbeen permitted to adopt the ISO or ITO unbundling models grants an advantage,\nfavor, privilege or immunity to the natural gas imported from those third -countries\nthat is not immediately and unconditionally accorded to natural gas originating in\nRussia, which is transported and placed on the market in Member States that require\nownership unbundling. Such Russian-origin natural gas is also accorded less favorable\ntreatment than domestic natural gas that is transported and placed on the market in\nMember States permitting the ISO and/or ITO models, contrary to the EU's obligations\nunder Article III:4 of GATT 1994.444 (footnotes omitted)\n7.135. On the basis of our scrutiny of the relevant part of Russia's panel request quoted above,\nwe establish that the sp ecific measure at issue identified in Russia's panel request in accordance\nwith Article 6.2 of the DSU is the unbundling measure based on the provisions of the Directive.\n7.136. However, we do not find a clear indication in the relevant part of its panel request that\nRussia challenges a specific instance of application of unbundling in Lithuania. While Russia's panel\nrequest refers to the implementation of unbundling in Lithuania, and the effect thereof 445, we do\n\n444 Russia's panel request, pp. 2–3.\n445 The relevant part of Russia's panel request states that \"in certain Member States that have adopted\nimplementing legislation requiring ownership unbundling, including Lithuania and Estonia, the Russian supplier\nof pipeline transport services has been required to cede control in the TSO or will be required to do so in the\nfuture on the basis of existing legislation.\" (Russia's panel request, p. 2).\n\nnot consider that this reference provides a sufficiently clear indication that a particular instance of\napplication of unbundling in Lithuania is a measure challenged by Russia.\n7.137. As clarified by the Appellate Body, Article 6 .2 of the DSU requires the level of\n\"particularity\" in the identification of the measure at issue sufficient to indicate the nature of the\nmeasure and the gist of what is at issue. 446 We do not consider that Russia's reference to the\nimplementation of unbund ling in Lithuania, and the effect thereof, provide s a sufficient indication\nthat the nature of the measure it challenges is the application of unbundling in Lithuania.\nTherefore, in our view, Russia has failed to provide a sufficiently clear indication tha t its challenge\nis directed at a specific instance of application of unbundling in Lithuania in addition to the\nunbundling measure based on the provisions of the Directive.\n7.138. Thus, having carefully reviewed Russia's panel request, we consider that Russia's panel\nrequest does not identify any instance of application of unbundling in Lithuania with sufficient\nspecificity as to comply with the third requirement of Article 6.2. Consequently, we find that\nRussia's Claims 7, 9 and 11 pursuing a challenge against a specific instance of application of\nunbundling in Lithuania fall outside our terms of reference.\n7.139. However, we note that, under the third requirement of Article 6.2, a panel request does\nnot need to identify a measure that a complaining party refers to in its subsequent submissions as\npart of its argumentation or evidence in seeking to prove its claim. 447 Therefore, we confirm that,\nto the extent Russia refers to the application of unbundling in Lithuania, and the effect thereof, in\nits subsequent submissions, as relevant evidence in support of its Claims 6, 8, and 10, it falls\nwithin the scope of our examination.\n7.2.2.2.8 Russia's alternative claims 29 through 31 against the TEN-E measure\n7.140. In its response to Panel question No. 5, Russia included alternative Claims 29 through 31 ,\ncharacterizing these as \"as applied\" claims. These \"as applied\" claims mirror Russia's main\nClaims 29 through 31 inasmuch as they concern the challenge against the TEN -E measure and\nallege the violation of Article II:1 of the GATS and Articles III:4 and I:1 of the GATT 1994.448\n7.141. The European Union objects to Russia's inclusion of alternative \"as applied\" Claims 29\nthrough 31 in its response to Panel question No. 5, and requests the Panel to rule that these\nclaims fall outside the Panel's terms of reference. 449 The European Union argues that, while the\npanel request makes no reference to \"as applied\" claims and does not identify any \"specific\ninstances\" of application of the TEN -E measure, Russia is now advancing \"as app lied\" claims (in\nthe alternative to its de facto claims) against \"specific instances of application\" of the TEN -E\nmeasure.450 The European Union argues further that this new characterization is contradicted by\nRussia's own first written submission, which mak es de jure claims and, alternatively, de facto\nclaims against the TEN -E measure, but does not advance any \"as applied\" claims against specific\ninstances of application of the TEN-E measure.451\n\n446 Appellate Body Report, US – Continued Zeroing, para. 169. The Appellate Body observed as follows:\n\"Moreover, although a measure cannot be identified without some indication of its contents, the identification\nof a measure within the meaning of Article 6.2 need be framed only with sufficient particularity so as to\nindicate the nature of the measure and the gist of what is at issue.\" (Appellate Body Report, US – Continued\nZeroing, para. 169). (emphasis added)\n447 Panel Report, India – Agricultural Products, paras. 7.44-7.45 and 7.54.\n448 We note that, in its first written submission, Russia argues that the TEN-E measure is inconsistent\nwith Articles II:1 of the GATS and I:1 and III:4 of the GATT 1994 alleging that it operates in such a way as to\ndeny the infrastructure projects that benefit Russian gas, services and service suppliers eligibility for being\ndesignated as projects of common interest. See Russia's first written submission, paras. 753-785 (concerning\nArticle II:1 of the GATS); 786-802 (concerning Article III:4 of the GATT 1994); and 803-809 (concerning\nArticle I:1 of the GATT 1994). These arguments are also reflected in the summaries of Russia's main Claims 29\nthrough 31 provided in Russia's response to Panel question No. 5. (Russia's response to Panel question No. 5,\nparas. 52-53).\n449 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 72 and 76.\n450 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 69-70\nand 73-74.\n451 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 71 and 74.\n\n7.142. In response to the European Union's arguments, Russia submits th at section 3 on pages 8\nand 9 of the panel request makes clear that Russia challenges both the TEN -E measure \"as such\"\nand its specific instances of application on an \"as applied\" basis.452 Russia contends that the text of\nits panel request is sufficiently p recise as to have enabled the European Union, as the respondent,\nto draw this conclusion.453\n7.143. In our view, the European Union's arguments raise the issue of whether Russia's panel\nrequest has identified the specific measure challenged by Russia's alternative \"as applied\"\nClaims 29 through 31 under the third requirement of Article 6.2 of the DSU.\n7.144. On the basis of Russia's description and summaries of these claims, provided in response\nto Panel question No. 5, we consider that Russia's \"as applied\" Claims 29 th rough 31 pursue a\nchallenge against the specific instance(s) of application of the TEN -E Regulation, which, in Russia's\nview, result(s) in the absence of \"Russian projects\" designated as PCIs. 454 Therefore, specific\ninstance(s) of application of the TEN -E Regulation constitute a challenged measure that must be\nidentified in the panel request in accordance with the third requirement of Article 6.2. In\nconsidering whether Russia's panel request identifies any such specific measure, we scrutini ze the\nrelevant text of Russia's panel request, which reads as follows:\n3. \"Projects of Common Interest\" Measures\nThe EU has also enacted regulations establishing \"trans -European energy\ninfrastructure priority corridors and areas,\" including four specific \"priority gas\ncorridors.\" The principal regulation, Regulation (EU) No 347/2013, is referred to as\nthe \"TEN -E regulation.\" It sets forth criteria for identifying \"projects of common\ninterest\" or \"PCIs,\" which are accorded priority status, including within priority gas\ncorridors. The TEN -E regulation provides for the implementation of PCIs, including\nthose concerning natural gas, to be facilitated by \"streamlined and efficient permit\ngranting procedures,\" \"improved regulatory treatment\" and EU financial assistance.\nIn Octob er 2013, the Commission issued an amendment to the TEN -E regulation\nsetting out the initial list of PCIs. These include a number of projects that promote and\nfacilitate the production and transportation of domestic natural gas, as well as the\nimportation a nd transportation of gas from various third -countries, including\nnumerous LNG projects. However, the list of PCIs excludes any project designed to\nfacilitate the importation or transportation of natural gas from Russia. The Russian\nFederation is not aware of any such projects currently under consideration for\ndesignation as a PCI.\nThe Russian Federation considers that, contrary to GATS Article II:1, these measures\naccord Russian services and service suppliers less favorable treatment than is\naccorded to l ike services and service suppliers of other third -countries, which benefit\nfrom having projects listed as PCIs. Natural gas originating in third -countries that is\ntransported and placed on the EU market through pipelines or other infrastructure\nlisted as PCIs is also accorded an advantage, favor, privilege or immunity that is not\nimmediately and unconditionally accorded to natural gas originating in Russia,\ncontrary to Article I:1 of GATT 1994. Such Russian-origin natural gas is also accorded\nless favorable treatment than domestic natural gas that is transported and placed on\nthe market through pipelines or other infrastructure listed as PCIs, in a manner\ninconsistent with Article III:4 of GATT 1994.455 (footnote omitted)\n7.145. We observe that the first paragraph quoted above identifies the measure challenged by\nRussia. This measure (the TEN -E measure) comprises the TEN -E Regulation, setting forth the\n\n452 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 74.\n453 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para 74.\n454 Russia's response to Panel question No. 5, paras. 52–53. In respect of its Claim 29, Russia explains\nthat it \"challenged specific instances of application by the EU of the TEN-E Measure and contended that, by\nexcluding Russian projects from designation as projects of common interest (or 'PCIs'), 'as applied,' the TEN-E\nMeasure provides Russian services and service suppliers less favourable treatment than like services and\nservice suppliers of other countries\". (Russia's response to Panel question No. 5, para. 52).\n455 Russia's panel request, p. 8.\n\ncriteria for identifying the projects of common interest and the legal regime for such projects, and\nits amendment, setting out the list of projects of common interest. However, we do not find in this\nparagraph a clear indication that Russia challenges any specific instance(s) of application of the\nTEN-E measure. Russia's panel request only refers to the absence of \"p rojects designed to\nfacilitate the importation or transportation of natural gas from Russia\" from the list of projects of\ncommon interest.\n7.146. As already noted, the level of \"particularity\" in the identification of the measure at issue,\nunder the third requirement of Article 6.2 of the DSU, should be sufficient to indicate the nature of\nthe measure and the gist of what is at issue. 456 We do not deny that the application of the criteria\nfor PCI designation set out in the TEN -E Regulation by the Commission may res ult in the absence\nof certain projects from the list of PCIs. However, to our mind, simply pointing to this outcome\ndoes not provide a sufficient indication that the nature of the challenged measure is the application\nof the criteria for the identification of the projects of common interest. Thus, we consider that\nRussia's panel request does not provide a sufficient indication that any specific instance(s) of the\napplication of these criteria, in addition to the criteria themselves, constitutes the challenged\nmeasure.\n7.147. In view of the foregoing, we find that Russia's panel request has not identified any specific\ninstance(s) of the application of the TEN -E measure with sufficient specificity in order to meet the\nthird requirement of Article 6.2. As a result, Russia's alternative \"as applied\" Claims 29 through 31\nfall outside our terms of reference.\n7.148. However, we note that our decision does not preclude us from rev iewing the alleged\nabsence of \"projects designed to facilitate the importation or transportation of natural gas from\nRussia\" as evidence submitted in support of Russia's remaining Claims 29 through 31.457\n7.2.2.3 Decision on the terms of reference issues not resolved in the second preliminary\nruling\n7.149. We recall that, in the preliminary ruling of 10 November 2016, guided by the consideration\nof ensuring an objective assessment of the matter before us, we refrained from deciding, at that\nstage in the proceedings, on ce rtain of the terms of reference objections covered by the European\nUnion's request for a preliminary ruling. These objections concerned the following matters: (a)\nLithuania's grant of priority to natural gas supplied by Litgas UAB (Litgas) through the Klai peda\nLNG Terminal and the supply agreement between Litgas and Statoil in respect of Russia's claim\nagainst the unbundling measure in the Directive under Article I:1 of the GATT 1994, referred to in\nRussia's response to Panel question No. 5 as Claim 10 458; (b ) Articles 20(5) and 29(4)(3) of\nLithuania's Law on Natural Gas and Section 123 of Hungary's Gas Act 459 (additional conditions) in\nrespect of Russia's claim against the third -country certification measure in the national\nimplementing laws of Croatia, Hungary and Lithuania under Article XVII of the GATS, referred to in\nRussia's response to Panel question No. 5 as Claim 15; and (c) Commission certification opinions\nregarding TIGF and DESFA in respect of Russia's claim against the third -country certification\nmeasure in the Directive under Article II:1 of the GATS, referred to in Russia's response to Panel\nquestion No. 5 as Claim 17. We address each of these terms of reference objections below.\n7.2.2.3.1 Lithuania's grant of priority to na tural gas supplied by Litgas through the\nKlaipeda LNG Terminal and the supply agreement between Litgas and Statoil\n7.150. In its first written submission, Russia refers to Lithuania's gran t of priority to na tural gas\nsupplied by Litgas through the Klaipeda LNG Terminal and the supply agreement between Litgas\n\n456 Appellate Body Report, US – Continued Zeroing, para. 169.\n457 See, above para. 7.139. See also Panel Report, India – Agricultural Products, paras. 7.44–7.45 and\n7.54.\n458 In light of the Panel's finding that Russia's Claim 11 fell outside its terms of reference, the Panel did\nnot consider it necessary to rule on the European Union's objections concerning Russia's reference to\nLithuania's grant of priority to natural gas supplied by Litgas through the Klaipeda LNG Terminal and the supply\nagreement between Litgas and Statoil in its first written submission in the context of this claim. (See fn 10 of\nthe preliminary ruling of 10 November 2016).\n459 The specific provisions of Hungary's Gas Act referred to by Russia in its first written submission are\nSections 123(5) and 123(6) (Russia's first written submission para. 431). In our analysis below, we focus on\nthese two sections.\n\nand Statoil in the context of its claim against the unbundling measure under Article I:1 of the\nGATT 1994. 460 The European Union objects to Russia's re ference to these circumstances and\nsubmits that Russia's claim regarding an alleged priority of purchasing natural gas imported\nthrough the Klaipeda LNG terminal in Lithuania is outside the Panel's terms of reference because\nthis measure was not identified, nor the claim mentioned, in Russia's panel request. 461 According\nto the European Union, both Lithuania's grant of priority to natural gas supplied by Litgas through\nthe Klaipeda LNG Terminal and the five -year deal between Statoil and Litgas \"have nothing to do\nwith the unbundling measure in Directive 2009/73/EC that Russia challenges\" 462 and Russia's\npanel request does not mention these measures or claims.463\n7.151. Russia indicated that it does not a rgue that Lithuania's grant of priority to na tural g as\nsupplied by Litgas through the Klaipeda LNG Terminal and the supply agreement between Litgas\nand Statoil constitute challenged measures. 464 Russia further clarified that it refers to these\narrangements as examples of the alleged discrimination. 465 In light of Russia's clarifications, in the\npreliminary ruling of 10 November 2016, we indicated that we would not consider Lithuania's grant\nof priority to na tural gas supplied by Litgas through the Klaipeda LNG Terminal and the supply\nagreement between Litgas and Statoil as challenged measures in respect of Russia's Claim 10. 466\nHowever, we declined to rule at that stage of the proceedings on whether Russia's reference to\nLithuania's grant of priority to natural gas supplie d by Litgas through the Klaipeda LNG Termin al\nand the supply agreement between Litgas and Statoil in its first written submission constituted a\nseparate claim that fell outside our terms of reference.\n7.152. Turning to our consideration of this issue, we observe that, pursuant to Articles 7.1\nand 6.2 of the DSU, we are bound by our terms of reference only with respect to our review of\nmeasures and claims, but not evidence. In order to fall within our terms of reference, measures\nand claims must be included in a panel request in accordance with Article 6.2 of the DSU. 467\nHowever, Article 6.2 of the DSU does not require that evidence a complainant relies on in\nadvancing its claims be included in a panel request. 468 Thus, while our terms of reference limit the\nscope of our review to those measures and claims that have been included in a panel request, they\ndo not limit the scope of our review of evidence.\n7.153. Having conducted a careful examination of Russia's reference to the Klaipeda LNG Terminal\nand the supply agreement between Litgas and Statoil in its first writt en submission, in light of\nRussia's further submissions to the Panel, we understand that Russia refers to these circumstances\nas evidence in support of its claim against the unbundling measur e under Article I:1 of the\nGATT 1994 (Claim 10). Thus, we conside r that, by referring to the Klaipeda LNG Terminal and the\nsupply agreement between Litgas and Statoil, Russia is not presenting a different problem than\nthat presented in its panel request , or asserting a separate claim , but rather refers to evidence in\n\n460 Russia's first written submission, paras. 374–375.\n461 European Union's first written submission, paras 421–422; and comments on Russia's response to\n462 European Union's first written submission, para. 421.\n463 European Union's first written submission, paras. 421-422; and comments on Russia's response to\n464 Russia's response to Panel question No. 17, para. 106. See also Russia's comments on the European\nUnion's comments on Russia's response to Panel question Nos. 5 and 17, para. 21.\n465 Russia's response to Panel question No. 17, para 106.\n466 The European Union objected to Russia's reference to these circumstances in the context of Russia's\nClaims 10 and 11. (European Union's comments on Russia's response to Panel question Nos. 5 and 17,\npara. 22). As we found Claim 11 to fall outside of our terms of reference, we did not consider it necessary to\ndecide in the preliminary ruling of 10 November 2016 on the European Union's objections concerning Russia's\nreference to Lithuania's grant of priority to natural gas supplied by Litgas through the Klaipeda LNG Terminal\nand the supply agreement between Litgas and Statoil in its first written submission in the context of this claim.\nSee, above paras. 7.138. -7.139 and fn 458.\n467 As clarified by the Appellate Body, the measures and claims together constitute the \"matter referred\nto the DSB\". (Appellate Body Reports, Guatemala – Cement I, para. 72; US – Carbon Steel, para. 125;\nAustralia – Apples, para. 416; EC and certain member States – Large Civil Aircraft, para. 639; and China – Raw\nMaterials, para. 219) (emphasis original)\n468 We recall that the panel in India – Agricultural Products opined as follows:\nLike previous panels and the Appellate Body, we are of the view that a measure to which a party\nrefers solely for the purpose of making a comparison with a cha llenged measure in respect of a\ndiscrimination claim may serve as evidence in the argumentation in support of that claim, and\ndoes not in itself constitute a measure that must be identified in a panel request by virtue of\nArticle 6.2 of the DSU. (Panel Report, India – Agricultural Products, para. 7.53).\n\nsupport of its claim against the unbundling measure under Article I:1 of the GATT 1994 (Claim\n10). In light of this , we need not make a ruling on whether Lithuania's grant of priority to natural\ngas supplied by Litgas through the Klaipeda LNG Terminal and th e supply agreement between\nLitgas and Statoil fall within our terms of reference. We consider the relevance and weight of this\nevidence in the appropriate part of this Report.\n7.2.2.3.2 Additional conditions in respect of the third -country certification measure in\nthe national implementing laws of Croatia, Hungary and Lithuania\n7.154. As noted above, in advancing its claim against the third -country certification measure in\nthe national implementing laws of Croatia, Hungary and Lithuania under Article XVII of the GATS,\nRussia challenges certain additional conditions in Articles 20(5) and 29(4)(3) of Lithuania's Law on\nNatural Gas, and Sections 123(5) and (6) of Hungary's Gas Act.469\n7.155. The European Union submits that the additional conditions in Sections 123(5) and (6) of\nHungary's Gas Act and Articles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas challenged by\nRussia are outside the Panel's terms of reference. 470 According to the European Union, Russia\nfailed to identify, in its panel request, the challenged measures in respect of these provisions. 471\nThe European Union notes that the meas ures challenged pursuant to Russia's panel request\nconsist of Croatia's, Hungary's and Lithuania's \"versions\" of the security of supply requirement of\nArticle 11 of the Directive. 472 In the European Union's view, the mentioned provisions do not\ndirectly implement the security of supply requirement of Article 11 of the Directive, and therefore,\ncannot be considered to have been included in Russia's panel request.473 In addition, the European\nUnion argues that the \"problem\" referred to by Russia in relation to ea ch of the mentioned\nprovisions is not presented with sufficient clarity in the panel request.474\n7.156. In response to the European Union's terms of reference objections, Russia submits that, by\nidentifying the EU member State's \"versions\" of the third -country cer tification measure in the\npanel request, Russia has not limited the scope of its potential claims to only those provisions that\ncorrespond precisely to the terms of Article 11 of the Directive. 475 Russia therefore argues that\nSections 123(5) and (6) of Hunga ry's Gas Act and Articles 20(5) and 29(4)(3) of Lithuania's Law\non Natural Gas are within the Panel's terms of reference.476\n7.157. We note that the European Union's terms of reference objections with respect to Russia's\nchallenge against Sections 123(5) and (6) of Hungary's Gas Act and Articles 20(5) and 29(4)(3) of\nLithuania's Law on Natural Gas are based on the alleged failure of Russia to identify these\nprovisions and to provide a brief summary of the legal basis of the complaint in its panel request.\nThe European Union thus argues that Russia's panel request fails to comply with the third and\nfourth requirements of Article 6.2 of the DSU.\n7.158. We note that the relevant part of Russia's panel request provides as follows:\nNext, the Directive requires that TSOs in each Member State be certified as complying\nwith the relevant unbundling requirements. However, when certification is requested\nby a transmission system owner or TSO controlled by a person or persons from a\nthird-country, the Directive requires that the reque st be refused unless it is\ndemonstrated that certification \"will not put at risk the security of supply\" of the\n\n469 Russia's first written submission, paras. 430–441 and 446.\n470 European Union's first written submission, paras. 546-551 and 553–556; and comments on Russia's\nresponse to Panel question Nos. 5 and 17, paras. 34, 40 and 45.\n471 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 29-30, 36-\n38 and 41-43.\n472 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 29-30, 36-\n38 and 41-43.\n473 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 29-30, 36-\n38 and 41-43.\n474 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 31-33, 39\nand 44.\n475 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, paras. 34, 40 and 44.\n476 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, paras. 35, 40 and 45.\n\nMember State and the EU. 477 No similar requirement applies to certification requests\nby domestic persons. Croatia, Hungary and Lithuania have impl emented versions of\nthis \"third -country certification measure\" in their respective legislation. The Russian\nFederation considers these measures to be inconsistent, de jure, with the obligations\nof Croatia, Hungary and Lithuania under GATS Article XVII to a ccord services and\nservice suppliers of any other Member treatment no less favorable than these three\nMembers' like services and service suppliers.478 (emphasis added)\n7.159. We consider it appropriate to commence our examination of the European Union's\nobjections by first addressing whether Russia's panel request complies with the fourth requirement\nof Article 6.2 of the DSU before proceeding to examine its compliance with the third requirement\nof Article 6.2 of the DSU.\n7.160. Based on our scrutiny of Russia's panel request, we find that Russia complies with the\nfourth requirement of Article 6.2 of the DSU. In our view, by explaining that the \"versions\" of the\nthird-country certific ation measure implemented by Croatia, Hungary and Lithuania are\ninconsistent with Article XVII of the GATS because they require the security of supply assessment\nonly in case of certification requests by third -country persons, and not domestic persons, Rus sia\nhas provided a brief summary of the legal basis of the compl aint sufficient to present the problem\nclearly in accordance with Article 6.2 of the DSU. Russia's arguments with respect to\nSections 123(5) and (6) of Hungary's Gas Act and Articles 20(5) and 29(4)(3) of Lithuania's Law\non Natural Gas in its first writt en submission present the same problem .479 Therefore, in our\nanalysis below, we focus only on Russia's compliance with the third requirement of Article 6.2 of\nthe DSU regarding the identification of Sections 123(5) and (6) of Hungary's Gas Act and\nArticles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas in its panel request.\n7.161. We observe that the quoted paragraph of Russia's panel request does not explicitly\nmention Sections 123(5) and (6) of H ungary's Gas Act and Articles 20(5) and 29(4)(3) of\nLithuania's Law on Natural Gas. However, this paragraph indicates that Russia brings a challenge\nagainst the \"versions of this 'third -country certification measure'\" implemented in the laws of\nCroatia, Hu ngary and Lithuania. Thus, in considering whether the mentioned provisions of\nHungary's Gas Act and Lithuania's Law on Natural Gas are identified in Russia's panel request in\naccordance with the third requirement of Article 6.2 of the DSU, we need to exami ne two issues.\nFirst, we need to determine whether Russia's reference in its panel request to the \"versions of this\n'third-country certification measure'\" implemented in the laws of Croatia, Hungary and Lithuania\nsatisfies the third requirement of Article 6.2 of the DSU. Second, in case we answer the first\nquestion in the affirmative, we will need to determine whether Russia's reference to the \"versions\nof this 'third -country certification measure'\" covers Sections 123(5) and 123(6) of Hungary's Gas\nAct and Articles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas.\n7.162. Turning to the first question, we note that the second sentence of the paragraph quoted\nabove provides a reference to Article 11 of the Directive, which we understand to indicate that\n\"this third-country certification measure\" means the third -country certification measure found in\nArticle 11 of the Directive. 480 Therefore, the implemented \"versions\" of the third -country\ncertification measure referred to in Russia's panel request are those that i mplement the third -\ncountry certification required by Article 11 of the Directive. This sentence also describes the third -\ncountry certification measure of Article 11 of the Directive as a measure requiring that a\ncertification request by a transmission syst em owner or TSO controlled by a person or persons\nfrom a third country be refused, unless it is demonstrated that certification \"will not put at risk the\nsecurity of supply\" 481 of the EU member State and the European Union. From this description,\nwhich broad ly corresponds to the text of Article 11 of the Directive, we further infer that the\n\n477 (footnote original) Directive, Article 11.\n478 Russia's panel request, p. 3.\n479 Russia's first written submission, paras. 430–441 and 446.\n480 Russia's panel request, p. 3 and fn 11. See also, above para. 7.158 and fn 478.\n481 We note that both parties use the terms \"security of energy supply\", \"security of supply\", and \"SoS\"\ninterchangeably. (See, e.g., Russia's first written submission, paras. 63, 69, 454, 459, 510 and 512; and\nsecond written submission, paras. 302, 303 and 347; and European Union's first written submission, paras.\n177, 468, 471 and 480; and second written submission, paras. 36, 192, 193 and 301). We further note that\nArticle 11(3)(b) of the Directive uses the term \"security of energy supply\" and we proceed on the\nunderstanding that all of the terms used by the parties refer to \"security of energy supply\".\n\n\"versions\" of the third -country certification measure implemented in the national laws of Croatia,\nHungary and Lithuania are those that include the same requirement.\n7.163. We r ecall that the Directive requires EU member States to implement its particular\nprovisions in national laws. 482 As we have determined above, Russia's panel request refers to\nArticle 11 of the Directive and explicitly mentions the requirement of the security o f energy supply\nassessment stipulated therein. Russia then refers to the \"versions of this 'third-country certification\nmeasure'\" implemented in the laws of Croatia, Hungary and Lithuania. Thus, given that Russia has\nreferred to Article 11 of the Directive , and moreover, explicitly mentioned the requirement of the\nsecurity of energy supply assessment prescribed by Article 11, we consider that Russia's reference\nto the \"versions of this 'third -country certification measure'\" implemented in the laws of Croati a,\nHungary and Lithuania in its panel request is sufficiently specific to identify the challenged\nmeasure in accordance with Article 6.2 of the DSU.\n7.164. Having determined that the \"versions\" of the third -country measure implemented in the\nlaws of Croatia, Hun gary and Lithuania constitute a specific measure identified by Russia in its\npanel request, in accordance with Article 6.2 of the DSU, we now proceed to examine whether\nSections 123(5) and 123(6) of Hungary's Gas Act and Articles 20(5) and 29(4)(3) of Lith uania's\nLaw on Natural Gas fall within the scope of such \"versions\". In our view, to be covered by the\nreference to the \"versions of this 'third -country certification measure'\" in Russia's panel request,\nthe provisions of the national laws of Croatia, Hung ary and Lithuania need not reproduce the text\nof Article 11 of the Directive verbatim. However, our analysis above requires us to ensure that\nsuch provisions, at a minimum, possess the following two characteristics stemming from Article 11\nof the Directive : (i) they must concern third -country TSO certification; and (ii) they must include\nthe requirement to conduct an assessment of the security of energy supply. Thus, in the\nsubsections below, we examine separately whether, on the basis of these two characte ristics,\nSections 123(5) and (6) of Hungary's Gas Act and Articles 20(5) and 29(4)(3) of Lithuania's Law\non Natural Gas constitute implemented \"versions\" of the third -country certification measure in\nHungary and Lithuania, respectively.\n7.2.2.3.2.1 Sections 123(5) and 123(6) of Hungary's Gas Act\n7.165. We recall that Russia challenges Sections 123(5) and 123(6) of Hungary's Gas Act as\nproviding an additional condition that must be satisfied by a third -country applicant for TSO\ncertification, aside from satisfying the conditi ons stipulated in Section 128/A of Hungary's Gas\nAct.483\n7.166. Section 128/A is located in sub -chapter \"Certification Procedure\" within Chapter XVI of\nHungary's Gas Act entitled \"The Office\" and governs specifically third -country TSO certification.484\nThere is no disagreement between the parties that Section 128/A of Hungary's Gas Act constitutes\na \"version\" of the third-county certification measure implemented in Hungary.485\n7.167. In contrast, Sections 123(5) and 123(6) are contained in Chapter XIV of Hungary's Gas Act\nentitled \"Common Provisions Relating to Corporate Events\". 486 As noted above, the European\nUnion argues that these Sections do not implement the third -country certification measure in\nHungary and therefore fall outside our terms of reference. 487 In determining w hether\nSections 123(5) and 123(6) of Hungary's Gas Act may be covered by the reference to the\n\"version\" of the third-country certification measure implemented in Hungary, we are guided by the\nanalytical framework we have set out above in paragraph 7.164.\n7.168. Therefore, below we examine whether these sections concern third -country TSO\ncertification and include the requirement to conduct an assessment of the security of energy\n\n482 See, above para. 2.3.\n483 Russia's first written submission, para. 431.\n484 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 128/A(1).\n485 Russia's first written submission, para. 430; and European Union's first written submission,\npara. 474.\n486 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 123.\n487 European Union's first written submission, paras. 546-551; and comments on Russia's response to\n\nsupply. We commence our examination by scrutinizing the text of Sections 123(5) and 123(6) of\nHungary's Gas Act.\n7.169. Sections 123(5) and 123(6) of Hungary's Gas Act provide as follows:\n(5) The Office's resolution granting consent is required for the ex ecution of any\ntransaction that would allow a person or persons from a third country or third\ncountries to acquire control over a transmission system operator or the controlling\nshareholder of a transmission system operator.\n(6) The Office may refuse to g rant approval or render its approval conditional for the\ntransactions referred to in Subsections (2) and (5) above and in Subsection (1) of\nSection 122, if they are deemed to pose any potential threat to the security of natural\ngas supply , to public safety, to the enforcement of compliance with energy policy\nobjectives, to the discharge of activities subject to authorization under this Act, or the\nregulations for determining the price of transmission, storage and distribution\nservices, and universal s ervices, and the regulations for determining the quality of\nsuch services, furthermore, if the execution of such transactions would infringe upon\nthe pre-emption right notified to the Office according to Subsection (8).488\n7.170. On the basis of the text of Sections 123(5) and 123(6), we note that Section 123(6) allows\nthe \"Office\"489 to refuse to grant approval or render its approval conditional for the transactions\nreferred to in Section 123(5) on the ground that such transactions \"are deemed to pose any\npotential threat\" to \"the security of natural gas supply \". Section 123(6) thus requires the Office to\nconduct an assessment of the security of energy supply before approving a transaction referred to\nin Section 123(5). In our view, this means that Section 123(6), re ad in conjunction with\nSection 123(5), possesses one of the two characteristics necessary for them to constitute an\nimplemented \"version\" of the third-country certification measure in Hungary.\n7.171. The remaining part of our analysis focuses on whether Sections 123(5) and 123(6) concern\nthird-country TSO certification and thus possess the other characteristic necessary for them to be\nconsidered an implemented \"version\" of the third -country certification measure in the Directive by\nHungary. In this regard, we not e that the t hird-country certification measure in the Directive sets\nout the grounds for the initiation of third -country certification in Articles 11(1) and 11(2) , and its\nprocedure in Articles 11(3) through 11(8).\n7.172. Pursuant to Articles 11(1) through 11(2) of the Directive, the third -country TSO\ncertification procedure must be initiated in two situations: (i) certification is requested by a\ntransmission system owner or a TSO which is controlled by a person or persons from a third\ncountry or third countries; (ii) the regulatory authority has acquired knowledge of any\ncircumstances that would result in a person or persons from a third country or third countries\nacquiring control of the transmission system or the TSO. The certification procedure, pursuant to\nArticles 11(3) through 11(8) of the Directive, involves inter alia a consideration by the relevant\nNRA, and then by the Commission, of whether the certification will not put at risk the security of\nenergy supply, and issuing the decision by the NRA and the opinion of the Commission within the\nset deadlines.\n7.173. We note that transactions described in Section 123(5) of Hungary's Gas Act, and which\nmust be approved under Section 123(6), are those that would allow a person or persons from a\nthird country or third co untries to acquire control over a TSO or the controlling shareholder of a\nTSO. Such transactions will be covered by Article 11(2) of the Directive as the \" circumstances\"\nthat would result in a person or persons from a third country or third countries acquiring control of\na transmission system or a TSO. As the circumstances referred to in Article 11(2) of the Directive\nrequire third-country TSO certification490, it may be inferred that, by setting out transactions that\nfall within such \"circumstances\", Section 123(5) of Hungary's Gas Act includes one of the grounds\nfor the initiation of third-country TSO certification procedure.\n\n488 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Sections 123(5) and 123(6). (emphasis added;\nfootnotes omitted)\n489 The \"Office\" refers to Hungarian Energy and Public Utilities Office, which is Hungary's NRA for the\npurposes of third-country TSO certification (Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 3(5)).\n490 European Union's response to Panel question No. 146, para. 2.\n\n7.174. However, Sections 123(5) and 123(6) of Hungary's Gas Act do not contain a textual\nreference to \"certification\" and refer instead to \" approval\". Neither party has pointed us to any\nprovision in Hungary's Gas Act specifying the nature of this approval procedure.\n7.175. The European Union argues that the approval procedure under Sections 123(5) and 123(6)\nof Hungary's Gas Act is separate and independent from the certification procedure prescribed by\nArticle 11 of the Directive and implemented in Section 128/A of Hungary's Gas Act. The European\nUnion submits that approval under Section 123 is a legal pre -condition for registering with the\ncompetent commercial court the transactions described in Sections 123(2) and 123(5), whereas\ncertification under Article 128/A is a procedure necessary to enable the controlled entity to operate\nas a TSO in the gas transmission market. 491 The European Union points to different consequences\nof the absence of approval under Section 123 and certification under Section 128/A: in the\nabsence of the former, the transactions concerned can have no legal effect under Hungarian law;\nin the absence of the latter, the controlled entity will not be able to operate as a TSO.492\n7.176. We observe, however, that the European Union has provided no evidence to substantiate\nits arguments regarding the alleged differences between the ap proval procedure under\nSections 123(5) and 123(6) of Hungary's Gas Act, on the one hand, and the certification procedure\nunder Section 128/A of Hungary's Gas Act, on the other. The European Union has cited no\nprovision in Hungary's Gas Act prohibiting the Office from relying on the third -country TSO\ncertification procedure of Article 11 of the Directive, and implemented in Section 128/A of\nHungary's Gas Act, when granting its approval for transactions referred to in Section 123(5).\n7.177. In fact, by subsequently stating that Section 123(5) of Hungary's Gas Act \"complies with\nthe responsibilities of the Regulatory Authority deriving from para (1) and (2) of Article 11 of\nDirective 2009/73/EC\", the European Union appears to acknowledge an interlinkage between the\nthird-country TSO certification p rocedure and the approval of transactions under Sections 123(5)\nand 123(6).493 Thus, we are not persuaded by the European Union's arguments that the approval\nprocedure under Sections 123(5) and 123(6) is separate and independent from the third -country\nTSO certification procedure under Section 128/A.494\n7.178. Our analysis above shows that there are two important features common to the approval\nprocedure under Sections 123(5) and 123(6) and certification procedure under Section 128/A.\nThese features include: (a) subst antially the same grounds to commence both procedures –\ntransactions granting control to persons from third countries over a TSO; and (b) the requirement\nto conduct a security of energy supply assessment. Given these similarities, we find it plausible\nthat, when granting approval under Sections 123(5) and 123(6), the Office may consider the same\nfactors that it reviews in the context of third -country TSO certification under Section 128/A. The\nEuropean Union's statement that Section 123(5) of Hungary's Gas A ct complies with the\nresponsibilities of the Office deriving from Article 11(1) and 11(2) of the Directive is a further\nconfirmation that the third -country TSO certification procedure is directly relevant for the\nprocedure conducted by the Office under Sections 123(5) and 123(6).\n7.179. In light of the above, we consider that the approval of transactions under Sections 123(5)\nand 123(6) of Hungary's Gas Act is sufficiently closely related to the third-country TSO certification\nprocedure such that Sections 123(5) and 123(6) can be found to implement the third -country\ncertification measure of Article 11 of the Directive. Having previously concluded that\nSection 123(6), read in conjunction with Section 123(5), contains a requirement to conduct a\nsecurity of energy su pply assessment, we therefore find that Sections 123(5) and 123(6) of\nHungary's Gas Act constitute an implemented \"version\" of the third -country certification measure\nin Hungary identified in Russia's panel request.\n7.2.2.3.2.2 Article 20(5) of Lithuania's Law on Natural Gas\n7.180. We observe that Article 20 of Lithuania's Law on Natural Gas is entitled \"Licences and\nCertificates in the Natural Gas Sector\". 495 Article 20(5) of Lithuania's Law on Natural Gas requires\n\n491 European Union's response to Panel question No. 150, paras. 13-14.\n492 European Union's response to Panel question No. 150, paras. 13-14.\n493 European Union's comments on Russia's response to Panel question No. 169(c), para. 43.\n494 European Union's response to Panel question No. 150, para. 15.\n495 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 20.\n\nthat licenses for transmission, distribution, storage and liq uefaction be issued to a legal entity\nestablished in the Republic of Lithuania or a unit of a legal entity or other organization of another\nMember State established in the Republic of Lithuania. 496 As is clear from its text, Article 20(5)\ndoes not possess ei ther characteristic necessary for it to be considered a \"version\" of the third -\ncountry certification measure implemented in Lithuania: (i) it does not concern third -country\ncertification required by Article 11 of the Directive; and (ii) it does not include the requirement to\nconduct a security of energy supply assessment. Therefore, we consider that Article 20(5) of\nLithuania's Law on Natural Gas does not constitute Lithuania's implemented \"version\" of the third -\ncountry certification measure identified in Russia's panel request.\n7.2.2.3.2.3 Article 29(4)(3) of Lithuania's Law on Natural Gas\n7.181. Article 29(4)(3) of Lithuania's Law on Natural Gas provides that the NRA of Lithuania shall\ndesignate a third -country TSO provided that it demonstrates that legitimate public securi ty\ninterests are protected. 497 The European Union maintains that Article 29(4)(3) of Lithuania's Law\non Natural Gas provides a requirement different from Lithuania's \"version\" of the third -country\ncertification measure, including the security of energy suppl y requirement, identified in Russia's\npanel request.498\n7.182. Russia, on the other hand, argues that its panel request does not limit its claim to onl y\nthose provisions of Lithuania' s law that correspond precisely to the terms of Article 11 regarding\n\"security of supply\", directi ng it instead against Lithuania' s \"version\" of the third -country\ncertification measure.499 Russia thus submits that Article 29(4)(3) is part of Lithuania's \"version\" of\nthe third -country certification measure that the European Union applies only to third -country\napplicants.500\n7.183. In examining whether Article 29(4)(3) of Lithuania's Law on Natural Gas is an implemented\n\"version\" of the third-country certification measure, we note that it is one of the three conditions a\nthird-country applicant must satisfy in order to be certified as a TSO in Lithuania. All three\nconditions are provided in Article 29(4) of Lithuania's Law on Natural Gas (entitled \"Designation of\na Transmission System Operator in Relation to Third Countries\") as follows:\nThe Commission shall designate an operator provided that it demonstrates that:\n1) it complies with the requirements of Chapter Four of this Law;\n2) such designation will not put at risk energy supply and the security of such supply\nof the Republic of Lithuania, another Member State or the European Union. …\n\n496 The relevant parts of Article 20 of Lithuania's Law on Natural Gas read as follows:\nArticle 20. Licences and Certificates in the Natural Gas Sector\n1. The following are licensed activities in the natural gas sector:\n1) transmission;\n2) distribution;\n3) storage;\n4) liquefaction;\n5) supply;\n6) activities of a market operator.\n…\n5. Licences for transmission, distribution, storage and liquefaction shall be issued to a legal entity\nestablished in the Republic of Lithuania or a unit of a legal entity or other organisation of another\nMember State established in the Republic of Lithuania. Licences shall be issued to persons who\nare equipped with adequate technological, financial and managerial capacities which enable the\nproper fulfilment of the conditions of licensed activities. Technological, fin ancial and managerial\ncapacities of persons and the procedure for their evaluation shall be established by the\nCommission taking into account the following criteria:\n…\n(Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 20).\n\n497 Lithuania's Law on Natural Gas, (Exhibit Rus-136rev), Article 29(4)(3).\n498 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 37–38.\n499 Russia's response to Panel question No. 147, para. 21.\n500 Russia's response to Panel question No. 147, para. 21.\n\n3) legitimate public security interests are protected.501\n7.184. On the basis of the text of Article 29(4) of Lithuania's Law on Natural Gas, we consider\nthat Article 29(4)(3) of Lithuania's Law on Natural Gas concerns third-country TSO certification and\npossesses the first characteristic necessary for it to be considered a \"version\" of the third -country\ncertification measure implemented in Lithuania.\n7.185. As for the second characteristic, we observe that the requirement containe d in\nArticle 29(4)(3) of Lithuania's Law on Natural Gas refers to \"legitimate public security interests\"\nrather than security of energy supply. Thus, on its face, Article 29(4)(3) contains no requirement\nto conduct an assessment of the security of such sup ply. We understand that, under EU law, the\nconcept of \"public security\" has been interpreted as covering restrictions on the free movement of\ngoods or capital necessary to ensure the security of supply. 502 This raises the question of whether\nthe possibility of interpreting the concept of \"public security\" as including security of energy supply\nbrings Article 29(4)(3) of Lithuania's Law on Natural Gas within the scope of the implemented\n\"version\" of the third -country certification measure referred to in Russia 's panel request. In\nresolving this issue, we consider as follows.\n7.186. Article 29(4)(2) of Lithuania's Law on Natural Gas, as quoted above, explicitly requires\nLithuania's NRA503 to conduct a security of energy supply assessment. This implies that, assuming\nthat Article 29(4)(3) could also cover security of energy supply, Lithuania's NRA would be able to\nrely on either Article 29(4)2 or 29(4)(3) of Lithuania's Law on Natural Gas in order to conduct a\nsecurity of energy supply assessment. However, we note that, wh ile Article 29(4)(2) explicitly\nrequires such an assessment in every case of third -country TSO certification, Article 29(4)(3)\nwould require such a n assessment only in the event security of energy supply is found to fall\nwithin the scope of \"legitimate public security interests\". Thus, in our view, for a security of energy\nsupply to be conducted under Article 29(4)(3) of Lithuania's Law on Natural Gas, an additional\ninterpretative step, subsuming security of energy supply within \"legitimate public security\ninterests\", would be necessary. We have not been presented with any evidence, and have no\nreason to believe, that Lithuania's NRA would rather rely on the public security concept of\nArticle 29(4)(3), instead of Article 29(4)(2), to conduct a security of e nergy supply assessment in\nthe course of third-country TSO certification.\n7.187. Russia further submits that Article 11(9) of the Directive \"help [s] demonstrate\" that\nArticle 29(4)(3) of Lithuania's Law on Natural Gas is within our terms of reference. 504 Article 11(9)\nof the Directive provides that \"[n]othing in this Article shall affect the right of Member States to\nexercise, in compliance with Community law, national legal controls to protect legitimate public\nsecurity interests\". Thus, Article 11(9) acknowledges the right of EU member States to protect\ntheir \"legitimate public security interests\".\n7.188. Russia argues, and we agree, that Article 29(4)(3) seeks to codify Lithuania's right \"to\nexercise … national legal controls to protect legitimate public securi ty inter ests\" expressly\nrecognized by Article 11(9). 505 However, we do not consider that Russia's reference in its panel\nrequest to the implemented \"versions\" of the third -country certification measure encompasses the\nprovisions of national laws implementing Article 11(9) of the Directive. As we have established on\nthe basis of our analysis of Russia's panel request, in order to be considered an implemented\n\"version\" of the third -country certification measure, a provision of a national law that concerns\nthird-country TSO certification must include the requirement to conduct a security of energy\nsupply assessment.506 Article 11(9) of the Directive does not contain such a requirement.\n7.189. In our view, the analysis conducted above provides sufficient grounds for us to disting uish\nthe concept of security of energy supply required by the third -country certification measure, as\ndescribed in Russia's panel request, from the concept of \"legitimate public security interests\". Even\n\n501 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 29(4).\n502 European Union's response to Panel question No. 102, para. 247.\n503 Lithuania's NRA is the National Control Commission for Prices and Energy, which is referred to as the\n\"Commission\" in Article 29(4) of Lithuania's Law on Natural Gas (Lithuania's Law on Natural Gas, (Exhibit RUS-\n136rev), Article 4(2)).\n504 Russia's response to Panel question No. 147, para. 14.\n505 Russia's response to Panel question No. 147, para. 16.\n506 See, above para. 7.164.\n\nin situations where the concept of public security may be interpreted to include security of energy\nsupply within its scope, the two concepts retain their distinct roles and separate legal existence in\nthe context of third -country TSO certification. Therefore, we consider that Article 29(4)(3) of\nLithuania's Law on Natural Gas does not constitute an implemented \"version\" of the third -country\ncertification measure in Lithuania identified in Russia's panel request.\n7.2.2.3.2.4 Conclusion\n7.190. Based on the foregoing, we find that Sections 123(5) and 123(6) of Hungary's Gas Act\nconstitute a \"version\" of the third -country certification measure implemented in Hungary referred\nto in Russia's panel request and fall within our terms of reference. However, we conclude that\nArticles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas are not covered by the reference to\na \"version\" of the third -country certification measure implemented in Lithuania in Russia's panel\nrequest. Consequently, we find that Articles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas\nfall outside our terms of reference.\n7.2.2.3.3 Commission certification opinions regarding TIGF and DESFA\n7.191. In its first written submission, Russia refers to the Commission's certification opinions\nregarding Transport et Infrastructures Gaz France S.A. (TIGF) and Hellenic Gas Transmission\nSystem Operator S.A. (DESFA), in the context of its claim against the third -country certification\nmeasure under Article II:1 of the GATS (Claim 17).507 The European Union objects to Russia's\nreference to these two opinions in its first written submission, ar guing that the \"problem\"\npresented in Russia's panel request is different from the \" problem\" presented by Russia in its first\nwritten submission.508 The European Union explains that the \"problem\" Russia has presented in its\npanel request concerns the compari son between the Commission's opinions where the security of\nenergy supply assessment was conducted and other opinions where such an assessment was not\nconducted.509 According to the European Union, by referring to the Commission's opinions\nregarding TIGF and DESFA in its first written submission, Russia presents a different \"problem\",\nwhich allegedly involves less stringent security of energy supply assessment.510\n7.192. Russia subsequently indicated that it is not challenging the Commission's opinions\nregarding TIGF and DESFA as the measures at issue and relies on these opinions as evidence\nsupporting its discrimination claim. 511 In light of Russia's clarifications, in the pre liminary ruling of\n10 November 2016, we indicated that we would not consider the Commission's certification\nopinions regarding TIGF and DESFA as challenged measures in respect of Claim 17. However, we\ndeclined to rule at that stage of the proceedings on wh ether Russia's reference to those two\nopinions in its first written submission constituted a separate claim that fell outside our terms of\nreference.\n7.193. On the basis of a careful examination of Russia's reference to the Commission's\ncertification opinions regarding TIGF and DESFA in its first written submission, in light of Russia's\nfurther submissions to the Panel, we understand that Russia refers to these opinions as evidence\nin support of its claim against the third -country certification measure under Ar ticle II:1 of the\nGATS (Claim 17). However, we observe that, in relying on these opinions, Russia develops\nClaim 17, in its written submissions, on the basis of a \"problem\" that differs from the \"problem\"\npresented in Russia's panel request.\n7.194. The problem p resented by Russia in its first written submission , when referring to the\nCommission's certification opinions regarding TIGF and DESFA, is that a Russian service supplier is\ntreated less favourably than service suppliers of other third countries because the Commission\nallegedly conducted the security of supply assessment regarding Gaz-System on more stringent\n\n507 Russia's first written submission, paras. 455-500.\n508 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 57-59.\n509 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 57-58.\nSee also European Union's first written submission, paras. 579-581.\n510 European Union's comments on Russia's response to Panel question Nos. 5 and 17, paras. 57-58.\nSee also European Union's first written submission, paras. 579-581.\n511 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, paras. 51, 52 and 55.\n\nconditions than the security of supply assessment regarding TIGF and DESFA.512 The relevant part\nof Russia's panel request, on the other hand, provides as follows:\nMoreover, various Member States have issued certification decisions, most of which\nthe European Commission (\"Commission\") has approved. Yet the Commission refused\nto approve Poland's certification of Gaz-System S.A. as an ISO for the Polish section of\nthe Yamal-Europe Pipeline (\"Yamal\"). Having found that Yamal's owner, Europolgaz,\nis jointly controlled by the Polish gas incumbent and a Russian pipeline transport\nservice supplier, the Commission required Poland to conduct a security of supply\nassessment. Previously, however, the Commission approved certification of at least\ntwo TSOs in Member States in which other third -country persons owned up to 100\npercent interests, without any control or \"security of supply\" assessments having been\nconducted. In so doing , contrary to its obligations under GATS Article II:1, the EU\naccorded Russian services and service suppliers less favorable treatment than like\nservices and service suppliers of those third-countries.513 (emphasis added)\n7.195. We note that the re levant part of Russia's panel request quoted above first states that the\nCommission \"required\" Poland to conduct a security of supply assessment in respect of Gaz -\nsystem S.A. 514 The panel request then continues by alleging that \"[p]reviously, however, the\nCommission approved certification of at least two TSOs in Member States in which other third -\ncountry persons owned up to 100 percent interests, without any control or 'security of supply'\nassessments having been conducted\". 515 It then concludes that , \"[i]n so doing\", the European\nUnion accorded Russian services and service suppliers less favo urable treatment than like services\nand service suppliers of those third countries, contrary to its obligations under Article II:1 of the\nGATS.516\n7.196. Therefore, based on the te xt of Russia's panel request, we consider that the problem\npresented in Russia's panel request concerns the issue of whether or not to conduct a security of\nsupply assessment, and more particularly a comparison of the Commission's certification opinion\nregarding Gaz-System, in which the Commission conducted a security of supply assessment, with\nthe Commission's opinions regarding the certification of TSOs allegedly owned by third persons , in\nwhich the Commission did not conduct a security of supply assessment.\n7.197. In contrast, t he problem presented by Russia in its first written submission, when\nreferring to the Commission's certification opinions regarding TIGF and DESFA, concerns the\nsubstance of the security of supply assessments conducted by the Commission, and more\nparticularly a comparison of the security of supply assessment conducted by the Commission in its\ncertification opinion regarding Gaz -System with the security of supp ly assessment conducted by\nthe Commission in its opinions regarding the certification of TIGF and DESFA . Thus, we consider\nthat, in relying o n the Commission's certification opinions regarding TIGF and DESFA in its first\nwritten submission , Russia presents a different problem from the one presented in its panel\nrequest.\n7.198. We recall that a claim developed in the course of panel proceedings must present the same\nlegal \"problem\" as the one presented by the brief summary of the legal basis of the complaint in\nthe panel request, in order for such a claim to fall within a panel's terms of reference, pursuant to\nArticles 7.1 and 6.2 of the DSU. 517 We have concluded above that, in relying o n the Commission's\ncertification opinions regarding TIGF and DESFA in its first written submission, Russia presents a\ndifferent problem from the one presented in its panel request. On this basis, we find that the\naspects of Russia' s Claim 17 concerning the Commission's certification opinions regarding TIGF\nand DESFA, fall outside our terms of reference. The relevance and weight of these opinions as\nevidence in respect of Russia's Claim 17 developed within the limits of the problem presented in its\npanel request are discussed in the appropriate part of this Report.\n\n512 Russia's first written submission, paras. 482-489 and 491-500.\n513 Russia's panel request, p. 3.\n514 Russia's panel request, p. 3.\n515 Russia's panel request, p. 3.\n516 Russia's panel request, p. 3.\n517 See, above paragraphs 7.96-7.98.\n\n7.2.3 Other terms of reference issues\n7.199. Three further terms of reference issues have been considered by the Panel outside of the\ntwo preliminary rulings. Two of these issues have been raised by the Panel on its own motion and\none has been additionally raised by the European Uni on. Below, we first address the two issues\nthat we have raised on our own initiative, and then the additional terms of reference objection\nsubmitted by the European Union.\n7.2.3.1 Terms of reference issues raised by the Panel on its own motion\n7.200. As clarified by the Appellate Body, if necessary, panels must address issues that go to the\nroot of their jurisdiction on their own motion. 518 The Appellate Body has further confirmed that the\ncompliance of a panel request with Article 6.2 of the DSU is an issue that concerns a panel's\njurisdiction.519 Following this guidance by the Appellate Body, in the present proceedings, we have\nraised two jurisdictional issues on our own motion, which we address below.\n7.2.3.1.1 Russia's de facto claim against the public body measure in the national\nimplementing law of Hungary\n7.201. In its first and second written submissions, Russia claims that the public body measure\nimplemented in Croatia, Hungary and Lithuania is inconsistent de facto with Article XVII of the\nGATS because the governments of Croatia, Hu ngary and Lithuania each own and control\nundertakings \"supplying both transmission and supply services … within their respective\nterritories\".520 The relevant part of Russia's panel request provides as follows:\nMoreover, the governments of Croatia and Lithu ania both own and control the TSO\nand production or supply portions of the single VIU supplying pipeline transport\nservices in their respective territories. Therefore, the Russian Federation considers\nthat these measures are inconsistent, de facto, with th e obligations of Croatia and\nLithuania under GATS Article XVII.521 (underlining added)\n7.202. In light of Russia's omission of the word \"Hungary\" in the relevant part of its panel request\nquoted above, we invited the parties to provide their views as to whether the aspect of Russia's\nclaim against the public body measure that concerns the ownership and control by Hungary's\ngovernment of both transmission and supply undertakings in its territory (Russia's de facto claim\nconcerning Hungary) is within the Panel's terms of reference.\n7.203. The European Union submits that Russia did not identify any Hungarian measure to\nsupport its de facto claim and neither did Russia refer to an obligation by Hungary under the GATS\nfor this claim.522 Hence, in the European Union's view, Russia did not identify the specific measures\nat issue and also failed to provide \"a brief summary of the legal basis of the complaint sufficient to\npresent the problem clearly\".523 Therefore, the European Union argues that Russia's de facto claim\nconcerning Hungary is outside the Panel's terms of reference.524\n7.204. Russia argues that, at the time it submitted the panel request, Russia was unaware of any\npublicly available evidence indicating that the government of Hungary owned and controlled both\nthe TSO and production or supply undertaking in Hungary. 525 Russia also points to the reference,\nin the relevant part of its panel request, to \"any amendments or extensions, any replacement\nmeasures, any renewal measures, any other implementing measures or legal instruments, and\nother related measures of the foregoing\". 526 Russia further emphasizes that it included in its panel\nrequest a de facto claim concerning the ownership and control of the entire transmission and\n\n518 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 36.\n519 Appellate Body Reports, Argentina – Import Measures, para. 5.11.\n520 Russia's first written submission, para. 285. See also Russia's first written submission, paras. 235\nand 285–303; response to Panel question No. 5, para. 29; and second written submission, paras. 188–197.\n521 Russia's panel request, p. 2.\n522 European Union's response to Panel question No. 148, para. 11.\n523 European Union's response to Panel question No. 148, para. 11.\n524 European Union's response to Panel question No. 148, para. 11.\n525 Russia's response to Panel question No. 148, para. 29.\n526 Russia's response to Panel question No. 148, para. 30.\n\nsupply systems by the governments of Croatia and Lithuania withi n their respective territories. 527\nRussia thus argues that, viewed in this context and in light of Russia’s lack of information, its panel\nrequest provided the European Union with adequate notice of Russia’s intention to pursue its de\nfacto claim concerning Hungary.528\n7.205. In considering whether Russia's de facto claim concerning Hungary falls within our terms of\nreference, we examine whether Russia has identified the measure challenged by this claim and\nprovided a brief summary of the legal basis of the complaint in respect of this claim in its panel\nrequest, as required by Article 6.2 of the DSU.\n7.206. We note that, in the relevant part of the panel request quoted above, Russia refers to\n\"these measures\", which in its view are inconsistent, de facto, with the obligati ons of Croatia and\nLithuania under Article XVII of the GATS. We understand that \"these measures\" refer to the\nmeasures Russia has described in its panel request as follows:\nThe Directive also provides that, when the owner of the VIU is the Member State or\nanother public body, two separate public bodies exercising control over the TSO and\nover an undertaking performing production or supply functions shall be deemed not to\nbe the same person or persons. In reality, this measure permits a Member State\ngovernment to own and control both the TSO and the production or supply portions of\nthe VIU, whereas third -country service suppliers, including those of Russia, may not.\nCroatia, Hungary and Lithuania have each implemented versions of this measure in\ntheir respective legislation.529 (footnote omitted; emphasis added)\n7.207. Even though Russia's panel request does not explicitly mention Hungary in the context of\nits de facto claim, Russia has, in our view, implicitly identified the \"version\" of the public body\nmeasure implemented in Hungary by its reference to \"these measures\". Thus, we consider that\nRussia has identified in its panel request the specific measure at issue in respect of its de facto\nclaim concerning Hungary in accordance with the third requirement of Article 6 .2 of the DSU. 530\nWe now turn to an examination of whether Russia's panel request complies with the fourth\nrequirement of Article 6.2 of the DSU in respect of this claim.\n7.208. We recall that, under the fourth requirement of Article 6.2, a panel request must \"plainly\nconnect the challenged measure(s) with the provision(s) of the covered agreements claimed to\nhave been infringed\"531 and \"explain succinctly how or why the measure at issue is considered by\nthe complaining Member to be violating the WTO obligation in question\".532 In setting out its de\nfacto claim against the public body measure in the panel request (as quoted above), Russia\nexplicitly mentions the obligations of Croatia and Lithuania under Article XVII of the GATS. Russia\nthus \"plainly connects\" the public body measure implemented in these member States with an\nalleged de facto breach of their obligations under Article XVII of the GATS.\n7.209. Furthermore, by referring to the ownership and control by the governments of Croatia and\nLithuania of the TSO and p roduction or supply \"portions\" of the VIU in their respective territories,\nRussia has provided an explanation as to why the public body measure implemented in these\nmember States is, in its view, inconsistent with their obligations under Article XVII of the GATS.\n7.210. However, when setting out its de facto claim against the public body measure in the panel\nrequest, Russia refers neither to the obligations of Hungary under Article XVII of the GATS, nor to\nthe ownership and control by the government of Hungary of the TSO and production or supply\n\"portions\" of the VIU in its territory. In our view, Russia thus fails to \"plainly connect\" the public\n\n527 Russia's response to Panel question No. 148, para. 30.\n528 Russia's response to Panel question No. 148, para. 31.\n529 Russia's panel request, p. 2.\n530 As discussed above in para. 7.163, in the context of the third-country certification measure in the\nnational laws of Croatia, Hungary and Lithuania, Russia's identification of these measures by reference to the\n\"versions\" of the third-country certification measure implemented in these member States satisfies the third\nrequirement of Article 6.2 of the DSU. We consider that, similarly, Russia's identification of the public body\nmeasure in the national laws of Croatia, Hungary and Lithuania by reference to the \"versions\" of the public\nbody measure implemented in Croatia, Hungary and Lithuania in its panel request satisfies the third\nrequirement of Article 6.2 of the DSU.\n531 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 162.\n532 Appellate Body Report, EC – Selected Customs Matters, para. 130. (emphasis original)\n\nbody measure implemented in Hungary with its claim of de facto inconsistency with Article XVII of\nthe GATS and to provide an explanation as to why this measure is de facto inconsistent with\nArticle XVII of the GATS. Therefore, we consider that Russia's panel request does not comply with\nthe fourth requirement of Article 6.2 of the DSU in respect of its de facto claim concerning\nHungary.\n7.211. Russia argues that, in deciding whether its de facto claim concerning Hungary falls within\nour terms of reference, we should take into account the fact that Russia was not aware of any\npublicly available evidence that the government of Hungary owned and controlled both the TSO\nand produ ction or supply undertaking in Hungary. According to Russia, it was unaware of the\nCommission's opinion concerning certification of Magyar Gáz Tranzit Zrt. (MGT) as the TSO, issued\non 17 February 2015, at the time of the submission of its panel request, on 11 May 2015. 533\nRussia alleges that \"[t]o the best of Russia’s knowledge, the Commission’s MGT certification\nopinion had not been made publicly available on the EU’s website at the time Russia submitted its\npanel request in May 2015\".534\n7.212. We thus understand R ussia's arguments as implying that, to the extent its panel request\ndoes not comply with Article 6.2 of the DSU in respect of its de facto claim concerning Hungary, it\ncould be remedied by the fact that Russia was not aware that the government of Hungary o wned\nand controlled both the TSO and production or supply \"portions\" of any part of the transmission\nsystem in Hungary.\n7.213. We observe that, as confirmed by the Appellate Body, whether a measure can be identified\nin conformity with the requirements of Article 6.2 of the DSU may depend on the extent to which\nthat measure is specified in the public domain. 535 We similarly consider that, a complainant's\nability to \"provide a brief summary of the legal basis of the complaint in order to present the\nproblem clearly\" might be affected by the availability of relevant information in the public domain.\nIn our view, it may well be open to a complainant to argue , with due substantiation, that\ninformation pertinent to its claim was not publicly available and that, as a consequence, its ability\nto comply with the requirements of Article 6.2 of the DSU was affected.\n7.214. We understand Russia to argue that, due to the absence of relevant information in the\npublic domain, Russia could n ot have known that the government of Hungary owned and\ncontrolled both the TSO and production or supply undertaking in Hungary. We note, however, that\nRussia does not bring any evidence to substantiate its allegation that the Commission’s MGT\ncertification opinion was not publicly available before Russia's submission of its panel request.\nFurthermore, Russia has not provided any evidence demonstrating that there was no other\nreasonable opportunity for Russia to gain knowledge of the fact that Hungary's gove rnment owned\nand controlled both the TSO and production or supply undertaking in Hungary. Thus, we consider\nthat Russia has not demonstrated that its ability to comply with the fourth requirement of\nArticle 6.2 of the DSU in respect of its de facto claim c oncerning Hungary was affected by the\nalleged lack of information in the public domain that the government of Hungary owned and\ncontrolled both the TSO and production or supply \"portions\" of any part of the transmission system\nin Hungary.\n7.215. In view of the f oregoing, we find that the aspect of Russia's claim against the public body\nmeasure that concerns the ownership and control by Hungary's government of both transmission\nand supply undertakings in its territory falls outside our terms of reference.\n7.2.3.1.2 Section 123(4) of Hungary's Gas Act in respect of the unbundling measure in\nthe national implementing law of Hungary\n7.216. In advancing its claim against the unbundling measure under Article XVI:2(f) of the GATS\nin its first written submission, Russia refers to Section 123(4) of Hungary’s Gas Act 536, which\nprovides as follows:\n\n533 Russia's response to Panel question No. 148, paras. 29-30.\n534 Russia's response to Panel question No. 148, para. 30.\n535 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 648.\n536 Russia's first written submission, para. 227. See also Russia's response to Panel question No. 169(a),\nparas. 78-80. Even though Russia's reference in its first written submission concerns Section 194(4) of the Act\n\nAny company that is involved in the extraction of natural gas, the production of\nelectricity, or in the supply of natural gas or electricity, and any shareholders\nexercising control in such companies may not acquire any share - directly or indirectly\n- in a transmission system operator where such share constitutes entitlement to\nexercise control. The acquisition of shares in a transmission system operator, or in a\ncontrolling shareholder thereof, whe re such share constitutes entitlement to exercise\ncontrol is subject to the Office’s prior approval as well. This provision shall have no\nbearing on the provision contained in Subsection (1) of Section 121/B.537\n7.217. In its panel request, Russia has identified th e unbundling measure implemented in the\nnational laws of Croatia, Hungary and Lithuania as a specific measure at issue challenged under\nArticle XVI:2 of the GATS. 538 The provisions of Hungary's Gas Act implementing the unbundling\nrules of the Directive are l ocated in Chapter XIII of Hungary's Gas Act entitled \"Separation of\nActivities\".539 However, like Sections 123(5) and 123(6) examined above, Section 123(4) is\ncontained in Chapter XIV of Hungary's Gas Act entitled \"Common Provisions Relating to Corporate\nEvents\".540 This raises the question of whether Section 123(4) of Hungary's Gas Act falls within our\nterms of reference as part of the unbundling measure implemented in the national law of Hungary\nidentified in Russia's panel request.\n7.218. We note that, according to the last sentence of Section 123(4), this provision shall have no\nbearing on the provision contained in Section 121/B(1) of Hungary's Gas Act. The latter provision\nprescribes as follows:\nSubsidiaries of vertically integrated natural gas companies perform ing functions of\nproduction or supply of natural gas shall not have any direct or indirect shareholding\nin the transmission system operator. Transmission system operators shall not have\nany direct or indirect shareholding in the subsidiaries of vertically integrated natural\ngas companies performing functions of production or supply of natural gas.541\n7.219. We understand that Section 121/B(1) of Hungary's Gas Act resembles Article 18(3) of the\nDirective that concerns the ITO model. In contrast to Section 123(4) of H ungary's Gas Act,\n\namending Hungary's Gas Act, Russia has subsequently stated that this reference concerns Section 123(4) of\nHungary' Gas Act (Russia's response to Panel question No. 169, paras. 78-80 and 83).\n537 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 123(4).\n538 The relevant part of Russia's panel request provides as follows:\n\nThe Directive requires \"vertically integrated natural gas undertakings\" (\"VIUs\") to undergo\n\"unbundling\" and to separate their transmission system assets, or the transmission system\noperator (\"TSO\"), from assets relating to produc tion and supply. The Directive grants Member\nStates discretion to select from among three alternative unbundling models: ownership\nunbundling, independent system operator (\"ISO\"), and independent transmission operator\n(\"ITO\"). Ownership unbundling is the m ost restrictive model. It precludes the same person or\npersons from exercising control over an undertaking performing any of the functions of\nproduction or supply and exercising control or any right over the TSO or the transmission\nsystem, and vice versa. Among the rights that ownership unbundling precludes is the holding of\na majority share. The ISO model, in contrast, permits the VIU to retain full ownership of the\nTSO upon designation of an outside entity, the ISO, to operate the TSO. The ITO model is even\nless restrictive and permits VIUs to maintain control and operate the TSO through a separate\nsubsidiary.\n\nThe implementing laws of Croatia and Hungary permit all three unbundling models, whereas\nLithuania permits only the ownership unbundling model. In the pipeline transport services sector,\nas set out in their GATS Schedules of Specific Commitments on Services (the \"Schedules\"),\nCroatia, Hungary and Lithuania undertook commitments under Articles XVI and XVII of the GATS\nwith respect to pipeline tra nsport services. In light of these commitments, the Russian\nFederation considers that the unbundling measures, as implemented in the laws of Croatia,\nHungary and Lithuania, are inconsistent with these Members' market access obligations under\nGATS Article XVI:1 to accord services and service suppliers of any other Member treatment no\nless favorable than that provided for in their Schedules, and that all three Members are each\nmaintaining or adopting measures set out in GATS Article XVI:2. (Russia's panel re quest, p. 2)\n(footnotes omitted)\n539 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Sections 121/B-121/I.\n540 Hungary's Gas Act, (Exhibits EU-155/RUS-47).\n541 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 121/B(1).\n\nSection 121/B(1) prohibits any direct or indirect shareholding in a TSO specifically by the\nsubsidiaries of vertically integrated gas companies performing functions of production or supply of\nnatural gas, and not by any company, or its co ntrolling shareholders, involved in extraction or\nsupply of natural gas. Moreover, the prohibition under Section 121/B(1) concerns any direct or\nindirect shareholding, while the prohibition under Section 123(4) covers only shareholding that\ngrants control.\n7.220. In response to a question by the Panel, the parties have confirmed that Section 123(4) of\nHungary's Gas Act is not only relevant for the ITO model, but is rather a general rule that applies\nto all unbundling models. 542 We further note the European Union's position that Section 123(4) of\nHungary's Gas Act is \"fully in line with the Articles of Directive 2009/73/EC and as such\ncorrespond[s] to the principles of unbundling rules\".543\n7.221. Taking into account the clarifications of the parties, we consider that Sectio n 123(4) of\nHungary's Gas Act constitutes a provision implementing the unbundling measure in Hungary, and\ntherefore, falls within our terms of reference.\n7.2.3.2 Article 20(5) of Lithuania's Law on Natural Gas in respect of the unbundling\nmeasure in the national implementing law of Lithuania\n7.222. In advancing its claim against the unbundling measure in the national implementing law of\nLithuania under Article XVI:2(a) of the GATS, Russia refers to Article 20(5) of Lithuania's Law on\nNatural Gas.544 In response to Russia' s references to this provision, the European Union submits\nthat \"Russia’s claim regarding Article 20(5) of Lithuania’s Law on Natural Gas is outside the Panel’s\nterms of reference, also when it concerns its suggestion that it would violate Article XVI:2(a) of\nthe GATS\". 545 Russia has subsequently indicated that it is not challenging Article 20(5) of\nLithuania’s Law on Natural Gas as a measure at issue in respect of its claim against the unbundling\nmeasure under Article XVI:2(a) of the GATS.546\n7.223. The European Union, in its turn, has clarified that it would pursue a terms of reference\nobjection only if Russia were challenging Article 20(5) of Lithuania's Law on Natural Gas as a\nseparate measure under Article XVI:2(a) of the GATS.547\n7.224. In light of these clarifications by the parties, we understand that, as Russia is not\nchallenging Article 20(5) of Lithuania's Law on Natural Gas as a separate measure under\nArticle XVI:2(a) of the GATS, the European Union does not pursue its terms of reference objection.\nIn view of this, we do not consider it necessary to rule on whether Article 20(5) of Lithuania's Law\non Natural Gas falls within our terms of reference for the purposes of this claim.\n7.3 Legal standards\n7.225. As indicated above in paragraph 7.5, below we set out the legal standards pursuant to the\nrelevant legal provisions of the GATS and the GATT 1994 cited by the parties.\n7.3.1 GATS\n7.3.1.1 Article II:1 of the GATS\n7.226. Article II:1 of the GATS provides as follows:\nWith respect to any measure covered by this Agreement, each Member shall accord\nimmediately and unconditionally to services and service suppliers of any other\n\n542 Russia's response to Panel question No. 169(c), para. 89; and European Union's comments on\nRussia's response to Panel question No. 169(c), para. 42.\n543 European Union's comments on Russia's response to Panel question No. 169, para. 38.\n544 Russia's first written submission, paras. 218 and 219; and response to Panel question No. 3,\npara. 15(a).\n545 European Union's second written submission, para. 24. (footnotes omitted)\n546 Russia's response to Panel question No. 167(b), para. 77.\n547 European Union's response to Panel question No. 167(b), paras. 46-50.\n\nMember treatment no less favourable than that it accords to like services and service\nsuppliers of any other country.\n7.227. In order to establish that a challenged measure is inconsistent with this provision, the\ncomplaining Member must demonstrate the following elements: (i) the measure is covered by the\nGATS; (ii) the relev ant services and service suppliers are \"like\"; and (iii) the measure fails to\naccord \"immediately and unconditionally\" to services and service suppliers of any other Member\n\"treatment no less favourable\" than that the responding Member accords to like serv ices and\nservice suppliers of any other country.548\n7.3.1.2 Article XIV(a) of the GATS\n7.228. Article XIV of the GATS provides, in relevant part, as follows:\nSubject to the requirement that such measures are not applied in a manner which\nwould constitute a means of arbitrary or unjustifiable discrimination between countries\nwhere like conditions prevail, or a disguised restriction on trade in services, nothing in\nthis Agreement shall be construed to prevent the adoption or enforcement by any\nMember of measures:\n(a) necessary to protect public morals or to maintain public order[.]5\nSchedule, are defined as:\n\n548 See Appellate Body Report, Canada – Autos, paras. 170-171. See also Panel Report, EC – Bananas\nIII (Ecuador), para. 7.381.\n549 Appellate Body Reports, US – Gambling, para. 292; and Argentina – Financial Services, paras. 6.161-\n6.162 and 6.241. See also Panel Report, Argentina – Financial Services, para. 7.586.\n550 Appellate Body Report, US – Gambling, para. 292. The Appellate Body has also articulated this legal\nstandard for a provisional justification of a challenged measure under a similar general exception contained in\nArticle XX(a) of the GATT 1994 (for measures \"necessary to protect public morals\") (Appellate Body Reports,\n551 Appellate Body Report, US – Gambling, para. 339.\n\n(a) limitations on the number of service suppliers whether in the form of numerical\nquotas, monopolies, exclusive service suppliers or the requirements of an\neconomic needs test;\n\n…\n\n(e) measures which restrict or require specific types of legal entity or joint\nventure through which a service supplier may supply a service;\n(f) limitations on the participation of foreign capital in te rms of maximum\npercentage limit on foreign share -holding or the total value of individual\nor aggregate foreign investment.\n7.233. In order to establish that a challenged measure is inconsistent with subparagraphs (a), (e)\nor (f) of Article XVI:2 of the GATS, the complaining Member must demonstrate two elements:\n(i) the responding Member has undertaken market access commitments in its GATS Schedule with\nrespect to the relevant sector(s) and mode(s) of supply ; and (ii) the measure constitutes an\nimpermissible limitation falling within subparagraph (a), (e) or (f) of Article XVI:2 of the GATS.552\n7.3.1.4 Article XVII of the GATS\n7.234. Article XVII of the GATS provides as follows:\n1. In the sectors inscribed in its Schedule, and subject to any conditions and\nqualifications set out th erein, each Member shall accord to services and service\nsuppliers of any other Member, in respect of all measures affecting the supply of\nservices, treatment no less favourable than that it accords to its own like services and\nservice suppliers.10\n2. A Member may meet the requirement of paragraph 1 by according to services\nand service suppliers of any other Member, either formally identical treatment or\nformally different treatment to that it accords to its own like services and service\nsuppliers.\n3. Formally identical or formally different treatment shall be considered to be less\nfavourable if it modifies the conditions of competition in favour of services or service\nsuppliers of the Member compared to like services or service suppliers of any other\nMember.\nMember to compensate for any inherent disadvantages which result from the foreign character of\nthe relevant services or service suppliers.\n7.235. In order to estab lish that a challenged measure is inconsistent with Article XVII of the\nGATS, the complaining Member must demonstrate the following three elements: (i) the responding\nMember has assumed national treatment commitment s in the relevant sector(s) and mode(s) o f\nsupply in its GATS Schedule; (ii) the measure in question \"affect[s] the supply of services\" in the\nrelevant sector(s) and mode(s); (iii) the relevant services and service suppliers are \"like\"; and (iv)\nthe measure fails to accord to services and service suppliers of any other Member \"treatment no\nless favourable\" than that accorded by the responding Member to its own like services and service\nsuppliers.553\n\n552 Appellate Body Report, US – Gambling, para. 143. See also Panel Reports, China – Publications and\nFinancial Services, para. 7.391.\n553 Panel Reports, Argentina – Financial Services, para. 7.448; China – Electronic Payment Services,\n\n7.3.2 GATT 1994\n7.3.2.1 Article I:1 of the GATT 1994\n7.236. Article I:1 of the GATT 1994 provides as follows:\nWith respect to customs duties and charges of any kind imposed on or in connection\nwith importation or exportation or imposed on the international transfer of payments\nfor imports or exports, and with respect to the method of levying such duties and\ncharges, and with respect to all rules and formalities in connection with importation\nand exportation, and with respect to all matters referred to in paragraphs 2 and 4 of\nArticle III,* any advantage, favour, privilege or immunity granted by any Member to\nany product origin ating in or destined for any other country shall be accorded\nimmediately and unconditionally to the like product originating in or destined for the\nterritories of all other Members.\n7.237. In order to establish that a challenged measure is inconsistent with Artic le I:1 of the\nGATT 1994, the complaining Member must demonstrate the following elements: (i) the measure\nfalls within the scope of application of Article I:1; (ii) the imported products at issue are \"like\"\nproducts; (iii) the measure confers an \"advantage, favour, privilege, or immunity\" on a product\noriginating in the territory of any country; and (iv) the advantage so accorded is not extended\n\"immediately\" and \"unconditionally\" to like products originating in the territory of all Members.554\n7.3.2.2 Article III:4 of the GATT 1994\n7.238. Article III:4 of the GATT 1994 provides as follows:\nThe products of the territory of any Member imported into the territory of any other\nMember shall be accorded treatment no less favourable than that accorded to like\nproducts of national origin in respect of all laws, regulations and requirements\naffecting their internal sale, offering for sale, purchase, transportation, distribution or\nuse. The provisions of this paragraph shall not prevent the application of differential\ninternal transportation charges which are based exclusively on the economic operation\nof the means of transport and not on the nationality of the product.\n7.239. In order to establish that a challenged measure is inconsistent with Article III:4 of the\nGATT 1994, the complaining Member must demonstrate the following elements: (i) the measure is\na law, regulation, or requirement affecting the internal sale, offering for sale, purchase,\ntransportation, distribution, or use of the products at issue; (ii) the imported and domestic\nproducts are \"like products\"; and (iii) the treatment accorded to imported products is \"less\nfavourable\" than that accorded to like domestic products.555\n7.3.2.3 Article X:3(a) of the GATT 1994\n7.240. Article X of the GATT 1994, entitled \"Publication and Administration of Tra de Regulations\",\nprovides, in relevant parts, as follows:\n1. Laws, regulations, judicial decisions and administrative rulings of general\napplication, made effective by any contracting party, pertaining to the classification or\nthe valuation of products for customs purposes, or to rates of duty, taxes or other\ncharges, or to requirements, restrictions or prohibitions on imports or exports or on\nthe transfer of payments therefor, or affecting their sale, distribution, transportation,\ninsurance, warehousing in spection, exhibition, processing, mixing or other use, shall\nbe published promptly in such a manner as to enable governments and traders to\nbecome acquainted with them. …\n\n554 Appellate Body Reports, EC – Seal Products, para. 5.86.\n555 Appellate Body Reports, EC – Seal Products, para. 5.99 (referring to Appellate Body Report, Thailand\n– Cigarettes (Philippines), para. 127 (in turn referring to Appellate Body Report, Korea – Various Measures on\n\n…\n3. (a) Each contracting party shall administer in a uniform, impartial and reasonable\nmanner all its laws, regulations, decisions and rulings of the kind described in\nparagraph 1 of this Article.\n7.241. In order to establish that a challenged measure is inconsistent with Article X:3(a) of the\nGATT 1994, the complaining Member must demonstrate the following elements: (i) the measure is\na law, regulation, judicial decision or administrative ruling of general application; (ii) the measure\nis of the kind described in Article X:1 of the GATT 1994; and (iii) the measure is not administered\nin a \"uniform, impartial and reasonable manner\".556\n7.3.2.4 Article XI:1 of the GATT 1994\n7.242. Article XI:1 of the GATT 1994, entitled \"General Elimination of Quantitative Restrictions\",\nprovides as follows:\nNo prohibitions or restrictions other than duties, taxes or other charges, whether\nmade effective through quotas, import or export licences or other measures, shall be\ninstituted or maintained by any Member on the importation of any product of the\nterritory of any other Member or on the exportation or sale for export of any product\ndestined for the territory of any other Member.\n7.243. Based on the text of Article XI:1 of the GATT 1994, in order to establish that a challenged\nmeasure is inconsistent with Article XI:1 of the GATT 1994, the complaining Member must\ndemonstrate the following elements: (i) the measure falls within the scope of the phrase \"quotas,\nimport or export licences or other measures\" (emphasis added); and (ii) the measure constitutes a\nprohibition or restriction on the importation or on the exportation or sale for export of any\nproduct.557\n7.3.2.5 Article XX(j) of the GATT 1994\n7.244. Article XX of the GATT 1994 provides, in relevant part, that nothing in the GATT 1994 shall\nbe construed to prevent the adoption or enforcement by any Member of measures:\n[E]ssential to the acqui sition or distribution of products in general or local short\nsupply; Provided that any such measures shall be consistent with the principle that all\nMembers are entitled to an equitable share of the international supply of such\nproducts, and that any such measures, which are inconsistent with the other\nprovisions of the Agreement shall be discontinued as soon as the conditions giving rise\nto them have ceased to exist.\n7.245. In order to justify a challenged measure under the general exception in Article XX(j) of the\nGATT 1994, the responding Member must demonstrate the following elements: (i) the measure is\nprovisionally justified under paragraph (j) of Article XX; and (ii) the measure satisfies the\nrequirements of the chapeau of Article XX.558\n7.246. In order to provisio nally justify a challenged measure under paragraph (j) of Article XX,\nthe responding Member must establish the following elements: (i) the measure is \"designed\" to\naddress \"the acquisition or distribution of products in general or local short supply\"; and (ii) the\nmeasure is \"essential\" to the acquisition or distribution of products in general or local short\nsupply.559\n7.247. Based on the text of Article XX(j), the provisional justification of a measure under\nparagraph (j) of Article XX also includes two additional elements: (i) that the measure must \"be\n\n556 See Panel Report, Thailand – Cigarettes (Philippines), para. 7.866.\n557 Appellate Body Reports, Argentina – Import Measures, paras. 5.217-5.218.\n558 Appellate Body Report, India – Solar Cells, paras. 5.56, 5.57 and 5.60 (referring to Appellate Body\nReports, US – Gasoline, p. 22, DSR 1996:I, 3, at p. 20; Dominican Republic – Import and Sale of Cigarettes,\n559 Appellate Body Report, India – Solar Cells, paras. 5.57–5.60.\n\nconsistent with the principle that all Members are entitled to an equitable share of the international\nsupply of the products concerned\"; and (ii) that the measure inconsistent with the other provisions\nof the GATT 1994 must be \"discontinued as soon as the conditions giving rise to [the measure]\nhave ceased to exist\".\n7.248. In order to demonstrate that the challenged measure provisionally justified under\nparagraph (j) of Article XX satisfies the requirements of the chapeau of Article XX of the\nGATT 1994, the responding Member must show that the measure is not \"applied in a manner\nwhich would constitute a means of arbitrary or unjustifiable discrimination between countries\nwhere the same conditions prevail or a disguised restriction on international trade\".560\n7.4 General issues related to Russia's claims under the GATS\n7.249. In this section, we shall start with an examination of the meaning and scope of the\nservices at issue for Russia's claims under the GATS , \"natural gas pipeline t ransport services\" or\n\"pipeline transport services\", as defined by Russia in its panel request.561\n7.250. We shall then turn to an examination of the Schedules of Croatia, Hungary and Lithuania ,\nat stake in this dispute. It is well-established that, for purposes of claims under Articles XVI:2 and\nXVII of the GATS, a complaining party must demonstrate, as a first step, that the respondent has\nundertaken relevant specific commitments in its GATS Schedule .562 Keeping in mind that, in this\ndispute, Russia has made claims under Articles XVI:2 and XVII of the GATS against the national\nimplementing laws of Croatia, Hungary and Lithuania 563, we need therefore to determine whether\nRussia has shown that those EU member States have undertaken relevant market access and\nnational treatment commitments with respect to the services at issue.\n7.4.1 The services at issue\n7.4.1.1 Introduction\n7.251. In its request for the establishment of a panel, Russia submits that \"the TEP, like the EU's\nnatural gas and broader energy policy overall, unjustifiably restrict s imports of natural gas\noriginating in Russia and discriminates against Russian natural gas pipeline transport services and\nservice suppliers.\"564 In a footnote attached to that sentence, Russia explains as follows:\n\"Natural gas pipeline transport services\" (or \"pipeline transport services\") include, but\nare not necessarily limited to, the transmission (or transport) and supply of natural\ngas, including LNG, and the services related to the transmission and supply of natural\ngas, including LNG services.565\n7.252. Russia states that \"the services at issue in this dispute consist of 'natural gas pipeline\ntransport services ', or simply 'pipeline transport services'\". 566 In Russia's view, t he services at\nissue should be construed \"broadly\" to include the transmission and sup ply of natural gas,\nincluding LNG, and all services related to or associated with the transmission and supply of natural\ngas, including LNG services. 567 Russia submits that \"[b]roadly defining the covered services as\nincluding all pipeline transport services, including LNG services, is also consistent with the 'Subject\n\n560 See Appellate Body Reports, EC – Seal Products, para. 5.296. See also Panel Report, India – Solar\nCells, para. 5.296.\n561 Russia's panel request, p. 1.\n562 See paras. 7.233 and 7.235 above.\n563 In this dispute, Russia claims that the unbundling measure in the national implementing laws of\nCroatia, Hungary and Lithuania is inconsistent with Article XVI:2(e) and (f) of the GATS, that the unbundling\nmeasure in the national implementing laws of Croatia and Lithuania is inconsistent with Article XVI:2(a) of the\nGATS, and that the public body measure and the third-country certification measure in those national\nimplementing laws are inconsistent with Article XVII of the GATS. See sections 7.5.2, 7.6 and 7.10.2 below.\n564 Russia's panel request, p. 1.\n565 Russia's panel request, fn 3.\n566 Russia's first written submission, para. 93.\n567 Russia's first written submission, para. 93; and Russia's second written submission, para. 75.\n\nmatter and scope' of the Directive, as set forth in Article 1\", although Russia takes issue with\ncertain definitions contained in the Directive.568\n7.253. According to Russia, \"transmission\" is a segmen t of the energy industry, i.e. the TSO\nunder the Directive, which is responsible for delivering or transporting natural gas via high\npressure pipelines between the producers/generators and local distribution companies or large end\nusers.569 Industry definitions of \"transmission\" recognize the role of the entities involved, including\nTSOs, in supplying natural gas, along with the services necessary to transport and supply that gas,\nto customers at various stages of the supply chain. 570 Referring to dictionary de finitions of the\nterm \"supply\", Russia argues that all services related to the supply of natural gas, including its\ntransmission, fall within these broad definitions .571 Russia further argues that the entire gas\nmarket can be thought of as a \"supply system\".572\n7.254. In Russia's view, the \"supply\" of natural gas as a service overlaps with natural gas\nproduction, sale and transmission573, and \"a gas supplier, which may well also be a producer, also\nsupplies the market with pipeline transport services\".574 For Russia, natural gas is produced for the\npurpose of supplying it to customers and \"[t]his takes place through the sale and resale of gas,\nincluding LNG, but also through its transmission, just as the transmission of natural gas naturally\nincludes its supply.\"575\n7.255. Russia f urther submits that the services at issue also include LNG services as well as\nservices necessary to convey raw gas from gas fields or gas production projects to the processing\nplant or terminals or final coastal landing terminals, which the Directive defi nes as \"upstream\npipeline networks\".576 While, according to Russia, the supply of natural gas \"naturally includes its\n'distribution' and related services\", Russia indicates that \"distribution\" and related services, which\nare supplied by \"distribution system operators\", are excluded from the services at issue.577\n7.256. The European Union contends that Russia's definition of the services at issue is excessively\nbroad578, and does not fit with the reality in the gas markets or the objective characteristics of the\nactivities at stake.579\n7.257. The European Union submits that pipeline transport services are very specific services\nconsisting of the carrying of natural gas from one point to another via pipeline, namely from the\npoint of production to the point where the gas is trans ferred into local distribution systems for\nsupply (i.e. sale) to customers at lower pressure. 580 The European Union argues that the\ndistribution or supply (i.e. the sale) of natural gas 581, and LNG services are not covered under\n\"pipeline transport services\".582\n7.258. The European Union further argues that Russia's proposed definition does not correspond\nto the ordinary meaning of \"pipeline transport services\" and ignores the principle of mutual\nexclusivity of sectors and sub-sectors in the CPC.583 For the European Union, there is no such thing\n\n568 Russia's first written submission, paras. 96-97.\n569 Russia's first written submission, para. 100.\n570 Russia's first written submission, paras. 99-100 (referring to Sprague Natural Gas Glossary,\nhttp://www.spragueenergy.com/natgas/additional-resources/glossary (accessed 10 May 2016), (Exhibit\nRUS-28)).\n571 Russia's first written submission, paras. 101-102.\n572 Russia's first written submission, para. 102.\n573 Russia's response to the Panel question No. 62, para. 288; and second written submission, para. 79.\n574 Russia's response to the Panel question No. 155, para. 1.\n575 Russia's first written submission, para. 104.\n576 Russia's first written submission, para. 94.\n577 Russia's first written submission, fn 117. Russia also excludes storage services from the services at\nissue. (See Russia's comments on European Union's response to Panel question No. 156, para. 58).\n578 European Union's first written submission, para. 51.\n579 European Union's first written submission, para. 50; and opening statement at the second meeting of\nthe Panel, para. 18.\n580 European Union's first written submission, para. 80.\n581 European Union's first written submission, paras. 71 and 80; and opening statement at the second\n582 European Union's first written submission, para. 80; and opening statement at the second meeting of\nthe Panel, para. 20.\n583 European Union's comments on Russia's response to Panel question No. 155, para. 5.\n\nas \"supply services\" in the GATS and the basis for interpreting \"pipeline transport services\" should\nnot be the business model used by one specific Russian company.584\n7.259. We observe, first, that it is the prerogative of Russia, as the complaining party, to identify\nthe services at issue in this dispute. Nonetheless, this prerogative does not necessarily entail\nunlimited discretion when it comes to defining the services at issue.\n7.260. In our view, the definition of the services at issue is fundamental for a proper assessment\nof claims under the GATS and, consequently, a panel has the authority, indeed the duty, to\naddress it. 585 We also recall that previous panels looked into the m eaning and scope of the\nservices at issue identified in the complainant's panel request.586 Likewise, we consider that we are\nnot bound by Russia's proposed definition and that we must look into the meaning and scope of\nthe services at issue identified in Ru ssia's panel request before proceeding to an assessment of\nRussia's claims under the GATS.\n7.261. Two different , albeit closely related , tasks arise with respect to our assessment of the\nmeaning and scope of the services at issue. One task is for us to look into the meaning and scope\nof the phrase \"natural gas pipeline transport services\" or \"pipeline transport services\". Another\ntask is to interpret, in accordance with the rules of treaty interpretation, the meaning and scope of\nthe relevant sectoral entries in the Schedules of Croatia, Hungary and Lithuania identified by\nRussia in the context of its claims under Articles XVI:2 and XVII of the GATS (see section 7.4.2\nbelow).\n7.262. In this dispute, we note the similarity between, on the one hand, the terms used by Russia\nto identify the services at issue, i.e. \"natural gas pipeline transport services\" or \"pipeline transport\nservices\", and, on the other hand, \"Pipeline Transport [ Services]\"587, the terms found under\nsector 11.G in the Schedules of Croatia, Hungary and Lithuania. In view of this similarity, we need\nto ensure a coherent interpretation of the meaning and scope of, respectively, the services at issue\nand the terms used in the Schedules.588\n7.263. We recall that the parties to the dispute agree that the services at issue are \"natural gas\npipeline transport services\" or \"pipeline transport services\". 589 Both parties also concur that the\nservices at issue encompass transmission of natural gas, which they describe in a similar\nmanner.590 We also observe that both parties consider that transportation or transmission of\n\n584 European Union's comments on Russia's response to Panel question No. 155, paras. 5-6.\n585 The Appellate Body explained that:\nPanels have to address and dispose of certain issues of a fundamental nature, even if the parties\nto the dispute remain silent on those issues. … panels cannot simply ignore issues which go to\nthe root of their jurisdiction – that is, to their authority to deal with and dispose of matters.\nRather, panels must deal with such issues – if necessary on their own motion – in order to satisfy\nthemselves that they have authority to proceed. (Appellate Body Report, Mexico – Corn Syrup\n(Article 21.5 – US), para. 36).\n586 Panel Reports, China – Electronic Payment Services, paras. 7.25-7.37; and China – Publications and\nAudiovisual Products, paras. 7.1147-7.1153.\n587 For the use of the expression \"Pipeline Transport [Services]\", see below footnote 652.\n588 According to Russia, \"Sector 11G, 'Pipeline Transport' services, includes natural gas pipeline\ntransport services, including LNG services, the services at issue in this dispute, as broadly defined therein\"\n(Russia's first written submission, para. 117). We note that, in a response to a question by the Panel, Russia\nexplains that the \"scope issues\" concerning the services at issue are \"relevant to the commitments of Croatia,\nHungary and Lithuania in Sector 11G of their GATS Schedules, the 'Pipeline Transport' services sector, which\ndo not necessarily overlap with the scope of covered services, as discussed below\". (Russia's response to Panel\nquestion No. 155, para. 2). However, Russia does not further specify to what extent the scope of, respectively,\nthe services at issue and the services covered under sector 11.G in those three Schedules would \"not\nnecessarily overlap.\" We also understand that the arguments of the European Union when discussing the\nservices at issue and the interpretation of the sectoral entries in the Schedules of Croatia, Hungary and\nLithuania are largely based on the same grounds. (See European Union's first written submission, paras. 50 ff.;\nand comments on Russia's response to Panel question No. 155, paras. 5-7).\n589 For the sake of convenience, we shall use the phrase \"pipeline transport services\" when referring to\nthe services at issue in the remainder of our Report.\n590 According to Russia, \"transmission\" includes the industry segment responsible for transporting\nnatural gas via high pressure pipelines between the producers/generators and local distribution companies or\nlarge end users. (See Russia's first written submission, para. 100). The European Union states that \"pipeline\ntransport services\" encompass \"the carrying of natural gas from one point to another via pipeline, namely from\nthe point of production to the point where the gas is transferred to the local distribution system\". (See\n\nnatural gas through transmission pipelines correspond to the services provided by TSOs under the\nDirective.591 We see no reason to disagree with the parties. In our view, \"pipeline transport\nservices\" encompass the transportation or transmission of natural gas through transmission\npipelines and also coincide with the services provided by a TSO under the Directive.\n7.264. The parties disagree, however, on whether (i) \"supply\" of natural gas and \"supply\nservices\", as well as (ii) LNG services should be encompassed under the definition of \"pipeline\ntransport services\".592 We shall therefore turn to these two issues.\n7.4.1.2 Analysis by the Panel\n\"Supply\" of natural gas and \"supply services\" in Russia's proposed definition\n7.265. According to Russia, the \"supply\" of natural gas is not a separate market segment, unlike\nthe transmission segment, but encompasses the entire gas market which, in Russia's view, can be\nthought of as a \"supply system\". 593 For Russia, it is essential to include the supply of natural gas\nor \"supply services\" – the latter referring, according to Russia, t o a service overlapping with\nnatural gas production, sale and transmission – in the definition of \"natural gas pipeline transport\nservices\".594 In Russia's view, \"a producer is, by definition, a supplier of natural gas\", and a gas\nsupplier \"also supplies the market with pipeline transport services\".595 In response to a question by\nthe Panel, Russia further explains:\nThe main components of the \"supply\" of natural gas as a \"service\" include services\nthat overlap with natural gas production, as well as services re lated to the sale of\nnatural gas, as the EU has argued. Supply services naturally overlap to a broad\ndegree with the services required for the \"transmission\" or transport of natural gas.\nRussia considered it essential to include both transmission and suppl y services in the\ndefinition of covered services to recognize expressly (1) that this overlapping\nrelationship is critical to understanding how pipeline transport services are supplied in\nthe EU and elsewhere and the competitive relationship between relate d types of\nservice suppliers; and (2) that the EU seeks to separate the supply and transmission\nsegments of the market in certain instances, but not others, in what Russia believes is\na selective effort to marginalize Russian pipeline transport services an d serv ice\nsuppliers and fulfil the EU' s overriding objective of reducing reliance on Russian\nnatural gas.596\n7.266. The European Union argues that \"natural gas pipeline transport services\" do not include\nthe supply of natural gas which entails the activity of sell ing gas to industrial, commercial and\nhousehold consumers. 597 The definition of the word \"service\" indicates that the production of a\ngood must be distinguished from the services that are related to that good. 598 Moreover, for the\nEuropean Union, there is no such thing as a \"supply service\" in the GATS.599\n\nEuropean Union's first written submission, para. 80). The parties do not distinguish between transmission of\none's own natural gas versus transmission of somebody else's natural gas and we do not feel it is necessary to\ndraw such a distinction for the purpose of this case.\n591 See Russia's first written submission para. 100; and European Union's second written submission,\npara. 72.\n592 The parties also disagree as to whether services related to \"upstream pipeline networks\", as defined\nin Article 2(2) fall under the scope of the services at issue. Russia also argues that upstream pipeline networks\nservices are included the definition of the services at issue. (See Russia's first written submission, para. 94).\nThe European Union is of the view that upstream pipeline networks do not carry out transmission as pipeline\ntransport services. (European Union's opening statement at the second meeting of the Panel, para. 21). As we\nhave determined that Russia's claim under the GATS against the upstream pipeline networks measure is\noutside our terms of reference (see para. 7.129), we will not discuss further whether upstream pipeline\nnetwork services fall within the scope of \"pipeline transport services\".\n593 Russia's first written submission, para. 102.\n594 Russia's response to the Panel question No. 62, para. 288.\n595 Russia's response to the Panel question No. 155, para. 1.\n596 Russia's response to Panel question No. 62, para. 288.\n597 European Union's first written submission, para. 60.\n598 European Union's first written submission, paras. 65-66 (referring to Oxford English Dictionary\nOnline, definition of \"service, n.1\"\n\n7.267. Russia's explanations with respect to \"supply\" and \"supply services\" are not entirely clear.\nWe understand that Russia views \"supply\" as referring to the \"supply\" of natural gas by producers\nto consumers, which Russia also refers to as \"the entire gas market\" or \"a supply system\". Russia\nalso seems to equate \"supply\" of natural gas with \"supply services\". 600 To our mind, the notions of\n\"supply\" and \"supply services\" that Russia includes in its proposed definition of the services at\nissue raise three types of conceptual and systemic difficulties. They (i) encompass activities falling\noutside the scope of the GATS; (ii) are redundant to the extent that \"transmission\" of gas , in\nRussia's own words, \"overlaps\" with \"supply\", and (iii) do not allow to identify with sufficient clarity\nthe services which would be concerned by our findings and cannot be reconciled with the principle\nof mutual exclusivity of sectors and sub-sectors. We discuss these three issues in turn below.\n7.268. Starting with the first issue raised in the previous paragraph, we observe that Russia\ngrounds its proposed understanding of the \"supply\" of natural gas on dictionary definitions of the\nword \"supply\" which, Russia notes, has a broad ordinary meaning. 601 As acknowledged by Russia,\nhowever, \"[i]ndustry and other glossaries of natural gas terms normally do not define natural gas\n'supply'\".602 In any event, assuming that the \"supply\" of natural gas should be ascribed the broad\ndefinition proposed by Russia 603, we cannot agree with Russia's proposition that the \"supply \" of\nnatural gas should be viewed as a service. We recall that the GATS applies to measures affecting\n\"trade in services\", the latter being defined as \"the supply of a service\" through any of the fou r\nmodes defined in Article I:2(a) to (d). In turn, the \"supply of a service\" includes \"the production,\ndistribution, marketing, sale a nd delivery of a service\" (GATS Article XXVIII(b)). Hence, the\n\"supply\" of natural gas, namely the supply of a good 604, does not fall within the scope of the\nGATS.605\n7.269. In addition, b y including production and/or services related to production, transmission\nand sale of natural gas, it appears to us that Russia's notion of \"supply\" seeks to subsume the\nentire gas supply chain under the phrase \"pipeline transport services\" , thus blurring the line\nbetween trade in goods and trade in services . As noted by the European Union, the gas industry\n\nhttp://www.oed.com/view/Entry/176678?rskey=JSiVqR&result=1&isAdvanced=false#eid (accessed 1 July\n2016), (Exhibit EU-24)).\n599 European Union's comments on Russia's response to Panel question No. 155, para. 6.\n600 See, for instance, Russia's response to Panel question No. 155, para. 8.\n601 Russia's first written submission, para. 101, (referring to Shorter Oxford English Dictionary,\nW. Trumble and A. Stevenson (eds) (Oxford University Press, 2002), Vol. II, pp.3118-3119, which defines the\nverb \"supply\" as meaning, inter alia, \"provide or make available (something needed or wanted); furnish for use\nor consumption, esp. commercially; yield, afford\"). Russia also refers to the definition of \"supply\" as a noun\nbeing defined, inter alia, as \"A quantity or amount of something supplied, a stock or store of something\nprovided or obtainable … A system by which such a store (of water, gas, blood, etc.) is made available at a\ndistance; a network by which something is conveyed to a site\". (Ibid.)\n602 Russia's first written submission, para. 102, (referring to H. R. Williams and C. J. Myers (eds.),\nManual of Oil and Gas Terms, 15th edn (LexisNexis, 2012) (selected pages), (Exhibit RUS-29); and University\nof Texas at Austin, Petroleum Extension Service, A Dictionary for the Oil and Gas Industry, 2nd edn, (Austin,\nTexas 2011), p. 165, (Exhibit RUS-270)). Russia also refers to \"market descriptions\" which, in its view, \"tend\ninstead to describe supply and supply services in the broadest possible sense\". (See Russia's first written\nsubmission, para. 102 (referring to A. Goldthau, \"The Geopolitics of Natural Gas: The Politics of Natural Gas\nDevelopment in the European Union\", Harvard University's Belfer Center & Rice University's Baker Institute\nCenter for Energy Studies, (October 2013), (Exhibit RUS-30))). We observe that this document is a \"study on\nthe geopolitical implications of natural gas\" (see p. 5) and Russia does not point to a specific page or\nparagraph allegedly supporting its views. Having reviewed this document, we understand that the term\n\"supply\" as used therein chiefly refers to supply of gas and we observe that the notion of \"supply services\" is\nnot used in this document.\n603 According to the European Union, which refers to the definition contained in Article 2(7) of the\nDirective, \"supply\" includes only the sale of gas. (European Union's first written submission, para. 67). Russia\ntakes issue with this definition which it considers too narrow. (Russia's first written submission, para. 103). We\ndo not find it necessary to discuss the appropriateness of the definition of \"supply\" in the Directive in this case.\n604 Natural gas is obviously not \"tangible\", i.e., \"[a]ble to be touched; discernible or perceptible by\ntouch; having material form\" (Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford\nUniversity Press, 2007), Vol. 2, p. 3175), but is unquestionably a \"good\". As noted by the European Union,\nnatural gas is classified under the Harmonised System, which covers only goods (LNG is found under HS\n2711.11 and natural gas in its gaseous state under HS 2711.21). (European Union's first written submission,\npara. 71 (referring to Harmonized Commodity Description and Coding System, Chapter 27, available at:\nwww.wcoomd.org (accessed 3 August 2017), (HS Chapter 27), (Exhibit EU-32))). We also note that Russia\ndoes not argue otherwise.\n605 For the same reasons, we cannot accept Russia's proposition that the \"supply\" of LNG is a service.\n\ndoes not involve only trade in services, it also involves trade in goods. 606 The production of ga s\ndoes not fall within the scope of the GATS and the sale of gas is not necessarily a service.607 In our\nview, it would be improper for a panel to rely on a definition of the services at issue which includes\nactivities falling outside the scope of the GATS.\n7.270. Turning to the second issue raised in paragraph 7.267, we recall that \"transmission\" and\n\"supply\" are two elements in Russia's definition of \"pipeline transport se rvices\". Russia explains\nthat transmission of natural gas \"naturally includes its supply\" 608 and also that \"[s]upply services\nnaturally overlap to a broad degree with the services required for the 'transmission' or transport of\nnatural gas\".609 As noted above, both parties agree that transmission of gas through pipelines is\nencompassed under Russia's proposed definition of the services at issue as per the reference to\nthe term \"transmission (or transport)\" included therein. To the extent that the notion s of \"supply\"\nand \"supply services\" \"overlap\" with transmission of gas, these notions are redundant.\n7.271. Finally, with respect to the third issue raised in paragraph 7.267, we examine more closely\nthe notion of \"supply services\". In its first written submission, Russia calls for an interpretation of\n\"supply\" and \"supply services\" in the \"broadest possible sense \" to include the services covered by\nthe Directive.610 In response to a question by the Panel, Russia explains that \"supply services\"\n\"overlap with natural gas production \", are \"related to the sale of natural gas \" and \"naturally\noverlap to a broad degree wit h the services required for the 'transmission' or transport of natural\ngas\".611 In response to another question by the Panel, Russia explains that \"it is more accurate\nand consistent with the ordinary meanings of these terms and actual industry practice to v iew\npipeline transport services as supplied not in a vacuum … but rather as part of a continuum\". 612\nRussia further explains that the \"entire continuum of pipeline transport services\" provided by VIUs\n\"also includes typical 'supply' services, such as cleaning, processing and similar services to prepare\nthe gas for consumption and facilitate its transmission and sale to traders and consumers;\nnegotiating supply and purchase commitments and relevant terms of sale, including price and\nvolume, normally via long t erm services and supply contracts; and injection of the purified (or\n\"sales\") gas into the transmission system to include arranging for and ensuring adequate and\ntimely pipeline transmission capacity\".613\n7.272. Based on Russia's explanations, the notion of \"suppl y services\" appears to be a catch -all\nterm to subsume under \"pipeline transport services\" an open-ended list of services that are related\nto the \"supply\" of natural gas.614 For Russia, this notion includes not only \"the entire continuum\" of\nservices supplied by VIUs, but also all services referred to in the Directive, except those services\nthat Russia has decided to exclude from the dispute.615\n7.273. Russia's notion of \"supply services\" calls for two comments. First, we find it impossible to\nidentify with sufficient clarity the services which are encompassed under the notion of \"supply\nservices\", which means that, should we use that notion, we would not be in a position to assess\n\n606 European Union's first written submission, para. 71; and comments on Russia's response to Panel\nquestion No. 155, para. 6. Ukraine also argues that \"the sale of gas and services related thereto are clearly\ndifferent business activities\" and that \"the sale of gas as a good, including to end-users\" must be dealt with\nunder the GATT. (See Ukraine's third-party submission, para. 7).\n607 In China – Publications and Audiovisual Products, the panel found that \"[o]bviously, the simple\nproduction of a good could not be said to constitute a service, nor would it make sense to undertake\ncommitments under the GATS as regards the production of a good\". (Panel Report, China – Publications and\nAudiovisual Products, fn 659). Moreover, like the sale of other goods, the sale of gas may entail the direct sale\nby producers or the resale by traders (wholesalers or retailers). Wholesale and retail services fall under the\nGATS, but not the direct sale of a product by a producer.\n608 Russia's first written submission, para. 104.\n609 Russia's response to Panel question No. 62, para. 288.\n610 Russia's first written submission, paras. 102-103; and Russia's response to Panel question\nNo. 155(a), paras. 3-12.\n611 Russia's response to Panel question No. 62, para. 288 (quoted above at para. 7.265).\n612 Russia's response to Panel question No. 155, para. 10.\n613 Russia's response to Panel question No. 155, para. 10 (referring to Article 44 of the Directive,\nentitled \"Record keeping\").\n614 We also recall that, pursuant to Russia's proposed definition, pipeline transport services \"include, but\nare not necessarily limited to\" transmission, supply and LNG services.\n615 We recall that Russia excludes distribution services of gas and storage services from the scope of the\ndispute. (See Russia's first written submission, fn 117; response to Panel question No. 57, para. 310; and\ncomments on European Union's response to Panel question No. 156, para. 58).\n\nthe scope of our findings. Second, purs uant to the principle of mutual exclusivity of sectors and\nsub-sectors – referred to by the Appellate Body when interpreting GATS Schedules 616 – a given\nservice cannot fall under two different sectors or subsectors at the same time.\n7.274. The importance of the co ncept of \"sector\" under the GATS is obvious for Members'\nobligations on market access (GATS Article XVI) and national treatment (GATS Article XVII)\nbecause these provisions apply in service sectors as listed by each Member in its GATS Schedule.\nHowever, as indicated by the definition of \"'sector' of a service\" in GATS Article XXVIII(e), the\nrelevance of the concept of \"sector\" is not limited to Members' specific commitments. 617 The\napplication of other GATS provisions is also premised on the identification of sectors618, as is the\napplication of certain other WTO obligations. 619 By clustering all services related to natural gas\nunder the notion of \"supply services\", the latter being in turn meant to be included under the\nterms \"pipeline transport services\", Russia 's proposed definition leads to an artificially broad\nconstruction of the latter terms and cannot be reconciled with the principle of mutual exclusivity of\nsectors and sub-sectors.\n7.275. Russia also explains that an objective in defining the covered services is \"to follow as\nclosely as possible the scope and subject matter of the Directive\", while also including\n\"corrections\" in response to the fact that \"the EU attempts in the Directive to manipulate\ndefinitions to serve its regulatory objectives\". 620 According t o Russia, the definitions in the\nDirective help support the regulatory and policy distinction \"between the TSO, transmission system\nand services or 'functions of transmission', on the one hand, and the supply portion of the VIU and\n'functions of production or supply', on the other\" 621, which, in turn, \"helps facilitate the European\nUnion providing discriminatory treatment through the Directive and other measures, to Russian\npipeline transport services and service suppliers\".622\n7.276. We are not convinced by the proposition that the definition of the services at issue should\nbe governed by the scope of a challenged instrument when this leads to an artificially broad\nconstruction and/or includes activities falling outside the scope of the GATS. We are similarly\nunconvinced by Russia's explanations that its definition seeks to address the \"discriminatory\ntreatment\" granted to Russian services and service suppliers that, according to Russia, derives\nfrom the definitions contained in the Directive623 and that all these \"overlapping\" services would be\nin a competitive relationship. 624 While a determination of whether Russian service suppliers are in\na competitive relationship and discriminated against when compared with other services and\nservice suppliers is an integral part of a panel's assessment under Articles II:1 and XVII of the\nGATS, it does not, in and of itself, define the services at issue.\n7.277. In light of the foregoing, we conclude that the notion s of \"supply\" and \"supply services\"\nare not encompassed within the meaning and scope of the terms \"pipeline transport services\".\n\n616 Appellate Body Report, US – Gambling, para. 172. We discuss this principle further in section 7.4.2\nbelow.\n617 Pursuant to Article XXVIII(e) of the GATS, a \"'sector' of a service means, (i) with reference to a\nspecific commitment, one or more, or all, subsectors of that services, as specified in a Member's Schedule,\n(ii) otherwise, the whole of that service sector, including all of its subsectors.\" (emphasis added)\n618 For instance, in order to be consistent with Article V of the GATS, an economic integration agreement\nneeds to have \"substantial sectoral coverage\", a condition which is understood, inter alia, in terms of \"number\nof sectors\". While the application of the MFN obligation in Article II:1 of the GATS is not explicitly sector-based,\nMFN exemptions maintained by Members pursuant to Article II:2 and the GATS Annex on Article II Exemptions\nare listed by sector. (See Lists of Article II Exemptions, documents GATS/EL/2 to -/156). Members' Lists of\nArticle II Exemptions are part of the GATS Annex on Article II Exemption and, consequently, form an integral\npart of the GATS.\n619 Pursuant to Article 22.3(f)(ii) of the DSU, the suspension of concessions under the GATS also takes\nplace on the basis of \"sectors\" as identified in the \"Services Sectoral Classification List\". The latter refers to\nServices Sectoral Classification List, Note by the Secretariat, MTN.GNS/W/120 (10 July 1991), (W/120),\n(Exhibits EU-15/RUS-38).\n620 Russia's response to the Panel question No. 68, para. 313.\n621 Russia's first written submission, para. 110.\n622 Russia's first written submission, para. 110.\n623 Russia's first written submission, para. 97.\n624 Russia explains that by including \"both supply and transmission services in the definition of covered\nservices in this dispute\", Russia \"sought to emphasise that … pipeline transport services include each of these\noverlapping services, many of which along with the suppliers of pipeline transport services are in a competitive\nrelationship\". (Russia's second written submission, para. 79).\n\nLNG services in Russia's proposed definition\n7.278. Russia submits that LNG services are included within the meaning of \"pipeline transport\nservices\".625 According to Russia, LNG services correspond to the servi ces described in\nArticles 2(11) and 2(12) of the Directive and relate to the operation by LNG system operators of\nLNG facilities, including the importation, offloading and regasification or reconversion of LNG to its\nnatural gaseous state, as well as relat ed temporary storage. 626 For Russia, \"just as LNG services\nare 'supply' services they are 'transmission services', in that they concern the transport or\nconveyance of reconverted natural gas either directly from the LNG transport vessel or from the\nadjacent regasification facility via pipeline to the transmission system\".627\n7.279. The European Union argues that LNG services must be distinguished from \"pipeline\ntransport services\". 628 For the European Union, the essence of LNG services is liquefaction and\nimportation, offloading and re -gasification of natural gas, but does not concern transmission via\npipeline.629 The European Union also submits that CPC 2.1, which classifies LNG services and\npipeline transportation services in two different categories, confirms this understanding.630\n7.280. We start by observing that Russia's inclusion of LNG services in the definition of the\nservices at issue stems from the same proposition, discussed in the previous section, that all\nservices involved in the gas supply chain should fall under th e phrase \"pipeline transport services\"\non the ground that they are supplied as part of a \"continuum\" and are covered under the Directive.\nWhen discussing Russia's notions of \"supply\" and \"supply services\" in the previous section, we\nhave addressed the conceptual and systemic problems arising from such a proposition. The various\nconcerns we raised above are equally relevant when it comes to Russia's proposition that LNG\nservices should be viewed as \"supply\" and \"transmission\" services and, for that reason, i ncluded\nwithin the meaning of \"pipeline transport services\".\n7.281. Furthermore, we note that, according to the parties, LNG services consist principally of the\nliquefaction of natural gas and importation, offloading and re -gasification of LNG. 631 Hence, the\nessential or core activities carried out in relation to LNG do not entail transportation or\ntransmission of natural gas. Liquefaction of natural gas and re-gasification of LNG take place at\nspecial terminals, while transportation or transmission of natural gas requires a pipeline\ninfrastructure.\n7.282. We observe that there is complementarity between LNG activities and transport via\npipeline: liquefaction of natural gas permits the transport of LNG in special tankers via sea vessels,\nwhile regasification allows regasified LNG to be delivered to the transmission system and\nsubsequently to the final consumer.632 Hence, we can agree with Russia that LNG services concern\nor enable \"pipeline transport services\" of regasified LNG .633 However, in our view, a service\nconcerning or enabling the supply of another service must not necessarily and automatically be\nthat other service for GATS purposes.\n7.283. Finally, the fact that regasified LNG \"is … eventually consumed in the same manner as \"634\nnatural gas that has not been previously liquefied does not make LNG services and pipeline\ntransport services one and the same thing. Russia's argument conflates the service with the good.\n\n625 Russia's first written submission, para. 105.\n626 Russia's second written submission, para. 80\n627 Russia's second written submission, para. 81.\n628 European Union's opening statement at the second meeting of the Panel, para. 20.\n629 European Union's opening statement at the second meeting of the Panel, para. 20; and European\nUnion's response to the Panel question No. 53, para. 145.\n630 European Union's comments on Russia's response to Panel question No. 155, para. 12.\n631 Both parties define LNG services by reference to the definitions of \"LNG facility\" and \"LNG system\noperator\" contained, respectively, in Article 2(11) and (12) of the Directive. (See Russia's first written\nsubmission, para. 107; and European Union's first written submission, para. 285). We do not mean to say,\nhowever, that the definitions in the Directive should govern the definition of LNG services for the purpose of\nthe GATS.\n632 As further discussed in para. 7.842 below, regasified LNG is transported and supplied via pipelines in\nthe same way as natural gas that has not been previously liquefied.\n633 Russia's second written submission, para. 81.\n634 Russia's first written submission, para. 105.\n\n7.284. On the basis of the foregoing, we conclude that LNG services are not encompassed within\nthe terms \"pipeline transport services\".\nConclusion\n7.285. Our analysis of Russia's proposed definition of the services at issue leads us to the\nconclusion that \"pipeline transport services\" encompass transportation or transmission of natural\ngas through transmission pipelines and coincide with the services provided by TSOs under the\nDirective.635 We further conclude that \"pipeline transport services\" do not include the notions of\n\"supply\" and \"supply services\", nor do they include LNG services. These conclusions find further\nsupport in our analysis of the meaning and scope of the treaty terms \"Pipeline Transport\n[Services]\" in the Schedules of Croatia, Hungary and Lithuania, as we shall see in section 7.4.2\nbelow.\n7.286. Therefore, any finding concerning \"pipeline transport services\", the services at issue, will\nnot concern \"supply\" and \"supply services\", nor will they concern LNG services.\n7.4.2 Interpretation of the Schedules of Croatia, Hungary and Lithuania\n7.4.2.1 Introduction\n7.287. We turn now to an examination of the Schedules of Croatia, Hungary and Lithuania at\nstake in this dispute.\n7.288. As will be discussed in more detail below, Russia claims that the unbundling measure in\nthe national implementing laws of Croatia, Hungary and Lithuania is inconsistent with\nArticle XVI:2(e) and (f) of the GATS and that the unbundling measure in the national implementing\nlaws of Croatia and Lithuania is inconsistent with Article XVI:2( a) of the GATS (see section 7.5.2\nbelow). Russia further claims that the public body measure and the third -country certification\nmeasure in the national implementing laws of Croatia, Hungary and Lithuania are inconsistent with\nArticle XVII of the GATS (see sections 7.6 and 7.10.2 below).\n7.289. It is well -established that, in order to establish a prima facie case of violation under\nArticle XVI:2 of the GATS , a complaining party must first establish that the responding party has\nundertaken relevant market access commitm ents.636 Similarly, in order to sustain a claim that a\nmeasure breaches Article XVII of the GATS, a complaining party must first establish that the\nresponding party has made relevant commitments on national treatment.637\n7.290. Russia alleges that Croatia, Hungary and Lithuania have undertaken specific commitments\non market access and national treatment with respect to the services at issue under sector 11.G,\n\"Pipeline Transport [Services]\"638 in their respective Schedules. 639 Russia has also confirmed that\neach of its claims under the GATS in this dispute concerns mode 3, namely the commercial\npresence mode of supply.640\n7.291. Therefore, we need to determine whether Russia has shown that Croatia, Hungary and\nLithuania have undertaken market access and national treatment commitments with respect to the\nservices at issue under sector 11.G, \"Pipeline Transport [Services]\" of their Schedules. For that\npurpose, we shall turn, first, to an examination of the terms \"Pipeline Transport [Service s]\" in the\nsectoral column of the Schedules concerned. We shall then examine, successively, Croatia's,\nHungary's and Lithuania's market access and national treatment commitments, as identified by\nRussia in this dispute.\n\n635 See Russia's first written submission para. 100; and European Union's second written submission,\npara. 72.\n636 See para. 7.233 above.\n637 See para. 7.235 above.\n638 For the use of the expression \"Pipeline Transport [Services]\", see below footnote 652.\n639 See Russia's first written submission, headings VI.A, VII.B and VIII.B.\n640 Russia's response to Panel question No. 56, para. 285.\n\n7.4.2.2 The terms \"Pipeline Transport [Services]\"\n7.4.2.2.1 Introduction\n7.292. We need to determine whether Russia has demonstrated that Croatia, Hungary and\nLithuania have undertaken specific commitments with respect to the services at issue under\nsector 11.G, concerning \"Pipeline Transport [Services]\" in their r espective Schedules of Specific\nCommitments.641\n7.293. Article XX:1 of the GATS provides that each Member \"shall set out in a Schedule the\nspecific commitments it undertakes\", notably on market access and national treatment. Pursuant\nto Article XX:3 of the GATS, Schedules of specific commitments \"shall form an integral part\" of the\nGATS and, thus, are legally part of the WTO Agreement. The Appellate Body has confirmed that\nGATS Schedules must be interpreted according to customary rules of interpretation of public\ninternational law, as codified in Articles 31 and 32 of the Vienna Convention.642\n7.294. We shall therefore interpret the relevant entries in the Schedules of Croatia, Hungary and\nLithuania in accordance with the ordinary meaning to be given to the terms of those Sc hedules in\ntheir context and in light of the object and purpose of the GATS in accordance with Article 31 of\nthe Vienna Convention . If necessary, w e will turn to supplementary means of interpretation\npursuant to Article 32 of the Vienna Convention.\n7.4.2.2.2 Analysis by the Panel\n7.295. Russia submits that the inscriptions \"Pipeline Transport [Services]\" under sector 11.G in\nthe Schedules of Croatia, Hungary and Lithuania cover natural gas transport pipeline services, i.e.\nthe services at issue in this dispute, which encomp ass the transmission and supply of natural gas,\nincluding LNG, and the supply of services necessary or otherwise related to the transmission (i.e.\ntransport) and supply of natural gas, including LNG services. 643 According to Russia, \"pipeline\ntransport\" as a specific subsector within the transport services sector includes services related to\neach of the categories or types of pipelines, including gathering, transmission and distribution\nsystems; it also includes the supply of services that enable the transpor t by pipelines of\nreconverted natural gas from an LNG carrier through the necessary connection lines and the\ntransmission system.644\n7.296. The European Union argues that Russia's proposed definition is excessively broad and does\nnot correspond to the ordinary mean ing of the relevant terms read in their context. According to\nthe European Union, Russia attempts to artificially stretch the meaning of the committed services\nin order to make an interpretation of WTO obligations that is also inappropriately broad. 645 The\nEuropean Union submits that the relevant entries in the Schedules of Croatia, Hungary and\nLithuania consist of the carrying of natural gas from one point to another via pipeline, namely from\nthe point of production to the point where the gas is transferred into local distribution systems for\nsupply to customers at lower pressure. 646 According to the European Union, sector 11.G does not\ncover the production and supply or sale of gas, nor does it include transport via other means than\npipelines.647 The European Un ion further contends that pipeline transport services must be\ndistinguished from liquefaction and regasification of natural gas (LNG services) for which other CPC\ncodes exist.648\n7.297. The relevant sectoral entries in the three Schedules at issue are as follows:\n\n641 Schedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000), (Exhibits EU-16/\nRUS-37); Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n 36); and Schedule of Specific Commitments of Lithuania, GATS/SC/133 (21 December 2001), (Exhibits EU-19/\nRUS-35).\n642 See Appellate Body Reports, US – Gambling, para. 160; and China – Publications and Audiovisual\nProducts, para. 348.\n643 Russia's first written submission, para. 128.\n644 Russia's first written submission, para. 133.\n645 European Union's first written submission, paras. 50-51.\n646 European Union's first written submission, para. 80.\n647 European Union's first written submission, para. 67.\n648 European Union's first written submission, para. 76.\n\nSector or subsector\n\nCroatia649\n\nHungary650 Lithuania651\n\n11. Transport Services\n…\nG. Pipeline Transport Services\n (CPC 713)\n\n11. Transport Services\n…\nG. Pipeline Transport\n\n11. Transport Services\n…\nG. Pipeline Transport\n (CPC 713)\n\n7.298. We observe that the sectoral entries in the three Schedules at issue all contain the terms\n\"Pipeline Transport\" and are inscribed under sector G (\"Pipeline Transport\"), Section 11\n(\"Transport Services\"). These entries also exhibit some variations. The entry in Hungary's\nSchedule does not contain a reference to \"CPC 713\" under the heading \"Pipeline Transport\",\ncontrary to the entries in the Schedules of Croatia and Lithuania. Another variation is the absence\nof the word \"Services\" following the terms \"Pipeline Transport\" in the Schedules of Hungary and\nLithuania. Considering the similarities of those entries, we will conduct a holistic analysis of the\nthree Schedules concerned, taking into account , as appropriate, the variations just noted. 652 We\nobserve that this approach coincides with the way both parties presented their arguments.\n7.299. Following the principles of treaty interpretation, we first determine the ordinary meaning of\nthe relevant terms used in sector 11.G.\nOrdinary meaning of \"Pipeline Transport [Services]\"\n7.300. Russia submits that, given the widely accepted ordinary meaning of \"pipeline transport\"\nand the related terms within the energy and transport service sectors, it follows that the use of\n\"Pipeline Transport\" in sector 11.G of the relevant Schedules was intended to encompass the\nnatural gas pipeline transport services at issue in this proceeding, i.e. the transmission and supply\nof natural gas, including LNG, and the supply of services necessary or otherwise related to the\ntransmission (i.e. transport) and supply of natural gas, including LNG services.653\n7.301. The European Union argues that the ordinary meaning of \"pipeline transport services\"\nbased on dictionary definitions and industry -specific descriptions does not involve the production\nand processing of gas, nor the s upply (i.e. sale) of gas to consumers. The European Union also\nexcludes transport via means of transport other than pipeline.654\n7.302. We begin our analysis with the ordinary meaning of the term \"Pipeline Transport\". The\nShorter Oxford English Dictionary defines \"pipeline\" as \"[a] continuous line of pipes; a long pipe for\nconveying oil, gas, etc., long distances, esp. underground; a (usu. flexible) tube for carrying liquid\nin machinery etc.\" 655 The term \"transport\" means \"[t]he carrying or conveyance of a p erson or\nthing from one place to another\". 656 Hence, pursuant to dictionary definitions, \"pipeline transport\"\nrefers to the carrying or conveying of oil, gas or other products over long distances through a long\npipe which is often underground.\n\n649 Schedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000), (Exhibits EU-16/\nRUS-37), p. 33.\n650 Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n36), p. 32.\n651 Schedule of Specific Commitments of Lithuania, GATS/SC/133 (21 December 2001), (Exhibits EU-19/\nRUS-35), p. 23.\n652 For the sake of convenience and in order to reflect the variations in those three entries, we shall use\nthe expression \"Pipeline Transport [Services]\" throughout this Report when referring collectively to the entry\nfound under sector 11.G in the Schedules of Croatia, Hungary and Lithuania.\n653 Russia's first written submission, para. 128; and second written submission, para. 82-86.\n654 European Union's first written submission, paras. 67-68.\n655 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 2218.\n656 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 3327.\n\n7.303. In the Schedu le of Croatia, the term \"Pipeline Transport\" is followed by the word\n\"Services\". The ordinary meaning of the term \"services\" is \"[t]he sector of the economy that\nsupplies the needs of the consumer but produces no tangible goods, as banking or tourism\".657\n7.304. We note that the Schedules of Hungary and Lithuania do not contain the term \"Services\"\nafter \"Pipeline Transport\". However, in those two Schedules, sector G is found under Section 11,\nentitled \"Transport Services\", which suggests that all the sectors contai ned in Section 11 concern\nservices of transport, whether or not the word \"services\" is explicitly mentioned in the sub -\nheading.658 Hence, the absence of the word \"Services\" after \"Pipeline Transport\" does not make a\nmaterial difference with respect to the me aning and scope of the commitments at issue in the\nSchedules of Hungary and Lithuania, as, in our view, this word is implied.\n7.305. Our analysis of dictionary definitions of the phrase \"Pipeline Transport [Services]\" in the\nSchedules of Croatia, Hungary and Lit huania indicates that this sector covers the activity\nconsisting in carrying or conveying goods such as oil or gas through a long pipe, often\nunderground, over long distances. The ordinary meaning of this phrase further indicates that the\nsector does not produce tangible goods.659\n7.306. Both parties refer to more specific glossaries and industry sources when discussing the\nordinary meaning of \"pipeline transport services\". The panel in China – Electronic Payment\nServices considered it appropriate to examine indust ry sources as potential relevant evidence of\nthe ordinary meaning of a specific term in a particular industry, in addition to general dictionaries,\nfor the purpose of determining the meaning of a term appearing in a GATS Schedule. 660 With this\nguidance in mi nd, we shall examine the meaning of the terms \"Pipeline Transport [Services]\" in\nindustry sources and specialized publications provided to us by the parties.\n7.307. The Manual of Oil & Gas Terms , provided by Russia, defines a \"pipeline\" as \"[a] tube or\nsystem of tubes used for the transportation of oil or gas\". 661 According to the Illustrated Glossary\nfor Transport Statistics , also referred to by Russia, the term \"pipeline\" is defined as \"a closed\nconduit, with pumps, valves and control devices, for conveying fluids , gases, or finely divided\nsolids by pumping or compression\". 662 In the same Glossary, a \"gas pipeline\" is defined as \"[a]ll\nparts of the pipe conduit, complete with such equipment as valves, compressor stations,\ncommunications systems, and meters for transp orting natural and/or supplemental gas from one\npoint to another, usually from a point in or beyond the producing field or processing plant to\nanother pipeline or to points of utilization\". 663 \"Pipeline transport\" is defined as \"[a]ny movement\nof crude or re fined liquid petroleum products or gases in a given pipeline network\". 664 A \"pipeline\nnetwork\" means \"[a]ll pipelines in a given area\".665\n7.308. Industry sources provided by the parties also present a similar description of three\ndifferent types of natural gas pipe lines, namely gathering pipelines, transportation (or trunk)\npipelines and distribution pipelines, used to convey natural gas from production fields to the\n\n657 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 2766.\n658 We observe that, in the W/120, the word \"Services\" is not used in a consistent manner across the\ndifferent sub-sectors in the \"Transport Services\" Section. For instance, while W/120 refers to \"Maritime\nTransport Services\", \"Air Transport Services\", \"Rail Transport Services\", \"Road Transport Services\", it omits the\nword \"Services\" for \"Internal Waterways Transport\", \"Space Transport\" and \"Pipeline Transport\". (See W/120,\n(Exhibits EU-15/RUS-38)). We observe a similar pattern in the Schedules of Hungary and Lithuania. We agree\nwith Russia that \"given that it cannot reasonably be disputed that all of the subsectors concern 'services', the\nfact that the description of certain subsectors includes the word 'services' is not a material distinction\".\n(Russia's first written submission, fn 200).\n659 As noted in footnote 604 above, natural gas is not tangible but is a good.\n660 Panel Report, China – Electronic Payment Services, para. 7.89. That panel cautioned, however, that\n\"panels must be mindful of the limitations, such as self-interest, that industry sources may present and should\ngovern their interpretive task accordingly\". (Ibid.)\n661 H. R. Williams and C. J. Myers (eds.), Manual of Oil and Gas Terms, 15th edn (LexisNexis, 2012)\n(selected pages), (Exhibit RUS-29), p. 766.\n662 Illustrated Glossary for Transport Statistics, Chapter D, \"Pipeline Transport\", 4th edn (UNECE 2009),\npp. 97-103, (UNECE glossary for transport statistics), (Exhibit RUS-41), p. 97.\n663 UNECE glossary for transport statistics, (Exhibit RUS-41), p. 97.\n664 UNECE glossary for transport statistics, (Exhibit RUS-41), p. 100.\n665 UNECE glossary for transport statistics, (Exhibit RUS-41), p. 97.\n\ntransmission system and then to the final consumer. 666 The usage of the terms \"pipeline\" and\n\"pipeline transport\" in industry sources or specialized glossaries does not cause us to question our\nunderstanding reached on the basis of dictionary definitions.\n7.309. Russia does not present specific arguments to the effect that the ordinary meaning of\n\"pipeline transport services\" would include the notions of \"supply\" and \"supply services\". Our own\nassessment based on dictionary definitions, industry sources and other specialized glossaries does\nnot allow us to read \"supply\" of natural gas or \"supply services\" into th e ordinary meaning of the\nterms \"Pipeline Transport [Services]\".\n7.310. Russia further asserts that the ordinary meaning of \"Pipeline Transport [Services]\" in\nsector 11.G includes LNG services, and refers to various sources which, in its view, support this\nproposition.667 Russia points to the description of the Klaipedos Nafta LNG terminal which states,\ninter alia, that \"all the services necessary to process that LNG, …, are supplied to facilitate the\npipeline transport of the natural gas to customers\". 668 Russia further quotes Article 2(11) of the\nDirective which defines a n LNG facility as including \"… ancillary services and temporary storage\nnecessary for the re-gasification process and subsequent delivery to the transmission system….\"669\nThe United Nations Economic Co mmission for Europe's (UNECE) LNG study also quoted by Russia\nindicates that, at regasification terminals, \"[t]he LNG is then warmed … and the resulting natural\ngas is injected into pipelines for delivery to local users\".670\n7.311. Even if the sources cited by Rus sia constitute relevant evidence to establish the ordinary\nmeaning of a treaty term 671, they do not go towards demonstrating that the ordinary meaning of\n\"pipeline transport\" includes LNG services. First, the sources referred to by Russia concern LNG\nand related activities, not \"pipeline transport services\". In addition, the fact that LNG services are\nsupplied \"to facilitate the pipeline transport of natural gas\", for \"subsequent delivery [of gas] to\nthe transmission system\" or with the purpose of injecting gas \"into the pipelines for delivery to\nlocal users\" indicates that there is a close relationship between LNG services and pipeline transport\nservices: this does not establish, however, that the ordinary meaning of \"pipeline transp ort\nservices\" includes LNG services. Similarly, the fact that LNG facilities may include some pipelines,\nfor example for the purpose of connecting the LNG facility with the transmission system 672 is not\nsufficient to read \"LNG services\" into the ordinary mea ning of \"pipeline transport services\".\nTherefore, we must conclude that the ordinary meaning of \"Pipeline Transport [Services]\" does not\nrefer to LNG services.\n7.312. To sum up, our examination of the ordinary meaning of the terms \"Pipeline Transport\n[Services]\" based on dictionary definitions and industry sources indicates that this sector covers\nthe activity consisting in carrying or conveying goods, usually oil or gas through a long pipe, often\n\n666 UNECE glossary for transport statistics, (Exhibit RUS-41), pp. 97-98; and US Department of\nTransportation, Pipeline & Hazardous Materials Safety Administration, \"Stakeholder Communications: Natural\nGas Pipeline Systems\" https://primis.phmsa.dot.gov/comm/NaturalGasPipelineSystems.htm (accessed 1 July\n2016) (Exhibit EU-26); MIT Study on the Future of Natural Gas, Chapter 6, \"Infrastructure\", pp. 131-146,\navailable at: http://energy.mit.edu/research/future-natural-gas/ (accessed 3 August 2017), (Exhibit EU-27);\nNaturalGas.org, \"Natural Gas – From Wellhead to Burner Tip\" http://naturalgas.org/naturalgas/ (accessed 3\nAugust 2017) (Exhibit EU-28); and US Energy Information Administration, Natural Gas Transmission Path\nhttp://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/transpath_fig.html\n(accessed 1 July 2016), (Exhibit EU-29).\n667 Russia's first written submission, paras. 129-130.\n668 Russia's first written submission, para. 132 (referring to Commission Decision of 20 November 2013\non the state aid to Klaipedos NAFTA – LNG Terminal (SA.36740 (2013/NN)), C(2013) 7884 final, (Exhibit\nRUS-42)).\n669 Russia's first written submission, para. 130 (referring to Directive 2009/73/EC, (Exhibit EU-5),\nArticle 2(11)).\n670 Russia's first written submission, para. 120, (referring to United Nations Economic Commission for\nEurope, Study on Current Status and Perspectives for LNG in the UNECE Region (UN 2013), Chapter 2,\nFigure 1: Illustrations of LNG and Pipeline Value Chains, p. 2, (UNECE LNG Study), (Exhibit RUS-271)) (the\ndocument originally submitted by Russia with its first written submission did not contain the quote referred to\nby Russia. At the request of the Panel, Russia submitted the document quoted in its first written submission as\nExhibit RUS-271).\n671 For the sake of discussing comprehensively Russia's arguments, we consider the evidence relied to\nby Russia and contained in Exhibits RUS-271, RUS-42 and EU-5. We also note that the European Union does\nnot object to Russia using these sources for the purpose of establishing the ordinary meaning of treaty terms.\n672 See Russia's first written submission, paras. 131-132 (referring to the Klaipedos Nafta LNG\nterminal).\n\nunderground, over long distances. We also found that the ordinary m eaning of those terms does\nnot refer to \"supply\" or \"supply services\", nor does it refer to LNG services.\n7.313. We turn now to the contextual elements of the phrase \"Pipeline Transport [Services]\"\ncontained in the Schedules of Croatia, Hungary and Lithuania.\nContext\n7.314. Principles of treaty interpretation direct us to consider the ordinary meaning of treaty\nterms in their context, which comprises the text of the treaty, including its preamble and annexes.\nFor the purpose of interpreting a GATS Schedule, the Appellate Body has explained that the\ncontext includes (a) the remainder of the Member's Schedule; (b) the substantive provisions of the\nGATS; (c) the provisions of covered agreements other than the GATS; and (d) the GATS Schedules\nof other Members.673\n7.315. In this disput e, we consider that our examination of the relevant context should cover\nother elements in the Schedules of Croatia, Hungary and Lithuania, in particular: (i) the rest of\nsector 11.G; and (ii) the remainder of the Schedules of Croatia, Hungary and Lithuania.\nThe rest of sector 11.G in the Schedules of Croatia, Hungary and Lithuania\n7.316. The phrase \"Pipeline Transport [Services]\" in the Schedules of Croatia and Lithuania is\nimmediately followed by the inscription \"(CPC 713)\" to which we must give meaning and effect.\n7.317. The panel in EC – Bananas III observed that, in the Schedule of the European Community,\nthe terms \"(CPC 622)\" were inscribed after the terms \"wholesale trade services\", and concluded\nthat \"[a]ny legal definition of the scope of the EC's commitments in wholesale services should be\nbased on the CPC description of the sector and the activities it covers\". 674 Hence, following the\nguidance by the panel in EC – Bananas III, we consider that the legal definition of the scope of the\ncommitments on \"Pipeline Transport [Services]\" under sector 11.G in the Schedules of Croatia and\nLithuania should be based on the description found under CPC 713.675\n7.318. Before proceeding to an examination of the description found under \"CPC 713\", we recall\nthat the sectoral entry in Hungary 's Schedule under sector 11.G, entitled \"Pipeline Transport\", is\nnot followed by the inscription \"CPC 713\". We must therefore determine whether the absence of\nthe inscription \"CPC 713\" in the Schedule of Hungary has a material effect on the assessment of\nscope of Hungary's commitments under sector 11.G. In addressing this question, we note that the\nhorizontal section of Hungary's Schedule contains a footnote that states as follows:\nNumbering of sectors and sub -sectors is that of the Services Sectoral Classi fication\nList (MTN.GNS/W/120). However, if reference to another definition is also made, the\nspecific commitment relates only to the services covered by that definition. Where an\n\"ex\" is attached to a CPC code, only part of the services defined under the r elevant\ncode of the UN Central Product Classification is covered.676\n7.319. According to the European Union, the CPC is relevant for interpreting Hungary's\ncommitments because this footnote \"refers to W/120, indicating that the numbering is according\n\n673 Appellate Body Report, US – Gambling, para. 7.102. When examining the remainder of a Member's\nSchedule as part of a contextual analysis, previous panel and the Appellate Body reports reviewed in particular\nthe structure of the Schedule, other relevant elements of the subsector at issue, sectoral headings in the sector\nconcerned, market access and national treatment commitments, as well as commitments scheduled under\nanother related sector. (Appellate Body Reports, US – Gambling, para. 179; and China – Publications and\nAudiovisual Products, paras. 361-372; and Panel Report, China – Electronic Payment Services, para. 7.104).\n674 Panel Reports, EC – Bananas III, para. 7.289.\n675 CPC codes in the W/120 Services Sectoral Classification List refer to the 1991 Provisional Central\nProduct Classification and both parties agree that the Schedules of Croatia, Hungary and Lithuania are based\non the classification contained in the W/120. (See Russia's first written submission, paras. 113 and 136,\n(referring to W/120, (Exhibits EU-15/RUS-38)); and European Union's first written submission, para. 73).\nHence, CPC references in those Schedules are those of the 1991 Provisional Central Product Classification. The\nparties do not argue otherwise.\n676 Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n36), p. 2.\n\nto the Service s Sectoral Classification List in W/120\" and that \"[t]his list in turn refers to the\nProvisional CPC, including CPC 7131\". 677 Russia states that this footnote has no relevance for\ninterpreting the scope of Hungary's specific commitments 678, but considers nonet heless that\nHungary has included the \"same services as Croatia and Lithuania\" under sector 11.G 679 and that\nthe reference to \"CPC 713\" is \"also relevant for interpreting the commitments undertaken by\nHungary in its Schedule.\"680\n7.320. A review of Hungary's Schedule shows that, as a general rule, Hungary has followed the\nstructure of W/120, by using the same numbering and language. The wording of the\naforementioned footnote suggests that the services listed in Hungary's Schedule are defined on\nthe basis of the CPC, unless another definition is referenced. In our view, therefore, the absence of\na CPC code for sector 11.G does not mean that the words used therein have a different meaning\nand scope than the same words used in the Schedules of Croatia and Lithuania. 681 The parties do\nnot opine otherwise. Thus, based on an examination of Hungary's Schedule and keeping in mind\nthe guidance provided by the Appellate Body, we consider that, although it does not contain the\ninscription \"CPC 713\", the terms \"Pipeline Transport\" in Hungary's Schedule have the same\nmeaning and scope as in the Schedules of Croatia and Lithuania. The legal definition of the scope\nof the commitments on \"Pipeline Transport\" under sector 11.G in the Schedule of Hungary should\ntherefore be based on the CPC description found under CPC 713.\n7.321. We examine now the description found under the code \"CPC 713\". In the CPC, Group 713\n\"Transport services via pipeline\", which corresponds to sector 11.G of W/120 (\"Pipeline\nTransport\"), is broken down into two sub-classes, namely:\n7131 71310 Transportation of petroleum and natural gas\n7139 71390 Transportation of other goods\n7.322. According to the explanatory note for CPC 71310, \"Transportation of petroleum and natural\ngas\" encompasses \"[t]ransportation via pipeline of crude or refined petroleum and petroleum\nproducts and of natural gas\". By including a reference to CPC 713, Croatia and Lithuania have\nundertaken a commitment with respect to the entire Group covered under this code, including\nCPC 71310. To the extent that the com mitments on \"Pipeline Transport [Services]\" under sector\n11.G in the Schedule of Hungary should be based on the CPC description of the sector and the\nactivities covered under CPC 713, Hungary similarly undertook specific commitments with respect\nto CPC 71310. Hence, Croatia, Hungary and Lithuania have undertaken specific commitments with\nrespect CPC 71310, which covers the \"transportation via pipeline of … natural gas\". We therefore\nfind that sector 11.G, as defined in the description contained under CPC 71 3, covers transmission\nof natural gas via pipelines and we note that the parties do not opine otherwise.\n7.323. The parties disagree, however, as to whether \"supply\" of natural gas and \"supply\nservices\", as well as LNG services are also covered under sector 11.G. According to Russia, the\nfact that Croatia, Hungary and Lithuania did not limit the coverage of sector 11.G confirms that\nthese Members intended to include all the services at issue, including LNG services. 682 The\n\n677 European Union's response to Panel question No. 61, para. 168.\n678 Russia's response to Panel question No. 61, para. 287.\n679 Russia's response to Panel question No. 65, para. 307 (\"Hungary did not inscribe any CPC listing.\nHowever, by making its commitments in Sector 11G, Hungary signified its intention to include the same\nservices as Croatia and Lithuania. After all, Sector 11G in Document W/120 is structured very similarly to CPC\n713 in the Provisional CPC. That is, it includes both 'Transportation of fuels 7131' and 'Transportation of other\ngoods 7139'\").\n680 Russia's response to Panel question No. 66, para. 308.\n681 We recall that, in a previous dispute involving the interpretation of an entry which did not contain a\nreference to a CPC code, the Appellate Body observed that the Schedule at issue \"generally follows the\nstructure, and adopts the language, of W/120\". These \"structural and linguistic similarities\" led the Appellate\nBody to conclude \"that the absence of references to CPC codes does not mean that words used in the []\nSchedule must have a different meaning and scope than the same words used in the Schedules of other\nMembers\". (See Appellate Body Report, US – Gambling, para. 183). (emphasis original; footnote omitted)\n682 Russia's first written submission, para. 140.\n\nEuropean Union responds that Russia errs w hen it seeks to interpret these entries as covering\n\"supply\" of natural gas as well as LNG services.683\n7.324. We therefore turn to other relevant context, namely the remainder of the Schedules of\nCroatia, Hungary and Lithuania.\nThe remainder of the Schedules of Croatia, Hungary and Lithuania\n7.325. In considering the remainder of the Schedules of Croatia, Hungary and Lithuania as\nproviding relevant context for interpreting the scope of the terms \"Pipeline Transport [Services]\" in\nsector 11.G, we keep in mind that a Memb er's Schedule should be considered as a whole because,\nas explained by the Appellate Body, sectors and subsectors \"must be mutually exclusive\". 684 We\nnote that both parties refer to and agree with the principle of mutual exclusivity of sectors and\nsub-sectors as guiding the interpretation of GATS Schedules.685\n7.326. Like the European Union 686, we observe that the Schedules of Croatia, Hungary and\nLithuania include commitments in various service sectors which constitute relevant context for the\ninterpretation of \"Pipeline Transport [Services]\" in sector 11.G.\n7.327. Croatia's Schedule contains commitments with respect to \"Services incidental to energy\ndistribution (CPC 887)\" under sector 1.F. (\"Other Business Services\"), which include, inter alia ,\ndistribution services of gaseous fuels to household, industrial, commercial and other users. The\nexplanatory note for CPC 887 further specifies that \"transport services via pipeline on a fee or\ncontract basis of petroleum and natural gas are classified in subclass 71310\", thereby\ndistinguishing distribution services of gas from pipeline transportation services.\n7.328. The same observation can be made with respect to Hungary and Lithuania which have\nundertaken partial commitments on \"Services incidental to energy distribution (CPC 887)\"687 under\nsector 1.F, \"Other Business Services\". In the section \"Other Business Services\" (1.F), Hungary also\nhas commitments on \"Consultancy services incidental to mining (ex CPC 883)\". The relevant\ndefinition of the CPC defines \"services incidental to mining \" as \"services rendered on a fee or\ncontract basis at oil and gas fields […]\". Hence, services related to the production of gas are not\nfound under sector 11.G.\n7.329. Continuing our examination of the remainder of the three Schedules at issue, we observe\nthat al l three Members have undertaken specific commitments on \"Distribution Services\", in\nparticular \"Whole Trade Services\" (sector 4.B) and \"Retailing Services\" (sector 4.C). The sector\n\"Whole Trade Services\" covers, inter alia, \"Wholesale trade services of sol id, liquid and gaseous\nfuels and related products (CPC 62271)\" and \"Retailing Services\" encompasses, inter alia , the\n\"[r]etail sales of fuel oil, bottled gas, coal and wood (CPC 63297)\". Thus, wholesaling and retailing\nservices of natural gas are not found under sector 11.G.\n7.330. Furthermore, all three Members have commitments under sector 11.H, \"Services Auxiliary\nto All Modes of Transport\", in particular on \"Storage and Warehous e Services (CPC 742)\". This\nsector encompasses, inter alia , the \"[b]ulk storage ser vices of liquids or gases (CPC 7422)\".\nFinally, we observe that, under sector 11.A, \"Maritime Transport\", Croatia has commitments on\n\"Freight transportation (CPC 7212)\", which includes, under \"Transportation of bulk liquids or gases\n(CPC 72122)\", \"transportation by seagoing vessels of bulk liquids or gases in special tankers\". In\nour view, this entry encompasses transportation services of LNG in sea tankers.\n\n683 European Union's first written submission, para. 80.\n684 Appellate Body Report, US – Gambling, para. 180. The Appellate Body further explained: \"If this\nwere not the case, and a Member scheduled the same service in two different sectors, then the scope of the\nMember's commitment would not be clear where, for example, it made a full commitment in one of those\nsectors and a limited, or no, commitment, in the other.\" (Ibid. fn 219).\n685 Russia's first written submission, para. 135; and European Union's first written submission, para. 55.\n686 European Union's first written submission, fn 71.\n687 Hungary has commitments on \"Consultancy services incidental to energy distribution (ex CPC 887)\"\nand Lithuania on \"Services incidental to energy distribution (CPC 887[])\" which Lithuania defines as covering\n\"consultancy services related to the transmission and distribution on a fee basis of electricity, gaseous fuels,\nsteam and hot water to household, industrial, commercial and other users)\".\n\n7.331. Our review of the remainder of the Schedules of Croatia, Hungary and Lithuania provides\nseveral pert inent indications. The existence of different commitments encompassing gas -related\nservices confirms that, under the GATS, the terms \"Pipeline Transport [Services]\" cannot cover all\nservices related to natural gas, which, in turn, does not support Russia's proposition that\nsector 11.G includes the notions of \"supply\" and \"supply services\".688\n7.332. None of the three Schedules contains a reference to LNG services. 689 Nonetheless, our\nexamination of the remainder of those Schedules gives us two useful indications.\n7.333. First, the existence of commitments on \"Services Auxiliary to All Modes of Transport\"\nconfirms that services closely related to, or enabling, transportation, are classified separately from\ntransportation per se. Second, the fact that \"Transportation of bulk l iquids or gases (CPC 72122)\"\nencompasses transportation of LNG in sea tankers contradicts Russia's argument that LNG services\nfall under sector 11.G, \"Pipeline Transport [Services]\". The reason is that, if LNG services should\nbe considered to fall under \"P ipeline Transport [Services]\" on the ground that the essential role of\nre-gasification is to facilitate the transport of natural gas via pipelines, LNG services might also be\nconsidered to fall under \"Transportation of bulk liquids or gases (CPC 72122)\" on the ground that\nliquefaction facilitates the transport of LNG in sea tankers. However, in accordance with the\nprinciple of mutual exclusivity of sectors and sub -sectors, LNG services cannot be classified at the\nsame time under sector 11.A, \"Maritime Trans port \", and sector 11.G, \"Pipeline Transport\". Thus,\nwe can only conclude that LNG services must be classified elsewhere. For the purpose of this\ndispute, we do not need to determine where LNG services should be classified in the W/120 or in\nthe CPC, but w e feel confident that they are not found in sector 11.G, \"Pipeline Transport\n[Services]\".\n7.334. In light of the foregoing, we find that a consideration of the remainder of the Schedules of\nCroatia, Hungary and Lithuania as relevant context confirms that sector 1 1.G does not cover\n\"supply\" or \"supply services\" nor does it cover LNG services. It also confirms our view that\nsector 11.G, \"Pipeline Transport [Services]\" encompasses the transportation or transmission of\nnatural gas through transmission pipelines.\nObject and purpose of the GATS\n7.335. The parties do not make specific arguments with respect to the consistency of their\nproposed interpretation with the object and purpose of the GATS.\n7.336. In US – Gambling and in China – Publications and Audiovisual Products, the Appellate Body\nobserved that the objectives contained in the preamble of the GATS did not provide specific\nguidance as to the correct interpretation of GATS Schedules. 690 In US – Gambling, the Appellate\nBody found nonetheless that the purpose of transparency cont ained in the preamble to the GATS\nsupported the need for precision and clarity in scheduling GATS commitments, and underlined the\nimportance of having Schedules that are readily understandable by all other WTO Members, as\nwell as by service suppliers and consumers.691\n7.337. We find that our interpretation of the scope of the commitments undertaken by Croatia,\nHungary and Lithuania under sector 11.G, \"Pipeline Transport [Services]\" is consistent with the\npurpose of transparency contained in the preamble of the GATS because we define the meaning\nand scope of the relevant commitments in accordance with the ordinary meaning of the terms\nused and the relevant context as described above.\n\n688 GATS Schedules do not contain specific commitments on activities falling outside the scope of the\nGATS. Hence, for the reasons explained above (see section 7.4.1.2), the Schedules of Croatia, Hungary and\nLithuania do not include commitments on \"supply\" of natural gas or LNG.\n689 We also note that neither the W/120 nor the CPC contain an explicit reference to LNG services.\nHowever, as confirmed by the Appellate Body in US – Gambling, \"the CPC is exhaustive (all goods and services\nare covered)\". (Appellate Body Report, US – Gambling, para. 172). W/120, which is based on the CPC, should\nbe considered to be equally exhaustive. The parties concur with this view even though they disagree on where\nLNG services should be classified. (See Russia's response to Panel question No. 53, para. 275; and European\nUnion's response to Panel question No. 53, para. 146).\n690 Appellate Body Reports, US – Gambling, para. 189; and China – Publications and Audiovisual\nProducts, para. 393.\n691 Appellate Body Report, US – Gambling, para. 188.\n\nConclusion\n7.338. We conclude that sector 11.G, \"Pipeline Transport [Services]\", in the Schedules of Croatia,\nHungary and Lithuania encompasses the transportation or transmission of natural gas through\ntransmission pipelines. We further find that this sector does not cover \"supply\" or \"supply\nservices\", nor does it cover LNG services.692\n7.4.2.3 Market access and national treatment commitments\n7.4.2.3.1 Introduction\n7.339. As indicated above, in order to make a prima facie case of violation under Article XVI:2\nand/or XVII of the GATS, a complaining party must first establish that the responding party has\nundertaken commitments on market access and/or national treatment with respect to the relevant\nsector and mode at issue.693\n7.340. In this section, we shall assess whether Russia has demonstrated that Croatia, Hungary\nand Lithuania have undertaken specific commitments on market access and/or national treatment\nwith respect to sector 11.G, \"Pipeline Transport [Services]\". Russia has confirmed that each of its\nclaims under the GATS in this dispute concerns mode 3, namely the commercial presence mode of\nsupply.694\n7.341. We shall therefore consider, first, the commitments inscribed under mode 3 in the market\naccess column for sector 11.G. We sh all then turn to the mode 3 commitments contained in the\nnational treatment column. In our analysis, we shall also consider the horizontal commitments\ncontained in the Schedules of Croatia, Hungary and Lithuania.\n7.4.2.3.2 Market access commitments\n7.342. Russia argues t hat Croatia and Lithuania, having inscribed a \"None\" for mode 3 in the\nmarket access column with respect to sector 11.G, signified their intention to impose no limitation\non the supply of pipeline transport services through mode 3.695 Russia further argues that Hungary\nhas made essentially a full mode 3 commitment as, in Russia's view, the phrase included by\nHungary in the market access column with respect to mode 3 does not materially limit Hungary's\nmarket access commitment.696\n7.343. The European Union does not mak e specific arguments with respect to the market access\ncommitments contained in the Schedules of Croatia and Lithuania. The European Union submits,\n\n692 We consider that our interpretation pursuant to Article 31 of the Vienna Convention of the terms\n\"Pipeline Transport [Services]\", in sector 11.G, does not leave the meaning of those terms ambiguous or\nobscure, nor does it lead to a result which is manifestly absurd or unreasonable. Accordingly, we do not find it\nnecessary to resort to supplementary means of interpretation under Article 32 of the Vienna Convention. For\nthis reason, it is also not necessary for us to determine whether, as argued by the European Union, the\nCPC 2.1 constitutes supplementary means of interpretation. We recall that the European Union refers to\nthe CPC 2.1 to support its view that pipeline transport services must be distinguished from LNG services.\n(European Union's first written submission, para. 76). CPC 2.1 distinguishes \"Transport services via pipeline of\npetroleum and natural gas\" (CPC 65131), which includes \"transportation via pipeline of natural gas\" from\n\"Other supporting transport services n.e.c.\"(CPC 67990), the latter including the services of liquefaction of\nnatural gas and regasification of LNG for transportation. (See CPC Ver.2.1 code 65131, Detailed structure and\nexplanatory notes, United Nations Statistics Division, Classifications Registry\nhttp://unstats.un.org/unsd/cr/registry/regcs.asp?Cl=31&Lg=1&Co=65131 (accessed 1 July 2016), (CPC 2.1\ncode 65131), (Exhibit EU-34); and CPC Ver.2.1 code 67990, Detailed structure and explanatory notes, United\nNations Statistics Division, Classifications Registry\nhttp://unstats.un.org/unsd/cr/registry/regcs.asp?Cl=31&Lg=1&Co=67990 (accessed 1 July 2016), (CPC 2.1\ncode 67990), (Exhibit EU-37)). According to the European Union, CPC 2.1 constitutes \"supplementary means of\ninterpretation\" under Article 32 of the Vienna Convention. (European Union's response to Panel question No.60,\npara. 165). Russia submits that CPC 2.1 is not relevant for the purpose of interpreting GATS Schedules since\nthose are based on the 1991 Provisional CPC. (Russia's response to Panel question No. 60, para. 286; and\nsecond written submission, para. 86).\n693 See, above paras. 7.233 and 7.235.\n694 Russia's response to Panel question No. 56, para. 285.\n695 Russia's first written submission, paras. 144 and 146.\n696 Russia's first written submission, para. 145.\n\nhowever, that Hungary has included a \"specific limitation\" for this mode which, in its view, means\nthat \"[t]hese services may only be provided through a Contract of Concession granted by the state\nor the local authority\".697\n7.344. We recall that Russia has identified the market access commitments under sector 11.G for\nmode 3 by, respectively, Croatia, Hungary and Lithuania as follows698:\nLimitations on Market Access\n\nCroatia699\n\nHungary700 Lithuania701\n\n1) None\n2) None\n3) None\n\n4) Unbound, except as\nindicated in the horizontal\nsection\n\n1) Unbound\n2) None\n3) Services may be\nprovided through a Contract of\nConcession granted by the\nstate or the local authority.\n4) Unbound, except as\nindicated in Part I\n\n1) Unbound\n2) None\n3) None\n\n4) Unbound, except as\nindicated in Part I\n\n7.345. According to Article XX:3 of the GATS, Members' Schedules of Specific Commitments are\nan integral part of the GATS and their meaning must be determined in accordance with the rules of\ninterpretation of the Vienna Convention.702\n7.346. We start our analysis with the Schedules of Croatia and Lithuania, both of which contain\nthe word \"None\" in the \"Limitations on market access\" column for mode 3 with respect to\nsector 11.G.\n7.347. The word \"None\" is not defined in the GATS, but, in US – Gambling, the Appellate Body\nexplained that the word \"None\" in the market access column means that the Member concerned\n\"has undertaken to provide full market access, within the meaning of Article XVI, in respect of the\nservices included within the scope of\" its commitment in the sector at issue, and, in so doing, the\nMember concerned \"has committed not to maintain any of the types of measures listed in the six\nsub-paragraphs of Article XVI:2\".703\n7.348. In light of the foregoing, we conclude that, having inscribed \"None\" in the \"Limitations on\nmarket access\" with respect to mode 3, Croatia and Lithuania have made a full commitment for\n\"Pipeline Transport [Services]\" under sector 11.G. In other words, Croatia and Lithuania have\nundertaken not to maintain any of the six measures listed under Article XVI:2.\n7.349. We turn now to the \"Limitations on Market Access\" column in the Schedule of Hu ngary\nwhich contains the following inscription under mode 3: \"Services may be provided through a\nContract of Concession granted by the state or the local authority\".\n\n697 European Union's first written submission, para. 46.\n698 Russia's first written submission, paras. 144-146.\n699 Schedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000), (Exhibits EU-16/\nRUS-37), p. 33. (emphasis added)\n700 Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n 36), p. 32. (emphasis added)\n701 Schedule of Specific Commitments of Lithuania, GATS/SC/133 (21 December 2001), (Exhibits EU-19/\nRUS-35), p. 23. (emphasis added)\n702 Appellate Body Report, US – Gambling, para. 160.\n703 Appellate Body Report, US – Gambling, para. 215. As explained by the panel in China – Electronic\nPayment Services, the term \"None\" needs to be read in conjunction with the title of the column in which this\nterm appears; it means that the Member has undertaken \"no\" limitation, or, in other words, a full commitment,\nwith respect to market access (or national treatment) in the mode concerned. (See Panel Report, China –\nElectronic Payment Services, para. 7.651).\n\n7.350. The parties hold different views on the meaning and effect of this inscription. According to\nRussia, this limitation \"only makes the mode 3 supply of pipeline transport services in Hungary\nsubject to winning a concession tender issued by the state or a local authority\" and does not\ncorrespond to any of the six limitations enumerated in Article XVI:2 of the GATS.704 The European\nUnion replies that the entry at issue \"falls under the scope of XVI:2(a) of the GATS, under the\nform of service suppliers having a concession\" and means that Hungary's commitment \"does not\noblige the state or a local autho rity to grant a single concession contract\". 705 The European Union\nfurther explains that, at the moment, two service suppliers have the permission to supply pipeline\ntransport services, but the maximum number of TSOs is not limited under the Hungarian Gas\nAct.706\n7.351. We observe that, in this dispute, Russia's claim under Article XVI: 2(a) of the GATS\nchallenges the unbundling measure in the implementing laws of Croatia and Lithuania, but not\nHungary.707 We therefore do not find it necessary to determine whether, as ar gued by the\nEuropean Union, the inscription in Hungary's Schedule amounts to a limitation within the meaning\nof Article XVI:2(a). We recall, however, that Russia challenges Hungary's unbundling measure\nunder Article XVI:2(e) and (f) of the GATS .708 Therefore, we need to determine whether th is\ninscription amounts to a limitation within the meaning of either, or both, of those two provisions.\n7.352. We note, first, that Hungary has not inscribed the term \"Unbound\" in the \"Limitations on\nmarket access\" column with respect to mode 3, which is the notation used to indicate that the\nMember concerned undertakes no specific commitment. 709 Therefore, we do not consider that\nHungary has undertaken no market access commitments for mode 3. The European Union is not\narguing eit her that the entry at issue amounts to an \"Unbound\", nor is the European Union\ncontending that Hungary's inscription in the market access column under mode 3 amounts to a\nlimitation within the meaning of Article XVI:2(e) or (f).\n7.353. We recall that the mode 3 inscription at issue states that \"Services may be provided\nthrough a Contract of Concession granted by the state or the local authority\". It is clear – and the\nparties do not argue otherwise – that, by its own terms, this inscription does not refer to measures\nrestricting or requiring specific types of legal entity or joint -venture, not does it refer to limitations\non the participation of foreign capital. We conclude, therefore, that, in its \"Limitations on Market\nAccess\" column under sector 11.G, \"Pipeline Transport\", Hungary has not inscribed any limitation\nwithin the meaning of Article XVI:2(e) or (f), or both, with respect to the commercial presence\nmode of supply (mode 3).710\n7.354. We recall that sectoral entries in a Member's Schedule have to be read together with the\nrelevant entries in the so-called horizontal section of that Member's Schedule, as the latter applies\nto all the sectors and subsectors listed in the Schedule. 711 Hence, as a general matter, the so -\n\n704 Russia's response to Panel question No. 86, paras. 372 and 374.\n705 European Union's response to Panel question No. 168, paras. 52-53. See also European Union's\nresponse to Panel question No. 86, paras. 220-221.\n706 European Union's response to Panel question No. 168, para. 54.\n707 See below section 7.5.2.2. In its response to a question by the Panel after the second substantive\nmeeting, Russia appears to allege that Hungary's unbundling measure is inconsistent with Article XVI:2(a) of\nthe GATS. (See Russia's response to Panel question No. 169, para. 83). However, for the reasons explained in\nsection 7.5.2.2, we shall not rule on this allegation by Russia.\n708 See sections 7.5.2.3 and 7.5.2.4 below.\n709 Appellate Body Report, US – Gambling, fn 257. We observe that Hungary has used the notation\n\"Unbound\" in a number of sectors and modes across its Schedule, including under sector 11.G, in the market\naccess column for mode 1. Hence, the fact that Hungary did not inscribe \"Unbound\" in the \"Limitations on\nmarket access\" for mode 3 with respect to the same sector indicates that Hungary has undertaken market\naccess commitment with respect to this sector and mode. (See Schedule of Specific Commitments of Hungary,\nGATS/SC/40 (15 April 1994), (Exhibits EU-17/RUS- 36)).\n710 We wish to clarify that we have not determined whether this limitation amounts to a limitation on the\nnumber of service suppliers within the meaning of Article XVI:2(a). Nor have we determined whether this entry\namounts to a limitation under sub-paragraphs (b), (c) or (d) in Article XVI:2. Moreover, without further\nexamination, we cannot exclude that the meaning and effect of this entry does not coincide with any of the six\ntypes of limitations listed under Article XVI:2. However, we do not need to reach a finding on these particular\nissues and we do not. We only determine, for the purpose of addressing Russia's claims in this case, that this\nparticular entry does not amount to a limitation within the meaning of Article XVI:2(e) or (f).\n711 See Panel Reports, China – Publications and Audiovisual Products, para. 7.950; and China –\nElectronic Payment Services, paras. 7.574 and 7.677.\n\ncalled \"horizontal commitments\" contained in the Schedules of Croatia, Hungary and Lithuania\nmay set out relevant limitations on market access. While Lithuania's Schedule does not contain\nany horizontal limitation on market access for mode 3, Croatia and Hungary have listed mode 3\nhorizontal limitations. We therefore examine the horizontal limitations in the Schedules of Croatia\nand Hungary, starting with the Schedule of Croatia.\n7.355. Croatia's Schedule contains certain horizontal limitations with respect to mode 3, as\nfollows712:\nSector or\nsubsector\nLimitations on market access\nHORIZONTAL\nCOMMITMENTS\n\nAll sectors\nincluded in this\nschedule\n3) Investment\nBranch offices can perform all kind of business activities, but are not\nconsidered to be independent legal entities. The rights and obligations of the\nbranch offices are those vested in the parent companies which have founded\nthem.\n\n3) Real Estate\nUnbound in relation to acquisition of real estate by services suppliers not\nestablished and incorporated in Croatia.\nAcquisition of real estate necessary for the s upply of services by companies\nestablished and incorporated in Croatia as legal persons is allowed.\nAcquisition of real estate necessary for the supply of services by branches\nrequires the approval of the Ministry of Foreign Affairs.\n\n7.356. In the horizontal section of its Schedule, Croatia has inscribed two entries concerning the\nmode 3 mode of supply, which concern, respectively, \"Investment\" and \"Real Estate\" in the\ncolumn dealing with \"Limitations on market access\". According to the European Union, this en try\n\"does not limit the types of legal entities that can be used, but determines merely that a branch is\nnot considered independent\" and, hence, \"is merely for transparency purposes\". 713 We see no\nreason to disagree with the European Union that this entry cl arifies the \"rights and obligations\" of\n\"branch offices\" vis-à-vis the \"parent companies\" . Neither party discusses the entry related to\n\"Real Estate\" nor do we have any reason to believe that this entry has relevance in this dispute.\nHaving reviewed the horizontal section in the Schedule of Croatia, we consider that it does not set\nout additional relevant limitations on market access for the purpose of this case. We therefore find\nthat, with respect to market access, Croatia's horizontal commitments do not modify the\nconclusion reached on the basis of the mode 3 entry under sector 11.G in paragraph 7.348 above.\nThe parties do not argue otherwise.\n7.357. Turning to the Sched ule of Hungary, we observe that Hungary has inscribed in the\nhorizontal section of its Schedules certain limitations on market access under mode 3 as follows714:\n\n712 Schedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000), (Exhibits EU-16/\nRUS-37), p. 2.\n713 European Union's response to Panel question No. 90, para. 229. The European Union explains:\nIt is well documented that WTO Members have inscribed certain specifications in their schedules\nthat are not measures that fall within the scope of Articles XVI or XVII of the GATS. Such so -\ncalled \"fog\" in schedules of commitments, i.e. entries that cannot be associated with any of the\nrelevant provisions of Article XVI (market access) or Article XVII (national treatment) of the\nGATS, is due to the desire of the WTO Members to specify as transparent as possible how each of\nthem sees its WTO obligations. (European Union's response to Panel question No. 90, para. 230\n(referring to R. Adlung, P. Morrison, M. Roy and W. Zhang, \"FOG in GATS Commitments – Boon\nor Bane?\", Staff Working Paper ERSD -2011-04, World Trade Organization, Economic Research\nand Statistics Division (31 March 2011), (Exhibit EU-93))).\nRussia refers to the horizontal entry related to \"Investment\" as context to support its interpretation of\nArticle XVI:2(e). (See Russia's first written submission, para. 173).\n714 Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n 36), p. 1.\n\nSector or subsector Limitations on market access\nHORIZONTAL\nCOMMITMENTS\n\nALL SECTORS\nINCLUDED IN PART II\n3) Commercial presence should take the form of limited liability\ncompany, joint -stock company or representative office. Initial entry as\nbranch is not permitted.\n\nUnbound for the acquisition of state owned properties.\n\n7.358. Under the horizontal section of its Schedule, Hungary has listed two distinct entries in the\nmarket access column for mode 3. The first entry stipulates that \"[c]ommercial presence should\ntake the form of a limited liability company, joint -stock company or representative offic e\" and\nprohibits \"[i]nitial entry as a branch\". Both parties concur that this entry limits the scope of\nHungary's market access commitments for mode 3.715 In our view, by stipulating that service\nsuppliers establishing a commercial presence in Hungary \"shoul d take the form of limited liability\ncompany, joint-stock company or representative office\", and that \"initial entry as branch is not\npermitted\", this limitation may have relevance for the purpose of assessing Russia's claim against\nHungary under Article XVI:2(e) of the GATS.\n7.359. The second mode 3 entry contained in the market access column in the horizontal part of\nHungary's Schedule excludes from Hungary's commitments \"the acquisition of state -owned\nproperties\". In our view, this entry does not set out a limitation which is relevant for the purpose\nof assessing Russia's claims under Article XVI:2(e) or (f) of the GATS . The parties do not argue\notherwise.\n7.360. Having reviewed the relevant sectoral and horizontal entries in the Schedules of Croatia,\nHungary and Lithuania, we conclude that Croatia and Lithuania have undertaken a full mode 3\nmarket access commitment for \"Pipeline Transport [Services]\" under sector 11.G of their\nSchedule. We further conclude that, in its \"Limitations on Market Access\" column under mode 3 for\n\"Pipeline Transport\", Hungary has undertaken not to maintain any limitation within the meaning of\nArticle XVI:2(e) or (f). Nonetheless, in the horizontal part of its Schedule, Hungary has inscribed a\nlimitation stipulating that services suppliers establishing a commercial presence in Hungary \"should\ntake the form of limited liability company, joint -stock company or representative office\", and that\n\"initial entry as branch is not permitted\": this limitation may have relevance for the purpose o f\nassessing Russia's claim under Article XVI:2(e) of the GATS.\n7.4.2.3.3 National treatment commitments\n7.361. Russia argues that Croatia, Hungary and Lithuania recorded the word \"None\" in the\nnational treatment column for mode 3, thus signifying their commitment without limitation to\npermit service suppliers of other Members to supply pipeline transport services through\ncommercial presence in their respective territories. 716 The European Union does not comment on\nthis issue.\n7.362. Russia has identified the national treatment comm itments under subsector 11.G for\nmode 3 by, respectively, Croatia, Hungary and Lithuania as follows717:\n\n715 According to Russia, \"Hungary does appear to have limited the permissible 'forms of commercial\npresence' and thus the 'specific types of legal entity through which a service supplier may supply a service'.\nHowever, this limitation in no way excludes Hungary's unbundling measure from the coverage of\nArticle XVI:2(e).\" (Russia's first written submission, para. 174; and response to Panel question No. 165,\npara. 71). The European Union submits that \"Hungary's limitation does limit its commitments for mode 3, by\nstating that commercial presence should take the form of a limited liability company, joint-stock company, or\nrepresentative office and that initial entry as a branch is not permitted.\" (European Union's response to Panel\nquestion No. 5, para. 228).\n716 Russia's first written submission, para. 236.\n717 Russia's first written submission, para. 174; and response to Panel question No. 165, para. 71.\n\nLimitations on National Treatment\n\nCroatia718\n\nHungary719 Lithuania720\n\n1) None\n2) None\n3) None\n4) Unbound, except as\nindicated in the horizontal\nsection\n\n1) None\n2) None\n3) None\n4) Unbound, except as\nindicated in Part I\n\n1) Unbound\n2) None\n3) None\n4) Unbound, except as\nindicated in Part I.\n\n7.363. With respect to sector 11.G, Croatia, Hungary and Lithuania have inscribed the word\n\"None\" in the \"Limitations on national treatment column\" for mode 3.\n7.364. In paragraph 7.347 above, we noted that the word \"None\" in the market access column\nmeans that the Member concerned has undertaken to accord full market access within the\nmeaning of Article XVI:2 of the GATS. Similarly, the word \"None\" in the national treatment column\nmeans that the Member must accord full national treatment with respect to the particular sector\nand mode of supply, such national treatment extending to \"'all measures affecting the supply of\nservices', which is the scope of Article XVII as defined in t hat provision\".721 We see no reason to\ndepart from that interpretation.\n7.365. We conclude, therefore, that, having inscribed the word \"None\" with respect to mode 3 for\nsector 11.G, Croatia, Hungary and Lithuania have undertaken to accord full national treatment fo r\nmode 3 in this sector.\n7.366. We recall that sectoral entries in a Member's Schedule have to be read together with the\nrelevant entries in the so-called horizontal section of that Member's Schedule, as the latter applies\nto all the sectors listed in the Schedul e.722 Hence, the section on \"horizontal commitments\"\ncontained in Schedules of Croatia, Hungary and Lithuania may set out relevant limitations on\nnational treatment.\n7.367. The relevant part of Croatia's Schedule lists the following commitments723:\nSector or\nsubsector\n[…] Limitations on national treatment\nHORIZONTAL\nCOMMITMENTS\n\nAll sectors\nincluded in this\nschedule\n 1), 2), 3) Eligibility for subsidies from the Republic of Croatia may\nbe limited to legal persons established within the territory of Croatia\nor a particular geographical sub-division thereof.\nResearch and development subsidies are limited to legal persons\nestablished in Croatia.\n\n7.368. We turn to the Schedule of Hungary. The relevant part of Hungary's Schedule lists the\nfollowing commitments724:\n\n718 Schedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000) (Exhibits EU-16/\nRUS-37), p. 33. (emphasis added)\n719 Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n 36), p. 32. (emphasis added)\n720 Schedule of Specific Commitments of Lithuania, GATS/SC/133 (21 December 2001), (Exhibits EU-19/\nRUS-35), p. 23. (emphasis added)\n721 Panel Report, Argentina – Financial Services, para. 7.454.\n722 See, for instance, Panel Reports, China – Publications and Audiovisual Products, para. 7.950; and\nChina – Electronic Payment Services, paras. 7.574 and 7.677.\n723 Schedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000), (Exhibits EU-16/\nRUS-37), p. 2.\n\nSector or subsector […] Limitations on national treatment\nHORIZONTAL\nCOMMITMENTS\n\nALL SECTORS\nINCLUDED IN PART II\n 3) Unbound for the acquisition of state owned properties.\n\n Unbound with respect to subsidies\n\n7.369. Finally, we observe that the relevant part of Lithuania's Schedule is as follows725:\nSector or subsector […] Limitations on national treatment\nHORIZONTAL\nCOMMITMENTS\n\nHORIZONTAL\nCOMMITMENTS\n 3) Investment\n\nNone other than investments in organizing the lotteries which\nare forbidden under the Law on Foreign Capital Investment.\nEligibility of subsidies may be limited to legal persons established\nwithin the territory of Lithuania or a particular geographical\nsubdivision thereof.\n\n7.370. We observe that neither party argues that the horizontal limitations above are relevant to\nRussia's claims. Likewise, having reviewed these limitations, we consider that they do not modify\nthe conclusions we have reached above in paragraph 7.365.\n7.371. Having examined the relevant sectoral and horizontal entries in the three Schedules at\nissue, we conclude that Croatia, Hungary and Lithuania have undertaken a full national treatment\ncommitment for mode 3 under sector 11.G, \"Pipeline Transport [Services]\".\n7.5 The unbundling measure\n7.5.1 The unbundling measure in the Directive\n7.5.1.1 Introduction\n7.372. Russia challenges the unbundling measure in the Dir ective, described in paragraphs 2.10\nthrough 2.28 above, under Article II:1 of the GATS and Art icles I:1 and III:4 of the GATT 1994.\nThe European Union rejects all three claims and has raised n o defences in response to these\nclaims.\n7.373. Generally, the question before the Panel in respect of Russia's challenge against the\nunbundling measure in the Directive is whether this measure viol ates Article II:1 of the GATS and\nArticles I:1 and III:4 of the GATT 1994 by setting out different unbundling models, namely the\nownership unbundling model (OU model), the independent system operator model (ISO model),\nand the independent transmission oper ator model (ITO model). Importantly, Russia's claims\nagainst the unbundling measure in the Directive do not challenge the requirement to unbundle per\nse, but rather the alleged discrimination stemming from the Directive \"enabling\" EU member\nStates to choos e between implementing only the OU model or implementing the ISO and/or the\nITO models in addition to the OU model in respect of transmission systems that belonged to a\nvertically integrated undertaking (VIU) on 3 September 2009.726\n\n724 Schedule of Specific Commitments of Hungary, GATS /SC/40 (15 April 1994), (Exhibits EU-17/RUS-\n 36), p. 1.\n725 Schedule of Specific Commitments of Lithuania, GATS/SC/133 (21 December 2001), (Exhibits EU-19/\nRUS-35), p. 2.\n726 See, e.g. Russia's first written submission, paras. 314, 318-319, 326-327, 353, 355-356, 360-361,\n371 and 810; opening statement at the first meeting of the Panel, para. 35; and second written submission,\nparas. 58, 229-230, 237, 258 and 487.\n\n7.374. We note that there are important differences between Russia's claims under Article II:1 of\nthe GATS, Article I:1 of the GATT 1994 and Article III:4 of the GATT 1994 due to the distinct scope\nand subject matter of the GATS and the GATT 1994, respectively, a nd the different nature of the\nMFN and national treatment obligations in Articles I:1 and III:4 of the GATT 1994, respectively.\nNotably, whereas our assessment of Russia's claim under Article II:1 of the GATS will focus on the\ntreatment accorded to pipeline transport services and service suppliers under the different\nunbundling models, our assessment of Russia's claims under Articles I:1 and III:4 of the\nGATT 1994 will focus on the treatment accorded to natural gas under the different unbundling\nmodels. Fur thermore, whereas our assessment of Russia's clai m under Article I:1 of the\nGATT 1994 will involve a comparison of the treatment accorded to imported natural gas from\nRussia with that accorded to imported natural gas from other non -EU countries, our assessment of\nRussia's claim under Article III:4 of the GATT 1994 will involve a comparison of the treatment\naccorded to imported Russian natural gas with that accorded to domestic natural gas.\n7.375. Regardless of their differences, we note that all three of Russia's claims against the\nunbundling me asure in the Directive share a common feature. More particularly, they involve a\ncomparison of the alleged less favourable treatment accorded to pipeline transport services and\nservice suppliers or natural gas in EU member S tates, which have only implemented the OU\nmodel, with the alleged more favourable treatment accorded to pipeline transport services and\nservice suppliers or natural gas in EU member States, which have implemented the ISO and/or the\nITO models in addition to the OU model in respect of transmission systems that belonged to a VIU\non 3 September 2009.\n7.376. This specific approach calls upon us to consider the threshold issue of whether to assess\nthe unbundling measure's consistency with Article II:1 of the GATS and Articles I:1 and III:4 of\nthe GATT 1994 throughout the European Union or within each individual EU member State. The\nparties have opposite views but appear to agree that this issue should be dealt with in the same\nmanner for Russia's claims under Article I I:1 of the GATS and Articles I:1 and III:4 of the\nGATT 1994.727 In light of the approach taken by both parties, and the nature and object of Russia's\nclaims, we are similarly of the view that , regardless of the differences between the GATS and the\nGATT 1994, it would be appropriate to assess this issue uniformly for Russia's three claims.\n7.377. Accordingly, we will address, first, whether the unbundling measure's consistency with\nArticle II:1 of the GATS and Articles I:1 and III:4 of the GATT 1994 should be assessed throughout\nthe European Union or within each individual EU member State. We will then turn to the\nsubstantive assessment under each of these provisions, beginning with Russia's claim under\nArticle II:1 of the GATS and followed by Russia's claims under A rticles I:1 and III:4 of the\nGATT 1994.\n7.5.1.2 Level for assessing the WTO consistency of the unbundling measure\n7.378. The European Union argues that the unbundling measure's consistency with Article II:1 of\nthe GATS and Articles I:1 and III:4 of the GATT 1994 should be assessed within the individual\nEU member States and that the same unbundling model(s) apply within each individual EU\nmember State regardless of the origin of the pipeline transport services and service suppliers or\nthe natural gas. 728 In support of its p osition, the European Union argues that a measure's\nconformity with the MFN and national treatment obligations must be assessed in that measure's\n\"regulatory jurisdiction\", hereby referring to \"the jurisdiction of the regulatory authority that\ndetermines the conditions for selling a good or supplying a service.\" 729 The European Union argues\n\n727 See, e.g. Russia's response to Panel question No. 45(g), paras. 215-216; and second written\nsubmission, paras. 12-74; and European Union's responses to Panel question No. 45(b), paras. 102-104 and\nNo. 45(g), para. 117; and opening statement at the second meeting of the Panel, para. 39. Russia addresses\nthis as a \"common issue[]\" for its three claims, and we note that the European Union, while having addressed\nthe issue separately for each of Russia's three claims in its written submissions, does not distinguish its\nposition in regard to either of the three claims and has referred to it as a \"common issue\" at the second\nmeeting of the Panel with the parties. (Russia's second written submission, paras. 12-74; and European\nUnion's first written submission, paras. 289-297, 366-367 and 412-415; second written submission, paras. 63-\n71, 90-94 and 140; and opening statement at the second meeting of the Panel, paras. 6-17 and 39).\n728 European Union's first written submission, paras. 293-296, 366-367 and 413-415; opening\nstatement at the first meeting of the Panel, para. 32; and second written submission, paras. 63-64, 90 and\n140.\n729 European Union's response to Panel question No. 45(b), para. 102.\n\nthat the regulatory jurisdiction of the unbundling measure is each individual EU member State\nsince the \"precise conditions\" for supplying pipeline transport services and selling natural gas are\ndetermined by the national implementing laws adopted by the regulatory authorities of each EU\nmember State, rather than the Directive. 730 In the European Union's view , a measure should be\nassessed throughout the European Union only if it does not require further implementation by the\nEU member States 731 or does not leave any discretion to the EU member States in implementing\nit.732 The European Union also argues that there is no genuine relationship between the unbundling\nmeasure in the Directive and any alleged de facto discrimination, as the Directive does not require\nEU member States to exercise the discretion to choose between implementing only the OU model\nor also the ISO and ITO models \"in one or the other manner\".733\n7.379. Russia disagrees w ith the European Union's position and argues that the unbundling\nmeasure should be assessed throughout the European Union, by comparing the treatment\naccorded in EU member States that have only implemented the OU model with the treatment\naccorded in EU mem ber States that have implemented the ISO and/or the ITO models in addition\nto the OU model in respect of transmission systems that belonged to a VIU on 3 September 2009 .\nIn support of its position, Russia argues that the European Union is responsible for e ach of its\nmeasures, regardless of their form. 734 In this regard, Russia points out that the Directive required\neach EU member State to implement the unbundling measure and that, in doing so, each EU\nmember State was required to incorporate the OU model and authorized to incorporate the ISO\nand/or the ITO models in respect of transmission systems that belonged to a VIU on\n3 September 2009.735 Russia also submits that the European Union is responsible for the actions of\nits member States , arguing that EU member States are \"'regional' governments\" for which the\nEuropean Union, under Article I:3(a) of the GATS and Article XXIV:12 of the GATT 1994, is\n\"required to 'take such reasonable measures as may be available to it to ensure observance'\" of\nthe relevant prov isions of the GATS and the GATT 1994.736 Russia submits that the European\nUnion has acknowledged this responsibility for its member States in previous cases, in a formal\nletter responding to Russia's consultations request, and in response to que stions by the Panel. 737\nAs further support for its position, Russia submits that the European Union was not an \"innocent\nbystander\" in the alleged discriminatory implementation of the Directive by the EU member\nStates738, but rather had \"active involvement in securing this discriminatory result\" 739, ranging\nfrom being \"fully aware\" 740 or knowing 741 which EU member States would implement which\n\n730 European Union's response to Panel question No. 45(b), para. 103.\n731 European Union's response to Panel question No. 45(b), para. 102.\n732 European Union's response to Panel question No. 45(b), para. 104. Japan appears to agree with the\nEuropean Union's position, stating that \"to the extent that each model is consistent with GATS Article II …, it is\nalso reasonable to provide each member state a choice among such models, depending on its distinctive\nunbundling necessities.\" (Japan's third-party submission, para. 37). At the same time, Japan considers that\nthis issue should be determined on a \"case-by-case basis depending on the measure and obligation of the\nMember at issue\", taking into account \"(i) [w]hether the measure … is taken by the EU or a EU member state,\nwhich will partly depend on whether the alleged aspect of the measure is of the exclusive competence of the\nEU, the exclusive competence of EU member states, or shared by the EU and its member states\" and \"(ii)\n[w]ith regard to the national treatment obligation in the trade in services, whether the relevant commitment is\nmade in the name of the EU or the name of a EU member state\". (Japan's response to Panel question No. 2,\npara. 8). In our assessment below, we take into account the fact that the unbundling measure in the Directive\nis an EU measure rather than a measure taken by individual EU member States, but we have not found it\nnecessary to address the competences, under EU law, of the European Union or its member States in this\nregard. Furthermore, as Russia's claims against the unbundling measure in the Directive under Article II:1 of\nthe GATS do not involve specific commitments, we have not considered whether relevant commitments are\nmade.\n733 European Union's response to Panel question No. 171(c), para. 72.\n734 Russia's second written submission, para. 21.\n735 Russia's second written submission, para. 17.\n736 Russia's second written submission, paras. 27-30 (quoting Article XXIV:12 of the GATT 1994 and\nArticle I:3(a) of the GATS).\n737 Russia's second written submission, paras. 32-33 (referring to Panel Reports, EC – Trademarks and\nGeographical Indications (US), para. 7.98 and EC and certain member States – Large Civil Aircraft,\npara. 7.172; Letter of 8 May 2014 from the Permanent Mission of the European Union to the WTO regarding\nRussia's request for consultations (Exhibit RUS-115bis); and European Union's response to Panel question No.\n45(d), para. 106).\n738 Russia's second written submission, para. 20.\n739 Russia's second written submission, para. 16.\n740 Russia's second written submission, para. 14.\n741 Russia's second written submission, para. 15.\n\nunbundling model(s) to \"authoriz[ing]\"742, \"encourag[ing] and coordinat[ing]\"743 or \"enact[ing] and\nhelp[ing]\"744 with the implement ation of different combinations of unbundling models in different\nEU member States in order to discriminate against Russian pipeline transport services and service\nsuppliers or imported Russian natural gas.\n7.5.1.2.1 Analysis by the Panel\n7.380. For purposes of determining whether to assess the unbundling measure on an EU -wide or\nEU member State -specific basis, and more generally for assessing Russia's claims, we find it\ncrucial to know exactly what measure Russia is challenging.\n7.381. In this respect, we concur with the concern s raised by the European Union regarding\nRussia being \"imprecise as to what measure it actually challenges.\" 745 We note that Russia has\npointed to different measures as the challenged measure throughout these proceedings, including\nin response to questions b y the Panel seeking clarification on this matter. 746 More particularly,\nRussia has at different times appeared to be challenging either the unbundling measure in the\nDirective747, specific instances of application of the unbundling measures in the national\nimplementing laws of Lithuania and Germany 748, the unbundling measure in the Directive as well\nas the unbundling measures in the national implementing laws of all EU member States 749, the\nunbundling measure in the Directive and the unbundling measure in the national implementing law\nof Lithuania as \"a single measure\" 750, or the unbundling measure in the Directive and the\nunbundling measures in the national implementing laws of all EU member States as \"a single\nmeasure\".751\n7.382. We wish to emphasize that it is the responsi bility of the complaining party to specify which\nmeasure it is challenging. At the same time, and as mentioned above, we believe that it is crucial\nto understand exactly what measure Russia is challenging in order to determine whether to assess\nthis measure on an EU-wide or EU member State -specific basis. We therefore find it necessary to\nscrutinize Russia's submissions with a view to clarifying which of the above -listed measures should\nbe viewed as the challenged measure.\n7.383. We consider that an overall readin g of Russia's panel request and the submissions\nprovided by Russia throughout these proceedings points to the challenged measure being the\nunbundling measure in the Directive . As explained by Russia throughout these submissions,\nincluding in its requests f or findings, it is claiming that \"the unbundling measure under the\nDirective\" or \"the unbundling measure provided for in the Directive\" violates Article II:1 of the\nGATS and Articles I:1 and III:4 of the GATT 1994 \"by enabling Member States to select from\namong the unbundling models\". 752 Aside from the limited references, in Russia's various\nsubmissions, to the other measures listed in paragraph 7.381 above, Russia has not provided a\nclear explanation of how its claims that \"the unbundling measure under the Directive\" or \"the\nunbundling measure provided for in the Directive\" violates Artic le II:1 of the GATS and Articles I:1\nand III:4 of the GATT 1994 \"by enabling Member States to select from among the unbundling\nmodels\"753 could be addressed in respect of these other measures. Nor has Russia substantiated\n\n742 Russia's second written submission, paras. 17 and 21.\n743 Russia's second written submission, para. 21.\n744 Russia's second written submission, para. 41.\n745 European Union's response to Panel question No. 171(f), para. 81. See also European Union's closing\nstatement at the first meeting of the Panel, para. 6.\n746 See, e.g. Panel question Nos. 5 and 171(a).\n747 See, e.g. Russia's response to Panel question No. 5, para. 31.\n748 See, e.g. Russia's response to Panel question No. 5, para. 33. In this regard, we note our preliminary\nruling of 10 November, in which we concluded that Russia's \"as applied\" claims under Article II:1 of the GATS\nand Articles I:1 and III:4 of the GATT 1994, raised by Russia in its response to Panel question No. 5 following\nthe first meeting of the Panel, fall outside our terms of reference. (Preliminary ruling (conclusions) of\n749 See, e.g. Russia's response to Panel question No. 171(a), para. 100.\n750 See, e.g. Russia's responses to Panel question No. 5, para. 31 and No. 171(a), para. 101.\n751 See, e.g. Russia's comments on the European Union's response to Panel question No. 154,\nparas. 6-7.\n752 Russia's first written submission, para. 810, bullet points 5-7; and second written submission,\npara. 487, bullet points 6-8.\n753 Russia's first written submission, para. 810, bullet points 5-7; and second written submission,\npara. 487, bullet points 6-8.\n\nits notion of the unbundling measure in the Directive and the unbundling measure in the national\nimplementing laws of Lithuania being \"a single measure\" 754, or its alternative notion of the\nunbundling measure in the Directive and the unbundling measures in the national implementing\nlaws of all EU member States being \"a single measure\".755\n7.384. Furthermore, while we agree with the European Union's concerns regarding lack of\nprecision in Russia's submissions, we do not believe that there has been prejudice to the European\nUnion's ability to prepare its defence, nor that its due process rights are violated by our decision to\nfocus on the unbundling measure in the Directive, when assessin g Russia's claims under\nArticle II:1 of the GATS and Articles I:1 and III:4 of the GATT 1994. The European Union itself\ngenerally appears to focus its responses to these claims on the unbundling measure in the\nDirective and has in this regard explicitly referred to Russia's statement that \"the 'unbundling\nmeasure in the Directive is the only measure relevant to this claim'.\"756\n7.385. Having established that our assessment should focus on the unbundling measure in the\nDirective, we begin this assessment by examining the nature of this measure, including its design,\nexpected operation and regulatory effects.\n7.386. In this regard, we note t hat the European Union, when applying its own notion of\n\"regulatory jurisdiction\" as \"the jurisdiction of the regulatory authority that determines the\nconditions for selling a good or supplying a service\" 757, appears to focus exclusively on the role\nplayed by the national implementing laws while disregarding that of the Directive. The European\nUnion thus \"disagrees that [the Directive] has effects throughout the European Union: the\nprovisions in the Directive only have effects once implemented in the individual Member States.\"758\n7.387. However, and as pointed out by Russia, the Directive creates a legal obligation for the EU\nmember States to implement the rules on unbundling, and more particularly requires the EU\nmember States to implement the OU model and provides them the choice of implementing the ISO\nand/or the ITO models in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009. 759 In this way, the Directive therefore does \"determine\nthe conditions for selling [natura l gas] or supplying [pipeline transport services]\". 760 In other\nwords, the unbundling measure in the Directive applies in and has the above-mentioned regulatory\neffects throughout the EU territory.\n7.388. For this reason, the situation before us is also different f rom those addressed by the two\nGATT panels referred to by the European Union in support of its position, Canada – Provincial\nLiquor Boards (US) and US – Malt Beverages.761 The challenged measures in these two disputes\nwere measures by certain Canadian provin ces or US states, applicable within these provinces or\nstates only. Unlike the situation before us, these disputes did not involve any underlying measures\napplying throughout Canada or the United States and requiring implementation by their provinces\nor states, respectively.\n7.389. We also wish to make clear that we are not suggesting that the Directive imposes a direct\nrequirement to unbundle, or a particular unbundling model, on any economic actor in the\nEU territory. We are aware that the notion of \"direct effe ct\" has a particular meaning in the EU\n\n754 See, e.g. Russia's responses to Panel question No. 5, para. 31, and No. 171(a), para. 101.\n755 See, e.g. Russia's opening statement at the second meeting of the Panel, para. 102; and comments\non the European Union's response to Panel question No. 154, paras. 1 and 6-7. We emphasize that while we\nconsider the unbundling measure in the Directive the challenged measure for purposes of Russia's claims under\nArticle II:1 of the GATS and Articles I:1 and III:4 of the GATT 1994, we are not precluded from addressing\nevidence relating to the implementation of the unbundling measure in the Directive through the national\nimplementing laws of EU member States, as necessary and appropriate, when assessing Russia's claims\nagainst the unbundling measure in the Directive.\n756 European Union's comments of 21 October 2016 regarding terms of reference, para. 15; and\nresponse to Panel question No. 171(f), para. 81 (quoting Russia's first written submission, para. 307).\n757 European Union's response to Panel question No. 45(b), para. 102.\n758 European Union's response to Panel question No. 171(b), para. 71.\n759 Russia's second written submission, para. 17.\n760 European Union's response to Panel question No. 45(b), para. 102.\n761 European Union's opening statement at the second meeting with the Panel, paras. 10-11 (referring\nto GATT Panel Reports, Canada – Provincial Liquor Boards (US), fn 1 to para. 5.4; and US – Malt Beverages,\nparas. 5.16-5.17).\n\nlegal system, which was a point of discussion among the parties at the second meeting of the\nPanel.762 Our finding that the Directive applies in and has regulatory effects throughout the EU\nterritory does not concern su ch \"direct effect\". 763 Rather, and as explained above, this finding\nconcerns the Directive's above -mentioned regulatory effects of creating a legal obligation for EU\nmember States to implement the rules on unbundling, hereunder requiring EU member States to\nimplement the OU model and providing them the choice to implement the ISO and/or the ITO\nmodels in addition to the OU model in respect of transmission systems that b elonged to a VIU on\n3 September 2009.\n7.390. Having determined that the unbundling measure in the Directive applies in and has\nregulatory effects throughout the EU territory, we turn to the argument by the European Union\nthat the discretionary nature of the Directive should entail that the WTO consistency of this\nmeasure should be assessed within the individual EU member States.764\n7.391. We begin by noting that the unbundling measure in the Directive is not entirely\ndiscretionary in nature. As acknowledged by both parties, EU member States do not have\ndiscretion to choose whether or not to implement the OU model. Rather, they are allowed\ndiscretion to choose whether or not to implement the ISO and/or the ITO models in addition to the\nOU model and only with respect to transmission syst ems that belonged to a VIU on\n3 September 2009.765\n7.392. We understand the European Union to be arguing that this element of discretion under the\nDirective's unbundling measure entails that the WTO consistency of this measure should be\nassessed within the territory of individual EU member States rather than throughout the entire EU\nterritory.766 Effectively, the position of the European Union appears to be that this type of measure\nshould not be subject to a challenge under the MFN or national treatment obligations in the GATS\nand the GATT 1994 and that a complaining Member would instead h ave to challenge the \"national\nmeasure transposing the Directive\".767\n7.393. We have difficulties accepting this position. In our view, the approach suggested by the\nEuropean Union would be tantamount to automatically excluding the unbundling measure in the\nDirective from review under Article II:1 of the GATS and Articles I:1 and III:4 of the GATT 1994 by\nvirtue of the fact that this measure involves an element of discretion. As indicated by the European\nUnion, complaining parties would thus be confined to challengi ng the \"national measure[s]\ntransposing the Directive\" and the treatment accorded by such measures in the territory of the\nindividual EU member States.768 This would, in our view, contradict the Appellate Body's finding in\nUS – Corrosion-Resistant Steel Suns et Review that there is \"no reason for concluding that, in\nprinciple, non-mandatory measures cannot be challenged 'as such'\" 769 and that the discretionary\nor mandatory nature of a challenged measure \"is relevant, if at all, only as part of the panel's\nassessment of whether the measure is, as such, inconsistent with particular obligations.\"770\n7.394. In conclusion, and having established that the unbundling measure in the Directive applies\nin and has regulatory effects throughout the entire EU territory, we see no rea son to assess the\nWTO consistency of this measure within each individual EU member State, simply due to the fact\nthat its design and expected operation are such that it requires implementation by EU member\nStates and allows these member States an element of discretion when implementing it.\n\n762 Russia's oral response to advance Panel question No. 26 at the second meeting of the Panel; and\nEuropean Union's oral response to advance Panel question No. 26 at the second meeting of the Panel.\n763 We understand the European Union's position that \"the provisions in the Directive only have effects\nonce implemented in the individual Member States\" to be closely connected to the concept of \"direct effect\".\n(European Union's response to Panel question No. 171(a), para. 71).\n764 European Union's response to Panel question No. 171(c), paras. 71-76.\n765 Directive 2009/73/EC, (Exhibit EU-5), Article 9(8).\n766 European Union's response to Panel question No. 45(b), para. 103.\n767 European Union's response to Panel question No. 45(b), para. 103. See also European Union's first\nwritten submission, para. 296; and second written submission, paras. 64-65.\n768 European Union's response to Panel question No. 45(b), para. 103. See also European Union's first\nwritten submission, para. 296; and second written submission, paras. 64-65.\n769 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 88.\n770 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 89.\n\n7.395. Following the approach by the Appellate Body in US – Corrosion-Resistant Steel Sunset\nReview, we will consider the element of discretion under the Directive's unbundling measure only if\nrelevant in the context of our sub stantive assessments under Articl e II:1 of the GATS and\nArticles I:1 and III:4 of the GATT 1994. More particularly, should we find that Russia has\ndemonstrated that its pipeline transport services and service suppliers or its imported natural gas\nare accorded less favourable treatment, we will consider whether such potential less favourable\ntreatment is attributable to the unbundling measure in the Directive, taking into account the\nelement of discretion allowed under it.\n7.396. When reaching this conclusion, we are mindful that the issue of whether to assess the\nunbundling measure in the Directive on an EU -wide or a member State -specific basis has been a\ncontentious one, with both parties raising concerns of a systemic nature. 771 We note, in particular,\nthe position of the European Union that \"[t]he consequence of Russia's claim would be that any\ndifferences that may exist in the laws or regulations that apply in sub -divisions of the territory of a\nWTO Member must disappear\" 772 and that \"[a]n interpretation of the MFN obligation in the GATS\nthat would require one single harmonised treatment throughout the Member States of the\nEuropean Union is manifestly wrong and would have grave consequences for any WTO Member\nwith a federal system.\"773 In light of these concerns, we find it useful to provide a few observations\nconcerning the basis for and scope of our finding, including what we have not found.\n7.397. We, first, wish to emphasize that our finding regarding the relevant level for assessing the\nWTO consistency of the Directive's unbundling measure is based on the particularities of this\nmeasure and Russia's challenge against it, taking into account the sui generis nature of the\nEuropean Union and its member States in the WTO. Hence , our finding does not determine\nwhether this wou ld be the relevant level in future cases involving a different type of measure or\nchallenge. In particular, we recall that the challenged measure is an EU measure, which applies in\nand has regulatory effects throughout the EU territory , and that the allege d discrimination\nchallenged by Russia stems from models explicitly provided for by the Directive. This situation is\ntherefore distinguishable from other situations where \"differences … may exist in the laws or\nregulations that apply in sub -divisions of the territory of a WTO Member\" without the existence of\nan underlying measure applying throughout such a WTO Member. For the same reasons, we do\nnot believe that our finding that the unbundling measure in the Directive should be assessed on an\nEU-wide basis w ould automatically \"require one single harmonised treatment throughout the\nMember States of the European Union\". We also emphasize that, u nder Article II:1 of the GATS\nand Articles I:1 and III:4 of the GATT 1994, a complaining party would, in any event, be required\nto demonstrate that any differences in the treatment or that any lack of \"one single harmonised\ntreatment\" throughout the responding party result in less favourable treatment being accorded to\nthe services and service suppliers or the goods of th e complaining party. In fact, these are the\nvery issues we address in sections 7.5.1.3 and 7.5.1.4 below.\n7.398. Secondly, we wish to point out that we have not found it necessary to address all\narguments submitted by Russia in response to the European Union's position that the unbundling\nmeasure in the Directive should be assessed within the individual EU member States. In particular,\nwe have not found it necessary to address Russia's argument that EU member States are\n\"'regional' governments\" within the meaning of Article I:3(a) of the GATS and Article XXIV:12 of\nthe GATT 1994 774, a position the European Union opposes. 775 Nor have we found it necessary to\naddress Russia's argument that the European Union and its member States are granted \"a type of\npreferential treatment compared to other WTO Members\" by \"enjoy[ing] a special relationship with\nthe WTO\" under which both the European Union and its member States are Members of the\n\n771 See, e.g. Russia's opening statement at the first meeting of the Panel, para. 38; second written\nsubmission, para. 38; and opening statement at the second meeting of the Panel, para. 81; and European\nUnion's first written submission, paras 296-297; opening statement at the first meeting of the Panel, para. 33;\nand response to Panel question No. 171(c), para. 77.\n772 European Union's first written submission, para. 297.\n773 European Union's opening statement at the first meeting of the Panel, para. 33. See also European\nUnion's response to Panel question No. 171(c), para. 77.\n774 Russia's second written submission, paras. 27-30; and opening statement at the second meeting of\nthe Panel, para. 83.\n775 European Union's opening statement at the second meeting of the Panel, para. 14.\n\nWTO.776 Our finding that the unbundling measure in the Directive should be assessed throughout\nthe EU territory therefore should not be viewed as addressing, let alone resolving, these issues.\n7.399. Likewise, we have not found it necessary to address the alleged involvement by the\nEuropean Union in the implementation of the unbundling measure in the different EU member\nStates, including the evidence submitted by Russia, which was obtained through Wikileaks. 777 The\nEuropean Union rejects the notion of a \"conspiracy\" between itself and its member States, and\nsubmits, instead, that the adoption and implementation of the unbundling measure was \"the result\nof a normal democratic process\" 778, and \"strongly object[s] to the Panel accepting illegally\nobtained confidential documents as evidence in WTO proceedings\". 779 In reaching the conclusion\nthat the unbundling measure in the Directive should be as sessed throughout the EU territory , we\nhave not found it necessary to address these issues , nor does this finding rely on any evidence\nobtained by Russia through Wikileaks.\n7.5.1.2.2 Conclusion\n7.400. For the reasons explained in paragraphs 7.378 through 7.395 above, we conclude that the\nWTO consistency of the Directive's unbundling measure should be assessed throughout the EU\nterritory.\n7.401. Having reached this conclusion, we proceed to examine Russia's claims against the\nunbundling measure in the Directive under Article II:1 of the GATS and Articles I:1 and III:4 of the\nGATT 1994 by comparing the treatment accorded throughout the EU territory to pipeline transport\nservices and service suppliers and to natural gas of different origin.\n7.5.1.3 Russia's claim under Article II:1 of the GATS\n7.5.1.3.1 Introduction\n7.402. The gist of Russia's claim against the unbundling measure in the Directive under this\nprovision is, as explained above, that the unbundling measure in the Directive accords less\nfavourable treatment to Russian pipeline transport services and service suppliers by \"enabling\" EU\nmember States to choose between implementing only the OU model or implementing the ISO\nand/or the ITO models in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009.780\n7.403. In response, the European Union submits that the treatment accorded to pipeline transport\nservices and service suppliers under the OU model is not less favourable than that accorded to\npipeline transport services and service suppliers under the I SO or ITO models 781 and that the\nunbundling measure in the Directive, in any event, does not discriminate against Russian pipeline\ntransport services and service suppliers, as these are not \"predominantly\" subject to the OU model\nin comparison with the pipel ine transport services and service suppliers of other non -EU\ncountries.782\n7.5.1.3.2 Analysis by the Panel\n7.404. In accordance with the legal standard for Article II:1 of the GATS, set out in\nparagraphs 7.226 and 7.227 above, our analysis below will focus on whether Russia has\ndemonstrated that (a) the unbundling measure in the Directive falls within the scope of the GATS;\n\n776 Russia's comments on the European Union's response to Panel question No. 154, paras. 43-46.\n777 Russia's second written submission, paras. 48-56 (referring to, e.g. Wikileaks, Public Library of US\nDiplomacy, Cable of 7 November 2007 \"Grand Coalition Opposes European Union Commission's Unbundling\nDirectives\", (Exhibit RUS-172); and Wikileaks, Public Library of US Diplomacy, Cable of 31 October 2008\n\"Outlook for the EU's Third Energy Package\", (Exhibit RUS-178)).\n778 European Union's second written submission, paras. 67 and 71; and response to Panel question\nNo. 171(c), paras. 73-75.\n779 European Union's opening statement at the second meeting of the Panel, paras. 15-16.\n780 See, e.g. Russia's first written submission, paras. 318-326.\n781 See, e.g. European Union's first written submission, para. 306-337; and second written submission,\npara. 72-75.\n782 See, e.g. European Union's first written submission, paras. 299-305 and 338-343; and second\nwritten submission, para. 76-87.\n\n(b) the relevant services and service suppliers are like; and (c) the unbundling measure in the\nDirective accords less favourable treatment to Russian services and service sup pliers than that\naccorded to like services and service suppliers of any other country.\n7.405. We address these elements, in turn, below.\n7.5.1.3.2.1 Scope of the GATS\n7.406. Article I:1 of the GATS sets out the scope of this Agreement as applying to \"measures by\nMembers affecting trade in services\" . As explained by the Appellate Bo dy, this requires Russia to\nmake a prima facie case: (a) that \"there is 'trade in services' in th e sense of Article I:2\"; and (b )\nthat the unbundling measure in the Directive \"'affects' such trade in services within the meaning of\nArticle I:1\".783\n7.407. In this regard, we note that Article I:2 of the GATS defines trade in services as the supply\nof a service through one of the four modes of supply set out in this provision. Russia has identified\npipeline transport services as the relevant services 784 and mode 3 or c ommercial presence, within\nthe meaning of Article I:2(c), as the relevant mode of supply. 785 It is undisputed that pipeline\ntransport services can be and are supplied through commercial presence in the European Union\nand, therefore, that there can be and is trade in pipeline transport services.\n7.408. Turning to whether the unbundling measure in the Directive affects trade in pipeline\ntransport services, we recall that the Appellate Body has clarified that the ordinary meaning of the\nterm \"affecting\" implies a measu re that has \"an effect on\", which indicates a broad scope of\napplication, wider in coverage than such terms as \"regulating\" or \"governing\".786\n7.409. We note that the unbundling measure, including all three unbundling models set out by it,\nregulates the conditions under which a pipeline transport service supplier may supply such services\nand, in particular, the relationship between a pipeline transport service supplier and producers or\nsuppliers of natural gas. More specifically, and as explained by the European Un ion itself, the OU\nmodel requires a pipeline transport service supplier to be structurally separated from natural or\njuridical persons engaged in the production or supply of natural gas in order for it to supply\npipeline transport services in the European Union787, whereas the ISO and ITO models impose\n\"behavioural and organisational\" requirements 788, as well as \"increased regulatory oversight\". 789\nWe further note that both parties agree that the unbundling measure in the Directive affects trade\nin pipeline transport services and thus falls within the scope of the GATS.790\n7.410. Mindful of these considerations , it is clear to us that the unbundling measure in the\nDirective does in fact affect the supply of pipeline transport services under mode 3, and we\ntherefore conclude that this measure falls within the scope of the GATS.\n7.5.1.3.2.2 Like services and service suppliers\n7.411. As explained in paragraphs 7.226 and 7.227 above, the MFN obligation in Article II:1 of\nthe GATS applies only with respect to services and service suppliers that are like and we therefore\nturn to the issue of whether Russia has made a prima facie case that the relevant services and\nservice suppliers are like within the meaning of Article II:1 of the GATS.\n7.412. Before turning to the actual assessment of likeness, we note that Russia briefly refers to\nLNG services and service suppliers when claiming that the relevant services and service suppliers\nare like, stating that \"pipeline transport services and service suppliers, including LNG services and\nservice suppliers, are in a competitive relationship with each other and thus satisfy the 'likenes s'\n\n783 Appellate Body Report, Canada – Autos, para. 155.\n784 Russia's first written submission, paras. 93-110 and 308.\n785 Russia's first written submission, para. 308; and response to Panel question No. 56, para. 285.\n786 Appellate Body Report, EC – Bananas III, para. 220.\n787 European Union's response to Panel question No. 59, para. 157.\n788 European Union's first written submission, para. 313.\n789 European Union's second written submission, para. 74.\n790 Russia's first written submission, paras. 307-308; and European Union's first written submission,\npara. 281.\n\nrequirement\".791 It is therefore not clear whether the relevant services and service suppliers, for\npurposes of Russia's claim under Article II:1 of the GATS against the unbundling measure in the\nDirective, include both pipeline transport services and ser vice suppliers a s well as LNG services\nand service suppliers.\n7.413. For this reason, we consider it helpful to determine the scope of the likeness enquiry to be\nconducted for Russia's claim against the unbundling measure in the Directive under Article II:1 of\nthe GATS, before turning to the actual assessment of likeness.\n7.414. In this regard, we recall that Russia's claim under Article II:1 of the GATS pertains to the\nalleged less favourable treatment of Russian services and service suppliers stemming from the\nDirective \"enabling\" EU member States to choose between implementing only the OU model or\nimplementing the ISO and/or the ITO models in addition to the OU model in respect of\ntransmission systems that belong ed to a VIU on 3 September 2009. More particularly , Russi a\nclaims concern the alleged less favourable treatment of pipelin e transport services under the OU\nmodel compared to the ISO and/or the ITO models.792\n7.415. In substantiating its claim, Russia focuses solely on entities supplying services within the\nEU territory through commercial presence in the form of TSOs. 793 Such entities supply pipeline\ntransport services within the meaning we employ throughout this Report, i.e. transportation or\ntransmission of natural gas via transmission pipelines.794 While Russia, as mentioned, briefly refers\nto LNG services and service suppliers in claiming that the relevant services and service suppliers\nare like, such services and service suppliers do not appear relevant for the substance of Russia's\nclaim under Article II:1 of the GATS against the unbundling measure in the Directive. As explained\nabove, this particular claim pertains to the alleged discrimination stemming from the Directive\n\"enabling Member States either to require full ownership unbundling or to permit the ISO and ITO\nunbundling models\" and not to the requirement to unbundle per se.795\n7.416. Both parties agree that the requirement to unbundle does not apply to LNG service\nsuppliers.796 In other words, LNG service suppliers are not subject to any of the three unbundling\nmodels and are thus not accorded the alleged more favourable treatment under the ISO or the ITO\nmodels or the alleged less favourable treatment under the OU model, challenged by Russia under\nits claim against the unbundling measure in the Directive. Notably, the alleged \"exemption\" of LNG\nfacilities from the requirement to unbundle (referred to in this Report as \"the LNG measure\") is not\nthe object of this particular claim, but is instead challenged by Russia as a \"separate, distinct\nmeasure[]\" under a separate claim. 797 In our view , this suggests that LNG services and service\nsuppliers are not relevant to Russia's claim against the unbundling measure in the Directive under\nArticle II:1 of the GATS. This conclusion is confirmed by the fact that Russia does not rely on any\nexample or argumentation with respect to LNG services or service suppliers in arguing that the\nunbundling measure in the Directive accords less favourable treatment in violation of Article II:1 of\nthe GATS.\n7.417. For the reasons outlined above, we find that only pipeline transport services and service\nsuppliers are relevant for Russia's claim against the unbundling measure in the Directive under\nArticle II:1 of the GATS. For the same reasons, it is not necessary or relevant for us to consider, in\nthe context of this claim, whether pipeline transport services and service suppliers are like LNG\nservices and service suppliers.\n7.418. Having determined that the scope of our likeness enquiry should be limited to pipeline\ntransport services and service suppliers, we proceed to consider the actual assessment of likeness.\nAs mentioned above, Russia's claim under Article II:1 of the GATS pertains to the alleged less\nfavourable treatment of Russian pipeline transport services and service suppliers under the OU\n\n791 Russia's first written submission, para. 309.\n792 Russia's first written submission, paras. 318-326; and second written submission, para. 204.\n793 Russia's first written submission, paras. 329-339; and second written submission, paras. 209\nand 223.\n794 See para. 7.285 above.\n795 Russia's first written submission, heading IX.D.2.b and paras. 314, 319, and 326-327.\n796 Russia's response to Panel question No. 1, paras. 4 and 7; and European Union's first written\nsubmission, para. 433.\n797 Russia's first written submission, paras. 380-414; and responses to Panel question No. 4, para. 16,\nand No. 5, para. 38.\n\nmodel in comparison with that accorded to pipeline transport services and service suppliers under\nthe ISO and/or the ITO models. 798 In light of this, two issues arise in determining whether the\nrelevant services and service suppliers are like: First, whether pipeline transport services and\nservice suppliers are like regardless of their origin, and second, whether pipeline transport services\nand service suppliers are like regardless of whether these are supplied/supply their services under\nthe OU model or the ISO or ITO models.\n7.419. In addressing these issues of likeness, we recall that the Appellate Body has clarified that\nthe assessment of whether services and service suppliers are like involves an examination of their\n\"degrees of 'competitiveness' or 'substitutability'\"799, taking into account the specific circumstances\nof the particular case including, but not necessarily limited to: (a) the nature and characteristics of\nthe services and service suppliers; (b) the end -uses of the services; (c) consumers' preferences in\nrespect of the services and service suppliers; and (d) the classification and description of the\nservices under, for instance, the CPC.800\n7.420. Russia argues that pipeline transport services and service suppliers are like \"regardless of\nwhether the service supplier is located i n Russia or any other third -country and supplies its\nservices via commercial presence within one or more EU Member States.\" 801 The European Union\ndoes not dispute that Russian pipeline transport services and service suppliers are like pipeline\ntransport services and service suppliers of other non-EU countries, as \"[a]ll these suppliers are in a\ncompetitive relationship, taking into account the 'nature and characteristics' of the services\ntransactions and suppliers at stake.\" 802 Similarly, the European Union con siders that \"all\ntransmission pipeline transport service providers are 'like' and enjoy the same competitive\nopportunities to provide services, regardless of the unbundling model under which they\noperate.\"803\n7.421. It is undisputed that the nature and characteristics, the end -uses, and the classification\nunder the CPC 804 of the pipeline transport services and service suppliers described in\nparagraph 7.418 above are identical, which suggests that these are like. Furthermore, none of the\nevidence and argumentation supplied by the parties suggests that consumers' preferences differ\nfor these pipeline transport services and service suppliers.\n7.422. In light of the above, we hence conclude that the relevant services and service suppliers –\ni.e. pipeline transport services and service suppliers of different origins, operating under different\nunbundling models – are like within the meaning of Article II:1 of the GATS. Having made this\nfinding of likeness, we proceed to assess whether Russia has demonstrated that the unbundling\nmeasure in the Directive accords less favourable treatment to Russian pipeline transport services\nand service suppliers than that accorded to the like pipeline transport services and service\nsuppliers of any other non-EU country.\n7.5.1.3.2.3 Less favourable treatment\n7.423. As explained above, the underlying premise of Russia's claim under Article II:1 of the\nGATS is that the unbundling measure in the Directive violates th is provision by \"enabling\" EU\nmember States to choose between implementing only the OU model or implementing the ISO\nand/or the ITO models in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009. More particularly, Russia argues that the implementation\nof only the OU model in respect of transmission systems that did not belong to a VIU on\n3 September 2009 as well as in respect of transmission systems that did belon g to a VIU on\n3 September 2009 in certain EU member States results in less favourable treatment of Russian\npipeline transport service suppliers. Russia contrast s this treatment with that of pipeline transport\n\n798 Russia's first written submission, paras. 318-326; and second written submission, para. 204.\n799 Appellate Body Report, Argentina – Financial Services, para. 6.26 (quoting Appellate Body Report, EC\n– Asbestos, para. 99).\n800 Appellate Body Report, Argentina – Financial Services, para. 6.32.\n801 Russia's first written submission, para. 309.\n802 European Union's first written submission, para. 282.\n803 European Union's response to Panel question No. 182, para. 123.\n804 As explained in section 7.4.2 above, pipeline transport services are classified as CPC 713 under the\nCPC prov. In addition, we further note that pipeline transport services are classified as CPC 65131 under the\nCPC 2.1, an element that, as explained below in paragraph 7.1412, has been found relevant for assessing\nlikeness of services and service suppliers.\n\nservices and service suppliers of other non -EU countries, supplying their services through\ncommercial presence in certain EU member States that have implemented the ISO and/or the ITO\nmodels in addition to the OU model in respect of transmission syst ems that belonged to a VIU on\n3 September 2009.805\n7.424. The European Union responds that Russia has failed to demonstrate that pipeline transport\nservices and service suppliers are accorded less favourable treatment under the OU model in\ncomparison with the ISO and/or the ITO models.806 In any event, the European Union submits that\nRussia has failed to demons trate that the unbundling measure is discriminatory, pointing out that\nall pipeline transport service suppliers, regardless of their origin, are subject to the same\nunbundling model(s) when operating through commercial presence in any particular EU member\nState, and that Russia has not shown that the OU model \"predominantly\" affects Russian pipeline\ntransport services and service suppliers.807\n7.425. Before addressing the alleged less favourable treatment of Russian pipeline transport\nservices and service suppliers under the different unbundling models, we find it useful to recall a\nfew factual aspects concerning these different models.\n7.426. As explained in paragraphs 2.10 through 2.28 above, the OU model requires structural\nseparation between natural or juridical persons engaged in the production and supply of natural\ngas, on the one hand, and natural or juridical persons engaged in the transportation or\ntransmission of natural gas through transmission pipelines, on the other hand. 808 Under this\nmodel, a VIU is therefore required to divest its control and rights, including the power to exercise\nvoting rights, the power to appoint members of the supervisory board, of the administrative board\nor of representative bodies, and the holding of a majority share 809, ov er either its natural gas\nproduction and supply undertakings or its transmission systems and TSOs.810 Under the ISO model\n– applicable only in EU member States that have chosen to implement this model and only where\nthe transmission system belonged to the VI U on 3 September 2009811 – a VIU continues owning\nthe transmission system but the TSO, also known as the ISO, is required to be separate from the\nVIU by complying with the rules on ownership unbundling. 812 Under the ITO model – also\napplicable only in EU membe r States that have chosen to implement this model and only where\nthe transmission system belonged to the VIU on 3 September 2009813 – the owner and operator of\n\n805 See, e.g. Russia's first written submission, paras. 320-326; and second written submission,\npara. 204.\n806 See, e.g. European Union's first written submission, paras. 306-337; opening statement at the first\nmeeting of the Panel, paras. 35-37; and second written submission, paras. 72-75.\n807 See, e.g. European Union's first written submission, paras. 299-305 and 338-343; opening\nstatement at the first meeting of the Panel para. 38; and second written submission, paras. 76-87.\n808 Directive 2009/73/EC, (Exhibit EU-5), Article 9.\n809 We note that Russia, at times, contends that the OU model does not permit passive, minority\nshareholding in a transmission system or a TSO whereas the European Union disagrees with this position.\n(Russia's opening statement at the second meeting of the Panel, paras. 90 and 96; and response to Panel\nquestion No. 172(a), paras. 116-119; and European Union's first written submission, paras. 28 and 311;\nsecond written submission, paras. 82 and 132; and comments on Russia's response to Panel question\nNo. 172(a), paras. 58-60). Generally, we have difficulties understanding how the Directive could be construed\nso as to prevent the holding of a passive, minority share. Most notably, Recital (8) explicitly states that \"a\nproduction or supply undertaking should be able to have a minority shareholding in a transmission system\noperator or transmission system.\" In fact, Russia, at times, appears to agree with the European Union's\nposition that such passive, minority shareholding is permitted. (See, e.g. Russia's opening statement at the\nfirst meeting of the Panel, para. 41; response to Panel question No. 87, para. 384; and second written\nsubmission, paras. 107, 209, 211 and 234). In any event, and as explained below, our assessment of Russia's\nclaim under Article II:1 of the GATS focuses on the conditions of competition for pipeline transport services and\nservice suppliers, rather than financial rights such as passive, minority shareholding. We therefore do not find\nit relevant for us to examine further whether or not the OU model under the Directive permits passive, minority\nshareholding. Indeed Russia itself, at times, suggests that this issue is not relevant for the assessment of\nRussia's claim. (See, e.g. Russia's opening statement at the first meeting of the Panel, para. 41; and second\nwritten submission, para. 234).\n810 Directive 2009/73/EC, (Exhibit EU-5), Articles 9(1) and 9(2).\n811 Directive 2009/73/EC, (Exhibit EU-5), Article 9(8).\n812 Directive 2009/73/EC, (Exhibit EU-5), Article 14.\n813 Directive 2009/73/EC, (Exhibit EU-5), Article 9(8). We note that the infrastructure exemption\nmeasure in Article 36 of the Directive allows exemptions to be granted from, among others, the requirement to\nunbundle and that Russia at times refers to the TAP infrastructure exemption decision, which allowed TAP AG\nto operate as an \"'ad hoc' ITO\" despite not belonging to a VIU on 3 September 2009. (Russia's first written\n\nthe transmission system, the TSO or the ITO, belongs to a VIU but a number of requirements\napply in respect of the relationship between the two.814\n7.427. In our view, the parties' argumentation raise s two issues: (a) whether Russia has\ndemonstrated that pipeline transport services and service suppliers are accorded less favourable\ntreatment under the OU model in comparison with that accorded to pipeline transport services and\nservice suppliers under the ISO and/or the ITO models; and (b) if so, whether Russia has\ndemonstrated that the unbundling measure in the Directive accords less favourable treatment to\nRussian pipeline transport services and service suppliers than that accorded to pipeline transport\nservices and service suppliers of any other non -EU country by \"enabling\" EU member States to\nchoose between implementing only the OU model or implementing the I SO and/or the ITO models\nin addition to the OU model in respect of transmission syst ems that belonged to a VIU on\n3 September 2009.\n7.428. Before addressing these issues, we note that there appears to be an underlying\ndisagreement, or at least a difference in approach, between the parties with respect to the focus of\ntheir argumentation:\n7.429. The European Union criticizes Russia for focusing its argumentation on VIUs when arguing\nthat such entities are \"prevented from supplying [their] pipeline transport services to the EU\nmarket through a commercial presence\" under the OU model, whereas other VIUs \"are able to\ncontinue supplying their lik e pipeline transport services to the EU market through a commercial\npresence in the form of an ITO (or ISO)\" in EU member States that have implemented the ISO\nand/or the ITO models in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009.815\n7.430. The European Union faults Russia for \"equat[ing]\" VIUs with pipeline transport service\nsuppliers an d instead submits that it is TSOs which constitute pipeline transport service\nsuppliers816, arguing that the ISO and the ITO models are in fact more restrictive for such entities\nthan the OU model in terms of the \"behavioural and organisational\" 817 requirements, as well as\nincreased \"regulatory oversight\".818\n7.431. We consider this issue a fundamental one, which determines the basis for our continued\nassessment of Russia's claim under Article II:1 of the GATS. We therefore find it appropriate to\nbegin our examination of the alleged less favourable treatment of Russian pipeline transport\nservices and service suppliers by addressing this issue.\nFocus of the assessment under Article II:1 of the GATS\n7.432. We recall that Russia has identified mode 3 as the relevant mode of suppl y.819 In this\nregard, we note that the supply of a service through mode 3 is defined in Article I:2(c) of the\nGATS as \"the supply of a service … by a service supplier of one Member, through commercial\npresence in the territory of any other Member\". We furthe r note that \"commercial presence\" is\n\nsubmission, paras. 332-334; second written submission, para. 227; and response to Panel question\nNo. 172(a), para. 120 (referring to Russia's response to Panel question No. 183(a))). As we explained at the\noutset of our Report, we consider it important not to conflate the different measures challenged by Russia\nunder different claims. Since TAP AG is an \"'ad hoc' ITO\" under the infrastructure exemption measure rather\nthan an ITO under the unbundling measure in the Directive, we do not believe it is relevant to consider this\nexample further in the context of addressing Russia's claims against the latter measure. More particularly, and\nas further explained below, it is the design, structure and expected operation of the unbundling measure we\nmust consider when determining whether this measure is WTO consistent or not. Russia does not suggest that\nthe design, structure and expected operation of the unbundling measure are such that it would have subjected\nTAP AG to the ITO model. Indeed, this is the reason why TAP AG was obliged to apply for – and ultimately\nreceive – an exemption from the rules on unbundling pursuant to the infrastructure exemption measure.\n814 Directive 2009/73/EC, (Exhibit EU-5), Articles 17-23.\n815 Russia's second written submission, para. 204. See also Russia's first written submission, paras. 316\nand 324-325; and second written submission para. 209.\n816 European Union's second written submission, para. 72.\n817 European Union's first written submission, para. 313. See also European Union's second written\nsubmission, para. 74.\n818 European Union's second written submission, para. 74. See also European Union's first written\nsubmission, para. 313.\n819 Russia's first written submission, para. 308; and response to Panel question No. 56, para. 285.\n\ndefined in Article XXVIII(d) as \"any type of business or professional establishment, including\nthrough (i) the constitution, acquisition or maintenance of a juridical person, or (ii) the creation or\nmaintenance of a bra nch or a representative office, within the territory of a Member for the\npurpose of supplying a service\".\n7.433. These provisions make it clear that two types of entities are involved when a service is\nsupplied under mode 3. First, the commercial presence within the \"host\" or \"importing\" Member,\nwhich according to Article XXVIII(d) of the GATS consists of any type of business or professional\nestablishment within the territory of that Member \"for the purpose of supplying a service\",\nincluding a juridical person or a branch or representative office. Second, natural or juridical\npersons of another, \"exporting\" Member, which supply services through the commercial presence,\nin accordance with Article I:2(c) of the GATS. We understand from the evidence and\nargumentation provided by the parties that TSOs within the EU territory constitute the former type\nof entity, the commercial presence, for purposes of the dispute before us. Furthermore, we\nunderstand that natural or juridical persons, including VIUs, from other , exporting Members may\nsupply services through the commercial presence of such TSOs, in which case these natural or\njuridical persons, including VIUs, from other Members would constitute the latter type of entity.\n7.434. Bearing in mind the nature of the supply of services under mode 3 described above, we do\nnot believe it would be appropriate to automatically conclude that only one of these two types of\nentities – i.e. the commercial presence in the importing Member or th e natural or juridical persons\nin the exporting Member – is the service supplier for purposes of considering claims under the\nGATS. We find support for this approach both in the relevant provisions of the GA TS as well as in\nprior jurisprudence.\n7.435. Beginning with the relevant provisions of the GATS, Article XXVIII(g) defines a \"service\nsupplier\" as \"any person that supplies a service\", which could imply that a service supplier is the\nnatural or juridical person directly supplying a service.\n7.436. We recall, however, the definition of mode 3 in Article I:2(c) of the GATS as \"the supply of\na service … by a service supplier of one Member, through commercial presence in the territory of\nany other Member\". This definition is echoed in Article XXVIII(f)(ii), which defines a service of\nanother Member as \"a service which is supplied, … in the case of the supply of a service through\ncommercial presence …, by a service supplier of that other Member\". In our view, the references in\nthese provisions to a service supplier supplyin g services through commercial presence suggest\nthat, while the service may be supplied directly by the commercial presence, the service supplier\ncannot necessarily be considered as consisting solely of this commercial presence.\n7.437. Furthermore, footnote 12 to the definition of a service supplier in Article XXVIII(g) states\nthat:\nWhere the service is not supplied directly by a juridical person but through other\nforms of commercial presence such as a branch or a representative office, the service\nsupplier (i.e. the juridical person) shall, nonetheless, through such presence be\naccorded the treatment provided for service suppliers under the Agreement. Such\ntreatment shall be extended to the presence through which the service is supplied and\nneed not be extended to any other parts of the supplier located outside the territory\nwhere the service is supplied.820\n7.438. The language of this footnote clarifies that, under mode 3, the commercial presence forms\npart of the service supplier and that the natural or juridical person i n the exporting Member,\nalthough not directly supplying a service, should also be considered the service supplier. As with\nthe definitions in Articles I:2(c) and XXVIII(f)(ii) of the GATS, footnote 12 to Article XXVIII(g) thus\nsuggests that a more comprehe nsive notion of a service supplier is called for when addressing\nclaims concerning the supply of a service through commercial presence.\n7.439. A similarly comprehensive approach has been taken by panels in prior cases. For instance,\nin EC – Bananas III, the pane l referred to the commercial presence as the service supplier when\nstating that there are \"non-EC-owned or controlled service suppliers commercially present in the\n\n820 Emphasis added.\n\nEC for GATS purposes that provide wholesale trade services in bananas\" 821 yet, in the same\nparagraph, explains that \"companies registered in the Complainants' countries provide wholesale\ntrade services in respect of bananas to and in the EC through commercially present owned or\ncontrolled subsidiaries in the meaning of Art icle XXVIII(n).\"822 Similarly, the panel in China –\nPublications and Audiovisual Products , clarified that \"the term 'service suppliers of another\nMember' supplying a service through commercial presence includes entities that have established\na commercial presence in the host Member a nd/or entities that seek to establish in the host\nMember\".823\n7.440. In light of the nature of mode 3, as evidenced by the relevant provisions of the GATS and\nprior jurisprudence, we therefore do not believe it would be appropriate to automatically disregard\neither the commercial presence in the importing Member or the natural or juridical persons in the\nexporting Member, supplying a service through that commercial presence, when considering the\ntreatment of services and service suppliers in the context of GATS clai ms concerning this mode of\nsupply. Depending on the particular claim and measure at issue, it may therefore be relevant to\nlook at either of these two types of entities, or at both.\n7.441. With respect to Russia's claim under Article II:1 of the GATS against the unbundling\nmeasure in the Directive, we therefore do not agree with the European Union insofar as it suggests\nthat we should focus solely on the treatment of TSOs and entirely disregard natural or juridical\npersons, including VIUs, that supply pipeline tra nsport services through the commercial presence\nof such TSOs. In fact, in response to a question by the Panel, the European Union states that it\n\"does not exclude that a VIU owning or controlling a TSO within the meaning of GATS\nArticle XXVIII(m)(ii) may s upply services within the meaning of GATS Article I:2(c) (if a\ncommercial presence is established) and may be a pipeline transport service supplier.\"824\n7.442. At the same time, we agree with the European Union that the treatment accorded to VIUs\nis relevant only insofar as it has been demonstrated that these are in fact pipeline transport\nservice suppliers, supplying such services in the EU territory through the commercial presence of\nTSOs within the meaning of the GATS.825\n7.443. Based on the evidence, we understand that the TSOs pointed to by Russia as constituting a\ncommercial presence take the form of juridical persons rather than, inter alia , branches or\nrepresentative offices. 826 When a commercial presence takes the form of a juridical person,\n\n821 Panel Reports, EC – Bananas III, para. 7.329.\n822 Panel Reports, EC – Bananas III, para. 7.329.\n823 Panel Report, China – Publications and Audiovisual Products, para. 7.974.\n824 European Union's response to Panel question No. 176(b), para. 105.\n825 European Union's response to Panel question Nos. 176(a) and (b), paras. 104-105. We note that\nUkraine has raised concerns regarding this issue in the context of two particular TSOs, namely the TSOs NEL\nGastransport GmbH (NEL GT) and OPAL Gastransport GmbH & Co. KG (OPAL GT), in respect of which Ukraine\n\"considers that the Russian Federation has wrongly applied GATS Article XXVIII by designating NEL GT and\nOPAL GT as 'commercial presence' of the Russian company Gazprom in Germany.\" (Ukraine's third-party\nsubmission, para. 72). Both parties agree that Gazprom supplies pipeline transport services through the\ncommercial presence of the TSOs NEL GT and OPAL GT in Germany. (Russia's response to Panel question No.\n52, paras. 263-265; and second written submission, para. 336; and European Union's response to Panel\nquestion No. 52, para. 143). We however agree with the underlying premise of Ukraine's arguments, namely\nthat it is for Russia to demonstrate that any particular VIU supplies pipeline transport services through the\ncommercial presence of a TSO within the meaning of the GATS.\n826 We note that Russia has not provided a clear characterization of the form(s) of commercial presence\nat issue in this dispute. However, Russia has made continuous references to VIUs either having divested or\ncontinuing to have \"shares\" or an \"interest\" in TSOs. (See, e.g. Russia's first written submission, paras. 325,\n327 and 332-336; and second written submission, paras. 66, 70 and 211). In our view, these references\nsuggest that the TSOs at issue are separate juridical persons, in which VIUs own a particular share or have a\nparticular interest, rather than branches or representative offices of the VIUs. We further note that Russia has\nmade continuous references to VIUs either having divested or continuing to have \"control\" over TSOs. (See,\ne.g. Russia's first written submission, paras. 324-325, 327 and 329-330; and second written submission,\nparas. 66, 142, 225 and 227). The term \"control\" is found in Articles XXVIII(m)(ii) and XXVIII(n)(ii) of the\nGATS, which concern juridical persons rather than branches or representative offices. We also recall that\nfootnote 12 to Article XXVIII(g) of the GATS distinguishes between, on the one hand, services supplied by a\njuridical person and, on the other hand, services supplied by \"other forms of commercial presence\", the latter\nincluding a branch or a representative office. This further confirms our understanding that the TSOs pointed to\nby Russia as constituting a commercial presence take the form of juridical persons rather than, inter alia,\nbranches or representative offices.\n\nArticle XXVIII(m)(ii) clar ifies that a \"juridical person of another Member\" is \"a juridical person\nwhich is … in the case of the supply of a service through commercial presence, owned or controlled\nby: 1. n atural persons of that Member; or 2 . juridical persons of that other Member\" . In other\nwords, for a natural or juridical person from an exporting Member to supply services through a\ncommercial presence taking the form of a juridical person in another, importing Member, the\njuridical person constituting the commercial presence in t he importing Member must be \"owned or\ncontrolled\" by the natural or juridical person from the exporting Member.\n7.444. In this regard, we note that Article XXVIII(n)(i) of the GATS specifies that a juridical\nperson is \"'owned' by persons of a Member if more than 50 per cent of the equity interest in it is\nbeneficially owned by persons of that Member\" and that Article XXVIII(n)(ii) of the GATS specifies\nthat a juridical person is \"'controlled' by persons of a Member if such persons have the power to\nname a majority of its directors or otherwise to legally direct its actions\".\n7.445. Russia argues that \"the GATS does not require the service supplier of one Member that\nsupplies services through 'commercial presence' within the territory of another Member to have\nmajority ownership or control of that commercial presence.\" 827 In Russia's view, it is instead \"the\n'juridical person of another Member,' which supplies a service through commercial presence within\nthe territory of the importing Member, that must be majority owned or controlled by natural or\njuridical persons of that other Member.\" 828 Russia appears to suggest that any juridical person of\nanother exporting Member, which owns shares in a juridical person supplying services within the\nterritory of the importing Member, sh ould be considered a service supplier, supplying its services\nthrough commercial presence, provided that it is owned or controlled by a \"third layer\" of natural\nor juridical persons from that other, exporting Member.\n7.446. In our view, this position has no basi s in the text of the GATS and we therefore cannot\nagree with Russia. In line with the position taken by prior panels, we believe that the appropriate\nfocus under mode 3 is the relationship between the commercial presence in the importing Member\nand the nat ural or juridical person in the exporting Member, which supplies services through the\ncommercial presence.829 We do not believe that it is relevant to consider any potential relationship\nbetween the natural or juridical person in the exporting Member, supply ing services through the\ncommercial presence in the importing Member by owning or controlling it, and natural or juridical\npersons that may, in turn, own or control the former of these two.\n7.447. Furthermore, we agree with the European Union that our assessment of the unbundling\nmeasure in the Directive under Article II:1 of the GATS should focus on the treatment of VIUs,\nwhich own or control TSOs within the meaning of Article XXVIII(n)(i) or (ii), only in their capacity\nof supplying pipeline transport services through the commercial presence of such TSOs.830\n7.448. VIUs are, per definition, engaged in both the supply of pipeline transport services and in\nthe production or supply of natural gas. As explained at the outset of our Report, however, the\nfocus under the GATS i s how the challenged measure affects the supply of a service or service\nsuppliers, not how it affects trade in goods. 831 In accordance with the scope and subject matter of\nthe GATS, our assessment of the unbundling measure's consistency with Article II:1 of the GATS\nwill therefore focus on how this measure affects the supply of pipeline transport services and\nservice suppliers, rather than how it affects trade in natural gas. For these reasons, we do not\nconsider Russia's arguments concerning the latter, such as the European Union's alleged \"objective\nof ousting Gazprom from the EU gas market\" or the \"detrimental impact on the competitive\nopportunities for the transportation and sale of Russian gas in the EU market\" 832, in the context of\naddressing Russia's claim under Article II:1 of the GATS. We address such arguments, instead, in\nthe context of Russia's claims against the unbundling measure in the Directive under Articles I:1\nand III:4 of the GATT 1994.\n7.449. Having set out these considerations concerning the focus of our assessment, we turn to\nthe two issues raised by the parties' argumentation, namely (a) whether Russia has demonstrated\n\n827 Russia's response to Panel question No. 52, para. 269.\n828 Russia's responses to Panel question No. 52, para. 269, and No. 92, para. 397.\n829 Panel Reports, EC – Bananas III, fn 493 to para. 7.318; and Canada – Autos, para. 10.257.\n830 European Union's response to Panel question No. 176(b), para. 105.\n831 Appellate Body Report, EC – Bananas III, para. 221.\n832 Russia's second written submission, para. 228.\n\nthat pipeline transport services and service suppliers are accorded less favourable treatment under\nthe OU model in comparison with that accorded to pipeline transport services and service suppliers\nunder the ISO and/or the ITO models; and (b) if so, whether Russia has demonstrated that the\nunbundling measure in the Directive a ccords less favourable treatment to Russian pipeline\ntransport services and service suppliers than that accorded to pipeline transport s ervices and\nservice suppliers of any other non-EU country by \"enabling\" EU member States to choose between\nimplementing only the OU model or implementing the ISO and/or the ITO models in addition to\nthe OU model in respect of transmission syst ems that belonged to a VIU on 3 September 2009.\nBelow, we address each of these issues in turn.\nComparison of the treatment of pipeli ne transport services and service suppliers\nunder the OU model and the ISO and ITO models\n7.450. We begin our comparison of the treatment of pipeline transport services and service\nsuppliers under the OU model and the ISO and ITO models by noting that the Appella te Body has\nclarified that the assessment of less favourable tre atment under Article II:1 of the GATS calls for\nan examination of whether a measure \"modif[ies] the conditions of competition to the detriment of\nservices or service suppliers of any other Mem ber\".833 Our comparison of the different unbundling\nmodels will therefore focus on whether the conditions of competition are modified to the detriment\nof pipeline transport services and service suppliers under the OU model in comparison with\npipeline transport services and service suppliers under the ISO and/or the ITO models.\n7.451. Russia's main position appears to be that a VIU is \"prevented from supplying its pipeline\ntransport services to the EU market through a commercial presence\" under the OU model, whereas\n\"VIUs are able to continue supplying their like pipeline transport services to the EU market through\na commercial presence in the form of an ITO (or ISO)\" under the ISO and ITO models. 834 In\nresponse, the European Union argues that the objective of all thre e models is the same, \"ensuring\nindependence of the transmission interest, on the one hand, from the production and supply\ninterests, on the other hand ('effective unbundling')\" 835 and that \"no matter the model that\napplies, 'effective unbundling' will need to be ensured, and thus there will be an 'effective\nseparation of networks from activities of production and supply'\".836\n7.452. We begin by examining the OU model and Russia's assertion that a VIU is \"prevented from\nsupplying its pipeline transport services throu gh a commercial presence\" under th is model. In this\nregard, we recall our findings above that a VIU can be considered to supply pipeline transport\nservices through the commercial presence of a TSO when that VIU owns or controls the TSO within\nthe meaning o f Article XXVIII(n)(i) or (ii) of the GATS. We further recall that the OU model does\nnot allow the same person or persons:\n[D]irectly or indirectly to exercise control over an undertaking performing any of the\nfunctions of production or supply, and directl y or indirectly to exercise control or\nexercise any right over a transmission system operator or over a transmission\nsystem[.]837\n7.453. As explained above, these rights include \"the power to exercise voting rights\" 838, \"the\npower to appoint members of the supervisor y board, the administrative board or bodies legally\nrepresenting the undertaking\" 839, and \"the holding of a majority share\". 840 A VIU, which per\ndefinition performs \"at least one of the functions of transmission, distribution, LNG or storage, and\n\n833 Appellate Body Report, Argentina – Financial Services, para. 6.106. See also ibid. paras. 6.103-6105\nand 6.127.\n834 Russia's second written submission, para. 204. See also Russia's first written submission, paras. 316,\n324-325, 329 and 331.\n835 European Union's first written submission, para. 306.\n836 European Union's first written submission, para. 316.\n837 Directive 2009/73/EC, (Exhibit EU-5), Article 9(1)(b)(i). Article 9(1)(b)(ii) mirrors this provision by\nnot allowing the same person or persons:\n[D]irectly or indirectly to exercise control over a transmission system operator or over a\ntransmission system, and directly or indirectly to exercise control or exercise any right over an\nundertaking performing any of the functions of production or supply[.]\n838 Directive 2009/73/EC, (Exhibit EU-5), Article 9(2)(a).\n839 Directive 2009/73/EC, (Exhibit EU-5), Article 9(2)(b).\n840 Directive 2009/73/EC, (Exhibit EU-5), Article 9(2)(c).\n\nat least one of the functions of production or supply of natural gas\" 841, is therefore required to\nrelinquish its control and rights over either the \"undertaking performing any of the functions of\nproduction or supply\" or the \"transmission system operator or [] transmission system\".\n7.454. Insofar as the VIU chooses to continue to perform any of the functions of production or\nsupply of natural gas, it will therefore not be permitted to hold a majority share in a TSO. In this\ncase, the VIU will plainly not be permitted to own a TSO within the meaning of Article XXVIII(n)(i)\nof the GATS, defined as \"beneficially own[ing]\" \"more than 50 per cent of the equity interest\".\n7.455. Furthermore, in this situation, the VIU will not be permitted \"[d]irectly or indirectly to\nexercise control\" over the TSO or to \"exercise any right\" over it, including the right to exercise\nvoting rights and to appoint members of the supervisory board, the administrative board or bodies\nlegally representing the TSO. In our view, the VIU will, in this situation, not be permitted to control\na TSO within the meaning of Article XXVIII(n)(ii) of the GATS, defined as having \"the power to\nname a majority of [the TSO's] directors or otherwise to legally direct its actions\".\n7.456. We note that Russia has indicated that the concepts of control used in Article XXVIII(n)(ii)\nof the GATS and in the Directive, respectively, \"are similar\" 842 and the European Union has\nindicated that the concept of control used in Article XXVIII(n)(ii) of the GATS \"is more limited\"\nthan that used in the Dire ctive.843 We do not believe it is necessary or appropriate for us to\nconsider, in the abstract, the exact content of the concepts of \"control\" in the Directive and in\nArticle XXVIII(n)(ii) of the GATS, respectively, but agree with the spirit underlying both parties'\npositions, namely that a VIU which cannot \"exercise control\" or \"exercise any right\" over a TSO\nwithin the meaning of the Directive, cannot \"control[]\" a TS O within the meaning of\nArticle XXVIII(n)(ii) of the GATS.\n7.457. We therefore agree with Russia to the extent that a VIU, which chooses to continue to\nperform any of the functions of production or supply of natural gas, will be \"prevented from\nsupplying its pipeline transport services to the EU market through a commercial presence\" under\nthe OU model. At the same time, we do not find it entirely accurate to conclude that the OU model\n\"prevent[s]\" a VIU from supplying its pipeline transport services to the EU market through a\ncommercial presence per se . Rather, we find it more accurate to conclude that the OU model\nimposes the legal necessity for VIUs to make a choice between continuing to perform any of the\nfunctions of production or supply of natural gas, on the one hand, or continuing to supply pipeline\ntransport services through commercial presence, on the other hand.844\n7.458. Before addressing the ISO and ITO models, we note that both parties have provided a\nconsiderable amount of argumentation concerning the issue of whether the OU model permits a\npassive, minority shareholding in a transmission system or a TSO. 845 We do not consider this\naspect relevant to our assessment of the OU model under Article II:1 of the GATS and Russia's\nclaim that a VIU is \"prevented from supplying its pipeline transport services to the EU market\nthrough a commercial presence\" unde r the OU model. More particularly, even if the OU model\n\n841 Directive 2009/73/EC, (Exhibit EU-5), Article 2(20).\n842 Russia's response to Panel question No. 28, para. 144.\n843 European Union's response to Panel question No. 28, para. 61.\n844 Russia argues that \"[i]t seems unlikely that any VIU would 'choose' instead to divest ownership and\ncontrol over its production and supply activities\" and on this basis appears to conclude that \"[t]hus, contrary to\nthe EU's baseless assertion in response otherwise, that VIU may not continue to supply any amount of services\nwhatsoever in the EU.\" (Russia's comments on the European Union's response to Panel question No. 178(b),\npara. 136). We do not believe it is appropriate, nor possible, for us to conclude in the abstract how VIUs will\ndecide to exercise the choice imposed upon them under the OU model. For purposes of considering whether\nthe conditions of competition are modified to the detriment of pipeline transport services and service suppliers\nunder the OU model in comparison with pipeline transport services and service suppliers under the ISO and/or\nthe ITO models, we believe it is sufficient for us to conclude that the OU model imposes the legal necessity for\nVIUs to make a choice between continuing to perform any of the functions of production or supply of natural\ngas, on the one hand, or continuing to supply pipeline transport services through commercial presence, on the\nother hand. We will address the issue of how VIUs have or will exercise this choice, as appropriate, in the\ncontext of considering whether the unbundling measure in the Directive accords less favourable treatment to\nRussian pipeline transport services and service suppliers.\n845 Russia's opening statement at the second meeting of the Panel, paras. 90 and 96; and response to\nPanel question No. 172(a), paras. 116-119; and European Union's first written submission, paras. 28 and 311;\nsecond written submission, paras. 82 and 132; and comments on Russia's response to Panel question\nNo. 172(a), paras. 58-60.\n\npermits a VIU to have a passive minority sharehol ding, this would, in and of itself , plainly not\nentail that the VIU is permitted to own a TSO within the meaning of Article XXVIII(n)(i) of the\nGATS. Similarly, such passive minority shareholding would, in our view, not entail that the VIU is\npermitted to control a TSO within the meaning of Article XXVIII(n)(ii) of the GATS. Hence, even if\nthe OU model permits a VIU to have a passive minority shareholding in a TSO, it does not alter the\nconclusion we reached in the preceding paragraphs and we therefore do not address this aspect\nfurther.\n7.459. Having examined the OU model, we turn to Russia's contention that \"VIUs are able to\ncontinue supplying their like pipe line transport services to the EU market through a commercial\npresence in the form of an ITO (or ISO)\" under the ISO and ITO models.\n7.460. Under the ISO model, a VIU owns, partly or fully, the transmission system network, but\nnot the operator of the transmissio n system. 846 Rather, the TSO, also known as the ISO, is\nrequired to comply with the rules under the OU model. 847 In light of this, it is unclear to us how a\nVIU could, in Russia's view, \"continue supplying their like pipeline transport services to the EU\nmarket through a commercial presence in the form of an [] ISO\" under the ISO model when\nRussia itself argues that a VIU is \"prevented\" from doing so under the OU model.848\n7.461. In the context of another claim raising a similar issue 849, Russia has suggested that the\nowner of a transmission system serves as \"the means through which\" pipeline transport services\nare supplied and hence constitute a commercial presence within the meaning of Article XXVIII(d)\nof the GATS. 850 In support of this position, Russia points out that th e GATS does not define a\n\"service\" and that the ISO model \"provides that 'the transmission system owner shall … provide all\nrelevant cooperation and support' to the ISO 'for the fulfilment of its tasks,' as well as all\nnecessary financing.\" 851 In Russia's vi ew, \"[t]his 'cooperation' requires some degree of active\nparticipation on the part of the transmission system owner to facilitate operation of the system by\nthe ISO.\"852\n7.462. In this regard, we recall that, while the GATS does not define a \"service\", it does defi ne\n\"supply of a service\" as including \"the production, distribution, marketing, sale and delivery of a\nservice\" in Article XXVIII(b). In paragraph 7.285 above, we have explained that pipeline transport\nservices cover transportation or transmission of natural gas through transmission pipelines. The\nissue is whether a VIU can be considered to produce, distribute, market, sell or deliver such\npipeline transport services when owning a transmission system under the ISO model. In our view,\nRussia has not provided a satisf actory explanation of how this would be the case , by pointing to\nthe obligation of the transmission system owner to cooperate with the ISO and to provide\nfinancing for the ISO's investment decisions.\n7.463. More particularly, we note that Article 14(5)(a) of the Directive requires the owner of the\ntransmission system to \" provide all the relevant cooperation and support to the independent\nsystem operator for the fulfilment of its tasks, including in particular all relevant information\", and\nArticle 14(5)(b) requires the owner of the transmission system to \"finance the investments decided\nby the independent system operator and approved by the regulatory authority, or give its\nagreement to financing by any interested party including the independent system operator.\" 853 It\n\n846 Directive 2009/73/EC, (Exhibit EU-5), Articles 9(8) and 14(1).\n847 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(a), stating that an EU member State \"may\napprove and designate an independent system operator only where … the candidate operator has\ndemonstrated that it complies with the requirements of Article 9(1)(b), (c) and (d)\".\n848 Russia's second written submission, para. 204.\n849 This claim is Russia's claim of de facto violation under Article II:1 of the GATS against the third-\ncountry certification measure in the Directive, where a similar issue arises in respect of a particular\ntransmission system owner, Europolgaz, and a particular ISO, Gaz-System. In the context of this claim, Russia\nalso submits arguments based on the operatorship agreement between Europolgaz and Gaz-System. (Russia's\nresponse to Panel question No. 204(a), paras. 244-251). We do not address these more specific arguments in\nthe context of examining the ISO model generally for purposes of Russia's claim under Article II:1 of the GATS\nagainst the unbundling measure in the Directive, but rather address these only when examining Russia's\narguments concerning Europolgaz and Gaz-System in the context of its claim against the third-country\ncertification measure. (See paras. 7.1084 through 7.1095 below).\n850 Russia's response to Panel question No. 55, para. 284.\n851 Russia's response to Panel question No. 55, para. 284. (omission by Russia)\n852 Russia's response to Panel question No. 55, para. 284.\n853 Article 14(5)(b) goes on to state that:\n\nis not clear to us how these cooperation and financing re quirements would entail that the\ntransmission system owner produces, distributes, markets, sells or delivers pipeline transport\nservices. On the contrary, the Directive makes it clear that it is the ISO, rather than the owner of\nthe transmission system, which operates the transmission system 854 and provides access for third\nparties to the transmission system. 855 As these are the obligations of the ISO, rather than the\nowner of the transmission system, we have difficulties understanding how the owner of the\ntransmission system could be considered as supplying pipeline transport services.\n7.464. At other times, Russia appears to acknowledge that the ISO, rather than the owner of the\ntransmission system, supplies pipeline transport services, but instead suggests that the VIU can\nexercise control over the ISO. 856 Russia does not explain , however, how a VIU would be able to\ncontrol the ISO within the meaning of Article XXVIII(n)(ii) of the GATS under the ISO model . We\nhave difficulties understanding Russia's position in this r egard, as the ISO is required to be\nunbundled under the OU model. When responding to a Panel question concerning this issue, Russia\nargues that the VIU \"by being permitted to retain complete ownership of the transmission system\"\n\"is entitled to receive ongoing financial benefits from the operation of that transmission system by\nthe ISO\".857\n7.465. The European Union does not dispute that a VIU receives certain sources of revenue when\nowning a transmission system under the ISO model. 858 Indeed, Article 41(3 )(d) of the Directive\nexplicitly requires that the \"network access tariffs collected by the independent system operator\ninclude remuneration for the network owner or owners\". Russia has, however, provided no\nexplanation of how such sources of revenue would entail that the VIU supplies pipeline transport\nservices within the meaning of the GATS or be relevant for our assessment under Article II:1 of\nthe GATS in any other way.\n7.466. In light of this, we do not believe that Russia has demonstrated that \"VIUs are able to\ncontinue supplying their like pipeline transport services to the EU market through a commercial\npresence\" – be that through an ISO or the owner of the transmission system – under the ISO\nmodel.\n7.467. Under the ITO model, it is undisputed that a VIU is permitted to own , partly or fully, the\nowner and operator of the transmission system, the TSO or the ITO. 859 Hence, the VIU is plainly\nable to continue owning the ITO within the meaning of Article XXVIII(n)(i) of the GATS and we\ntherefore agree with Russia that VIUs are \"ab le to continue supplying their like pipeline transport\nservices to the EU market through a commercial presence in the form of an ITO\" under the ITO\nmodel.\n7.468. The parties disagree, on the other hand, concerning the issue of whether a VIU is able to\ncontrol the ITO under the ITO model. In support of its position that a VIU is able to control the\nITO, Russia points to \"the role of the ITO's 'Supervisory Body'\" and its relationship with the VIU.860\nMore particularly, Russia argues that \"the Supervisory Body may be c omposed entirely of\n'members representing' the VIU\" and \"[i]n any event, the VIU seems almost certain to control a\nmajority of the members\"861 and points to Article 19(1) of the Directive, stating:\n\nThe relevant financing arrangements shall be subject to approval by the regulatory authority. Prior to\nsuch approval, the regulatory authority shall consult the transmission system owner together with other\ninterested parties[.]\n854 Directive 2009/73/EC, (Exhibit EU-5), Articles 13(1)(a) and 14(2)(b).\n855 Directive 2009/73/EC, (Exhibit EU-5), Article 14(4).\n856 See, e.g. Russia's response to Panel question No. 183(b), para. 184, in which Russia states that:\nEven assuming the ISO model is implemented in accordance with the terms of the Directive, a\nVIU under the ISO model may still be in a position to exercise at least limited rights or influence\nover how the ISO operates, maintains and develops the system.\n857 Russia's response to Panel question No. 172(b), para. 126.\n858 See, e.g. European Union's response to Russia's question No. 15, para. 9, stating that \"[t]he financial\nbenefits for the VIU would typically consist of a financial remuneration for the commercial use of the\ninfrastructure from the ISO.\"\n859 Directive 2009/73/EC, (Exhibit EU-5), Article 9.8(b) and Chapter IV.\n860 Russia's first written submission, para. 322.\n861 Russia's first written submission, para. 323.\n\nDecisions regarding the appointment and renewal, working con ditions including\nremuneration, and termination of the term of office, of the persons responsible for the\nmanagement and/or members of the administrative bodies of the transmission system\noperator shall be taken by the Supervisory Body of the transmission system operator\nappointed in accordance with Article 20.862\n7.469. The European Union, on the other hand, argues that \"[t]he VIU cannot control the network\noperation\" under the ITO model 863 and that there are \"strict rules for independence of the ITO\nmanagement\"864; that \"the VIU can, via the Supervisory Body, only be involved in the decisions\nthat are specifically provided under the Directive\" 865 and that \"all decisions concerning the day -to-\nday activities of the TSO and the management of the network and ten -year network development\nplan\" are \"explicitly excluded from the decision -making of the Supervisory Body\" 866; that \"the\nDirective ensures control over the Supervisory Body by the national regulatory authority\" in\nrespect of decisions concerning appointment of persons responsible for the management and/or\nmembers of the administrative bodies of the ITO, which only become binding if the relevant NRA\nhas not raised any objections 867; that there are certain independence requirements for \"at least\nhalf of the members of the S upervisory Body minus one\" and other requirements for all members\nof the Supervisory Body 868; and that \"the independence of the ITO is explicitly required by the\nDirective\".869\n7.470. When addressing this issue, we recall that Article XXVIII(n)(ii) of the GATS clarifies that a\njuridical person is \"'controlled' by persons of a Member if such persons have the power to name a\nmajority of its directors or otherwise to legally direct its act ions\". Generally, we wish to emphasize\nthat we do not believe that the concept of control under Article XXVIII(n)(ii) of the GATS is a\nmatter to be assessed in the abstract, but rather on a case -by-case basis. We further note that,\nhaving already agreed wi th Russia that VIUs are \"able to continue supplying their like pipeline\ntransport services to the EU market through a commercial presence in the form of an ITO\" under\nthe ITO model , by virtue of being permitted to own an ITO within the meaning of\nArticle XXVIII(n)(i) of the GATS, it is less pertinent for us to assess, in detail, whether VIUs are\nalso \"able to continue supplying their like pipeline transport services to the EU market through a\ncommercial presence in the form of an ITO\" under the ITO model , by virtue of being permitted to\ncontrol an ITO within the meaning of Article XXVIII(n)(ii) of the GATS.\n7.471. Having said this, we consider it useful to provide observations regarding the arguments\nsubmitted by the parties. We begin by noting that while we are not convinced that the Supervisory\nBody may be composed entirely of members representing the VIU, as suggested by Russia 870, it is\n\n862 Russia's first written submission, para. 322 (quoting Directive 2009/73/EC, (Exhibit EU-5),\nArticle 19(1)).\n863 European Union's first written submission, para. 319.\n864 European Union's first written submission, para. 329 (referring to Directive 2009/73/EC, (Exhibit\nEU-5), Article 19).\n865 European Union's first written submission, para. 331 (referring to Directive 2009/73/EC, (Exhibit\nEU-5), Article 20(1)).\n866 European Union's first written submission, para. 330 (referring to Directive 2009/73/EC, (Exhibit\nEU 5), Article 20(1)).\n867 European Union's first written submission, para. 332 (referring to Directive 2009/73/EC, (Exhibit\nEU-5), Article 19(2)).\n868 European Union's first written submission, para. 333 (referring to Directive 2009/73/EC, (Exhibit\nEU-5), Article 20(3)).\n869 European Union's first written submission, para. 334. In this regard, the European Union points to\nthe \"general obligation of independence\" under Article 18 of the Directive and to certain specific requirements,\nnamely the requirement for the ITO to have the power to raise money on the capital market; for subsidiaries of\nthe VIU performing functions of production or supply not to have any direct or indirect shareholdings in the ITO\nand vice versa; for \"all commercial and financial relations between the ITO and other parts of the VIU,\nincluding loans from the ITO to other parts of the VIU, [to] comply with market conditions and [to] be\ndisclosed to the regulatory authority upon request\" and for \"[a]ll commercial and financial relations with other\nparts of the vertically integrated undertaking giving rise to a formal agreement, oral or written, [to] be\nsubmitted for approval to the regulatory authority\"; for the VIU to refrain from \"any action impeding or\nprejudicing the ITO from complying with its obligations\"; and for the \"overall management structure and the\ncorporate statutes of the ITO [to] provide for a decision-making structure and rules ensuring effective\nindependence of the ITO\". (Ibid. (referring to Directive 2009/73/EC, (Exhibit EU-5), Articles 18(1)(b), 18(3),\n18(4), 18(6), 18(7), and 18(9)).\n870 Russia's first written submission, para. 323. In particular, we note that, for \"half of the members of\nthe Supervisory Body minus one\", the Directive requires that: (a) these members cannot exercise any\n\nundisputed that a majority of the members of the Supervisory Body may be members representing\nthe VIU. 871 In light of this, as wel l as the fact that the Supervisory Body is responsible for\n\"[d]ecisions regarding the appointment … of the persons responsible for the management and/or\nmembers of the administrative bodies\" of the ITO 872, we believe that there could be situations\nwhere a VI U would \"have the power to name a majority of [the ITO's] directors\" and hence to\ncontrol it within the meaning of Article XXVIII(n)(ii) of the GATS. At the same time, we reiterate\nour position that the concept of control should be addressed on a case -by-case basis, and the\nissue of whether a VIU has \"the power to name a majority of [the ITO's] directors\" will depend on\nthe corporate statutes of any particular ITO as well as the provision under Article 19(2) of the\nDirective that the Supervisory Body's appo intments \"become binding only if the regulatory\nauthority has raised no objections within three weeks of notification\".\n7.472. We therefore agree with Russia that \"VIUs are able to continue supplying their like pipeline\ntransport services to the EU market through a commercial presence in the form of an ITO\" under\nthe ITO model in the sense that a VIU is permitted to own an ITO within the meaning of\nArticle XXVIII(n)(i) of the GATS and could, under certain circumstances, be permitted to control an\nITO within the meaning of Article XXVIII(n)(ii) of the GATS under this model.\n7.473. In light of the above, we conclude that pipeline transport services and service suppliers are\naccorded less favourable treatment under the OU model in comparison with the ITO model in the\nsense that the OU model imposes the legal necessity for VIUs to make a choice between\ncontinuing to perform any of the functions of production or supply of natural gas, on the one hand,\nor continuing to supply pipeline transport services through commercial prese nce, on the other\nhand, which the ITO model does not. Insofar as the VIU chooses to continue to perform any of the\nfunctions of production or supply of natural gas , it will be required to cease supplying pipeline\ntransport services and its competitive oppo rtunities as a pipeline transport service supplier are\ntherefore entirely eliminated under the OU model, which is not the case under the ITO model.\n7.474. Having reached this conclusion, we wish to emphasize that this conclusion, as well as the\nconsiderations se t out above, concern the different unbundling models and the competitive\nconditions for pipeline transport services and service suppliers under these models in general. In\nother words, we have addressed the possibilities for VIUs of supplying pipeline tran sport services\nthrough the commercial presence of TSOs, in general, under each of these models. These general\nconsiderations do not prejudge the situations that may occur on a case-by-case basis.\n7.475. In particular, we note that Russia, when asserting that the unbundling measure in the\nDirective accords less favourable treatment to Russian pipeline transport services and service\nsuppliers under the OU model, appears to suggest that the Russian VIU Gazprom supplied pipeline\ntransport services before the entry in to force of the Directive whenever Gazprom had\nshareholdings in TSOs, including minority shareholding s. Correspondingly, Russia appears to\nsuggest that Gazprom was \"prevented\" or ceased supplying pipeline transport services when\ndivesting its shares in these TSOs under the OU model.\n7.476. As we explained in this , as well as the preceding section, a VIU can be considered to\nsupply pipeline transport services through the commercial presence of a TSO only when this TSO is\nowned or controlled by the VIU within the meaning of Article XXVIII(n)(i) or (ii) of the GATS. While\nwe have concluded that the OU model imposes the legal necessity for VIUs to make a choice\nbetween continuing to perform any of the functions of production or supply of natural gas, on the\none hand, or continuing to supply pipeline transport services through commercial presence, on the\nother hand, the issue of whether a particular VIU can be considered to have supplied pipeline\ntransport services through commercial presence before the entry into force of the Directive – and\n\nprofessional position or responsibility, interest or business relationship, either directly or indirectly, with any\npart of the VIU (other than the ITO) or its controlling shareholders during a period of three years before their\nappointment, during their appointment, or during a period of four years after termination of their appointment;\n(b) these members cannot hold an interest in or receive any financial benefit, directly or indirectly, from any\npart of the VIU other than the ITO or receive remuneration depending on activities or results of the VIU; and\n(c) these members shall be guaranteed \"[e]ffective rights of appeal to the regulatory authority … against\npremature terminations of their term of office\". (Directive 2009/73/EC, (Exhibit EU-5), Articles 19(3)-19(7)\nand 20(3)).\n871 See Directive 2009/73/EC, (Exhibit EU-5), Articles 20(2) and 20(3). See also European Union's first\nwritten submission, para. 331.\n872 Directive 2009/73/EC, (Exhibit EU-5), Article 19(1).\n\nto have ceased doing so following the entry into force of the Directive – is a matter to be\ndetermined on a case-by-case basis.\n7.477. Similarly, when asserting that the unbundling measure in the Directive accords more\nfavourable treatment to pipeline transport services and service suppliers from any other non -EU\ncountry under the ITO model, Russia, at times, appears to suggest that VIUs from any other non -\nEU country continue to supply pipeline transport services whenever they have shareho ldings in an\nITO, including minority shareholding s. As we have explained above, a VIU can be considered to\ncontinue supplying pipeline transport services through the commercial presence of an ITO only\ninsofar as that ITO is owned or controlled by the VIU w ithin the meaning of Articles XXVIII(n)(i) or\n(ii) of the GATS. While we have concluded that VIUs, generally, are able or permitted to continue\nsupplying pipeline transport services through the commercial presence of an ITO under the ITO\nmodel, the issue of whether a particular VIU does in fact supply pipeline transport services through\nthe commercial presence of a particular ITO should be assessed on a case -by-case basis, taking\ninto account whether \"more than 50 per cent of the equity interest in [the ITO ] is beneficially\nowned by [the VIU]\" or whether the VIU has \"the power to name a majority of [the ITO's]\ndirectors or otherwise to legally direct its actions\".\n7.478. We further wish to emphasize that the conclusion and considerations set out above\nconcern only pipeline transport service suppliers in the form of VIUs supplying pipeline transport\nservices through the commercial presence of TSOs. Russia has, in our view, not submitted any\nargumentation suggesting that the different unbundling models modify the cond itions of\ncompetition of pipeline transport service suppliers, which are not VIUs or part thereof. 873\nFurthermore, the European Union has not addressed the relevance of pipeline transport service\nsuppliers, which are not VIUs, except by stating that \"the possibilities are the same for all natural\nand juridical persons that are service suppliers\" 874, when responding to a question by the Panel\nconcerning this issue. We therefore do not address this situation further in our assessment below.\n7.479. We note that Russia ha s also submitted certain further arguments, in addition to its main\nline of argumentation . More particularly, Russia generally refers to \"the inherent commercial and\nlogistical competitive advantages associated with vertical integration\" 875 and, in this regard, points\nto a \"simple internet search quickly reveal[ing]\" the following advantages: \"[l]ower transaction\ncosts; [s]ynchronization of supply and demand along the chain of products; [l]ower uncertainty\n\n873 In response to a question by the Panel concerning this issue, Russia states that \"[t]he possibilities –\nor legal rights – of natural or juridical persons that do not meet the definition of a 'VIU' to supply pipeline\ntransport services in the EU differ depending upon which unbundling model or models is permitted by an\nindividual Member State.\" (Russia's response to Panel question No. 179, para. 152). Russia goes on to explain\n\"situations in which Member State governments have opted to exercise their rights under the [public body]\nmeasure set out in Article 9(6) of the Directive\" and that this has \"implications\" not just for the public body\nmeasure. (Ibid. paras. 154-156). Russia then explains that \"for purposes of the ITO model, natural or legal\npersons that are not a VIU are legally prohibited from supplying pipeline transport services in the EU …\nbecause, in Member States that permit the ITO model, only those VIUs that owned and controlled the entire\ntransmission and supply infrastructure as of 3 September 2009 were permitted pursuant to Article 9(8) of the\nDirective to adopt the ITO model.\" (Ibid. para. 157). We have difficulties understanding the position expressed\nby Russia in its response. First, the relevance of Russia's arguments concerning the public body measure\nremains unclear to us. More particularly, Russia itself explains that the public body measure applies regardless\nof the applicable unbundling model(s). (Russia's request for review of the Interim Report, para. 45). In light of\nthis, it is difficult to understand how or why this distinct measure would be relevant for assessing whether the\ndifferent unbundling models modify the conditions of competition for pipeline transport service suppliers,\nincluding those that are not VIUs. Second, we have difficulties understanding Russia's position that \"natural or\nlegal persons that are not a VIU are legally prohibited from supplying pipeline transport services in the EU\" in\nEU member States that have implemented the ITO model in addition to the OU model in respect of\ntransmission systems that belonged to a VIU on 3 September 2009. Insofar as a natural or juridical person\ndoes not perform \"at least one of the functions of production or supply of natural gas\", and is hence not a VIU,\nit will already be in compliance with the rules under the OU model and will therefore be able to supply pipeline\ntransport services without having to unbundle under either of the models. Even assuming that pipeline\ntransport service suppliers that are not VIUs are prohibited from supplying pipeline transport services where\nthe ITO model has been implemented, we fail to see how this relates to or supports Russia's position that the\nconditions of competition are modified to the detriment of pipeline transport service suppliers under the OU\nmodel in comparison with the ITO model.\n874 European Union's response to Panel question No. 179, para. 112.\n875 Russia's response to Panel question No. 172(a), para. 121.\n\nand higher investment; [s]trategic independence; and '[c]ompetitive advantages.'\" 876 These\narguments appear to involve a comparison of VIUs supplying pipeline transport services through\ncommercial presence in the EU territory under the ITO model 877 with pipeline transport service\nsuppliers supplying their services through a commercial presence in the EU territory without being\npart of a VIU.\n7.480. However, Russia does not provide any concrete explanation of whether the advantages\nrevealed by a \"simple internet search\" exist in the relationship between a VIU and an ITO under\nthe ITO model, taking into account the requirements imposed on their relationship under this\nmodel. Nor does Russia elaborate on how this comparison demonstrates the existence of less\nfavourable treatment of Russian pipeline transport services and s ervice suppliers. Instead, Russia\nsubmits that it is \"clear why multinational energy giants such as the owners of TAP AG and Engie,\nthe dominant French gas production -supplier, choose the ITO model\" and that \"[t]hey know it\nprovides them and their gas a co mpetitive advantage over other suppliers, such as Gazprom and\nits imported Russian gas in Lithuania, Estonia and Latvia\". 878 We recall that Russia, as the\ncomplaining party, cannot \"simply submit evidence and expect the panel to divine from it a claim\nof WTO-inconsistency\" nor \"simply allege facts without relating them to its legal arguments\". 879\nAccordingly, we cannot simply assume that Russia's assertions concerning the alleged advantages\nunder the ITO model are demonstrated by the fact that certain private e ntities have opted for this\nmodel over the OU model. We, therefore, do not address this line of argumentation further in\nassessing Russia's claim.880\n7.481. Having provided these considerations concerning the treatment of pipeline transport\nservices and service sup pliers under the OU model and the ISO and ITO models, we proceed to\nexamine the second issue raised by the parties' argumentation: whether Russia has demonstrated\nthat the unbundling measure in the Directive accords less favourable treatment to Russian pip eline\ntransport services and service suppliers than that accorded to pipeline transport services and\nservice suppliers of any other non-EU country by \"enabling\" EU member States to choose between\n\n876 Russia's response to Panel question No. 172(a), para. 122 (referring to Wikipedia, \"Vertical\nIntegration\", https://en.wikipedia.org/wiki/Vertical_integration#Problems_and_benefits (accessed 11 May\n2017), (Exhibit RUS-251); and Neil Kokemuller, \"The Advantages of a Vertical Integration Strategy\"\nhttp://smallbusiness.chron.com/advantages-vertical-integration-strategy-20987.html (accessed 3 August\n2017), (Exhibit RUS-252)). Russia also states that a \"study conducted concerning unbundling among European\nelectricity utilities attempted to quantify the cost and other benefits of avoiding unbundling\" which, in Russia's\nview, \"[w]hile not precisely applicable to the gas industry … dramatizes the general principle\". (Ibid. fn 106\n(referring to K. Gluger, M. Liebensteiner, and S. Schmitt, Vienna University of Economics and Business,\n\"Assessing the Economies of Scope from Vertical Integration: Evidence from European Electricity Utilities\",\nPowerPoint Presentation at IAEE Conference held in New York on 18 June 2014, (Exhibit RUS-188)).\n877 Notably, these arguments by Russia do not appear to be directed at the ISO model.\n878 Russia's response to Panel question No. 172(a), para. 124.\n880 In addition to its arguments concerning the \"inherent commercial and logistical competitive\nadvantages associated with vertical integration\", Russia has emphasized two other \"points\" when asked to\nclarify its position regarding the treatment of pipeline transport services and service suppliers under the OU\nmodel and the ITO model: (a) Russia argues that the OU model does not \"permit 'a producer or supplier' to\nmaintain 'a passive minority shareholding' in the TSO\"; and (b) Russia refers to its response to Panel question\nNo. 183(a) concerning \"the different treatment and competitive advantage accorded to domestic or imported\ngas by VIUs subject to the ITO model, compared to Russian-origin natural gas imported via pipelines that were\nsubjected to the OU model\". (Russia's response to Panel question No. 172(a), paras. 116-120 (quoting the\nEuropean Union's first written submission, para. 311)). With respect to the first of these points, we recall that\nwe have already addressed Russia's arguments concerning the possibility for VIUs of maintaining a passive\nminority shareholding in TSOs under the OU model and found these arguments irrelevant for Russia's claim\nunder Article II:1 of the GATS. With respect to the second of these points, we begin by reiterating our position\nthat the focus under the GATS is how the challenged measure affects the supply of a service or service\nsuppliers, not how it affects trade in goods. Consequently we consider Russia's arguments concerning the\n\"different treatment and competitive advantage accorded to domestic or imported gas\" irrelevant for Russia's\nclaim under Article II:1 of the GATS. Russia does, at times, refer to pipeline transport services and service\nsuppliers in its response to Panel question No. 183(a). More particularly, Russia argues that \"[f]rom a services\nstandpoint, the certainty that its natural gas will have guaranteed access to the EU market through its ITO also\naccords more favourable treatment to a third-country VIU supplier and its ITO in the EU\". (Russia's response to\nPanel question No. 183(a), fn 150). Russia, however, does not provide a more concrete explanation of how the\nITO model allegedly enhances the \"certainty that [a VIU's] natural gas will have guaranteed access to the EU\nmarket through its ITO\" and how this translates into a competitive advantage for the pipeline transport\nservices supplied by the VIU. Accordingly, we do not believe that Russia's reference to its response to Panel\nquestion No. 183(a) suffices to make a prima facie case of violation under Article II:1 of the GATS.\n\nimplementing only the OU model or implementing the ITO model in addition to the OU model in\nrespect of transmission systems that belonged to a VIU on 3 September 2009. As we have found\nthat Russia has not demonstrated that pipeline transport services and service suppliers are\naccorded less favourable treatment under the OU model in comparison with the ISO model, we do\nnot address the latter model any further in our assessment of this second issue.\nWhether the unbundling measure in the Directive accords less favourable\ntreatment to Russian pipeline transport services and service suppliers\n7.482. Russia appears to acknowledge that the unbundling measure in the Directive does not\ninvolve any de jure discrimination against Russian pipeline transport services and service\nsuppliers881 and does not dispute the European Union's posi tion that the Directive is neutral in the\nsense that the same unbundling models are applicable at any given time and within any given EU\nmember State regardless of the origin of the pipeline transport services or service suppliers. 882\nInstead, Russia seeks to demonstrate that the Directive accords de facto less favourable treatment\nof Russian pipeline transport services and service suppliers in comparison with that accorded to\npipeline transport services and service suppliers of any other non -EU country by referring to its\ndesign, structure and expected operation.883\n\n881 See, e.g. Russia's first written submission, para. 326.\n882 See, e.g. European Union's first written submission, paras. 289 and 292.\n883 See, e.g. Russia's second written submission, paras. 219-220. Russia also submits some arguments\nconcerning the objective or intentions of the European Union in adopting the unbundling measure in the\nDirective. Notably, Russia at times refers to the European Union having the \"major\", \"overall\" or \"overriding\"\nobjective of reducing its reliance on imported Russian natural gas or its reliance on Russian pipeline transport\nservices. (See, e.g. Russia's first written submission, para. 314; and second written submission, paras. 21, 62,\n73, 79, 226 and 228). As pointed out by the Appellate Body in EC and certain member States – Large Civil\nAircraft, we note that \"the Appellate Body and panels have, on several occasions, cautioned against undue\nreliance on the intent of a government behind a measure to determine the WTO-consistency of that measure\"\nand have found that \"the intent, stated or otherwise, of the legislators is not conclusive\" although \"objectively\nreviewable expressions of a government's policy objectives\" may constitute relevant evidence. (Appellate Body\nReport, EC and certain member States – Large Civil Aircraft, para. 1050 (citing Appellate Body Reports, Japan\n– Alcoholic Beverages II, p. 27, DSR 1996:1, 97, at p. 119; US – Offset Act (Byrd Amendment), para. 259;\nand Panel Report, Japan – DRAMs (Korea), para. 7.104)). (emphasis original) We begin by noting that Russia\nrefers to the alleged objectives of reducing reliance on imported Russian natural gas and reducing reliance on\nRussian pipeline transport services and service suppliers interchangeably, and at a variety of places in its\nsubmissions and statements. In accordance with the scope and subject-matter of the GATS, we however\nbelieve that the relevant issue is whether Russia has provided \"objectively reviewable expressions\" of the\nEuropean Union's policy objective being to reduce reliance on Russian pipeline transport services or service\nsuppliers, rather than imported Russian natural gas. (Appellate Body Report, EC – Bananas III, para. 221).\nHaving reviewed Russia's various arguments, we do not believe it has done so. More particularly, Russia has\nmade unsubstantiated assertions (Russia's opening statement at the first meeting of the Panel, para. 2);\nsubmitted arguments or evidence concerning the European Union allegedly having a general objective of\nreducing reliance on Russian pipeline transport services and service suppliers, without relating it to the\nunbundling measure or by relating it to different, distinct measures (Russia's response to the European Union's\nfirst request for a preliminary ruling, para. 26 (referring to Communication from the Commission to the\nEuropean Parliament and the Council, European Energy Security Strategy, COM(2014) 330 final,\n(28 May 2014), (Exhibit RUS-5)); first written submission, paras. 6-7; and opening statement at the first\nmeeting of the Panel, para. 2); submitted arguments and evidence relating to the implementation of the\nunbundling measure in Lithuania, consisting primarily of individual statements by Lithuanian ministers or\npoliticians and the notion that the Lithuanian Government \"directed a negative public relations campaign\nagainst Gazprom and Lietuvos [dujos] in conjunction with implementing the Directive and requiring adoption of\nthe OU model\" and \"launched investigative proceedings against Lietuvos [dujos] and the members of its Board\nof Directors nominated by Gazprom\" (Russia's response to Panel question No. 32(a), paras. 152-188 (referring\nto \"Prime Minister: Construction of Terminal Increases\", https://lrv.lt/en/news/prime-minister-construction-\nofterminal-increases-br-energy-independence-and-reduces-gas-prices, (Exhibit RUS-129); Baltic Business\nNews, \"Kubilius: Gazprom's influence on Lithuania must decrease\", (online, 13 September 2010), (Exhibit RUS-\n132); Seimas of the Republic of Lithuania, 6th (Spring) Session, Evening's Plenary Session No. 346, Verbatim\nReport, 28 June 2011 (unofficial translation), (Exhibit RUS-133); Seimas of the Republic of Lithuania, 6th\n(Spring) Session, Evening's Plenary Session No. 347, Verbatim Report, 30 June 2011 (unofficial translation),\n(Exhibit RUS-134); ICIS, \"Incumbent opposes Lithuanian grid unbundling decision\", (online, 20 May 2010),\n(Exhibit RUS-135); V. Žinios, \"Interview: Interview with Andrius Kubilius, Lithuania's Prime Minister by Rytas\nStaselis\", Business News, (Vilnius, 6 September 2010) (unofficial translation), (Exhibit RUS-138); Baltic News\nService, \"Energy Minister: Gazprom, Lithuania's Govt Pursue Different Interests With Building of Gas Pipeline to\nKlaipedia\", (Vilnius, 22 September 2009), (Exhibit RUS-139); Baltic News Service, \"Govt Asks Lithuanian Gas'\nTop Execs to Resign\", (Vilnius, 8 February 2011), (Exhibit RUS-140); Elta, \"Prime Minister Armed For\n\n7.483. We begin our assessment of the alleged de facto less favourable treatment of Russian\npipeline transport services and service suppliers under the unbundling measure in the Directive by\naddressing certain disagreements between the parties concerning the approach for determining de\nfacto discrimination or less favourable treatment.\n7.484. In its first written submission, Russia points to one example of the Russian VIU Gazprom\nhaving divested its shares in a TSO under the OU model in Lithuania, which has implemented only\nthis model 884 and three examples of VIUs from other non -EU countries, namely Norway and\nAzerbaijan, continuing to have shares in ITOs in Germany, Greece, and Italy, which have\nimplemented the ITO model in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009. 885 On the basis of this, Russia submits that the Russian\n\nNegotiations With Gazprom\", (online, 8 September 2011) (unofficial translation), (Exhibit RUS-141); and\nMinistry of Energy of the Republic of Lithuania: \"Ministry of Energy appeals to court to launch legal\ninvestigation of the operations of AB Lietuvos Dujos\", 17 March 2011, (Exhibit RUS-142)); and second written\nsubmission, para. 21 and fn 73); submitted arguments and evidence concerning the EU process of adopting\nthe unbundling measure in the Directive and the introduction of more unbundling models, which do not appear\nto refer to any objective of reducing reliance on or discriminating against Russian pipeline transport services or\nservice suppliers (Russia's second written submission, paras. 48-52 (referring to Energy Council,\nMemo/08/127, (27 February 2009), (Exhibit RUS-166); EurActiv, \"EU unveils plan to dismantle big energy\nfirms\", (online, 20 September 2007), (Exhibit RUS-170); Shepherd and Wadderburn LLP, \"Full ownership\nunbundling: no way or the third way\", Lexology, (online, 7 August 2008), (Exhibit RUS-171); Wikileaks, Public\nLibrary of US Diplomacy, Cable of 7 November 2007 \"Grand Coalition Opposes European Union Commission's\nUnbundling Directives\", (Exhibit RUS-172); EurActiv, \"Eight EU states oppose unbundling, table 'third way'\",\n(online, 1 February 2008), (Exhibit RUS-173); E. Chow, \"France, Germany Propose End-Run Around\nUnbundling\", Law360, (online, 29 January 2008), (Exhibit RUS-174); EurActiv, \"Commission rebuffs Franco-\nGerman energy proposals\", (online, 15 February 2008), (Exhibit RUS-175); I. Wissenbach, \"EU Commission\nsets strict terms on unbundling\", Reuters, (Brussels, 25 April 2008), (Exhibit RUS-176); V. Horváth,\n\"Compromise in sight on energy liberalization\", EurActiv, (online, 16 May 2008), (Exhibit RUS-177); Wikileaks,\nPublic Library of US Diplomacy, Cable of 31 October 2008 \"Outlook for the EU's Third Energy Package\", (Exhibit\nRUS-178); R. Goldirova, \"Parliament rejects full gas company unbundling\", Euobserver, (online, 10 July 2008),\n(Exhibit RUS-179); S. Stefanini, \"EU Backs a Compromise on Gas Unbundling\", Law360, (online, 9 July 2008),\n(Exhibit RUS-180); and P. Newton, \"EU institutions agree unbundling terms for energy networks\", Utility Week,\n(online 8 April 2009), (Exhibit RUS-181))); and submitted arguments and evidence relating to the\nCommission's role in the implementation of the unbundling measure in Lithuania, which do not appear to refer\nto any objective of reducing reliance on or discriminating against Russian pipeline transport services or service\nsuppliers (Russia's second written submission, paras. 61-71 (referring to Draft Decision of the Government of\nthe Republic of Lithuania \"On Approval of the Concept of the Amendment of the Law on Natural Gas of the\nRepublic of Lithuania\", (23 March 2010), (unofficial translation), (Exhibit RUS-130); and V. Pakalkaite,\n\"Lithuania's Strategic Use of EU Energy Policy Tools: A Transformation of Gas Dynamics\" (2016), paper NG111,\nOxford Institute for Energy Studies, (Exhibit RUS-167))). We do not consider the evidence provided by Russia\nto be \"objectively reviewable expressions\" of the European Union's policy objectives, nor do we believe that\nRussia has provided a clear explanation of how its evidence demonstrates that the objective of the Directive's\nunbundling measure, including its use of different unbundling models, is to reduce reliance on or discriminate\nagainst Russian pipeline transport services or service suppliers.\n884 Russia's first written submission, paras. 315-316, 325 and 229-331. This example concerns the\nRussian VIU Gazprom having sold its shares in the TSO AB Amber Grid (Amber Grid) under the OU model in\nLithuania, which has implemented only this model. Russia, at times, refers to the entity AB Lietuvos dujos\n(Lietuvos dujos) rather than Amber Grid. We understand that Lietuvos dujos operated the transmission system\nin Lithuania prior to the implementation of the unbundling measure, after which its transmission assets were\nincorporated in the TSO Amber Grid. Gazprom then sold its shares in Amber Grid. (Russia's first written\nsubmission, para. 202). For clarity and ease of reference, we refer only to Amber Grid in our assessment of the\nunbundling measure in the Directive. In its first written submission, Russia also points to the example of the\nTSO NEL GT in Germany. (Russia's first written submission, paras. 337-339). However, as acknowledged by\nboth parties, Germany allows all three unbundling models and NEL GT has in fact been certified as an ITO and\nGazprom has accordingly not sold any shares in this TSO. (See Shareholdings of TSOs before and after the\nThird Package, (Exhibit RUS-189), row 25; and Shareholdings in TSOs in the European Union (Exhibit EU-110)\n(BCI), row 23). We therefore fail to see how this example is relevant for Russia's claim that the unbundling\nmeasure in the Directive violates Article II:1 of the GATS by \"enabling\" EU member States to select from\namong the unbundling models.\n885 Russia's first written submission, paras. 324 and 329-336. These examples concern the Norwegian\nVIU Statoil and its ITO jordgas under the ITO model implemented in Germany in addition to the OU model in\nrespect of transmission systems that belonged to a VIU on 3 September 2009; and the Azerbaijani VIU State\nOil Company of the Azerbaijan Republic (SOCAR) and its ITO DESFA under the ITO implemented in Greece in\naddition to the OU model in respect of transmission systems that belonged to a VIU on 3 September 2009.\nRussia also refers to the Azerbaijani VIU SOCAR and its \"'ad hoc' ITO\" TAP AG under an infrastructure\nexemption granted pursuant to Article 36 of the Directive. As explained above, however, since TAP AG is an\n\"'ad hoc' ITO\" under the infrastructure exemption measure rather than an ITO under the unbundling measure\n\nVIU Gazprom was \"prohibited from supplying it s pipeline transport services to the European Union\nthrough a commercial presence in Lithuania\" whereas these other VIUs from other non -EU\ncountries \"are able to continue supplying their pipeline transport services to the European Union\nthrough a commercial presence in other Member States\".886\n7.485. The European Union criticizes this approach, arguing that the treatment of the \"group\" of\nRussian pipeline transport services and service suppliers must be compared with the treatment of\nthe \"group\" of like pipeline transport services and service suppliers of any other non-EU country.887\nMore specifically, the European Union submits that Russia must demonstrate that the detrimental\nimpact under the OU model is \"predominantly\" on the group of Russian pipeline transport services\nand service suppliers.888\n7.486. We also question the approach taken by Russia. As pointed out by the European Union,\nsimilar approaches have been rejected for goods, under the national treatment obligations of the\nGATT 1994 and the Agreement on Technical Barriers to Trade (TBT Agreement). In par ticular, we\nnote the following finding by the panel in US – Clove Cigarettes:\nIn our view, WTO jurisprudence does not support the proposition that \"less favourable\ntreatment\" can be established merely by showing that there are some imported\nproducts that are treated less favourably than some domestic like product[s]. Indeed,\nwe agree with the United States that this is an \"extreme view that has been squarely\nrejected by the Appellate Body\" in EC – Asbestos.889\nThis sentiment was echoed by the Appellate Body in the same dispute, stating:\n[T]he national treatment obligation of Article 2.1 [of the TBT Agreement] does not\nrequire Members to accord no less favourable treatment to each and every imported\nas compared to each and every domestic like product. Article 2 .1 does not preclude\nany regulatory distinctions between products that are found to be like, as long as\ntreatment accorded to the group of imported products is no less favourable than that\naccorded to the group of like domestic products.890\n7.487. Russia's reliance on the examples listed in paragraph 7.484 above appears to denote a\nmore general approach under which Russia believes that the assessment of less favourable\ntreatment under Article II:1 of the GATS should be based on a comparison of Russian pipeline\ntransport services and service suppliers subject to the less favourable treatment under the OU\nmodel, on the one hand, with the pipeline transport services and service suppliers of other non -EU\ncountries subject to the more favourable trea tment under the ITO model, on the other hand. In\nother words, Russia appears to suggest that evidence concerning Russian pipeline transport\nservices and service suppliers subject to the more favourable treatment under the ITO model and\npipeline transport s ervices and service suppliers from other non -EU countries subject to the less\nfavourable treatment under the OU model, is irrelevant.891\n7.488. We note that similar approaches have been rejected for goods. In particular, we note the\nAppellate Body's warning in US – Tuna II (Mexico) (Article 21.5 – Mexico) that \"a panel may not\nartificially limit its analysis to only subsets of the relevant groups of like products in a manner that\nrisks skewing the proper comparison for purposes of determining detrimental impact.\"892\n7.489. In our view, the rationale behind the findings above is equally applicable for claims under\nArticle II:1 of the GATS. As with the MFN and national treatment obligations under the GATT 1994\nand the TBT Agreement, Article II:1 of the GATS contains a fundamen tal non -discrimination\n\nin the Directive, we do not believe it is relevant to consider this example further in the context of addressing\nRussia's claims against the latter measure.\n886 Russia's first written submission, para. 316. See also Russia's first written submission, paras. 324-\n325, 329 and 331.\n887 European Union's first written submission, paras. 301-302.\n888 European Union's first written submission, para. 301; and second written submission, paras. 76-77.\n889 Panel Report, US – Clove Cigarettes, para. 7.273. (emphasis original)\n890 Appellate Body Report, US – Clove Cigarettes, para. 193. (emphasis original)\n891 See, e.g. Russia's second written submission, para. 221.\n892 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico), para. 7.71.\n\nobligation and is thus concerned with prohibiting discriminatory measures. 893 If we were to accept\nRussia's approach, it would, in our view, \"risk[] skewing the proper comparison\" in a manner that\nwould not allow us to discern whether or not the measure is in fact discriminatory. Instead , we\nbelieve that our assessment should \"take into consideration 'the totality of facts and circumstances\nbefore [us]'\" 894 and assess whether the \"design, structure, and expected operation\" 895 of the\nunbundling measure in the Directive is such that the conditions of competition are modified to the\ndetriment of the group of Russian pipeline transport services and service suppliers in comparison\nwith the group of pipeline transport services and service suppliers from any other non-EU country.\n7.490. Having said this, we wish to emphasize that we do not mean to suggest that the\n\"predominant effect\" test, set out by the European Union, is the sole means through which a\ncomplaining party may demonstrate de facto discrimination. While such evidence has been relied\non in a number of previous disputes 896, we do not believe it would be appropriate to automatically\nlimit the standard for demonstrating de facto discrimination to only this type of evidence. There\nmay be several way s for a complaining Member to demonstrate that the design, structure and\nexpected operation of a challenged measure is such that this measure, while neutral on its face,\nresults in de facto discrimination. We do not preclude that, as suggested by Russia as well as\nJapan, specific instances of application could serve as relevant evidence in this regard, nor that\nthis may be particularly relevant for claims under the GATS where the number of service suppliers\nin a specific sector could be limited. 897 However, it would be for the complaining party to expound\nthat such instances of application serve to demonstrate that the challenged measure is, as such, of\na discriminatory nature.898\n7.491. Furthermore, we wish to point out that, in deciding to assess Russia's claim by comparing\nthe treatment of the group of Russian pipeline transport services and service suppliers with that of\nthe group of pipeline transport services and service suppliers of any other non -EU country, we do\nnot believe we are accepting the notion of \"offsetting\", as suggested by Russia. 899 This concept\nwas introduced in US – Section 337 Tariff Act, where the complaining party challenged the alleged\ndiscrimination stemming from imported products being subject to differen t proceedings in patent -\nbased actions than those applying to domestic products. In th at dispute, the panel rejected the\nargument that the less favourable treatment under the proceedings applicable to imported\nproducts was \"offset\" by certain advantages und er those proceedings 900, stating that such \"an\nelement of more favourable treatment would only be relevant if it would always accompany and\noffset an element of differential treatment causing less favourable treatment.\"901 In contrast, when\ndeciding to assess the WTO consistency of the unbundling measure by comparing the treatment of\nthe group of Russian pipeline transport services and service suppliers with that of the group of\npipeline transport services and service suppliers of any other non -EU country, we a re not\npermitting any \"element of more favourable treatment\" under the OU model to \"offset\" the less\nfavourable treatment under this model. Rather, we are examining the design, structure and\nexpected operation of the unbundling measure in respect of the en tire group of relevant services\nand service suppliers, instead of only the subsets pointed to by Russia.\n\n893 See, e.g. Appellate Body Report, Argentina – Financial Services, para. 6.105.\n894 Appellate Body Reports, US – COOL, para. 269 (quoting Appellate Body Report, US – Clove\nCigarettes, para. 206).\n895 Appellate Body Reports, US – COOL, para. 269 (quoting Appellate Body Report, Thailand – Cigarettes\n(Philippines), para. 130).\n896 See, e.g. Appellate Body Reports, EC – Bananas III, paras. 243-244 and 246; Korea – Alcoholic\nBeverages, para. 150; Chile – Alcoholic Beverages, paras. 50-52, 64 and 76; US – Tuna II (Mexico),\nparas. 234-235; and EC – Seal Products, paras. 5.95-5.96; and Panel Reports, EC – Bananas III, paras. 7.332-\n7.338, 7.363-7.368, 7.378-7.380 and 7.392-7.393; Korea – Alcoholic Beverages, para. 10.102; Chile –\nAlcoholic Beverages, paras. 7.123, 7.128-7.129 and 7.155; EC – Hormones, para. 8.205; and EC – Seal\nProducts, paras. 7.597 and 7.600.\n897 Russia's response to Panel question No 44, para. 197; and second written submission, para. 220;\nand Japan's response to Panel question No. 1, paras. 1, 4 and 6-7.\n898 In this regard, we note Japan's argument that \"less favourable treatment shall not be accidental, but\nshall be discerned from the structure, design, and architecture of the measure.\" (Japan's response to Panel\nquestion No. 1, para. 4).\n899 Russia's response to Panel question No. 44, para. 197; and second written submission, para. 221\n(citing Appellate Body Report, India – Additional Import Duties, fn 405; and GATT Panel Report, US – Section\n337 Tariff Act, para. 5.14).\n900 GATT Panel Report, US – Section 337 Tariff Act, paras. 5.15-5.20.\n901 GATT Panel Report, US – Section 337 Tariff Act, para. 5.16.\n\n7.492. In light of the above-mentioned considerations, we proceed to assess Russia's claim under\nArticle II:1 of the GATS by examining whether the design, str ucture and expected operation of the\nunbundling measure in the Directive result in de facto discrimination against Russian pipeline\ntransport services and service suppliers by \"enabling\" EU member States to choose between\nimplementing only the OU model or implementing the ITO model in addition to the OU model in\nrespect of transmission systems th at belonged to a VIU on 3 September 2009. More particularly,\nand in accordance with our findings in paragraphs 7.452 through 7.473 above, we examine\nwhether the unbundling measure in the Directive results in Russian VIUs being prevented from or\nceasing to supply pipeline transport services to the EU market t hrough a commercial presence\nunder the OU model whereas VIUs from other non -EU countries are \"able to continue supplying\ntheir like pipeline transport services to the EU market through a commercial presence\" under the\nITO model.902\n7.493. In this regard, we note that both parties ap pear to agree on the relevant aspects of the\nunderlying design and structure of the unbundling measure in the Directive. First, that VIUs are\nable to choose between the OU model and the ITO model with respect to TSOs that belonged to\nthem on 3 September in 2009 in EU member States that have implemented the ITO model in\naddition to the OU model in respect of such TSOs. Second, that VIUs are required to undergo\nownership unbundling subject to the OU model with respect to TSOs that did not belong to them\non 3 September 2009 in all EU member States, regardless of the implemented unbundling models,\nand with respect to TSOs belonging to them on 3 September 2009 in EU member States that have\nimplemented only this model.903\n7.494. Bearing this in mind, we agree with Russia t hat \"the ITO option was being introduced in\nthe Directive only to benefit a finite number of TSOs\". 904 More particularly, we agree that \"[a]s the\nEU and its Member States had a finite list of TSOs belonging to a VIU on 3 September 2009 – the\ndate of entry of the Directive into force – the Directive explicitly limits the possibility to apply the\nITO option to these VIUs and TSOs only and to the Member States where they were located.\" 905\nHaving said this, we are not convinced that the introduction of the ITO mode l for a \"finite list of\nTSOs belonging to a VIU on 3 September 2009\" results in de facto discrimination against Russian\npipeline transport services and service suppliers. Russia does not dispute that the Russian VIU\nGazprom continues to supply pipeline tra nsport services through the commercial presence of a\nnumber of ITOs in EU member States that have implemented this model in addition to the OU\nmodel in respect of transmissi on systems that belonged to a VIU on 3 September 2009. 906, 907\n\n902 Russia's first written submission, para. 331; and second written submission, para. 204.\n903 Russia's first written submission, paras. 31 and 318; second written submission, fn 12 and para.\n146; and responses to Panel question No. 171(c), para. 112, and No. 183(a), para. 182; and European Union's\nfirst written submission, para. 257.\n904 Russia's comments on the European Union's response to Panel question No. 154, para. 49.\n905 Russia's comments on the European Union's response to Panel question No. 154, para. 50.\n906 More particularly, both parties agree that the Russian VIU Gazprom continues to supply pipeline\ntransport services through the commercial presence of the ITO GASCADE and the ITO NEL GT under the ITO\nmodel implemented in Germany in addition to the OU model in respect of transmission systems that belonged\nto a VIU on 3 September 2009. (Russia's response to Panel question No. 52, para. 265; and second written\nsubmission, para. 336; and European Union's first written submission, paras. 339 and 341; and response to\nPanel question No. 52, para. 143). In addition, both parties appear to agree that Gazprom continued to supply\npipeline transport services through the commercial presence of the ITO ONTRAS VNG in Germany following\nimplementation of the unbundling measure in the Directive. (Russia's response to Panel question No. 52,\npara. 264; and European Union's first written submission, para. 340). Russia points out that Gazprom\nsubsequently divested its interest in ONTRAS, in 2015, and that it is therefore not a Russian supplier of pipeline\ntransport services. (Russia's response to Panel question No. 180(b), para. 159). As pointed out by Russia itself,\nhowever, since \"ONTRAS operates under [the] ITO model and thus did not have [to] be ownership unbundled,\na change in its shareholding is irrelevant as it was not enforced by the Directive.\" (Russia's response to Panel\nquestion No. 161(c), para. 45.) We believe that this evidence is still relevant to demonstrate that the Russian\nVIU Gazprom continued to supply pipeline transport services through the commercial presence of ITOs\nfollowing implementation of the unbundling measure in the Directive.\n907 We further note that there are also examples of the Russian VIU Gazprom continuing to supply\npipeline transport services through the commercial presence of a TSO by virtue of having been exempted from\nthe rules on unbundling in their entirety pursuant to Article 36 of the Directive. More particularly, both parties\nagree that the Russian VIU Gazprom continues to supply pipeline transport services through the commercial\npresence of the TSO OPAL GT in Germany, having been granted an infrastructure exemption by the German\nNRA. (Russia's response to Panel question No. 52, para. 265; and European Union's response to Panel question\nNo. 52, para. 143). However, and as explained above, we do not consider evidence related to the\ninfrastructure exemption measure relevant for assessing the WTO consistency of the unbundling measure in\n\nIndeed, when examining the evidence provided by Russia itself, it appears that the \"finite list of\nTSOs belonging to a VIU on 3 September 2009\" involves more instances of the Russian VIU\nGazprom continuing to supply pipeline transport services through the commercial presence of ITOs\nthan instances of VIUs from any other non -EU country continuing to supply pipeline transport\nservices through the commercial presence of ITOs.908, 909\n7.495. We similarly agree with Russia's position that the Directive is \"designed and expected to\noperate so as to subject\" \"all TSOs that were in existence on 3 September 2009 and that did not\nform part of a VIU\", as well as all new TSOs , to the OU model.910 However, we do not believe that\nRussia has demonstrated that these aspects of the design, structure and expected operation of the\nunbundling measure in the Directive result in de facto discrimination against Russian pipeline\ntransport services and service suppliers. Russia argues that the European Union established an\n\"arbitrary deadline\" by only allowing EU membe r States the choice of implementing the ITO model\nin respect of transmissi on systems that belonged to a VIU on 3 September 2009, and hereby\n\"foreclosed the legal right and ability of other VIUs to supply natural gas and pipeline transport\nservices in the form of transmission services through a commercial presence in the EU market\". 911\nThe issue before us is, however, not whether the Directive's deadline of 3 September 2009 is\narbitrary or not. Rather, the issue is whether Russia has demonstrated that the desi gn, structure\nand expected operation of the unbundling measure in the Directive, including this allegedly\narbitrary deadline, result in less favourable treatment of Russia n pipeline transport services and\nservice suppliers. In our view, Russia has not made such a demonstration. Indeed, Russia does not\ncontest that VIUs of all origins will be subject to the OU model in respect of TSOs that did not\nbelong to such VIUs on 3 September 2009.\n7.496. Instead, Russia asserts that \"only TSOs controlled by the Russian VIU were required to\nundergo ownership unbundling\" 912 and in this regard points to four instances \"where a change in\nownership occurred, pursuant to the Directive\" 913, namely those involving the TSOs [***], [***],\n[***]914, and [***].915, 916 Having carefully reviewed this evidence, we do not believe that Russia's\n\nthe Directive. Such evidence is addressed instead below in section 7.8 when assessing Russia's claims against\nthe infrastructure exemption measure.\n908 In contrast to the three instances of the Russian VIU Gazprom continuing to supply pipeline transport\nservices through the commercial presence of ITOs, we can identify only one instance of the Norwegian VIU\nStatoil continuing to supply pipeline transport services through an ITO, namely the ITO jordgas in Germany;\nand one instance of the Azerbaijani VIU SOCAR supplying pipeline transport services through an ITO, namely\nthe ITO DESFA in Greece. (Russia's response to Panel question No. 52, para. 266; and European Union's\nresponse to Panel question No. 52, paras. 143-144. We note that the European Union's position that SOCAR\nsupplies pipeline transport services through the commercial presence of DESFA is conditional upon the\nprojected acquisition by SOCAR of 66% of the shareholdings in DESFA, but do not consider this of further\nrelevance for our findings concerning the WTO consistency of the unbundling measure in the Directive).\n909 As was the case for the Russian VIU Gazprom, there are also examples of VIUs from other non-EU\ncountries continuing to supply pipeline transport services through the commercial presence of TSOs by virtue\nof having been exempted from the rules on unbundling pursuant to Article 36 of the Directive. Indeed, Russia\nrefers to one such example, namely TAP AG which was granted an infrastructure exemption and hereby\nexempted from the requirement to belong to a VIU on 3 September 2009 and certified as an \"'ad hoc' ITO\".\n(Russia's first written submission, paras. 332-334; and second written submission, para. 227). However, and\nas explained above, we do not consider evidence related to the infrastructure exemption measure relevant for\nassessing the WTO consistency of the unbundling measure in the Directive. Such evidence is addressed instead\nbelow in section 7.8 when assessing Russia's claims against the infrastructure exemption measure.\n910 Russia's comments on the European Union's response to Panel question No. 154, para. 53.\n911 Russia's response to panel question No. 183(a), para. 182.\n912 Russia's response to Panel question No. 12(c), para. 99. See also Russia's second written\nsubmission, para. 223.\n913 Russia's opening statement at the second meeting of the Panel, para. 95.\n914 We note that Russia appears to acknowledge that Gazprom continues to own shares in the TSO\n[***] in Latvia, as Latvia has been granted a derogation from the rules on unbundling, but instead submits\nthat it is \"being unbundled based on the Directive, pursuant to the amendments to the Latvian Energy Law of\nFebruary 11, 2016\" which will require the OU model from 31 December 2017. (Russia's response to Panel\nquestion No. 173, para. 130. See also Russia's second written submission, para. 253; and response to Panel\nquestion No. 25(a), para. 128). The European Union does not dispute the factual accuracy of this.\n915 We note that Russia appears to acknowledge that Gazprom continued to own shares in the TSO\n[***] in Estonia following the entry into force of the Directive, as Estonia was granted a derogation from the\nrules on unbundling, and instead submits that Gazprom divested its shares once Estonia implemented the OU\nmodel in 2015. (Russia's response to Panel question No. 173, para. 130; and Shareholdings of TSOs before\nand after the Third Package, (Exhibit RUS-189), row 52). The European Union does not dispute the factual\naccuracy of this.\n\nreferences to such instances suffice to make a prima facie case that the unbundling measure in the\nDirective discriminates, on a de facto basis, against Russian pipeline transport services and service\nsuppliers for the reasons that follow.\n7.497. First of all, Russia's arguments concerning these four TSOs focus on the change in\nshareholdings by the Russian VIU Gazprom prior to and following the entry into force of the\nDirective. As we have explained above, however, a V IU can be considered to supply pipeline\ntransport services through the commercial presence of a TSO only when this TSO is owned or\ncontrolled by the VIU within the meaning of Articles XXVIII(n)(i) or (ii) of the GATS.\n7.498. We recall that Article XXVIII(n)(i) o f the GATS clarifies that a juridical person is \"'owned'\nby persons of a Member if more than 50 per cent of the equity interest in it is beneficially owned\nby persons of that Memb er\". Since Gazprom owned only [*** ], [***], [***], and [***] of the\nshares in the TSOs [***], [***], [***] and [***], respectively917, it plainly did not own these\nentities within the meaning of Article XXVIII(n)(i). We further recall that Article XXVIII(n)(ii) of the\nGATS clarifies that a juridical person is \"'controlled' by persons of a Member if such persons have\nthe power to name a majority of its directors or otherwise to legally direct its actions\". T he\nEuropean Union submits that it is \"uncertain\" or \"unlikely\" that Gazprom was able to control [***],\n[***], [***] and [***] within the meaning of Article XXVIII(n)(ii) of the GATS.918 In its comments\non the European Union's responses to questions following the second meeting of the Panel, Russia\nhas provided [***] and argues, on the basis of these, that Gazprom was able to control [***],\n[***], [***] and [***] within the meaning of Article XXVIII(n)(ii) of the GATS by being able to\n\"legally direct [their] actions\".919\n7.499. For the TSO [***], Russia submits that Gazprom was able to legally direct its actions, and\nin this regard points out that:\n[***]920\n7.500. Russia points out that [***] and [*** ].921 Russia also points out that [*** ].922 Lastly,\nRussia points out that:\n[***]923\n7.501. In our view, Russia's references to [***] are insufficient to demonstrate that Gazprom\ncontrolled this TSO within the meaning o f Article XXVIII(n)(ii) of the GATS. We recall that Russia\nbears the burden of making a prima facie case of violation under Article II:1 of the GATS. I n this\nregard, we do not believe that it is sufficient for Russia to merely point to the fact that\nshareholders [***], including Gazprom, may have limited possibilities of voting against one\nanother in respect of certain decisions, without further explanation of how this relates to the ability\nof Gazprom to \"legally direct\" [*** ] actions, and in particular it s actions concerning the supply of\npipeline transport services. Nor do we believe that it is sufficient for Russia to point to the fact that\n\n916 Russia's response to Panel question No. 174(a), para. 132.\n917 Shareholdings of TSOs before and after the Third Package, (Exhibit RUS-189), rows 54, 48, 53, and\n52; and Shareholdings in TSOs in the European Union, (Exhibit EU-110) (BCI), rows 38, 54, 37, and 10. We\nnote that Exhibit RUS-189 indicates that Gazprom owned 37.03% of the shares in [***] whereas Exhibit EU-\n110 indicates that Gazprom owned [***] of the shares in [***]. In our view, this minor difference in\nshareholding does not have any bearing on our findings.\n918 European Union's response to Panel question No. 174(b), paras. 85-88.\n919 Russia's comments on the European Union's response to Panel question No. 174(b), paras. 108-118.\nThe European Union was accorded an opportunity to comment on new evidence submitted by Russia in its\ncomments on the European Union's responses to Panel questions following the second meeting of the Panel,\nbut did not avail itself of this opportunity in respect of the [***] submitted by Russia, noting that it had \"no\nfurther comments\". (European Union's comments on new evidence submitted by Russia after the second\nmeeting, para. 8).\n920 Russia's comments on the European Union's response to Panel question No. 174(b), para. 109\n(referring to [***], (Exhibit RUS-217) (BCI)).\n921 Russia's comments on the European Union's response to Panel question No. 174(b), para. 110\n(referring to [***], (Exhibit RUS-217) (BCI)). Russia also points out that [***]. (Ibid.)\n922 Russia's comments on the European Union's response to Panel question No. 174(b), para. 111\n(referring to [***], (Exhibit RUS-217) (BCI)).\n923 Russia's comments on the European Union's response to Panel question No. 174(b), para. 111\n(referring to [***], (Exhibit RUS-217) (BCI)).\n\nGazprom is able to name a minority of [***] board members and [***] without explaining how\nthis translates into \"control\" of a supplier of pipeline transport services.\n7.502. For the TSO [***], Russia asserts that Gazprom was able to legally direct its actions,\npointing out that:\n[***]924\n7.503. In our view, thes e brief arguments by Russia do not suffice to demonstrate that Gazpro m\ncontrolled [***] within the meaning of Article XXVIII(n)(ii) of the GATS. More particularly, we do\nnot believe that it is sufficient for Russia to merely point to the fact that Gazprom had veto rights\nor voting rights in respect of certain actions or decisions by [***], without any further explanation\nof how these rights relate to the ability o f Gazprom to \"legally direct\" [*** ] actions, and in\nparticular its actions concerning the supply of pipeline transport services.\n7.504. For the TSO [***], Russia asserts t hat Gazprom was able to legally direct its actions,\npointing out that:\n[***]925\n7.505. We do not consider these brief arguments sufficient. As explained above, the mere\nreference to Gazprom having veto rights in respect of certain specific decisions, which appear to\nrelate to corporate and financial issues concerning [***] rather than its supply of pipeline\ntransport services, in our view, falls short of making a prima facie case that Gazprom controlled\n[***] within the meaning of Article XXVIII(n)(ii).\n7.506. In addition to these [***], Russia provides the [***].926 It is not clear whether Russia\nmeant for this [***] to be relevant for the TSO [***] and Russia provides no explanation in this\nregard. Instead Russia argues that Gazprom was able to legally direct the actions of [***], as\nGazprom:\n[***]927\n7.507. Even assuming that the [***] provided by Russia relates to [***], we do not consider\nRussia's brief a rguments sufficient to demonstrate that Gazprom controlled [***] within the\nmeaning of Article XXVIII(n)(ii) of the GATS , especially since Gazprom could only appoint a\nminority, namely [***]928, of the members of the management board of [***] or [***].\n7.508. As ex plained in the preceding paragraphs, we are not convinced that Russia has\ndemonstrated that the four instances relied upon by it involve Russian pipeline transport services\nor service suppliers. In light of this, it is difficult to understand how this evid ence could serve to\nsubstantiate Russia's assertion that the unbundling measure in the Directive accords de facto less\nfavourable treatment to Russian pipeline transport services and service suppliers.\n7.509. Even assuming that Gazprom could be considered to have supplied pipeline transport\nservices through the commercial presence of these four TSOs before the entry into force of the\nDirective and to have ceased doing s o pursuant to the OU model, we nonetheless have difficulties\nunderstanding how Russia reaches th e conclusion that \"only TSOs controlled by the Russian VIU\nwere required to undergo ownership unbundling\".929 As pointed out by the European Union, one of\nthe instances referred to by Russia, namely that involving the TSO [***], demonstrates that not\n\n924 Russia's comments on the European Union's response to Panel question No. 174(b), para. 114\n(referring to [***], (Exhibit RUS-218) (BCI)).\n925 Russia's comments on the European Union's response to Panel question No. 174(b), para. 117\n(referring to [***], (Exhibit RUS-221) (BCI)).\n926 Russia's comments on the European Union's response to Panel question No. 174(b), para. 116\n(referring to [***], (Exhibit RUS-220) (BCI)).\n927 Russia's comments on the European Union's response to Panel question No. 174(b), para. 116\n(referring to [***], (Exhibit RUS-220) (BCI)).\n928 [***], (Exhibit RUS-220) (BCI).\n929 Russia's response to Panel question No. 12(c), para. 99. See also Russia's second written\nsubmission, para. 223.\n\nonly Russian VIUs were subject to the OU model. 930 More particularly, the US VIU Conoco Phillips\nhad shareholdings in [***] equal to those of Gazprom, was a party to th e same [***], and also\ndivested its shares pursuant to the OU model. 931 Insofar as the Russian V IU Gazprom could be\nconsidered to have supplied pipeline transport services through the commercial presence of\nInterconnector UK prior to the entry into force of the Directive and to have ceased doing so\npursuant to the OU model, the US VIU Conoco Phillips should also be considered to have done so.\nLikewise, in stating that \"only TSOs controlled by the Russian VIU were required to undergo\nownership unbundling\", Russia appears to disregard the fact that the OU model, as pointed to by\nRussia itself, is the on ly applicable model with respect to TSOs that did not belong to a VIU on\n3 September 2009 and that VIUs of all origins will therefore be subject to the OU model in respect\nof TSOs that did not belong to such VIUs on 3 September 2009.\n7.510. Indeed, even assuming that there are more instances where the Russian VIU Gazprom\nceased supplying pipeline transport services through the commercial presenc e of TSOs that\nbelonged to it prior to 3 September 2009 pursuant to the OU model than instances where VIUs\nfrom any other non-EU country did so, this is mirrored by the fact that there are more instances\nwhere the Russian VIU Gazprom continue s to supply pipeline transport services through the\ncommercial presence of ITOs that belonged to it on 3 September 2009 under the ITO m odel than\ninstances where VIUs from any other non -EU country continue to do so. 932 In our view, this\npattern does not suggest that the unbundling measure in the Directive is discriminatory in nature.\nRather, it seems to reflect the factual particularities of the EU market for pipeline transport\nservices and more specifically the fact that Russian pipeline transport service suppliers had a\ngreater commercial presence than those of other non -EU countries, when the Directive entered\ninto force on 3 September 200 9. It is for this reason, rather than the design, structure and\nexpected operation of the unbundling measure in the Directive, that there were more instances of\nRussian pipeline transport service suppliers subject to both the OU and the ITO models in 2009.\nThe mere fact that the unbundling measure in the Directive results in more instances of Russian\npipeline transport service suppliers being subject to both the OU and the ITO models in 2009 is, in\nour view, not a proper basis for concluding that this measu re violates Article II:1 of the GATS\nwhen this result is explained by factors unrelated to the origin of the pipeline transport services\nand service suppliers.933\n\n930 European Union's second written submission, para. 84. We note that the European Union has also\npointed to other examples of persons from other non-EU countries having divested shares in TSOs, namely the\nVIU Eni SpA having divested its shares in the TSO Snam SA in Italy after its \"successful but temporary\ncertification under the ITO model\", the VIU Sonatrach Petroleum Investment Corporation BV having \"modified\"\nits shares in the TSO Reganosa to be \"passive financial rights with no influence or voting power\" \"in order to\ncomply with OU\" in Spain, the \"ownership structure and rights of individual shareholders [being] changed (e.g.\nregarding Board Members) in order to comply with OU\" in the TSO REN Gasodutos SA \"wherein several third\ncountry persons have shareholdings\", and \"OU [taking] place\" in respect of the TSO TIGF in France, where GIC\nPrivate Limited had a shareholding. (European Union's second written submission paras. 85-86). Russia argues\nthat these examples are \"beside the point and ha[ve] nothing to do with the effect of the Directive which is the\nsubject matter of this dispute.\" (Russia's opening statement at the second meeting of the Panel, para. 97).\nMore particularly, Russia points out that the TSOs Snam SA and TIGF were certified as ITOs and that it was a\nvoluntary decision for VIUs to \"exit\" these TSOs. For the TSO Reganosa and for the TSO REN Gasodutos SA,\nRussia points out that \"Portugal had to privatize TSO REN Gasodutos SA pursuant to the Economic Adjustment\nProgramme, aimed at restoring confidence, enabling the return of the economy to sustainable growth, and\nsafeguarding financial stability in Portugal, the euro area and the EU\" rather than the OU model. (Russia's\nopening statement at the second meeting of the Panel, paras. 97-98). The European Union points out that \"the\nMoU concluded with Portugal in the context of the Economic Adjustment Programme fell in between the\nadoption of the Gas Directive in 2009 and the deadline for complying with the unbundling requirements of\nMarch 2012\" and \"[h]ence, the Programme's requirement to privatise REN Gasodutos was based on and\nmotivated by the respective provisions of the Gas Directive\" and that \"the sale of [] shareholding in SNAM and\nthe subsequent certification as ownership unbundled TSO were based on a decree by the Italian Government\"\nas well as an antitrust procedure by the Commission, but does not appear to dispute that these examples are\nnot directly related to the unbundling measure in the Directive. (European Union's response to Panel question\nNo. 175, paras. 89-94). Since these examples are not directly related to the unbundling measure in the\nDirective, we consider them of less relevance to our assessment of the unbundling measure in the Directive\nunder Article II:1 of the GATS.\n931 Shareholdings of TSOs before and after the Third Package, (Exhibit RUS-189), row 48; Shareholdings\nin TSOs in the European Union, (Exhibit EU-110) (BCI), row 54; and [***], (Exhibit RUS-218) (BCI).\n932 See para. 7.494 and fns 906 and 908 above.\n933 See Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes, para. 96.\n\n7.511. In fact, when Russia points out that the unbundling measure in the Directi ve reserves the\nITO model for a \"finite list of TSOs belonging to a VIU on 3 September 2009\"934, this would seem\nto suggest that the design, structure and expected operation of the unbundling measure is such\nthat pipeline transport services and service suppliers from countries with a greater commercial\npresence in the EU market on 3 September 2009 benefit from the Directive \"enabling\" EU member\nStates to implement the ITO model in addition to the OU model in respect of transmission system\nthat belonged to a VIU on this date. Mor e particularly, only VIUs that were commercially present\nthrough VIUs on 3 September 2009 had the possibility of continuing to supply pipeline transport\nservices through the commercial presence of an ITO, albeit only in EU member States that made\nuse of th e possibility of implementing the ITO model in respect of transmission systems that\nbelonged to a VIU on this date.\n7.512. Therefore, while the design, structure and expected operation of the unbundling model is\nsuch that regulatory distinctions are drawn betwee n: (a) TSOs that did not belong to a VIU on\n3 September 2009; (b) TSOs that did belong to a VIU on 3 September 2009 and are commercially\npresent in EU member States that have implemented only the OU model; and (c) TSOs that did\nbelong to a VIU on 3 Septemb er 2009 and are commercially present in EU member States that\nhave made use of the possibility, provided for in the Directive, of implementing the ITO model in\naddition to the OU model, we do not believe that Russia has made a prima facie case that these\nregulatory distinctions result in de facto discrimination against Russian pipeline transport services\nand service suppliers. In other words, Russia has not demonstrated that the unbundling measure\naccords less favourable treatment to the group of Russian pi peline transport services and service\nsuppliers than that accorded to the group of pipeline transport services and service suppliers from\nany other non-EU country.935\n7.513. As we have concluded that Russia has not demonstrated the existence of less favourable\ntreatment of Russian pipeline transport services and service suppliers, we do not find it necessary\nor appropriate to consider, in the abstract, whether such – non-existent – less favourable\ntreatment is attributable to the unbundling measure in the Directive, taking into account the\nelement of discretion under this measure.\n7.5.1.3.3 Conclusion\n7.514. Having considered the various arguments and evidence provided by Russia, and for the\nreasons explained in paragraphs 7.482 through 7.513 above, we conclude that Rus sia has not\ndemonstrated that the unbundling measure in the Directive accords less favourable treatment to\nRussian pipeline transport services and service suppliers in comparison with that accorded to\npipeline transport services and service suppliers of an y other non-EU country. Hence, we find that\nRussia has failed to make a prima facie case of violation under Article II:1 of the GATS with\nrespect to the unbundling measure in the Directive.\n\n934 Russia's comments on the European Union's response to Panel question No. 154, para. 52.\n935 We note that both parties have, at times, also pointed to and submitted arguments and evidence\nwith respect to VIUs that are not subject to the rules on unbundling in respect of TSOs in EU member States\nthat are permitted to derogate from these rules all together. (See Russia's response to Panel question No. 158,\npara. 39; and comments on the European Union's response to Panel question No. 154, para. 55; and European\nUnion's second written submission, paras. 69 and 79). In this regard, we recall that EU member States falling\nwithin the categories set out in Article 49 of the Directive are permitted to derogate from the rules on\nunbundling in their entirety, including all three models set out herein. It is not entirely clear, in our view, how\nsuch arguments pertain to Russia's overarching claim concerning the unbundling measure in the Directive\n\"enabling\" EU member States to choose between implementing only the OU model or implementing the ITO\nmodel in addition to the OU model in respect of transmission systems that belonged to a VIU on\n3 September 2009. In any event, we do not believe that our findings above would alter, taking into account\nevidence concerning TSOs operating in EU member States that have been permitted to derogate from the rules\non unbundling altogether. More particularly, the Russian VIU Gazprom continued to have shares in the TSO\n[***] in Finland, which has been permitted to derogate from the rules on unbundling. Although Gazprom's\nshares in [***] were later divested to the Finnish State, Russia acknowledges that this divestiture was \"due to\nreasons unrelated to [the implementation of the Directive] – as Finland enjoyed a derogation\". (Russia's\nresponse to Panel question No. 161, para. 54). Similarly, we recall that Gazprom continued to have shares in\nthe TSO [***] during the period in which Estonia was granted a derogation and that Gazprom continues to\nhave shares in the TSO [***] in Latvia, which has been granted a derogation. (See fns 914-915 above).\n\n7.5.1.4 Russia's claims under Articles I:1 and III:4 of the GATT 1994\n7.5.1.4.1 Introduction\n7.515. The gist of Russia's claims under Articles I:1 and III:4 of the GATT 1994 is, as explained\nabove, that the unbundling measure in the Directive accords less favourable treatment to imported\nRussian natural gas than that accorded to imported natural gas from other non -EU countries and\nto domestic EU natural gas by \"enabling\" EU member States to choose between implementing only\nthe OU model or implementing the ISO and/or the ITO models in addition to the OU model in\nrespect of transmission systems that belonged to a VIU on 3 September 2009. 936 In response, the\nEuropean Union submits that the unbundling measure in the Directive does not affect trade in\nnatural gas and hence falls outside the scope of Articles I:1 and III:4 of the GATT 1994. 937\nFurthermore, the European Union argues that natural gas is not accorded less favourable\ntreatment under the OU model in comparison with that accorded to natural gas under the ISO or\nthe ITO models 938 and, in any event, that Russia has not demonstrated that the unbundling\nmeasure in the Directive discriminates against imported Russian natural gas, as the OU model\ndoes not \"predominantly\" impact imported Russian natural gas in comparison with imported\nnatural gas from other non-EU countries or domestic EU natural gas.939\n7.516. Before assessing Russia's claims, we recall that, as explained in paragraph 7.3 above, a\npanel has discretion in setting out the order of its analysis. With respect to Russia's claims under\nArticles I:1 and III:4 of the GATT 1994 against the unbundling measure in the Directive, we note\nthat both parties address the latter claim first and, to a large degree, refer to their argumentation\nconcerning that claim in addressin g the claim under Article I:1 of the GATT 1994. In light of this,\nwe find it practical to begin with our assessment of Russia's claim under Article III:4 of the\nGATT 1994, followed by our assessment of Russia's claim under Article I:1 of the GATT 1994.\n7.5.1.4.2 Analysis by the Panel of Russia's claim under Article III:4 of the GATT 1994\n7.517. Bearing in mind the legal standard under Article III:4 of the GATT 1994, set out in\nparagraphs 7.238 and 7.239 above, we proceed to assess Russia's claim against the unbundling\nmeasure in the Directive under this provision by determining whether Russia has made a prima\nfacie case that: (a) the unbundling measure in the Directive falls within the scope of Article III:4 of\nthe GATT 1994; (b) the relevant imported and dome stic products are like; and (c) the unbundling\nmeasure in the Directive accords less favourable treatment to the relevant imported Russian\nproducts than the treatment it accords to the relevant like domestic products.\n7.518. We address these elements, in turn, below.\n7.5.1.4.2.1 Scope of Article III:4 of the GATT 1994\n7.519. As explained by the panel in Argentina – Financial Services , the legal standard for\ndetermining whether a measure is covered by Article III:4 of the GATT 1994 is as follows:\n[F]or a measure to be covered by Article III:4 of the GATT 1994 it must (i) consist of\na \"law, regulation or requirement\" and (ii) \"affect[ing] the internal sale, offering for\nsale, purchase, transportation, distribution or use\" of the products concerned.940\n7.520. We note that the European Union does not appear to disagree with Russia's assertion that\nthe unbundling measure in the Directive is a \"'law' or 'regulation,' which imposes 'requirements'\"\nwithin the meaning of GATT Article III:4941, and we are similarly of the view that this measure falls\nwithin the types of instruments covered by Article III:4 of the GATT 1994.\n\n936 See, e.g. Russia's first written submission, paras. 353, 356 and 370-371.\n937 See, e.g. European Union's first written submission, paras. 361-362 and 403-406.\n938 See, e.g. European Union's first written submission, paras. 368-373 and 409; and second written\nsubmission, paras. 95-100 and 140.\n939 See, e.g. European Union's first written submission, paras. 365, 374-376 and 417-419; and second\nwritten submission, paras. 101-138 and 140.\n940 Panel Report, Argentina – Financial Services, para. 7.1015.\n941 Russia's first written submission, para. 342.\n\n7.521. Instead, the main point of contention between the parties relates to the second element,\nnamely, whether the unbundling measure in the Directive affects the internal sale, offering for\nsale, purchase, transportation, distribution or use of natural gas.\n7.522. Russia argues that the unbundling measure in the Directive affects \"natural gas being sold,\noffered for sale, supplied, purchased , transported, etc. on the market by the undertakings subject\nto the unbundling requirements in the same manner as it affects the undertakings themselves .\"942\nMore particularly, Russia argues that all three unbundling models affect natural gas since they\nimpact the ability of VIUs to control TSOs and thus to make \"decisions relating to the transmission\nor transportation or downstream sale of the gas\".943 The European Union argues that any effects of\nthe unbundling measure in the Directive on the conditions of c ompetition of natural gas in the EU\nmarket are \"merely 'hypothetical'\". 944 More particularly, the European Union argues that \"the\nunbundling measure is exactly meant to increase competition between g as of different origin and\nto ensure that gas from differen t producers and suppliers is not foreclosed from having access to\nthe transmission network\"945 and that \"[t]here is no link between the origin of the gas that flows\nthrough a pipeline and the origin of the service supplier , because of the third party access\nprinciple\".946\n7.523. At the outset, we wish to emphasize that we agree with the point raised by the European\nUnion, as well as Japan and Ukraine, that it would not be appropriate to assume that the\nunbundling measure in the Directive affects the internal sale, off ering for sale, purchase,\ntransportation, distribution or use of natural gas solely by virtue of affecting services related to\nnatural gas.947 As pointed out at the outset of our Report, the subject -matter and scope of the\nGATS and the GATT 1994, respectivel y, are distinct and we are mindful of this in assessing\nRussia's claims under each Agreement. We therefore reiterate our view mentioned in\nparagraph 7.14 above concerning the conflation, at times, by Russia of its various claims under\nthese two Agreements.\n7.524. At the same time, however, Russia has, in our view, not solely substantiated its asserti on\nthat the unbundling measure in the Directive is covered by Article III:4 of the GATT 1994 by\npointing to this measure's effects on pipeline transport services and service suppliers. In addition\nto these effects, Russia also points to the effects on supp liers or producers of natural gas, in\nparticular VIUs, and their ability to control and make certain decisions relating to the transmission,\ntransportation or sale of the natural gas produced by them.948\n7.525. We agree with Russia that the unbundling measure in t he Directive has effects on\nproducers and suppliers of natural gas in respect of the supply or transportation of that good. More\nparticularly, the unbundling measure regulates the relationship that producers or suppliers of\nnatural gas may have with undert akings involved in transportation of that natural gas.\nImportantly, it regulates the manner in which that relationship may impact the competitive\nconditions under which the natural gas produced or supplied by the former is transported. As\npointed out by th e European Union itself, it does so either by requiring natural gas producers or\nsuppliers to be structurally separated from undertakings involved in transportation of natural gas\n(the OU model) 949 or by imposing \"behavioural and organisational\" 950 requirements, as well as\n\"increased regulatory oversight\" 951 concerning the relationship between such undertakings (the\nISO and the ITO models).\n\n942 Russia's second written submission, para. 235.\n943 Russia's second written submission, para. 236.\n944 European Union's first written submission, para. 361 (quoting Panel Report, Argentina – Financial\nServices, para. 7.1028).\n945 European Union's first written submission, para. 362.\n946 European Union's first written submission, para. 362.\n947 See European Union's first written submission, paras. 361-362 (referring to Appellate Body Report,\nChina – Auto Parts, para. 195; and Panel Report, Argentina – Financial Services, para. 7.1028); Japan's third-\nparty submission, paras. 41-42; and Ukraine's third-party submission, paras. 20-23 and 36 (referring to\nAppellate Body Reports, US – FSC (Article 21.5 – EC), para. 208; and Korea – Various Measures on Beef,\npara. 133).\n948 Russia's second written submission, paras. 234-236.\n949 European Union's response to Panel question No. 59, para. 157.\n950 European Union's first written submission, para. 313.\n951 European Union's second written submission, para. 74.\n\n7.526. In our view, a number of the arguments put forward by the European Union in the context\nof the scope of Article III:4 appear misplaced. More particularly, by arguing that the unbundling\nmeasure is \"meant to increase competition between gas of different origin\"952, the European Union\nseems to suggest that our assessment of the scope of Article III:4 should address not only\nwhether the unbundling measure in the Directive affects the conditions of competition for natural\ngas in the EU market, but also the manner in which those conditions of competition are affected.\nWe do not believe such an analysis is warranted when considering whether a measure falls within\nthe scope of Article III:4 of the GATT 1994 a s this would truncate the further assessment under\nthis provision. Similarly, the European Union's argument that \"[t]here is no link between the origin\nof the gas that flows through a pipeline and the origin of the service supplier, because of the third\nparty access principle\" 953 seems to relate to the issue of whether there is less favourable\ntreatment of imported Russian natural gas in comparison with that of domestic EU natural gas,\nrather than the preliminary issue of whether the competitive conditions of natural gas are,\ngenerally, affected by the unbundling measure in the Directive.\n7.527. Having established that the unbundling measure in the Directive affects the internal sale,\noffering f or sale, purchase, transportation, distribution or use of natural gas, we find that this\nmeasure falls within the scope of Article III:4 of the GATT 1994 and proceed to assess whether the\nrelevant imported and domestic products are like and whether the unb undling measure accords\nless favourable treatment to the relevant imported Russian products.\n7.5.1.4.2.2 Like products\n7.528. As explained in paragraphs 7.238 and 7.239 above, the national treatment obligation in\nArticle III:4 of the GATT 1994 applies only with respect to like products and we , therefore, turn to\nassess whether Russia has made a prima facie case that the relevant products are like within the\nmeaning of this provision.\n7.529. Similarly to Russia's claim against the unbundling measure in the Directive under\nArticle II:1 of the GATS, the scope of Russia's likeness enquiry is not entirely clear for its claim\nunder Article III:4 of the GATT 1994. Notably, Russia states that \"Russian and domestic gas, like\nnatural gas imported from any other country, including LNG, are in a perfectly competitive\nrelationship and thus are 'like products' withi n the broad meaning of that term under\nArticle III:4.\"954 Furthermore, Russia includes a few references to LNG when challenging the\nunbundling measure under Article III:4 of the GATT 1994, pointing to that fact that \"the L SO, the\ngas supplier and TSO are now all owned by the [Lithuanian] State\" and to the increase in imports\nof Norwegian LNG in Lithuania. 955 We therefore begin by determining the scope of the likeness\nenquiry before turning to the actual assessment of likeness.\n7.530. In this regard , we recall that Rus sia's claim under Article III:4 of the GATT 1994 pertains\nto the alleged discrimination against imported Russian natural gas stemming from the Directive\n\"enabling\" EU member States to choose between implementing only the OU model or\nimplementing the ISO an d/or the ITO models in addition to the OU model in respect of\ntransmission systems that belonged to a VIU on 3 September 2009.956\n7.531. Both parties agree that the requirement to unbundle does not apply to LNG facilities. 957 In\nother words, a VIU may produce and supply LNG without having to unbundle any ownership or\ncontrol over its LNG facilities or the operators of such facilities under either of the unbundling\nmodels. LNG is thus not accorded the alleged more favourable treatment under the ISO and/or the\nITO models or the alleged less favourable treatment under the OU model, challenged by Russia\nunder its claim against the unbundling measure in the Directive under Article III:4 of the\nGATT 1994. As previously explained, the alleged \"exemption\" of LNG facilities (referred to in this\n\n952 European Union's first written submission, para. 362.\n953 European Union's first written submission, para. 362.\n954 Russia's first written submission, para. 349.\n955 Russia's second written submission, para. 251.\n956 Russia's first written submission, paras. 353 and 356.\n957 Russia's response to Panel question No. 1, paras. 4 and 7; and European Union's first written\nsubmission, para. 433.\n\nReport as \"the LNG measure\") is not the object of this particular claim, but is instead challenged\nby Russia as a \"separate, distinct measure\" under a separate claim (see section 7.7 below).958\n7.532. For these reasons, we find that natural gas is the only relevant product for Russia's claim\nagainst the unbundling measure in the Directive under Article III:4 of the G ATT 1994 and do not\nconsider it necessary or relevant to determine, in the context of this claim, whether LNG is like\nnatural gas. As explained in paragraphs 7.840 through 7.845 below, we consider that natural gas\nand LNG are distinct products.\n7.533. Having determined that the scope of our likeness enquiry should be limited to natural gas,\nwe proceed to the actual assessme nt of likeness. As mentioned above , Russia's claim under\nArticle III:4 of the GATT 1994 pertains to the alleged discrimination against imported Russian\nnatural gas stemming from the alleged less favourable treatment of natural gas being s upplied by\nVIUs subject to the OU model compared to that of natural gas being supplied by VIUs subject to\nthe ISO and/or the ITO models. In our view, this claim raises two issues of likeness: first whether\nimported Russian natural gas is like domestic EU natural gas and, se cond, whether natural gas is\nlike regardless of whether it is supplied by VIUs subject to the OU model or by VIUs subject to the\nISO or the ITO models.\n7.534. In addressing these issues of likeness, we recall that the Appellate Body has clarified that\nthe assessm ent of whether products are like for purposes of Article III:4 of the GATT 1994\ninvolves an assessment of the extent of the competitive relationship or substitutability between\nthese products, taking into account all relevant evidence, including : (a) the physical properties of\nthe products, including the nature and quality of the products; (b) the end -uses of the products;\n(c) consumers' tastes and habits; and (d) the international classification of the products for tariff\npurposes.959 The Appellate Body has further explained that panels must examine all the relevant\nevidence and determine whether that evidence, as a whole, indicates that the products in question\nare like within the meaning of Article III:4 of the GATT 1994.960\n7.535. Both parties agree that imported R ussian natural gas and domestic EU natural gas are like\nwithin the meaning of Article III:4 of the GATT 1994 regardless of whether that natural gas is\nsupplied by VIUs subject to the OU model or by VIUs subject to the ISO or the ITO models. 961 We\nare equally convinced that these are like: it is clear that the physical properties, end -uses and\ntariff classification of these groups of natural gas are identical. Furthermore, there is nothing on\nthe record indicating that the preferences of consumers of natural g as differ depending on the\norigin of that natural gas or the applicable unbundling model.\n7.536. We therefore conclude that imported Russian natural gas and domestic EU natural gas,\nsupplied by VIUs subject to the different unbundling models , are lik e within the meaning of\nArticle III:4 of the GATT 1994. Having made this finding of likeness, we proceed to assess whether\nRussia has demonstrated that the unbundling measure in the Directive accords less favourable\ntreatment to imported Russian natural gas than that accorded to domestic EU natural gas.\n7.5.1.4.2.3 Less favourable treatment\n7.537. As explained above, the underlying premise of Russia's claim under Article III:4 of the\nGATT 1994 is that the unbundling measure in the Directive violates this provision by \"enabling\" EU\nmember States to choose between implementing only the OU model or implementing the ISO\nand/or the ITO models in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009. 962 More particularly, Russia argues that the\nimplementation of only the OU model in respect of transmission systems that did not belong to a\nVIU on 3 September 2009 as well as in respect of transmission systems that did belong to a VIU\non 3 September 2009 in certain EU member States results in less favou rable treatment of\n\n958 Russia's first written submission, paras. 380-414; and responses to Panel question No. 4, para. 16,\nand No. 5, para. 38.\n959 Appellate Body Report, EC – Asbestos, paras. 101-102.\n960 Appellate Body Report, EC – Asbestos, para. 103.\n961 Russia's first written submission, paras. 343-347; and response to Panel question No. 110(a),\npara. 445; and European Union's first written submission, para. 359; and response to Panel question\nNo. 110(a), para. 285.\n962 See, e.g. Russia's first written submission, paras. 353 and 356.\n\nimported Russian natural gas of VIUs subject to this model, in comparison with that accorded to\ndomestic EU natural gas, produced and supplied by VIUs that continue to own a transmission\nsystem, under the IS O model, or continue to own a n ITO, under the ITO model, in EU member\nStates that have implemented these models in addition to the OU model in respect of transmission\nsystems that belonged to a VIU on 3 September 2009. 963 The European Union responds that\nRussia has failed to demonstrate that natural gas is accorded less favourable treatment under the\nOU model in comparison with the ISO and/or the ITO models.964 In any event, the European Union\nsubmits that Russia has failed to demonstrate that the unbundling measure is discriminatory,\npointing out that the applicable unbundling model does not depend on the origin of the natural gas\nand that Russia has not shown that the OU model \"predominantly\" affects imported Russian\nnatural gas.965\n7.538. In our view, the parties' argumentation raise s two issues: (a) whether Russia has\ndemonstrated that natural gas is accorded less favourable treatment under the OU model in\ncomparison with that accorded to natural gas under the ISO and/or the ITO models; and (b) if so,\nwhether Russia has demonstrated t hat the unbundling measure in the Directive accords less\nfavourable treatment to imported Russian natural gas than that accorded to domestic EU natural\ngas by \"enabling\" EU member States to choose between implementing only the OU model or\nimplementing the ISO and/or the ITO models in addition to the OU model in respect of\ntransmission systems that belonged to a VIU on 3 September 2009.\n7.539. We begin our assessment with the first of these issues. In this regard, we recall that the\nAppellate Body has expressly found that '\"[a] formal difference in treatment between imported and\nlike domestic products is … neither necessary, nor sufficient, to show a violation' of the national\ntreatment obligation.\"966 Instead, our assessment will focus on whether the OU model \"modifies\nthe conditions of competition in the relevant market to the detriment\" of natural gas in comparison\nwith the ISO and/or the ITO models.967\n7.540. We note that Russia's argumentation concerning the specific alleged competitive\nadvantages under the ISO and the IT O models has not been entirely clear throughout these\nproceedings. On the basis of a reading of all submissions by Russia, we can, however, discern\nthree alleged competitive advantages or three specific \"aspects of the relevant advantage\" 968,\nnamely (a) that VIUs can \"facilitate the importation and supply of their natural gas\" by exercising\ncontrol over a TSO 969; (b) that VIUs can continue to receive \"transport fees and other revenue\nassociated with being the TSO and helping to operate the transmission system\" 970; and (c) that\nVIUs \"retain[] at least some role in overseeing investments into the transmission system\". 971 It is\nnot always clear from Russia's argumentation whether these alleged advantages pertain to the ISO\nmodel or the ITO model, or both. For the sake of completeness, we will consider both of these\nmodels in addressing the three alleged advantages below:\nControl over the TSO\n\n963 See, e.g. Russia's response to Panel question No. 183(a), paras. 160-182 and 183(b) paras. 183-\n186.\n964 See, e.g. European Union's first written submission, paras. 368-373; and second written submission,\nparas. 95-100.\n965 See, e.g. European Union's first written submission, paras. 165 and 374-376; and second written\nsubmission, paras. 101-138.\n966 Appellate Body Reports, US – COOL, para. 277 (quoting Appellate Body Report, Korea – Various\nMeasures on Beef, para. 137). (omission by the Appellate Body)\n967 Appellate Body Report, Korea – Various Measures on Beef, para. 137. (emphasis original) See also\nAppellate Body Reports, EC – Seal Products, para. 5.101 (referring to Appellate Body Reports, US – Clove\nCigarettes, para. 179; Thailand – Cigarettes (Philippines), para. 128; and Korea – Various Measures on Beef,\npara. 137).\n968 Russia's response to Panel question No. 183(a), para. 160.\n969 Russia's response to Panel question No. 114(a), para. 473. See also Russia's first written submission,\n970 Russia's response to Panel question No. 114(f), para. 494. See also Russia's first written submission,\nNo. 183(b), para. 186.\n971 Russia's response to Panel question No. 183(b), para. 185. See also Russia's first written submission,\nparas. 321 and 354.\n\n7.541. Beginning with Russia's arguments concerning the possibilities of a VIU maintaining some\ncontrol over a TSO, we initially note tha t these arguments appear directed at the ITO model. More\nparticularly, Russia argues that this model allows a VIU to \"continue exercising some degree of\ncontrol over the ITO, which benefits its gas\" 972 or which \"helps facilitate the supply and sale\" 973 of\nthat VIU's natural gas. The European Union responds that a VIU \"cannot control the network\noperation, as this is the very aim of unbundling\". 974 Furthermore, the European Union argues that\n\"[a]ny approach to the ISO or ITO model in which the VIU would try to inf luence TSO decision -\nmaking in order to favour its production or supply interests would … be illegal\"975, pointing out that\nthe rules on third -party access and capacity allocation, which apply under all three unbundling\nmodels, ensure that \"the supply branch of a VIU enjoys no privilege vis -a-vis other suppliers on\nthe market as regards access to the transmission network or booking a certain amount of the\ncapacity\".976\n7.542. In addressing this alleged competitive advantage, we are m indful of the fact that\nArticle III:4 of the GATT 1994 prohibits less favourable treatment of goods only and does not refer\nto less favourable treatment of producers, unlike the non -discrimination provisions of the GATS,\nwhich refer to less favourable treatment of services and service suppliers.977 For this reason, we do\nnot believe that it is sufficient for Russia to point to the ITO model permitting VIUs, which are\nproducers or suppliers of natural gas, to own and exert some control over the operator of the\ntransmission system, the ITO . Rathe r, Russia must demonstrate that this translates into a\ncompetitive advantage for the natural gas produced or supplied by the VIU.\n7.543. In this regard, we first note that the ITO model does not allow a VIU full control over the\nITO belonging to it. As pointed out by the European Union, the provisions of the ITO model require\nthe ITO and its staff and management to be independent, both generally and specifically from the\nVIU.978 Most notably, Article 18(4) of the Directive specifies that the VIU \"shall not determin e,\ndirectly or indirectly, the competitive behaviour of t he transmission system operator in relation to\nthe day to day activities of the transmission system operator and management of the network, or\nin relation to activities necessary for the preparation of the ten-year network development plan\".\n7.544. In light of provisions such as these, we find it difficult to agree with Russia's assertion\nconcerning the ITO model that:\nVIUs not only retain full ownership of the transmission system, they enjoy ongoing\nfinancial benefits from the ITO, a separate subsidiary, which provides much greater\nflexibility and control over the entire transmission system. This includes network\nmanagement and investment decisions through the ITO, providing the VIU greater\ninfluence over those assets.979\n7.545. Russia makes similar assertions when pointing to the example of GRTgaz S.A. (GRTgaz),\nwhich is an ITO in France and belongs to the French VIU Engie S.A. (Engie) in accordance with the\nITO model, implemented in France pursuant to the Directive. More specifically, Russia asserts that\n\"Engie continues exercising some degree of control over GRTgaz, its subsidiary and ITO, and thus\nover the competitive opportunities for its domestically sourced gas\" 980 or that \"Engie continues to\nexert at least some l evel of control over GRTGaz' s network management and investment\ndecisions\".981 Russia appears to support this assertion by suggesting that the VIU can exert control\n\n972 Russia's response to Panel question No. 183(a), para. 163.\n973 Russia's second written submission, para. 245.\n974 European Union's first written submission, para. 319.\n975 European Union's first written submission, para. 319.\n976 European Union's second written submission, paras. 119-120. See also European Union's second\nwritten submission, paras. 96-99.\n977 See, e.g. Appellate Body Report, Argentina – Financial Services, para. 6.27.\n978 Directive 2009/73/EC, (Exhibit EU-5), Articles 18 and 19. See also European Union's first written\nsubmission, paras. 329-334.\n979 Russia's first written submission, para. 321.\n980 Russia's first written submission, para. 358.\n981 Russia's first written submission, para. 354. See also Russia's first written submission, para. 373\nwhere Russia states as follows concerning the Norwegian VIU Statoil, in the context of its claim under\nArticle I:1 of the GATT 1994:\nStatoil retains at least some control over jor dgas' network management and investment\ndecisions, including the right to appoint members to the Supervisory Body and other advantages\nauthorized by the Directive in its ITO provisions.\n\nover the ITO through the so -called Supervisory Body982, which is provided for in Article 20 of the\nDirective and may include a majority of members representing the VIU. 983 However, and as\npointed out by the European Union, the role of the Supervisory Body is limited to:\n[T]aking decisions which may have a significant impact on the value of the assets of\nthe shareholders within the transmission system operator, in particular decisions\nregarding the approval of the annual and longer -term financial plans, the level of\nindebtedness of the transmission system operator and the amount of dividends\ndistributed to shareholders.984\n7.546. Russia suggests that it is for the European Union to clarify what \"decisions which may have\na significant impact on the value of the assets of the shareholders within the transmission system\noperator\" entail.985 While further clarification may have been helpful, we recall that it is for Russia\nto make a prima facie case of violation, and we do not believe it would be appropriate for us to\nsimply assume that the decisions referred to in Article 20(1) of the Directive have a bearing on the\ncompetitive opportunities of the natural gas produced or supplied by the VIU. This is particularly so\nin light of the fact that the Supervisory Body is explicitly excluded from making decisions in\nrelation to \"the day to day activities of the transmission sy stem operator and management of the\nnetwork, and in relation to activities necessary for the preparation of the ten -year network\ndevelopment plan\".986\n7.547. Russia also points to Article 19(1) of the Directive, according to which \"[d]ecisions\nregarding the appoint ment and renewal, working conditions including remuneration, and\ntermination of the term of office, of the persons responsible for the management and/or members\nof the administrative bodies of the transmission system operator shall be taken by the Supervis ory\nBody\" as \"just one example\" of a VIU being able to exert control over an ITO belonging to it under\nthe ITO model. 987 Russia does not elaborate further on this one example , yet the implication\npresumably is that the VIU, through the members representing i t in the Supervisory Body, would\nappoint persons that would seek to advance the competitive opportunities of natural gas produced\nor supplied by the VIU. We have difficulties agreeing with this notion as Article 19(2) of the\nDirective provides that the NRA may object to the Supervisory Body's appointments if \"doubts\narise as to the professional independence of a nominated person responsible for the management\nand/or member of the administrative bodies\", in which case the appointment does not become\nbinding.988\n7.548. In addition to the doubts explained above concerning the possibilities under the ITO model\nof a VIU exercising control over an ITO in a manner that impact s the competitive opportunities of\nnatural gas, we further note the European Union's argument that t he rules on third -party access\nand capacity allocation render it \"illegal\" for an ITO, which belongs to a VIU under the ITO model,\nto favour the natural gas of that VIU. 989 In this regard, we note that Article 32 of the Directive\nrequires the EU member States to implement:\n[A] system of third party access to the transmission and distribution system … based\non published tariffs, applicable to all eligible customers, including supply undertakings,\nand applied objectively and without discrimination between system users.\n\n982 Russia's first written submission, paras. 322-323 and 358.\n983 Directive 2009/73/EC, (Exhibit EU-5), Articles 20(2)-20(3).\n984 Directive 2009/73/EC, (Exhibit EU-5), Article 20(1). See also European Union's first written\nsubmission, para. 330.\n985 Russia's second written submission, para. 213.\n986 Directive 2009/73/EC, (Exhibit EU-5), Article 20(1). See also European Union's first written\nsubmission, para. 330.\n988 Directive 2009/73/EC, (Exhibit EU-5), Article 19(2). We note Russia's argument that \"there are no\nclear consequences following an objection by the regulatory authority to a nomination or termination.\"\n(Russia's first written submission, para. 49). In this regard, we would, however, agree with the European Union\nthat these consequences are clear from the text of Article 19(2), which explicitly states that these decisions\n\"become binding only if the regulatory authority has raised no objections within three weeks of notification.\"\n989 European Union's first written submission, para. 319; and second written submission, paras. 96, 99\nand 120. Ukraine submits similar arguments, stating that the advantage alleged by Russia \"in case of the ITO\nor ISO and not available under the OU model consists of the possibility for the VIU to retain its abusive control\nover the transmission system.\" (Ukraine's third-party submission, paras. 29-30).\n\n7.549. It is undisputed that the rules on third -party access apply to all TSOs, regardless of the\napplicable unbundling model. In our view, it is therefore clear from Article 32 that ITOs, which\nbelong to a VIU under the ITO model, cannot give the natu ral gas of that VIU access to the\ntransmission system on more favourable competitive terms than those given to any other source\nof natural gas. In fact, we note that the provisions of the ITO model specifically call for \"[a]ny\ncommercial and financial rela tions between the vertically integrated undertaking and the\ntransmission system operator … [to] comply with market conditions\" 990 and that all commercial\nand financial agreements between the ITO and the VIU must be approved by the relevant NRA.991\n7.550. Therefore, even assuming that a VIU may exert some control over an ITO belonging to it\nunder the ITO model, we agree with the European Union that the rules on third-party access would\nprohibit the VIU from exerting that control in a manner that would provide its natural gas access to\nthe transmission system on more favourable competitive terms. At the same time, we note\nRussia's argument that:\n[A]s the VIUs in Germany and France knew well when insisting on including the ITO\nmodel, it's a game of cat and mouse. The VIUs try to get away with as much as\npossible. Some regulators try to catch them more than others, which take long\nafternoon naps instead.992\n7.551. It may well be true that a VIU might attempt to exert control over its ITO in a manner that\nwould provide the natural gas of that VIU access to the transmission system on more favourable\ncompetitive terms than those given to natural gas from other sources. However, this would clearly\nviolate the rules on third -party access. We do not believe it would be appropriate to att ribute, to\nthe European Union, any potential competitive advantage for natural gas under the ITO model,\nwhich stems from a VIU violating provisions in the Directive, including provisions under the ITO\nmodel itself.\n7.552. For these reasons, we find that Russia ha s not demonstrated that the ITO model allows\nVIUs to control an ITO in a manner that would accord a competitive advantage to the natural gas\nof that VIU.\n7.553. Having considered Russia's arguments concerning control over an ITO in respect of the ITO\nmodel, we no te that Russia at times appears to suggest that these arguments apply, at least to\nsome extent, with respect to the ISO model as well. 993 Russia does not, however, provide any\nexplanation of the notion that a VIU would be able to control the operator of the transmission\nsystem, the ISO, under the ISO model. As explained above, the ISO model only permits a VIU to\ncontinue to own the transmission system. The operator, the ISO, of this system must be\nunbundled from the VIU in accordance with the rules under the OU model994, and we hence have\ndifficulties understanding how the ISO model would render a VIU more capable of controlling the\noperator of a transmission system than the OU model. In any event, we recall that the rules on\nthird-party access apply also for th e ISO model. In light of this, we do not believe that Russia has\ndemonstrated that the ISO model allows a VIU to control an ISO in a manner that would provide\nthe natural gas of that VIU a competitive advantage over the natural gas of a VIU subject to the\nOU model or any other source of natural gas.\nFinancial fees, revenue and dividends\n7.554. We turn now to Russia's arguments concerning various sources of revenue that accrue to a\nVIU, which owns a transmission system under the ISO model or a n ITO under the ITO mo del.\nThese arguments appear to concern both the ISO and the ITO models.\n\n990 Directive 2009/73/EC, (Exhibit EU-5), Article 18(6).\n991 Directive 2009/73/EC, (Exhibit EU-5), Article 18(7).\n992 Russia's second written submission, para. 210.\n993 See, e.g. Russia's response to Panel question No. 183(b), para. 184, in which Russia states that\n\"[e]ven assuming the ISO model is implemented in accordance with the terms of the Directive, a VIU under the\nISO model may still be in a position to exercise at least limited rights or influence over how the ISO operates,\nmaintains and develops the system.\" Russia does not expand on this position but instead proceeds to discuss\nthe possibility of a VIU influencing the investment decisions concerning the transmission system. (Ibid.\npara. 185). This alleged advantage is discussed below in paragraphs 7.561 through 7.565.\n994 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(a).\n\n7.555. In its written submissions, Russia has pointed to certain sources of revenue being available\nto a VIU under the ISO or the ITO models, which are not available under the OU model. More\nparticularly, Russia has pointed to \"revenue derived from the TSO 's transmission and supply of []\ngas\"995, \"ongoing financial benefits from the operation of [the] transmission system\"996, \"transport\nfees and other revenue associated with being the TSO and help ing to operate the transmission\nsystem\"997, and \"dividends that accrue to VIUs as a result of revenue and profits generated by\ntheir ITO-subsidiaries from transmission fees, transmission tariffs and any other sources\".998\n7.556. In accordance with the approach set out in paragraph 7.542 above, we do not believe it is\nsufficient for Russia to point to the fact that a VIU, which is a producer or supplier of natural gas,\nmay have certain sources of revenue under the ISO and/or the ITO models, which are not\navailable under the OU model. Rather, Russia must demonstrate that such sources of revenue\ntranslate into a competitive advantage for the natural gas produced or supplied by the VIU. Having\nconsidered all of Russia's arguments, we do not believe it has done so.\n7.557. More particularly, and as pointed to by the European Union 999, we note that Article 31(3)\nof the Directive requires natural gas undertakings, including VIUs, to:\n[K]eep separate accounts for each of their transmission, distribution, LNG and storage\nactivities as they would be required to do if the activities in question were carried out\nby separate undertakings, with a view to avoiding dis crimination, cross-subsidisation\nand distortion of competition.\n7.558. The European Union has confirmed that the rules on unbundling of accounts and the\nprohibition of cross-subsidization apply to all fees, revenue and dividends that may accrue to a VIU\nunder the ISO or the ITO models 1000, and Russia has not provided any evidence suggesting\notherwise. We further note that these rules apply regardless of the applicable unbundling model.\n7.559. Russia argues that the European Union's position is \"questionable, at best\" and t hat it is\n\"clear … that the EU itself has not viewed the concept of 'unbundling of accounts' as being\neffective.\"1001 In support of this contention, Russia points out that the predecessors to the\nDirective, Directive 98/30/EC and Directive 2003/55/EC, both in cluded rules on unbundling of\naccounts, which were \"exactly the same in all material respects\" and that Recital (7) of the\nDirective states that \"[t]he rules on legal and functional unbundling as provided for in Directive\n2003/55/EC have not, however, led to effective unbundling of the transmission system\noperators.\"1002 It is not clear to us how the existence of similar or identical rules on unbundling of\naccounts in previous EU legal packages would necessarily lead to the conclusion that the current\nrules should somehow be viewed as allowing cross -subsidization. Alternatively, Russia's argument\nconcerning the effectiveness of the rules on unbundling of accounts could be viewed as a\nreformulation of its argument that a VIU may \"try to get away with as much as possible\"1003 and\nhence attempt to enhance the competitive opportunities of its natural gas by cross -subsidizing it\nwith revenue accruing from its transmission activities, in contravention of Article 31 of the\nDirective. In this regard, we reiterate our view that it would not be appropriate to attribute, to the\nEuropean Union, potential effects stemming from economic actors contravening EU law, including\nthe rules on unbundling of accounts and the prohibition of cross-subsidization.\n7.560. Furthermore, Russia argues that \"even if the unbundling of accounts requirement, along\nwith the monitoring by regulatory authorities pursuant to Article 41(1)(b) of the Directive do help\navoid cross-subsidisation, as the EU argues, the fact remains that money is fungible.\" 1004 Russia\ndoes not, however, expand on the relevance of the fungible nature of money and we do not\n\n995 Russia's response to Panel question No. 183(a), para. 163.\n996 Russia's response to Panel question No. 183(b), para. 186.\n997 Russia's first written submission, para. 357.\n998 Russia's second written submission, para. 255.\n999 European Union's second written submission, para. 97.\n1000 European Union's response to Panel question No. 183(e), para. 129.\n1001 Russia's response to Panel question No. 117, para. 507.\n1002 Russia's response to Panel question No. 117, paras. 507-508 (quoting Directive 2009/73/EC,\n(Exhibit EU-5), Recital (7)).\n1003 Russia's second written submission, para. 210.\n1004 Russia's response to Panel question No. 117, para. 509.\n\nbelieve that it would be appropriate to assume that this would entail a competitive advantage for\nnatural gas produced or supplied by VIUs subject to the ISO or the ITO models.\nInvestment in the transmission system\n7.561. Lastly, we address Russia's argum ents concerning the role of VIUs in decisions regarding\ninvestment in the transmission system. These arguments appear to concern both the ISO and the\nITO models.\n7.562. At the outset, we note that Russia has not provided much further explanation of how the\nalleged role by a VIU in investment decisions regarding the transmission system, under the ISO\nand the ITO models, would translate into a competitive advantage for the natural gas of that VIU.\nThe implication of Russia's position presumably is that a VIU can seek to develop the transmission\nsystem in a manner that would enhance the competitive opportunities of its natural gas, through\nits alleged role in making investment decisions. H owever, we do not believe that Russia has\nsubstantiated this position.1005\n7.563. With respect to the ISO model, Russia argues that the OU model allows a VIU \"no input\nwhatsoever into the investment decisions … and thus no possibility to influence the decisions\nregarding its gas being supplied and placed on the EU market\" 1006 whereas the provisions of the\nISO model require the owner of the transmission system, which may be a VIU, to \"'finance the\ninvestments decided' by the ISO and 'approved by the regulatory authority' \".1007 Russia therefore\nappears to suggest that a VIU can influence the investment decisions of an ISO by virtue of being\nrequired to finance such investments. We have difficulties accepting this position. The relevant\nprovisions of the ISO model require the VIU to finance investments decided by the ISO or to \"give\nits agreement to financing by any interested party including the independent system operator\". 1008\nIt is, however, the ISO that makes these investment decisions 1009 and, as explained above, the\nISO is req uired to be separate from the VIU, i.e. complying with the rules on ownership\nunbundling, under the ISO model. 1010 Furthermore, and as pointed to by Russia itself, such\ninvestment decisions must be approved by the relevant NRA.1011 In light of this, we fail to see how\na VIU would have any more influence over investment decisions under the ISO model than under\nthe OU model, or be able to influence such investment decisions in a manner that would enhance\nthe competitive opportunities of its natural gas.\n7.564. With respect to the ITO model, Russia similarly argues that a VIU retains control over the\ntransmission system, including \"investment decisions through the ITO, providing the VIU greater\ninfluence over those assets\". 1012 Russia does not substantiate its assertion that a VIU can control\nor influence \"the investment decisions through the ITO\", but we note that the ITO model, similarly\nto the ISO model, requires that \"appropriate financial resources for future investment projects\nand/or for the replacement of existing asset s shall be made available to the transmission system\noperator in due time by the vertically integrated undertaking following an appropriate request from\nthe transmission system operator .\"1013 However, for the reasons explained above, we do not\nbelieve this fi nancing requirement serves to demonstrate that the ITO model allows a VIU to\ninfluence investment decisions in a manner that would enhance the competitive opportunities of its\nnatural gas.\n\n1005 See, e.g. Russia's response to Panel question No. 183(b), para. 185, where Russia states, with\nrespect to the ISO model, that \"the owner retains at least some role in overseeing investments into the\ntransmission system\" and that \"[i]n so doing, the owner must thereby be presumed to be in a position to\ninfluence the decisions regarding its gas being supplied and placed on the EU market through its transmission\nsystem as operated by the ISO.\" Without further elaboration, Russia concludes that \"[t]his constitutes a\ncompetitive advantage over a VIU such as Gazprom, which was subjected to the OU model\".\n1006 Russia's response to Panel question No. 183(b), para. 185.\n1007 Russia's response to Panel question No. 183(b), para. 184 (quoting Directive 2009/73/EC, (Exhibit\nEU-5), Article 14(5)(b)).\n1008 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(b).\n1009 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(b).\n1010 See Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(a).\n1011 Directive 2009/73/EC, (Exhibit EU-5), Article 14(5)(b).\n1013 Directive 2009/73/EC, (Exhibit EU-5), Article 17(1)(d).\n\n7.565. We therefore do not believe that Russia has demonstrated that the I SO or the ITO models\nallow a VIU to influence investment decisions in the transmission network in a manner that would\nenhance the competitive opportunities of that VIU's natural gas.\nAdditional considerations\n7.566. We note that, in addition to the specific alleged advantages considered above, Russia\nsubmits that the advantages accorded to natural gas under at least the ITO model are \"much\nbroader\".1014 In this respect, Russia appears to focus on the notion of \"certainty\". More\nparticularly, Russia points to \"the cer tainty that [a VIU's] domestic and/or third -country natural\ngas will be supplied by and transported through its own transmission system, which is operated\nand controlled by its own ITO\" and that \"[t]his certainty, predicated on the ability to base\ninvestment, supply and transmission decisions on access to the EU market via an ITO, contributes\nto the more favourable treatment accorded to the VIU\". 1015 In our view, the \"certainty\" referred to\nby Russia does not appear to be distinct from the alleged advantages addressed in\nparagraphs 7.541 through 7.565 above, but rather an underlying feature permeating all three, and\nin particular the alleged advantage stemming from a VIU supposedly being able to exert control\nover the TSO.\n7.567. In this regard, we recall our conclusion that Russia has not demonstrated that the ITO\nmodel, or the ISO mod el, allows a VIU to exercise control over the TSO in a manner that would\nprovide its natural gas access to the transmission system on more favourable competitive terms\nthan those given to natural gas from any other source. Similarly, since the Directive ca lls for a\nsystem of non-discriminatory third-party access to the transmission system, we do not believe that\nRussia has substantiated its contention that the natural gas of a VIU has any greater \"certainty\" of\naccess to the transmission system of a TSO belonging to that VIU than the natural gas of any\nother source. Furthermore, we recall our conclusions that Russia has not demonstrated that a VIU\ncan employ financial fees, revenue or dividends, accruing to it under the ISO or the ITO models, to\nenhance the competitive opportunities of its natural gas, nor that the ISO or the ITO models allow\na VIU to influence investment decisions in a manner that would enhance the competitive\nopportunities of its natural gas. We therefore also do not believe that Russia has demonstrated\nany additional \"certainty\" for natural gas under the ISO model or the ITO model in this regard.\n7.568. Having considered the alleged competitive advantages under the ISO and the ITO models,\nwe therefore conclude that Russia has not demonstrated that natural gas is accorded less\nfavourable treatment under the OU model in comparison with the treatment accorded to natural\ngas under the ISO and/or the ITO models. In light of this conclusion, it is not necessary for us to\naddress the issue of whether the unbundling measure in the Directive results in de facto\ndiscrimination against imported Russian natural gas by \"enabling\" EU member States to implement\nthe ISO and/or the ITO models in addition to the OU model in respect of transmission systems that\nbelonged to a VIU on 3 September 2009.\n7.5.1.4.2.4 Conclusion\n7.569. For the reasons explained in paragraphs 7.537 through 7.568 above, we conclude that\nRussia has not demonstrated that the unbundling measure in the Directive accords less favourable\ntreatment to imported Russian natural gas than that accorded to domestic EU natural gas. Hence,\nwe find that Russia has failed to make a prima facie case of violation under Article III:4 of the\nGATT 1994 with respect to the unbundling measure in the Directive.\n7.5.1.4.3 Analysis by the Panel of Russia's claim under Article I:1 of the GATT 1994\n7.570. Bearing in mind the le gal standard under Article I:1 of the GATT 1994, set out by the\nAppellate Body and explained above in paragraphs 7.236 and 7.237, we will assess Russia's claim\nagainst the unbundling measure in the Directive under this provision by determining whether\nRussia has made a prima facie case that: (a) the unbundling measure in the Directive falls within\nthe scope of Article I:1 of the GATT 1994; (b) the relevant imported products are like products; (c)\nthe unbundling measure in the Directive confers an \"advantage, favour, privilege or immunity\" on\n\n1014 Russia's response to Panel question No. 183(a), para. 164.\n1015 Russia's response to Panel question No. 183(a), paras. 165-166.\n\na product originating in the territory of any country; and (d) the advantage so accorded is not\nextended \"immediately\" and \"unconditionally\" to like Russian products.\n7.571. Before turning to the assessment of Russia's claim under Article I:1, we note that the legal\nstandards under Articles I:1 and III:4 of the GATT 1994 are similar in the sense that these are\nboth \"fundamental non -discrimination obligations under the GATT 1994\" 1016 and are both\n\"concerned, fundamentally, with prohibiting discriminatory measures by requiring, in the context\nof Article I:1, equality of competitive opportunities for like imported products from all Members,\nand, in the context of Article III:4, equality of competitive opportunities for imported products and\nlike domestic products\".1017 At the same time, we note that A rticles I:1 and III:4 differ in respect\nof their points of comparison. Most notably, Article I:1 of the GATT 1994 involves a comparison of\nthe treatment accorded to imported products from different Members, whereas Article III:4 of the\nGATT 1994 involves a comparison of the treatment accorded to imported products and domestic\nproducts, respectively.1018\n7.572. We further note that Russia's claims against the unbundling measure in the Directive under\nthese provisions involve certain similarities. In particular, both of Russia's claims under Articles I:1\nand III:4 of the GATT 1994 pertain to the alleged discrimination against imported Russian natural\ngas stemming from the Directive \"enabling\" EU member States to choose between implementing\nonly the OU model or implemen ting the ISO and/or the ITO models in addition to the OU model in\nrespect of transmission systems that belonged to a VIU on 3 September 2009. 1019 Due to the\nsimilarities between the legal standards under the two provisions as well as between Russia's\nclaims u nder these two provisions, our assessment of Russia's claim und er Article I:1 of the\nGATT 1994 will be guided by our findings on Russia's claim under Article III:4 of the GATT 1994\nwhen relevant and appropriate.\n7.5.1.4.3.1 Scope of Article I:1 of the GATT 1994\n7.573. With respect to the issue of whether the unbundling measure in the Directive falls within\nthe scope of Article I:1 of the GATT 1994, we note that this provision covers \"all matters referred\nto in paragraphs 2 and 4 of Article III\". We have already concluded, in paragraphs 7.519\nthrough 7.527 above, that the unbundling measure in the Directive falls within the scope of\nArticle III:4 of the GATT 1994 as it affects the internal sale, offering for sale, purchase,\ntransportation, dist ribution or use of natural gas, and we can therefore also conclude that this\nmeasure falls within the scope of Article I:1 of the GATT 1994 for the same reasons.\n7.5.1.4.3.2 Like products\n7.574. We begin our likeness enquiry for Russia's claim under Article I:1 of the GATT 1 994 by\nnoting that the scope of this enquiry is unclear in the same manner as was the case for the\nlikeness enquiry for Russia's claim under Article III:4 of the GATT 1994. More particularly, in\naddition to its argumentation concerning natural gas, Russia at times refers to LNG in arguing that\nthe unbundling measure violates Article I:1 of the GATT 1994.1020 In determining the scope of our\nlikeness enquiry, we recall that Russia's claim under Article I:1 of the GATT 1994, similarly to its\nclaim under Article III:4 of the GATT 1994, pertains to the alleged discrimination against imported\n\n1016 Appellate Body Reports, EC – Seal Products, para. 5.79.\n1017 Appellate Body Reports, EC – Seal Products, para. 5.82 (referring to Appellate Body Reports, US –\nClove Cigarettes, para. 176, in turn referring to GATT Panel Report, US – Section 337 Tariff Act, para. 5.10;\nChina – Publications and Audiovisual Products, para. 305, in turn referring to Appellate Body Report, Korea –\nVarious Measures on Beef, paras. 135-136; Thailand – Cigarettes (Philippines), para. 126, in turn referring to\nAppellate Body Report, Japan – Alcoholic Beverages II, p. 16, DSR 1996:I, 97, at p. 109; and Korea – Alcoholic\nBeverages, para. 127; and Panel Reports, US – COOL, para. 7.571, in turn referring to Panel Report, Colombia\n– Ports of Entry, para. 7.236, in turn referring to Panel Report, Argentina – Hides and Leather, para. 11.20, in\nturn referring to Appellate Body Reports, Japan – Alcoholic Beverages II, p. 16, DSR 1996:I, 97, at p. 109; and\nKorea – Alcoholic Beverages, paras. 119, 120 and 127).\n1018 Appellate Body Reports, EC – Seal Products, para. 5.79.\n1019 See, e.g. Russia's first written submission, paras. 353, 356 and 370-371.\n1020 See, e.g. Russia's first written submission, paras. 374-376; and second written submission,\nparas. 266-267. Furthermore, when arguing that imported Russian natural gas is like imported natural gas\nfrom other non-EU countries, Russia states that \"the Panel should find that natural gas imported from Russia is\n'like' natural gas, including LNG, imported from other countries within the meaning of Article I:1.\" (Russia's\nfirst written submission, para. 366). (emphasis added)\n\nRussian natural gas, stemming from the Directive \"enabling\" EU member States to choose\nbetween implementing only the OU model or implementing the ISO and/or the ITO models in\naddition to the OU model in respect of transmission syst ems that belonged to a VIU on\n3 September 2009 and , more particularly , the alleged less favourable treatment of natural gas\nbeing supplied by VIUs subject to the OU model compared to natural gas being s upplied by VIUs\nsubject to the ISO and/or the ITO models. 1021 As explained above in paragraph 7.531, the\nrequirement to unbundle, including all three unbundling models , does not apply with respect to\nVIUs' ownership or control over LNG facilities or LNG system operators and we therefore consider\nthat natural gas is the only relevant product for Russia's claim under Article I:1 of the GATT 1994\nagainst the unbundling measure in the Directive.1022\n7.575. Having determined that the scope of our likeness enquiry should be limited to natural gas,\nwe further note that Russia's claim under Article I:1 of the GATT 1994 raises two issues of\nlikeness: first whether imported Russian natural gas is like imported natural gas from other non -\nEU countries and, second, whether natural gas is like regardless of whether it is supplied by VIUs\nsubject to the OU model or by VIUs subject to the ISO or the ITO models.\n7.576. We note that both parties agree tha t imported Russian natural gas and imported natural\ngas from other non -EU countries are like within the meaning of Article I:1 of the GATT 1994\nregardless of whether that natural gas is supplied by VIUs subject to the OU model or by VIUs\nsubject to the ISO or the ITO models. 1023 We are equally convinced that these are like: more\nparticularly, and in accordance with the approach taken by previous panels, we believe that our\nassessment of these issues of likeness should be informed by the approach taken by the A ppellate\nBody in respect of likeness under Article III:4 of the GATT 1994. 1024 In this regard, we reiterate\nour position that the physical properties, end -uses and tariff classification of these groups of\nnatural gas are identical. Furthermore, there is nothi ng on the record indicating that the\npreferences of consumers of natural gas differ depending on the origin of that gas or the applicable\nunbundling model.\n7.577. We therefore conclude that imported Russian natural gas and imported natural gas from\nother non -EU c ountries, supplied by VIUs subject to the different unbundling models, are like\nwithin the meaning of Article I:1 of the GATT 1994.\n7.5.1.4.3.3 An advantage, favour, privilege or immunity\n7.578. Similarly to its claim under Article III:4 of the GATT 1994, the underlying premise of\nRussia's claim under Article I:1 of the GATT 1994 is that the unbundling measure in the Directive\nviolates this provision by \"enabling\" EU member States to choose between implementing only the\nOU model or implementing the ISO and/or the ITO mode ls in addition to the OU model in respect\nof transmission systems that belonged to a VIU on 3 September 2009. 1025 As with Russia's claim\nunder Article III:4, Russia's claim under Article I:1 is thus premised on the notion that natural gas\nis accorded an advan tage under the ISO and/or the ITO models, which is not granted under the\nOU model.1026 In section 7.5.1.4.2.3 above, we concluded that Russia has not demonstrated this to\nbe the case for its claim under Article III:4.\n7.579. As explained above, both Articles I:1 and III:4 of the GATT 1994 are \"concerned,\nfundamentally, with prohibiting discriminatory measures by requiring, in the context of Article I:1,\nequality of competitiv e opportunities for like imported products from all Members, and, in the\ncontext of Article III:4, equality of competitive opportunities for imported products and like\n\n1021 See, e.g. Russia's first written submission, paras. 370-371.\n1022 As explained in paragraphs 7.840 through 7.845 below, we consider that natural gas and LNG are\ndistinct products.\n1023 Russia's first written submission, para. 366; and response to Panel question No. 110(a), para. 445;\nand European Union's first written submission, para. 407; and response to Panel question No. 110(a),\npara. 285.\n1024 See, e.g. Panel Reports, US – Poultry (China), paras. 7.424-7.425 (referring to Appellate Body\nReports, EC – Asbestos, para. 102; and Japan – Alcoholic Beverages II, pp. 21-22, DSR 1996:I, 97, at pp.\n113-114; Panel Report, US – Gasoline, para. 6.8; and GATT Panel Reports, EEC – Animal Feed Proteins, para.\n4.2; and Japan – Alcoholic Beverages I, para. 5.6); and US – Tuna II (Mexico) (Article 21.5 – Mexico), para.\n7.409.\n1025 See, e.g. Russia's first written submission, paras. 370-371.\n1026 Russia's responses to Panel question No. 183(a), paras. 160-182 and No. 183(b), paras. 183-186.\n\ndomestic products\".1027 While these provisions have different points of comparison, we reca ll that\nthe enquiry under Article I:1 of whether a challenged measure confers an advantage, favour,\nprivilege or immunity to a product involves an assessment of whether this measure \"create[s]\n'more favourable competitive opportunities ' or affect[s] the co mmercial relationship between\nproducts of different origins\". 1028 This enquiry , thus, closely resembles the assessment of less\nfavourable treatment under Article III:4, which involves an assessment of whether a challenged\nmeasure \"modifies the conditions of c ompetition in the relevant market to the detriment of\nimported products\".1029 We further note that none of the parties suggests that this issue should be\ndealt with differently for Russia's claims under Articles I:1 and III:4 of the GATT 1994,\nrespectively.\n7.580. The points of comparison are different under the two claims and Russia therefore also\npoints to different examples in seeking to demonstrate that the ISO and/or ITO models confer an\nadvantage, favour, privilege or immun ity to natural gas, within the meaning of Article I:1, that is\nnot extended to natural gas under the OU model. More particularly, for its claim under Article I:1,\nRussia compares the treatment of imported Russian gas with that of imported natural gas from\nany other non-EU country, rather than domestic EU natural gas. As examples of this, Russia refers\nto the imported natural gas of the Russian VIU Gazprom and compares this with the imported\nnatural gas of the Norwegian VIU Statoil, which continues to own the ITO jordgas in Germany\nunder the ITO model1030, rather than the domestic EU natural gas of the French VIU Engie, which\ncontinues to own the ITO GRTgaz in France under the ITO model. 1031 However, Russia does not\nindicate that the various unbundling models operate differently, nor that the ISO or I TO models\nconfer any additional or different advantages, in the context of this comparison.\n7.581. Moreover, we note that Russia refers to Lithuania's grant of priority to natural gas supplied\nby Litgas through the Klaipeda LNG Terminal and the five-year deal between Statoil and Litgas.1032\nAs explained above in section 7.2.2.3.1, the European Union has raised a terms of reference\nobjection in respect of Russia's reliance on these. In our finding concerning this terms of reference\nobjection, we concluded that Lithuania's grant of priority to natural gas supplied by Litgas through\nthe Klaipeda LNG Terminal and the five -year deal between Statoil and Litgas should be considered\nevidence relied upon by Russia, which does not concern our terms of reference. 1033 Having said\nthis, we have difficulties understanding the relevance of this evid ence for Russia's claim under\nArticle I:1 against the unbundling measure in the Directive. When attempting to demonstrate the\nrelevance of this evidence, Russia argues that:\nBy requiring that TSOs unbundle, while exempting LSOs and LNG facilities and\nproviding other preferences for LNG in Lithuania and elsewhere, it should be clear that\nthe Directive was intended to provide differential treatment between pipeline gas\ntransported by TSOs and LNG-gas transported by LSOs and LNG facilities.1034\n7.582. However, and as ex plained above, Russia's claim under Article I:1 of the GATT 1994\nagainst the unbundling measure pertains to the Directive \"enabling\" EU member States to choose\nbetween implementing only the OU model or implementing the ISO and/or the ITO models in\naddition to the OU model in respect of transmission systems that belonged to a VIU on\n3 September 2009.1035 It does not pertain to the alleged exemption of LNG from the requirement\n\n1027 Appellate Body Reports, EC – Seal Products, para. 5.82 (referring to Appellate Body Reports, US –\nClove Cigarettes, para. 176, in turn referring to GATT Panel Report, US – Section 337 Tariff Act, para. 5.10;\nChina – Publications and Audiovisual Products, para. 305, in turn referring to Appellate Body Report, Korea –\nVarious Measures on Beef, paras. 135-136; Thailand – Cigarettes (Philippines), para. 126, in turn referring to\nAppellate Body Report, Japan – Alcoholic Beverages II, p. 16, DSR 1996:I, 97, at p. 109; and Korea – Alcoholic\nBeverages, para. 127; and Panel Reports, US – COOL, para. 7.571, in turn referring to Panel Report, Colombia\n– Ports of Entry, para. 7.236, in turn referring to Panel Report, Argentina – Hides and Leather, para. 11.20, in\nturn referring to Appellate Body Reports, Japan – Alcoholic Beverages II, p. 16, DSR 1996:I, 97, at p. 109; and\nKorea – Alcoholic Beverages, paras. 119, 120, and 127).\n1028 Panel Report, US – Poultry (China), para. 7.415 (quoting Panel Report, Colombia – Ports of Entry,\npara. 7.341, in turn quoting to Panel Reports, EC – Bananas III, para. 7.239).\n1029 Appellate Body Report, Korea – Various Measures on Beef, para. 137. (emphasis omitted)\n1030 Russia's first written submission, paras. 372-373; and second written submission, para. 265.\n1031 Russia's first written submission, paras. 357-358; and second written submission, paras. 245-246.\n1032 Russia's first written submission, paras. 374-375; and second written submission, paras. 266-267.\n1033 See section 7.2.2.3.1 above.\n1034 Russia's response to Panel question No. 122, para. 514.\n1035 See, e.g. Russia's first written submission, paras. 370-371.\n\nto unbundle per se (referred to as the \"LNG measure\" in this Report), a measure that is challenged\nseparately by Russia under Article I:1 of the GATT 1994.1036 It is difficult to see how Lithuania's\ngrant of priority to natural gas supplied by Litgas through the Klaipeda LNG Terminal or a 5 -year\ndeal between Litgas and Statoil for the supply o f natural gas via the Klaipeda LNG terminal would\nhave any bearing on the use of different unbundling models in the European Union. In light of this,\nwe agree w ith the European Union that this evidence lacks relevance for Russia's claim under\nArticle I:1 against the unbundling measure in the Directive.1037\n7.583. Therefore, and consistently with our findings on Russia's claim under Article III:4 of the\nGATT 1994, we also conclude that Russia has failed to demonstrate that the unbundling measure\nin the Directive conf ers an advantage, favour, privilege or immunity to natural gas under the ISO\nand/or the ITO models. In light of this conclusion, it is not necessary for us to address the issue of\nwhether the unbundling measure in the Directive results in de facto discrimination of imported\nRussian natural gas by \"enabling\" EU member States to implement the ISO and/or the ITO models\nin addition to the OU model in respect of transmission syst ems that belonged to a VIU on\n3 September 2009.\n7.5.1.4.3.4 Conclusion\n7.584. For the reasons explained in paragraphs 7.578 through 7.583 above, we conclude that\nRussia has not demonstrated that the unbundling measure in the Directive confers an advantage,\nfavour, privilege or immunity to imported natural gas from other non -EU countries, which is not\naccorded immediately and unconditionally to imported Russian natural gas. Henc e, we find that\nRussia has failed to make a prima facie case of violatio n under Article I:1 of the GATT 1994 with\nrespect to the unbundling measure in the Directive.\n7.5.2 The unbundling measure in the national implementing laws of Croatia, Hungary\nand Lithuania\n7.5.2.1 Introduction\n7.585. Russia challenges the unbundling measure in the national implementing laws of Croatia,\nHungary and Lithuania under Article XVI:2(e) and XVI:2(f) of the GATS. Russia further challenges\nthe unbundling measure in the national implementing laws o f Croa tia and Lithuania under\nArticle XVI:2(a) of the GATS.\n7.586. The European Union asks the Panel to reject all claims by Russia and, should the Panel find\notherwise, submits that the unbundling measure in the national implementing laws of Croatia,\nHungary and Lithuania is justified under Article XIV(a) and (c) of the GATS.\n7.587. We follow the legal standard, as set out in paragraph 7.233 above, in our examination of\nRussia's claims against the unbundling measure in the national implementing laws of Croatia,\nHungary and Lithuania under Article XVI:2(a), (e) and (f) of the GATS.\n7.588. The unbundling measure challenged by Russia under Article XVI:2 (a), (e) and (f) of the\nGATS consist s of the provisions of the national laws of Croatia, Hungary and Lithuania\nimplementing the unbundling requirement in the Directive. 1038 Russia has clarified that it is\nchallenging separately each of the national implementing laws of Croatia, Hungary and\nLithuania.1039 We recall that those laws are legally separate and distinct from each other and from\nthe Directive, and that the Directive is not a measure at issue under th ese claims. We also recall\nthat, while Croatia and Hungary have implemented the three unbundling models, Lithuania has\nimplemented only the OU model.1040\n\n1036 See section 7.7 below, where we assess the consistency of the LNG measure with Article I:1 of the\nGATT 1994.\n1037 European Union's first written submission, para. 421.\n1038 We refer to our factual description of the three unbundling models in section 2.2.2.1 above.\n1039 Russia's response to Panel question No. 5, para. 27.\n1040 See section 2.2.2.2 above.\n\n7.589. Keeping in mind that a panel has the autonomy to decide on the order of its analysis 1041,\nwe shall start with Russia's claim under Article XVI:2(a) of the GATS , and will then turn,\nsuccessively, to Russia's claims under Article XVI:2(e) and (f) of the GATS.\n7.5.2.2 Russia's claims under Article XVI:2(a) of the GATS\n7.5.2.2.1 Introduction\n7.590. Russia claims that the unbundling measure in the national implementing laws of Croatia\nand Lithuania imposes a limitation on the number of service suppliers in a manner inconsistent\nwith Article XVI:2(a) of the GATS.1042\n7.591. Before turning to the assessment of Russia's claim under Article XVI:2(a) of the GATS, we\nwish to clarify our understanding of the measu re at issue under this provision as, throughout its\nsubmissions and responses to questions, Russia's characterization of this measure has varied. 1043\nBased on an overall reading of Russia's arguments and explanations, in particular Russia's\nclarification to q uestion No. 5 by the Panel, we understand that Russia is challenging the\nunbundling measure in the national implementing laws of Croatia and Lithuania as imposing an\n\n1041 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 126.\n1042 In its response to a question by the Panel concerning its claim under Article XVI:2(f) of the GATS,\nRussia appears to allege that Section 123(4) of Hungary's Gas Act violates Article XVI:2(a) of the GATS. Russia\nstates as follows:\nAs explained in response to Question 169(a), \"Section 194\" refers to the relevant provision of\nHungary’s Amendment Act that amended Section 123 of its Gas Act (or GET). It is Subsection\n(4) of Section 123 of the Gas Act, as amended by the Amendment Act, that Russia is challenging\nunder Article XVI:2(f) of the GATS – along with the remaining provisions of the Gas Act that\nRussia identified, Sections 120/A, Section 121/B, and Section 121/H, each of which also forms\npart of Hungary’s unbundling measure that violates Article XIV:2(a). Specifically, Section 123(4)\nprovides that any company involved in the extraction of natural gas or the \"supply of natural\ngas... and any shareholders exercising control in such companies may not acquire any share –\ndirectly or indirectly – in a transmission system operator where such share constitutes\nentitlement to exercise control.\" It is in this regard that Section 123(4) violates Article XIV:2(a).\n(Russia's response to Panel question No. 169(b), para. 83). (emphasis original)\nWe observe that this is the first and only instance where Russia alleges that Hungary's Gas Act is\ninconsistent with Article XVI:2(a) of the GATS as, throughout these proceedings, Russia's claim under this\nprovision only concerned the unbundling measure in the national implementing laws of Croatia and Lithuania.\n(See Russia's first written submission, heading VII:E; second written submission, para. 101 and heading III:B;\nand response to Panel question No. 5, para. 27). Furthermore, Russia does not substantiate its allegation that\nSection 123(4) in Hungary's Gas Act amounts to a limitation on the number of service suppliers within the\nmeaning of Article XVI:2(a). Since there is no basis on which we can assess Russia's allegation against\nHungary under Article XVI:2(a), we shall not give further consideration to this issue.\n1043 In its first written submission, Russia alleges that \"Croatia and Lithuania's Unbundling Measures\nImpose Limitations on the Number of Service Suppliers, Contrary to Article XVI:2(a) of the GATS\" (Russia's\nfirst written submission, heading VII:E), \"Croatia and Lithuania, in implementing their unbundling measures,\nhave adopted quantitative limitations on the number of TSOs within their respective territories\" (Russia's first\nwritten submission, para. 210), and \"[Croatia] [Lithuania] Adopted a Prohibited Quantitative Limitation, in\nEffect, in the Form of a Monopoly or Exclusive Service Supplier, Contrary to Article XVI:2(a)\". (Russia's first\nwritten submission, headings VII:E:2; and VII:E:3). In response to a question by the Panel asking Russia to\nclarify, with respect to each claim, which measure was being challenged, Russia explains that, under\nArticle XVI:2(a) of the GATS, it challenges \"the unbundling measure in Croatia and Lithuania's implementing\nlaws as each imposing impermissible quantitative restrictions\" and further explains that \"the quantitative\nrestrictions resulting from Croatia and Lithuania's unbundling measures can best be characterized as violating\neach of these Members' obligations, as they constitute instances of de facto discrimination\". (Russia's response\nto Panel question No. 5, para. 25). Russia alleges in its second written submission that it \"has made a prima\nfacie case that Croatia and Lithuania's unbundling measures each violates Article XVI:2(a) of the GATS\".\n(Russia's second written submission, para. 109). In response to another question by the Panel, Russia explains\nthat its claim against Lithuania under Article XVI:2(a) \"concerns the fact that, through its unbundling measure,\nas set out in various provisions of the Law on Natural Gas, as amended, Lithuania has, formally or in effect,\nimposed a limitation on the number of service suppliers of pipeline transport services in the form of a\nmonopoly or exclusive service supplier\". (Russia's response to Panel question No. 167, para. 77). (emphasis\noriginal) Finally, with respect to this claim, Russia asks the Panel to find that the European Union and its\nmember States violate Article XVI:2(a) of the GATS \"because Croatia and Lithuania, in implementing their\nunbundling measures, have each, in effect, adopted a prohibited quantitative limitation in the form of a\nmonopoly or exclusive service supplier\". (Russia's first written submission, para. 810; and second written\nsubmission, para. 487).\n\nimpermissible quantitative limitation on the number of service suppliers in the form of a monopoly\nor exclusive service suppliers.\n7.592. The text and legal standard to establish a violation un der Article XVI:2 of the GATS are set\nout above in paragraphs 7.232 and 7.233. Pursuant to that legal standard, in order to establish a\nprima facie case of violation of Article XVI:2(a) of the GATS, Russia needs to demonstrate that:\na. Croatia and Lithuania have undertaken market access commitments in their respective\nGATS Schedules with respect to the sector(s) and mode(s) identified by Russia; and that\nb. The unbundling measure in the national implementing laws of Croatia and Lithua nia\nimposes an impermissible quantitative limitation on the number of service suppliers in\nthe form of a monopoly or exclusive service suppliers within the meaning of\nArticle XVI:2(a) of the GATS.\n7.593. We concluded above in paragraph 7.360 that Croatia and Lithuania have undertaken a full\nmarket access commitment for mode 3 under sector 11.G, \"Pipeline Transport [Services]\".\nAccordingly, we turn now to t he second element of the legal standard, namely whether the\nunbundling measure in the national implementing laws of Croatia and Lithuania breaches\nArticle XVI:2(a) of the GATS by imposing an impermissible quantitative limitation on the number\nof service suppliers in the form of a monopoly or exclusive service suppliers.\n7.5.2.2.2 Analysis by the Panel\n7.594. Russia argues that, when deciding whether a Member maintains any of the four types of\nquantitative limitations on the number of suppliers listed under Article XVI:2(a), consideration\nshould be given to the substance and effect of a challenged measure, rather than merely its formal\nconstruction. Based on this interpretation, Russia al leges that Croatia and Lithuania, in\nimplementing their unbundling measures, have adopted quantitative limitations on the number of\nTSOs within their respective territories, contrary to their scheduled commitments and in violation\nof Article XVI:2(a).1044 Russia further submits that the quantitative limitation Croatia and Lithuania\nhave each adopted on the number of service suppliers that may supply pipeline transport services\nwithin their territories is in the form of a monopoly or an exclusive service supplier. 1045 According\nto Russia, both Croatia and Lithuania, in effect, maintain a state-owned monopoly or, alternatively,\nexclusive service suppliers, both with regard to suppliers of transmission services and natural gas\nsupply services within their respective territory, thus breaching Article XVI:2(a) of the GATS.1046\n7.595. According to the European Union, the Appellate Body considered that the focus of\nArticle XVI:2(a) is on quantitative limitations and stressed that not any measure having a\nquantitative effect would fall within the scope of this provision. 1047 The European Union concurs\nwith Japan that \"to q ualify as a measure under sub -paragraph (a), the core characteristic of the\nmeasure must be to limit the number of service suppliers\". 1048 For the European Union, the\nunbundling requirement does not impose a quantitative maximum limit, but must be rather\nregarded as a minimum requirement for being certified as a TSO in the European Union. 1049 The\nEuropean Union submits that an unlimited number of service providers can be certified as\ntransmission service operators in Croatia and Lithuania and that nothing in Croa tia's or Lithuania's\nimplementing laws challenged by Russia would limit the number of pipeline transport service\nsuppliers.1050\n\n1044 Russia's first written submission, para. 210; and second written submission, para. 109.\n1045 Russia's first written submission, paras. 211 and 215.\n1046 Russia's first written submission, paras. 214 and 220; and second written submission, paras. 110-\n111.\n1047 European Union's first written submission, paras. 121-122; and second written submission, para.\n22.\n1048 European Union's second written submission, para. 21, (referring to Japan's third-party submission,\npara. 11). For Japan, Article XVI:2(a) of the GATS does not capture \"limitations which have any characteristics\nor any effect\", but, rather, \"a measure falls under subparagraph (a) only when its core characteristic or effect\nis to limit the number of service suppliers.\" (Ibid.)\n1049 European Union's first written submission, paras. 130-131.\n1050 European Union's second written submission, para. 23, (referring to the European Union's first\nwritten submission, paras. 132-134).\n\n7.596. Before assessing Russia's claim under Article XVI:2(a), we need to address the parties'\narguments regarding the scope of Article X VI:2(a). Both parties refer to the Appellate Body's\ninterpretation of Article XVI:2(a) in US – Gambling, but draw different conclusions from this\nreport.1051\n7.597. We recall that, after considering the definitions of the terms \"monopoly\" and \"exclusive\nservice sup pliers\" in, respectively, Articles XXVIII(h) and VIII:5 of the GATS 1052, the Appellate\nBody observed as follows:\n[T]he reference, in Article XVI:2(a), to limitations on the number of service suppliers\n\"in the form of monopolies and exclusive suppliers\" should be read to include\nlimitations that are in the form or in effect , monopolies or exclusive service\nsuppliers.1053\n7.598. This led the Appellate Body to consider that the words \"in the form of\" in Article XVI:2(a)\nshould not be interpreted so as to require that quantitative limitations be explicitly expressed in\nnumerical terms.1054 The Appellate Body stressed, however, that the w ords \"in the form of\" should\nnot be ignored or replaced by the words \"that have the effect of\" because, when viewed as a\nwhole, \"it is clear that the thrust of sub -paragraph (a) is not on the form of limitations, but on\ntheir numerical, or quantitative, nature\".1055\n7.599. Referring to this statement by the Appellate Body, the panel in China – Electronic Payment\nServices stressed that, when assessing the consistency of a measure with Article XVI:2(a) of the\nGATS, the focus must be on whether the measure at issue \"co nstitute[s] a limitation that is\nnumerical and quantitative in nature\" or acts \"as a quota would do\", and not on whether it\n\"formally or explicitly institute[s] a monopoly or an exclusive service supplier.\" 1056 When assessing\nmore specifically whether the mea sure at issue instituted a monopoly or exclusive service\nsuppliers, that panel decided to assess whether those measures \"are of such a nature that they\nlimit to one, or a small number\", the number of service suppliers.1057\n7.600. Hence, following the guidance provid ed by previous Appellate Body and panel reports, we\nconsider that our analysis must focus on whether the measure at issue constitutes a limitation that\nis numerical and quantitative in nature. In other words, our analysis of whether Russia has\ndemonstrated that the unbundling measure in the national implementing laws of Croatia and\nLithuania breaches Article XVI:2(a) of the GATS by imposing an impermissible quantitative\nlimitation in the form of a monopoly or exclusive service suppliers must focus on whethe r Russia\nhas demonstrated that the measure at issue is of such a nature that it \"limit [s] to one, or a small\nnumber\", the number of pipeline transport service suppliers in Croatia and Lithuania.\n7.601. We shall start with the unbundling measure in the national implementing law of Croatia\nand will then turn to Lithuania.\nCroatia\n7.602. Russia submits that, while Croatia's Gas Market Act permits the three unbundling models\nand provides procedures for obtaining TSO certification, in reality, however, Croatia has adopted a\n\n1051 See Russia's first written submission, para. 207; and European Union's first written submission,\nparas. 121-122.\n1052 Pursuant to Article XXVIII(h) of the GATS, a \"monopoly supplier of a service\" is \"any person, public\nor private, which in the relevant market of the territory of a Member is authorized or established formally or in\neffect by that Member as the sole supplier of that service\" (emphasis added). Article VIII:5 of the GATS states\nthat \"[t]he provisions of this Article shall also apply to cases of exclusive service suppliers, where a Member,\nformally or in effect, (a) authorizes or establishes a small number of service suppliers and (b) substantially\nprevents competition among those suppliers in its territory\". (emphasis added)\n1053 Appellate Body Report, US – Gambling, para. 230. (emphasis original)\n1054 Appellate Body Report, US – Gambling, para. 236.\n1055 Appellate Body Report, US – Gambling, para. 232.\n1056 Panel Report, China – Electronic Payment Services, paras. 7.592-7.593. We note that the issue\nbefore that panel also involved a determination whether the challenged measures constituted limitations on the\nnumber of service suppliers in the form of a monopoly or an exclusive service supplier within the meaning of\nArticle XVI:2(a) of the GATS.\n1057 Panel Report, China – Electronic Payment Services, para. 7.593.\n\nquantitative limitation in the form of a monopoly or an exclusive service supplier as the Croatian\ngovernment owns and controls both the sole TSO, Plinacro, and the sole gas supplier, HEP.1058\n7.603. The European Union contends that Russia fails to demonstrate how t he unbundling\nmeasure, as implemented in Croatia's Gas Market Act, is of a quantitative nature, in the sense that\nit limits the number of TSOs that can provide pipeline transport services in Croatia. According to\nthe European Union, merely noting that ther e is, at present, only one TSO in Croatia does not\nestablish that the unbundling measure would impose a quantitative limitation on the number of\nservice suppliers in Croatia.1059\n7.604. We recall that the measure at issue is the unbundling measure contained in Croa tia’s 2014\nGas Market Act 1060, namely Articles 14, 15 through 17, and 18 through 22 of that Act\nimplementing the three unbundling models. The question before us is whether Russia has\ndemonstrated that the unbundling measure in Croatia's national law is of suc h a nature that it\nlimits to one, or a small number, the number of pipeline transport service suppliers in Croatia.\n7.605. We turn to Russia's allegation that Plinacro has been established as a monopoly supplier of\npipeline transport services in Croatia. Accordi ng to Russia, by designating Plinacro as the national\nTSO in Croatia for a period of 30 years, \"the Croatian government has 'authorized or established'\nPlinacro 'formally or in effect' as the sole supplier of transmission services ( i.e. as the sole TSO) in\nthe country,\" which, for Russia, constitutes a monopoly supplier of a service prohibited by Article\nXVI:2(a).1061 In support of its allegation that Plinacro is authorized or established \"formally or in\neffect\" as a monopoly supplier of transmission services in Croatia, Russia refers to Article 10 of the\n2007 Gas Market Act which stipulates as follows: \"PLINACRO d.o.o., Zagreb, is appointed gas\ntransmission system operator in the Republic of Croatia for the period of 30 years.\"1062\n7.606. We note, first, that the 2007 Gas Market Act was superseded by the 2014 Gas Market Act\nwhich implemented the unbundling measure of the Directive (Article 112 of Croatia's Gas Market\nAct) and Russia does not explain whether the 2014 Gas Market Act, which implemented the\nunbundling measure, has confirmed the designation of Plinacro as TSO in Croatia.1063 Furthermore,\nArticle 10 of the 2007 Gas Market Act submitted by Russia as evidence merely states that Plinacro\n\"is appointed gas transmission system operator\" in Croatia for 30 years.\n7.607. On its own, and in the absence of any other evidence, this statement does not allow us to\nconclude that no other TSO can be appointed in Croatia and therefore that, as claimed by Russia,\nCroatia maintains \"formally or in effect\" a state -owned monopoly supplie r of pipeline transport\nservices.1064 To us, and we agree with the European Union on this point, the fact that Plinacro is\ncurrently the only supplier of pipeline transport services in Croatia 1065 is not sufficient per se to\nconclude that it has been established as a monopoly supplier of such services.\n7.608. Russia does not explain nor submits evidence as to why, pursuant to the unbundling\nmeasure, other suppliers of pipeline transport services cannot enter the Croatian market. While\nreferring to the provisions in Cro atia's Gas Market Act setting out the three unbundling models,\nRussia does not substantiate why the unbundling measure would be of such a nature that it limits\nto one, or a small number, the number of pipeline transport service suppliers. As explained by t he\n\n1058 Russia's first written submission, paras. 211-212; second written submission, para. 110; and\nopening statement at the second meeting of the Panel, para. 24.\n1059 European Union's first written submission, para. 133; and second written submission, para. 23.\n1060 Croatia's Gas Market Act (Exhibit RUS-45).\n1061 Russia's first written submission, para. 213; and opening statement at the second meeting of the\nPanel, para. 24.\n1062 Russia's response to Panel question No. 54, para. 279 (referring to Croatia's Gas Market Act (2007)\n(Exhibit RUS-152), Article 10).\n1063 The European Union notes that \"with respect to the designation of Plinacro as a TSO, Russia does\nnot refer to any current legislation in force\". (European Union's first written submission, fn 120).\n1064 Russia's first written submission, para. 212.\n1065 The European Union does not contest Russia's argument that Plinacro is currently the only TSO in\nCroatia, but argues that \"[m]erely noting that there is, at present, only one TSO in Croatia does not establish\nthat the unbundling measure would impose a quantitative limitation on the number of service suppliers in\nCroatia\". (European Union's first written submission, para. 133).\n\nAppellate Body, \"[a] prima facie case must be based on 'evidence and legal argument' put forward\nby the complaining party in relation to each of the elements of the claim.\"1066\n7.609. Croatia has implemented the rules on unbundling in the Directive through its Ga s Market\nAct and allows all three unbundling models. We have carefully reviewed the provisions on\nunbundling in Croatia's Gas Market Act 1067, as well as the corresponding provisions under the\nDirective when assessing Russia's claim under Article II:1 of the GATS.1068 We see nothing in these\nprovisions indicating that the unbundling requirement is of such a nature that it limits to one, or a\nsmall number, the number of service suppliers and Russia has not pointed to anything in Croatia's\nlaw which would cause us to reach a different conclusion.\n7.610. We turn to Russia's allegation that Hrvatska elektroprivreda d.d (HEP) acts as a monopoly\nsupplier of pipeline transport services. 1069 Russia refers to HEP as, alternatively, \"the country's\nnatural gas supplier\", a \"monopoly supplie r of pipeline transport supply services\" or \"a monopoly\nsupplier of supply services\". 1070 Based on the evidence provided by Russia, HEP has been\nappointed as a supplier of wholesale services of natural gas until 31 March 2017. 1071 Therefore,\nthis evidence indicates that HEP does not supply pipeline transport services.\n7.611. We recall that Croatia's specific commitments under sector 11.G, \"Pipeline Transport\nServices\", cover transmission of gas through high pressure pipelines and that this sector does not\nencompass wholesale services, nor does it encompass \"supply\" or \"supply services\".1072 Hence, the\nexample of HEP cannot constitute relevant evidence for the purpose of demonstrating that the\nunbundling measure allegedly breaches Article XVI:2(a) with respect to Croatia's specific\ncommitments on \"Pipeline Transport Services\" in sector 11.G of its Schedule. Therefore, we shall\nnot give further consideration to HEP in our assessment of whether Croatia's unbundling measure\nbreaches Article XVI:2(a).1073\n7.612. In view of the foregoing, we find that Russia has not demonstrated that the unbundling\nmeasure in the national implementing law of Croatia imposes an impermissible quantitative\nlimitation on the number of service suppliers in the form of a monopoly or exclusive service\nsuppliers within the meaning of Article XVI:2(a) of the GATS. Hence, we conclude that Russia has\nnot demonstrated that the unbundling measure in the national implementing law of Croatia is\ninconsistent with Article XVI:2(a) of the GATS.\nLithuania\n7.613. Russia submits that, in the context of implementing full ownership unbundling, Lithuania\nadopted a quantitative limitation in the form of a monopoly or an exclusive service supplier.\nAccording to Russia, Lithuania did so by forcing Gazprom and E.ON, who were holding joint\nmajority ownership in Lietuvos, to spin off Amber Grid, the new TSO, and then sell their shares in\nAmber Grid and Lietuvos to the Lithuanian government.1074 According to Russia, while, in theory, it\nwould be possible for a domestic entity to obtain a TSO licence under the Law of Natural Gas, in\neffect, the establishment of another TSO is not possible because Amber Grid was established for\n\n1066 Appellate Body Report, US – Gambling, para. 140. (emphasis original)\n1067 See sections 7.5.2.3 and 7.5.2.4 below.\n1068 See section 7.5.1.3 above.\n1069 Russia's first written submission, paras. 212-213.\n1070 Russia's first written submission, para. 213; and opening statement at the second meeting of the\nPanel, para. 24.\n1071 Decision of the Government of the Republic of Croatia of 3 October 2016 on Appointing the Supplier\non the Wholesale Gas Market, (Exhibit RUS-151). Pursuant to this Decision, \"Hrvatska elektroprivreda d.d.\n[HEP] is hereby appointed supplier on the wholesale gas market\" for the period until 31 March 2017 and its\ntask is to \"sell the gas to suppliers under public service obligation for the purposes of customers in the\nhousehold category, as well as ensure a reliable and secure supply, including the gas import into the Republic\nof Croatia\".\n1072 See paras 7.329-7.331 above.\n1073 For the same reason, we do not address Russia's allegation that \"[a]lternatively, both Plinacro and\nHEP may be viewed as 'exclusive service suppliers'\" evidencing, according to Russia, that Croatia has \"'formally\nor in effect' authorized or established 'a small number of service suppliers', within the meaning of Article VIII:5\nof the GATS and 'substantially prevent[ed] competition among those suppliers in its territory'\". (See Russia's\nfirst written submission, para. 213).\n1074 Russia's first written submission, paras. 215 and 217. See also Russia's response to Panel question\nNo. 167, para. 77.\n\nthe purpose of exclusively owning and operating the transmission grid. Russia further alleges that\nthe Lithuanian government ha s \"authorized or established\" Amber Grid \"formally or in effect\" as\nthe sole supplier of transmission services in Lithuania and Lietuvos duju tiekimas as the sole\nsupplier of \"natural gas supply services\". For Russia, Amber Grid and Lietuvos duju tiekimas may\nbe alternatively viewed as \"exclusive service suppliers\" within the meaning of Article XVI:2(a).1075\n7.614. The European Union replies that Russia's allegations that Gazprom and E.ON were forced\nto sell their shares in Amber Grid and Lietuvos \" are merely speculation\".1076 The European Union\nfurther asserts that Russia does not demonstrate how the unbundling requirement as implemented\nin Lithuania's Law on Natural Gas limits the number of pipeline transport service suppliers to only\none. According to the European Un ion, there are no legal restrictions preventing other entities (be\nthey domestically owned or owned by a third country person) from operating as a TSO a\ntransmission network in Lithuania because Amber Grid has no exclusive right to create or operate\nthe transmission network.1077\n7.615. We recall that the measure at issue is the unbundling measure implemented by Lithuania\nthrough its Law on Natural Gas and its Law Implementing the Law Amending the Law on Natural\nGas (the \"Implementing Law\"). The question before us is whether Russia has demonstrated that\nthe unbundling measure in Lithuania's national implementing law is of such a nature that it limits\nto one, or a small number, the number of pipeline transport service suppliers in Lithuania.\n7.616. Russia submits that Amber Grid has been established as a monopoly supplier of pipeline\ntransport services and that the establishment of another TSO is not possible in Lithuania. 1078 In\nsupport of this allegation, Russia refers to the Certification Opinion by the European Commission\nwith respect to the Lithuanian NRA's draft decision on the certification of Amber Grid as TSO for\ngas (the \"Commission Opinion\") and points to a statement, contained in that Commission Opinion,\nindicating that Amber Grid \"owns and operates the entire gas tra nsmission system of Lithuania\"\nand \"was established for the purpose of exclusively owning and operating the transmission\ngrid\".1079\n7.617. To us, the text of the Commission Opinion highlighted by Russia does raise a doubt as to\nwhether Amber Grid has been establish ed as the sole supplier of pipeline transmission services in\nLithuania. By stating that Amber Grid owns and operates \"the entire\" gas transmission system in\nLithuania and was established \"exclusively\" for that purpose, this text may be read as indicating\nthat no other TSO can provide pipeline transport services in Lithuania.\n7.618. However, we must note that this evidence consists of a narrative of the Commission\nOpinion with no established path showing that it is rooted in a legal text. While Russia further\ncontends that Lithuania's \"Natural Gas Law requires a domestic TSO to own the country's\ntransmission assets\" 1080, Russia does not point to any provision in that Law containing such\n\"requirement\".1081 Russia also submits that \"pursuant to the terms of its licence, [L ithuania's\nState-owned TSO] supplies pipeline transport services in each of Lithuania's ten counties \"1082, but\ndoes not submit any evidence to buttress this allegation. In other words, in the absence of\nevidence rooting the Commission Opinion's narrative in Lithuania's Law on Natural Gas or in any\nother legal document, we feel reluctant to conclude, on the basis of this Commission Opinion's\nnarrative alone, that Amber Grid has been established as a monopoly supplier of pipeline transport\nservices in Lithuania. Moreover, as noted above with respect to Croatia, the fact that there is\n\n1075 Russia's first written submission, paras. 219-220; and second written submission, para. 111.\n1076 European Union's first written submission, para. 134.\n1077 European Union's first written submission, paras. 135-136; and second written submission,\npara. 23.\n1078 Russia's first written submission, para. 219-220; and second written submission, para. 111.\n1079 Commission Opinion of 23 March 2015 pursuant to Article 3(1) of Regulation (EC) No. 715/2009 and\nArticle 10(6) of Directive 2009/73/EC - Lithuania - Amber Grid, C(2015) 2135 final, (Commission Opinion on\nthe Certification of Amber Grid), (Exhibits EU-54/RUS-50), p. 1.\n1080 Russia's second written submission, para. 111.\n1081 We recall that, as explained by the Appellate Body, it is not sufficient for a complaining party to\n\"merely to file an entire piece of legislation and expect a panel to discover, on its own, what relevance the\nvarious provisions may or may not have for a party's legal position.\" (See Appellate Body Report, Canada –\nWheat Exports and Grain Imports, para. 191).\n1082 Russia's second written submission, para. 111.\n\ncurrently only one supplier of pipeline transport services in Lithuania 1083 is not sufficient in and of\nitself to conclude that this supplier has been established as a monopoly supplier of such services.\n7.619. Russia does not explain nor submits evidence as to why, pursuant to the unbundling\nmeasure, other suppliers of pipeline transport services cannot supply pipeline transport services in\nLithuania. While referring to the provi sions in Lithuania's Law on Natural Gas and Law on\nImplementation, Russia does not explain how the OU model is of such a nature that it limits to\none, or a small number, the number of authorized TSOs in Lithuania. As explained by the Appellate\nBody, \"[a] prima facie case must be based on 'evidence and legal argument' put forward by the\ncomplaining party in relation to each of the elements of the claim.\"1084\n7.620. We have carefully reviewed the provisions on unbundling in Lithuania's Law on Natural Gas\nand Implementa tion Law 1085, as well as the corresponding provisions in the Directive when\nassessing Russia's claim under Article II:1 of the GATS .1086 We saw nothing in these rules\nindicating that the unbundling measure implemented in Lithuania is of such a nature that it lim its\nto one, or a small number, the number of service suppliers in Lithuania. Moreover, Russia has not\npointed to anything in Lithuania's law which would cause us to reach a different conclusion. We are\ntherefore unable to conclude that the unbundling measure in Lithuania's national implementing law\nlimits to one the number of service suppliers.\n7.621. We turn to Russia's allegation that Lietuvos duju tiekimas is the sole supplier of \"natural\ngas supply services\". 1087 Russia contends that this \"constitutes a 'monopoly supplier of a service'\nwithin the meaning of Article XXVIII(h) of the GATS\", or \"[a]lternatively, both Amber Grid and\nLietuvos duju tiekimas may be viewed as 'exclusive service suppliers' within the meaning of Article\nXVI:2(a)\".1088 As per Russia's explanati ons, Lietuvos duju tiekimas is a supplier of \"natural gas\nsupply services\" and we recall our conclusion above that natural gas \"supply\" or \"supply services\"\nare not encompassed under sector 11.G, \"Pipeline Transport\" in the Schedule of Lithuania. 1089 We\nfurther note that Russia has submitted no evidence in these proceedings regarding the\nestablishment of Lietuvos duju tiekimas as the alleged monopoly supplier of \"natural gas supply\nservices\". Therefore, we shall not give further consideration to Lietuvos duju tiekimas in our\nassessment of whether Lithuania's unbundling measure breaches Article XVI:2(a) of the GATS.1090\n7.622. In view of the foregoing, we find that Russia has not demonstrated that the unbundling\nmeasure in the national implementing law of Lithuania impos es an impermissible quantitative\nlimitation on the number of service suppliers in the form of a monopoly or exclusive service\nsuppliers within the meaning of Article XVI:2(a) of the GATS. Hence, we conclude that Russia has\nnot demonstrated that the unbundl ing measure in the national implementing law of Lithuania is\ninconsistent with Article XVI:2(a) of the GATS.\n7.5.2.3 Russia's claims under Article XVI:2(e) of the GATS\n7.5.2.3.1 Introduction\n7.623. Russia submits that the unbundling measure in the national implementing laws of Cro atia,\nHungary and Lithuania restrict s or require s specific types of legal entity through which service\nsuppliers of other Members may supply pipeline transport services, contrary to Article XVI:2(e) of\n\n1083 The European Union does not contest Russia's argument that Amber Grid is currently the only\npipeline transport service supplier in Croatia, but argues that Amber Grid has no exclusive right to create or\noperate the transmission network. According to the European Union, an entity may connect new segments of\nthe transmission pipeline (if the infrastructure is compliant with existing infrastructure) and, thus, may operate\nthe transmission system or part thereof. (European Union's first written submission, para. 136).\n1084 Appellate Body Report, US – Gambling, para. 140. (emphasis original)\n1085 See sections 7.5.2.3 and 7.5.2.4 below.\n1086 See section 7.5.1.3 above.\n1087 Russia's first written submission, para. 220.\n1088 Russia's first written submission, para. 220.\n1089 See para. 7.338 above.\n1090 For the same reason, we also decline to address Russia's allegation that \"both Amber Grid and\nLietuvos duju tiekimas may be viewed as 'exclusive service suppliers' within the meaning of Article XVI:2(a).\"\n(Russia's first written submission, para. 220).\n\nthe GATS.1091 The European Union responds that the unbund ling requirement, as implemented in\nthe laws of Croatia, Hungary and Lithuania, is not a measure that falls within the scope of\nArticle XVI:2(e) of the GATS.1092\n7.624. Pursuant to the relevant legal stan dard set out above in paragraphs 7.232 and 7.233, in\norder to make a prima facie case of violation of Article XVI:2(e), Russia is required to demonstrate\nthat:\na. Croatia, Hungary and Lithuania have undertaken market access commitments in their\nrespective GATS Schedules with respect to the sector(s) and mode(s) identified by\nRussia; and that\nb. The unbundling measure in the national implem enting laws of Croatia, Hungary and\nLithuania constitutes an impermissible limitation within the meaning of Article XVI:2(e)\nof the GATS.\n7.625. With respect to the first element, we concluded that Croatia and Lithuania have\nundertaken a full market access commit ment for mode 3 in sector 11.G, \"Pipeline Transport\n[Services]\". We further concluded that, for the same sector and mode, Hungary has undertaken\nnot to maintain any limitation within the meaning of Article XVI:2(e) of the GATS. Nonetheless, in\nthe horizontal section of its Schedule, Hungary has inscribed a limitation stipulating that service\nsuppliers establishing a commercial presence in Hungary \"should take the form of limited liability\ncompany, joint -stock company or representative office\", and \" [i]nitial entry as branch is not\npermitted\". We found that this limitation may have relevance for the purpose of assessing Russia's\nclaim under Article XVI:2(e) of the GATS.1093\n7.626. Accordingly, we turn now to the second element of the legal standard, namely whe ther the\nunbundling measure in the national implementing laws of Croatia, Hungary and Lithuania breaches\nArticle XVI:2(e) of the GATS by impermissibly restricting or requiring specific types of legal entity\nor joint-venture through which a service supplier may supply a service.\n7.5.2.3.2 Analysis by the Panel\n7.5.2.3.2.1 Introduction\n7.627. We note at the outset that this is the first time that Article XVI:2(e) of the GATS is invoked\nin a WTO dispute. Article 3.2 of the DSU directs us to interpret this provision \"in accordance with\ncustomary rules of interpretation of public international law\". In line with the principles of treaty\ninterpretation in Article 31 of the Vienna Convention, we shall interpret Article XVI:2(e) of the\nGATS in accordance with the ordinar y meaning to be given to the terms of this provision in their\ncontext, and in the light of the object and purpose of the GATS and the WTO Agreement. We may\nhave recourse to supplementary means of interpretation in accordance with Article 32 of the\nVienna C onvention to confirm the meaning resulting from the application of Article 31, or to\ndetermine the meaning of the terms if we conclude that the interpretation according to Article 31\nleaves the meaning ambiguous or obscure, or leads to a result that is man ifestly absurd or\nunreasonable.\n7.628. According to Russia, Article XVI:2(e) defines measures as prohibited based on their nature\nor characteristics, and must be interpreted broadly.1094 Russia submits that dictionary definitions of\nthe term \"legal entity\" do not de scribe or in any way restrict how a \"legal entity\" must be formed,\norganized or structured. 1095 Russia further alleges that Article XVI:2(e) broadly prohibits all\nmeasures that restrict the ability of service suppliers to supply services, whether through \"jur idical\npersons\" directly or through other specific \"forms of commercial presence\". 1096 For Russia, this\n\n1091 Russia's first written submission, heading VII.D and para. 178; and second written submission,\npara. 102.\n1092 European Union's first written submission, para. 119.\n1093 See para. 7.360 above.\n1094 Russia's first written submission, para. 154 and heading VII.D.1.a; and second written submission,\npara. 103.\n1095 Russia's first written submission, para. 157.\n1096 Russia's first written submission, para. 176.\n\nprohibition applies to measures that require total divestment of control over the legal entity\nthrough which that service supplier would otherwise supply t he service.1097 Russia urges the Panel\nto reject the interpretation proposed by the European Union because it would , in Russia's view,\ncreate a loophole for Members to enact and implement coercive measures, such as unbundling.1098\n7.629. The European Union distinguishe s the \"existence\" of an entity, as created by law, from\n\"qualitative requirements\" that may be attached to that entity regarding its formation,\norganization or structure. 1099 For the European Union, Article XVI:2(e) prohibits measures that\nrestrict or require specific types of legal entity, but does not cover measures that lay down\ncharacteristics of those types of legal entities and how these entities can do business, for instance\nthe different activities they can or cannot deploy simultaneously.1100\n7.630. We recall t hat, in sectors where specific commitments are undertaken, Article XVI:2(e)\nprohibits – unless they are scheduled – measures which \"restrict or require specific types of legal\nentity or joint venture through which a service supplier may supply a service.\" We understand that\nthe parties' disagreement focuses on the meaning and scope of the terms \"specific types of legal\nentity\" in Article XVI:2(e).\n7.631. The term \"legal entity\" is not defined in the GATS and we start our analysis with its\nordinary meaning. An \"ent ity\" is defined as \"[e]xistence, being, as opp. to non -existence; the\nexistence of a thing as opp. to its qualities or relations\" 1101 or \"an organization (as a business or\ngovernmental unit) that has an identity separate from those of its members\". 1102 The term \"legal\"\nmeans \"[o]f or pertaining to law; falling within the province of law\". 1103 Continuing our textual\nanalysis with the phrase \"specific types of\" which precedes the phrase \"legal entity\", we note that\nthe adjective \"specific\" means \"[c]learly or explicit ly defined; precise, exact; definite\". 1104 The\nnoun \"type\" is defined as \"[a] class of people or things distinguished by common essential\ncharacteristics; a kind, a sort.\"1105\n7.632. Hence, based on the ordinary meaning of relevant terms, Article XVI:2(e) appears to cover\nmeasures which restrict or require clearly defined kinds of organization falling within the province\nof law. Measures falling within the purview of Article XVI:2(e) do not \"restrict or require\" a \"legal\nentity\" itself, but rather, \"restrict or require \" clearly defined kinds of legal entity. Thus, measures\nfalling within the purview of Article XVI:2(e) do not generally restrict a legal entity from doing\nsomething, nor do they require a legal entity to do something. Rather, such measures restrict or\nrequire clearly defined kinds of legal entity through which a service supplier may supply a service.\nTo us, the ordinary meaning of the terms \"specific types of legal entity\" indicates that measures\nfalling within the purview of Article XVI:2(e) concern the legal form of a legal entity.1106\n7.633. The remainder of Article XVI:2(e) refers to \"specific types of … joint -venture\" which\nmeasures falling within the scope of that provision cannot restrict or require. A joint -venture is\ndefined as \"[a] business undertaking by two or more persons engag ed in a single defined\n\n1097 Russia's first written submission, paras. 157 and 176-177; and second written submission,\nparas. 103-104.\n1098 Russia's second written submission, para. 108.\n1099 European Union's first written submission, para. 94.\n1100 European Union's first written submission, paras. 94 and 100; and second written submission,\npara. 11.\n1101 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 1, p. 843.\n1102 Merriam Webster online, at http://www.merriam-webster.com/dictionary/entity, visited on\n14 November 2016.\n1103 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 1, p. 1575.\n1104 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 2944.\n1105 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 3392.\n1106 Japan reaches a similar conclusion. According to Japan, \"[t]he term 'types of legal entity' … can only\nbe properly interpreted as the corporate form of the entity itself … not the broader structure of the group of\ncompanies, or the assignment of ownership or control.\" (See Japan's third-party submission, para. 14; and\nresponse to Panel question No. 9, para. 25). The European Union agrees with the interpretation proposed by\nJapan. (See European Union's second written submission, para. 12).\n\nproject.\"1107 We note that the parties concur that a joint venture could be viewed as a specific type\nof legal entity.1108 Finally, the expression \"through which a service supplier may supply a service\"\nin Article XVI:2(e) indicates, in ou r view, that this limitation concerns primarily the commercial\npresence mode of supply. Hence, nothing in the remainder of Article XVI:2(e) causes us to\nquestion the conclusion reached in the previous paragraph.\n7.634. As observed by both parties, the definition of \"juridical person\" contained in\nArticle XXVIII(l) of the GATS provides relevant context for the interpretation of Article XVI:2(e).\nPursuant to that provision,\n\"juridical person\" means any legal entity duly constituted or otherwise organized\nunder applicable law, whether for profit or otherwise, and whether privately -owned or\ngovernmentally-owned, including any corporation, trust, partnership, joint venture,\nsole proprietorship or association.\n7.635. Both parties concur that, in its latter part, Article XXVIII (l) lists certain \"types of legal\nentity\"1109 and that this list is non-exhaustive, as evidenced by the use of the word \"including\".1110\n7.636. We find it instructive to consider the ordinary meaning of the terms \"corporation\", \"trust\",\n\"partnership\", \"joint venture\", \"sole proprietorship\" or \"association\" in Article XXVIII(l).\n7.637. A \"corporation\" is \"[a]n entity (usu. a business) having authority under law to act as a\nsingle person distinct from the shareholders who own it and having rights to issue stock and exist\nindefinitely.\"1111 A \"trust\" is \"the right, enforceable solely in equity, to the beneficial enjoyment of\nproperty to which another person holds the legal title; a property interest held by one person (the\ntrustee) at the request of another (the settlor) for the be nefit of a third party (the\nbeneficiary).\"1112 A \"partnership\" is a \"voluntary association of two or more persons who jointly\nown and carry on a business for profit.\" 1113 A \"sole proprietorship\" is \"a business in which one\nperson owns all the assets, owes all the liabilities, and operates in his or her personal capacity.\"1114\nAn \"association\" is an \"unincorporated organization that is not a legal entity separate from the\npersons who compose it.\"1115\n7.638. To us, a review of these definitions indicates that the different types of legal entity listed in\na non-exhaustive manner in Article XXVIII(l) are identified by reference to the possible legal form\nthat those entities may take.\n7.639. Article XXVIII(l) also contains other elements which may potentially shed light on the\nterms \"sp ecific types of legal entity\". Turning to the phrase, \"duly constituted or otherwise\norganized under applicable law\", we observe that \"constitute\" is defined as \"make up, go to form\"\nand \"[e]stablish (an institution etc.); give legal form to.\" 1116 \"Duly\" mean s \"[i]n due manner,\n\n1107 Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 915.\n1108 Article XXVIII(l) of the GATS contains the terms \"legal entity\" and \"joint venture\", but, unlike\nArticle XVI:2(e), Article XXVIII(l) does not mention the term \"joint venture\" alongside the term \"legal entity\"\n(or as alternatives). Pursuant to Article XXVIII(l), a joint venture would appear to be a type of legal entity. In\nresponse to a question by the Panel, both parties submit that there is no material difference between the\nconcepts of \"legal entity\" and \"joint venture\" as used in, respectively, Articles XVI:2(e) and XXVIII(l) of the\nGATS. Both parties also consider that a joint venture is a type of legal entity. (See Russia's response to Panel\nquestion No. 88, paras. 387-388; and European Union's response to Panel question No. 88, paras. 225 and\n227). Russia considers that \"joint venture\" \"is of less relevance in this proceeding\". (See Russia's first written\nsubmission, fn 214).\n1109 Russia's first written submission, para. 167; and European Union's first written submission,\npara. 99.\n1110 Russia's response to Panel question No. 88, para. 387; and European Union's second written\nsubmission, para. 13.\n1111 Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 391.\n1112 Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 1647.\n1113 Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 1230.\n1114 Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 1520.\n1115 Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 141.\n1116 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 1, p. 500.\n\norder, form or season; …\". 1117 \"Organized\" is defined as \"[f]ormed into a whole with\ninterdependent parts; coordinated so as to form an orderly structure.\" 1118 To our mind, the\nexpression \"duly constituted or otherwise organized under applica ble law\" conveys the idea that\nthe \"specific types of legal entity\" are established or given legal form, or in another way formed\nunder \"applicable law\", namely under the domestic law applicable in the Member concerned.\n7.640. Turning to the phrase \"whether for p rofit or otherwise, and whether privately -owned or\ngovernmentally-owned\" in Article XXVIII(l), we note that, according to the European Union, these\nelements \"indicate possible characteristics of legal entities\" as opposed to the \"types of\" such\nentities which are found in the latter part of the definition. 1119 Russia does not comment on this\nissue. We can agree with the European Union that terms such as \"for profit or otherwise\", or\n\"privately-owned\" vs. \"governmentally -owned\" may refer to certain characterist ics of a legal\nentity. However, depending on applicable domestic law, we do not exclude that these\ncharacteristics could also relate to the legal form of an entity. We are therefore reluctant to\nendorse in the abstract the categorization proposed by the Eu ropean Union with respect to these\nparticular elements of the definition contained in Article XXVIII(l). In any event, the phrase\n\"whether for profit or otherwise, and whether privately -owned or governmentally -owned\" in\nArticle XXVIII(l) does not cause us to question our analysis so far.\n7.641. Our contextual analysis based on Article XXVIII(l) of the GATS indicates that the legal\nentities listed in a non -exhaustive manner in that provision refer to different types of legal entity\nas distinguished by their legal f orm. Moreover, those legal entities are established or given legal\nform under applicable domestic law in the Member concerned.1120\n7.642. In light of the foregoing, our interpretation of Article XVI:2(e) based on the ordinary\nmeaning of relevant terms read in their context leads us to conclude that measures falling under\nArticle XVI:2(e) restrict or require the legal form of a legal entity through which a service supplier\nmay supply a service under the applicable law of the Member concerned . Such measures do not\ngenerally restrict legal entities from doing something, nor do they require legal entities to do\nsomething. In other words, the phrase \"restrict or require specific types of legal entity\" in\nArticle XVI:2(e) does not cover any measure that may affect a legal entity, either by requiring a\nlegal entity to do something or by restricting a legal entity from doing something. Those \"specific\ntypes of legal entities\" are established or given legal form under applicable domestic law in the\nMember where the service is supplied.1121 The application of Article XVI:2(e) calls for a case -by-\ncase approach and it is up to the complaining Member to show, with reference to applicable\ndomestic law in the Member concerned, that the measure at issue \"restrict[s] or require[s] specifi c\ntypes of legal entity.\"\n7.643. Having reached our conclusion on what is, in our view, the proper scope of\nArticle XVI:2(e), we wish nevertheless to address further arguments presented by Russia on this\nissue to ensure that nothing in these arguments causes us to question our interpretation.\n7.644. While agreeing that the non -exhaustive list in Article XXVIII(l) identifies \"certain types of\n'legal entity' by reference to business or organizational form that a 'juridical person' might\nadopt\"1122, Russia contests the idea t hat Article XVI:2(e) would prohibit only measures that\nexpressly identify the type or types of legal entity that a service supplier may or may not\n\n1117 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 1, p. 776.\n1118 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 2013.\n1119 See European Union's first written submission, para. 99.\n1120 We note Russia's argument that the entries found in the horizontal sections of the Schedules of\nCroatia and Hungary may serve as relevant context for the purpose of interpreting Article XVI:2(e). (Russia's\nfirst written submission, paras. 173-174). In our view, it is not necessary to address this argument in further\ndetail for the purpose of our contextual interpretation. We would like to recall in this regard that, while\nMembers' Schedules are an integral part of the GATS, each Schedule \"has its own intrinsic logic\". (Appellate\nBody Report, US – Gambling, para. 182). While this word of caution by the Appellate Body concerned the use\nof Members' Schedules as context when interpreting an entry in a particular Schedule, it should also be kept in\nmind when interpreting a provision of the GATS.\n1121 To our mind, Members have left themselves a degree of flexibility to articulate, in their respective\njurisdictions, the specific types of legal entity through which service suppliers can supply services under the\nGATS.\n1122 Russia's first written submission, para. 167.\n\nestablish.1123 Based on the alleged \"broad ordinary meaning\" of the term \"legal entity\", Russia\nasserts that using that term to define prohibited measures in Article XVI:2(e) \"should be presumed\nas intending a broad interpretation of the provision.\" 1124 While the term \"legal entity\" may be\nviewed as having a \"broad\" ordinary meaning, we do not believe that this term al one defines the\nscope of Article XVI:2(e) or, in Russia's words, \"defines prohibited measures\" in that provision. To\nus, an important flaw in Russia's proposed interpretation is that, by focusing on the term \"legal\nentity\", Russia fails to give meaning and effect to the terms \"specific types of\" which precedes the\nterm \"legal entity\". However, as underlined by the Appellate Body, \"[o]ne of the corollaries of the\n'general rule of interpretation' … is that interpretation must give meaning and effect to all th e\nterms of the treaty.\"1125\n7.645. Russia also refers to various GATS provisions (e.g., Article XXVIII(d), (g) and (l) and\nfootnote 121126) which, in its view, demonstrate that \"the GATS recognizes various means by which\na 'service supplier (i.e. the juridical person)' (in the words of footnote 12) of one Member may\nsupply services 'through commercial presence' in the territory of another Member – as well as the\nmeans by which that Member may improperly seek to restrict or require the supply of that\nservice.\"1127 For Russi a, \"the various 'forms of commercial presence' are each 'specific types of\nlegal entity', all of which 'shall … be accorded the treatment provided for service suppliers under\nthe Agreement.\"1128 Russia concludes\nMembers can and will distinguish an equally broad range of clearly or explicitly defined\ncommon or essential characteristics (from the definitions of \"specific\" and \"type\") to\napply in seeking to design measures that restrict or require the supply of a service\nthrough commercial presence in their terr itory. In accordance with the express terms\nof Article XVI:2(e), however, absent a properly scheduled limitation, any such\nmeasure is prohibited from restricting or requiring the \"specific types of legal entity\"\n(i.e. \"forms of commercial presence\") throug h which a service supplier may supply\nservices in another Member's territory.1129\n7.646. To us, Russia seems to blend different GATS concepts (\"types of legal entity\", \"forms of\ncommercial presence\", \"service supplier\", \"juridical person\") and this is potentially p roblematic as\nwe do not believe that these concepts are synonymous or can be used interchangeably under the\nGATS. Although, conceivably, the drafters of the GATS could have used the expression \"forms of\ncommercial presence\" in Article XVI:2(e), they chose instead the phrase \"specific types of legal\nentity\". We therefore do not consider it appropriate to use the expressions \"specific types of legal\nentity\" and \"forms of commercial presence\" interchangeably.\n7.647. For Russia, Article XVI:2(e) \"broadly prohibits all measures that restrict the ability of\nservice suppliers to supply services, whether through 'juridical persons' directly or through other\nspecific 'forms of commercial presence'.\" 1130 Russia also argues that Article XVI:2(e) covers\nmeasures \"designed\" to res trict service suppliers from establishing one or more type(s) of legal\nentity, as well as measures that \"have the effect\" of requiring specific types of legal entity by\nrestricting the ability of service suppliers to establish other types without expressly identifying any\nof the entities in question.1131\n7.648. In view of our conclusion above regarding the proper scope of Article XVI:2(e), w e are not\npersuaded by Russia's arguments. We share Japan's concern that, pursuant to Russia's proposed\ninterpretation, any mea sure indirectly resulting in a market access limitation may fall under the\n\n1123 Russia's response to Panel question No. 87, para. 376.\n1124 Russia's first written submission, para. 158.\n1125 Appellate Body Report, US – Gasoline, p. 23, DSR 1996:I, 3, at p. 21.\n1126 These provisions are cited above in paras. 7.432, 7.435, 7.634 and 7.437, respectively.\n1127 Russia's first written submission, paras. 168-170.\n1128 Russia's first written submission, para. 171. See also Russia's response to Panel question No. 87,\npara. 378.\n1129 Russia's first written submission, para. 172 (emphasis original); and second written submission,\npara. 107.\n1130 Russia's first written submission, para. 176. (emphasis original)\n1131 Russia's response to Panel question No. 87, para.381; second written submission, para. 106; and\nopening statement at the second meeting of the Panel, para. 5.\n\nscope of Article XVI:2.1132 Like the European Union 1133, we find it difficult to reconcile Russia's\nproposed interpretation with the case -law under Article XVI:2. We recall that previous panels\nstressed that \"the scope of the market access obligation does not extend generally to 'all measures\naffecting the supply of services'\", but, applies, instead, \"to six carefully defined categories of\nmeasures …\" 1134, which form a closed or exhaustive li st, as indicated in the chapeau of\nArticle XVI:2 which provides that the six measures listed below \"are defined as\". 1135 As explained\nby the panel in Argentina – Financial Services \"the list of measures in the six subparagraphs of\nArticle XVI:2 … also fulfils the function of establishing clearly, exactly and precisely the types of\nlimitation on market access that are prohibited and hence may not be maintained or adopted in\nthose sectors where a Member had adopted specific commitments, unless it has specificall y\nmentioned this possibility in its Schedule. \"1136 We also agree with this panel that \" any\ninterpretation of Article XVI:2 of the GATS must give effect to each of the six subparagraphs of the\nprovision.\"1137\n7.649. Having considered Russia's arguments, we see nothing that causes us to modify the\nconclusion reached above in paragraph 7.642.\n7.650. We find that our interpretation of Article XVI:2(e) is consistent with the object and purpose\nof the GATS as reflected in the preamble of the Agreement, which confirms, inter alia, Members'\nintention to expand trade in services \" under conditions of transparency\" 1138 and underlines \"the\nright of Members to regulate, and to introduce new regulations , on the supply of services … in\norder to meet national policy objectives …\". 1139 As observed by a previous panel, \"Members retain\nthe right to regulate in order to meet their national policy objectives, subject to relevant GATS\ndisciplines, Article VI in par ticular, including in those sectors where they have made specific\ncommitments under Article XVI of the GATS\". 1140 Our interpretation of Article XVI:2(e) respects\nMembers' right to regulate, including in sectors where they have made specific commitments.\n7.651. Our interpretation pursuant to Article 31 of the Vienna Convention does not leave the\nmeaning of those terms ambiguous or obscure, nor does it lead to a result which is manifestly\n\n1132 Japan considers that \"Russia, in this case, improperly attempts to expand this list to include\nmeasures that indirectly result in the market access limitations listed under Article XVI:2.\" (See Japan's third-\nparty submission, para. 2). (emphasis original) This concern is also shared by the European Union which\nconsiders that Russia's proposed interpretation would cover \"any measure that somehow would affect the\npossibility of a service supplier from one WTO Member to provide services through commercial presence in a\nhost WTO Member.\" (See European Union's second written submission, para. 9).\n1133 According to the European Union, Russia's proposed interpretation of Article XVI:2(a) \"ignores past\nWTO jurisprudence that has stressed the exhaustive nature of the list of measures in Article XVI:2, precisely to\nrespect the delicate balance carefully sought by the drafters of the GATS between the right to regulate and the\nprinciple of trade liberalization\". (European Union's second written submission, para. 11 (referring to Panel\nReports, US – Gambling, para. 6.298; China – Publications and Audiovisual Products, para. 7.1353; China –\nElectronic Payment Services, para. 7.629; and Argentina – Financial Services, para. 7.418)). Similarly, for\nJapan, a broad interpretation of Article XVI:2(e) \"would excessively restrict the Members' 'right . . . to\nregulate, and to introduce new regulations, on the supply of services within their territories in order to meet\nnational policy objectives', which is expressly recognized by WTO Members in the fourth recital of the GATS.\"\n(See Japan's third-party submission, para. 5).\n1134 Panel Report, China – Electronic Payment Services, para. 7.652. We also recall that, when\nexamining a claim under Article XVI:2(a) of the GATS, the Appellate Body stated that \"the words 'in the form\nof' [in Article XVI:2(a)] should [not] be ignored or replaced by the words 'that have the effect of'\". (Appellate\nBody Report, US – Gambling, para. 232). This statement indicates, in our view, that, while cautioning that the\nwords used in Article XVI:2(a) (in casu \"in the form of\") should not be read as \"prescribing a rigid mechanical\nformula\", the Appellate Body nonetheless considered that a broad \"effect\" test was inappropriate under this\nprovision. (Ibid. para. 231). While the Appellate Body's pronouncement was made in relation to a particular\nsubparagraph of Article XVI:2, we believe that its gist should equally guide the assessment of other\nsubparagraphs contained in that provision.\n1135 Panel Reports, China – Publications and Audiovisual Products, para. 7.1353; China – Electronic\nPayment Services, para. 7.629 and 7.652; and Argentina – Financial Services, para. 7.418. We note that the\nword \"define\" means \"[d]etermine or indicate the boundary or extent of … Set out precisely, describe or\nexplain the nature, properties, scope, or essential qualities of (a thing or concept)\". (Shorter Oxford English\nDictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 629).\n1136 Panel Report, Argentina – Financial Services, para. 7.418.\n1137 Panel Report, Argentina – Financial Services, para. 7.420.\n1138 Second recital of the GATS preamble.\n1139 Fourth recital of the GATS preamble.\n1140 Panel Report, Argentina – Financial Services, para. 7.423. See also Panel Report, US – Gambling,\nparas. 6.314-6.317.\n\nabsurd or unreasonable. Accordingly, we do not find it necessary to resort to su pplementary\nmeans of interpretation under Article 32 of the Vienna Convention.\n7.5.2.3.2.2 Whether the measures at issue constitute impermissible limitations within\nthe meaning of Article XVI:2(e)\n7.652. Russia claims that the unbundling measure in the national implementing laws of Croatia,\nHungary and Lithuania is inconsistent with Article XVI:2(e) as each unbundling model improperly\nrestricts or requires specific types of legal entity through which service suppliers may supply\ntransmission services.1141\n7.653. The European Union res ponds that the unbundling requirement, as implemented in the\nlaws of Croatia, Hungary and Lithuania, is not a measure that falls within the scope of\nArticle XVI:2(e) of the GATS.1142\n7.654. The question before the Panel is whether Russia has made a prima facie case that the\nunbundling measure implemented in the national laws of Croatia, Hungary and Lithuania breaches\nArticle XVI:2(e) of the GATS by impermissibly restricting or requiring specific types of legal entity\nor joint-venture through which a service supplier may supply a service.\n7.655. We begin our analysis with Russia's claim against the national implementing law of Croatia,\nand will then turn to the national implementing laws of Hungary and Lithuania, respectively.\nCroatia\n7.656. Croatia has implemented the ISO and ITO models, in addition to the OU model.\n7.657. With respect to the OU model, Russia claims that Article 14 of Croatia's Gas Market Act is\ninconsistent with Article XVI:2(e). Russia points to Article 14(1) which stipulates that \"[t]he\ntransmission system operat or must be the owner of the transmission system and shall be\norganized as a legal entity, independently of other activities in the gas sector\". 1143 Hence, Russia\nsubmits that \"Article 14(1) of Croatia's Gas Market Act expressly requires that the TSO be\n'organized as a legal entity', but fundamentally restricts how that legal entity may be\norganized.\"1144\n7.658. The European Union responds that, by merely focusing on the words \"shall be organized as\na legal entity\" in Article 14(1) of Croatia's Gas Market Act, Russia ig nores that the TSO can take\nthe form of any type of legal entity. For the European Union, ownership unbundling in Croatia's law\nmerely requires that the TSO be \"independent of other activities in the gas sector\".1145\n\n1141 Russia's first written submission, paras. 180 (Croatia), 194 (Hungary) and 203 (Lithuania);\nresponse to Panel question No. 5, para. 24; and second written submission, para. 107.\n1142 European Union's first written submission, para. 119.\n1143 Russia's first written submission, paras. 182-183, (referring to Croatia's Gas Market Act (Exhibit\nRUS-45), Article 14(1)).\n1144 Russia's first written submission, para. 183.\n1145 European Union's second written submission, para. 15. We also note the European Union's\nargument that the WTO Working Party on Domestic Regulation has identified measures very similar to the\nunbundling requirement, i.e. prohibition to combine certain activities, as falling within the scope of Article VI:4\nof the GATS and not within the scope of Article XVI. (See European Union's first written submission, para. 100\nand second written submission, para. 13, (referring to Working Party on Domestic Regulation, Informal Note by\nthe Secretariat, \"Examples of measures to be addressed by Disciplines under GATS Article VI:4\",\nJOB(02)/20/Rev.10 (31 January 2005), (Exhibit EU-40))). The two examples cited by the European Union are\n\"[l]icensing is conditional upon the observance of the prohibition for service suppliers in the wholesale\nsubsector to undertake retailing activities simultaneously\" and \"[l]icense is conditional upon the observance of\nthe prohibition for service suppliers acting in the fixed telephony subsector to undertake activities in the mobile\ntelephony subsector simultaneously\". Commenting on the evidence submitted by the European Union, Russia\nreplies that the measures described by the Working Party do not appear to be particularly similar to the\nEuropean Union's unbundling regime and further notes that the Working Party declined to reach any conclusion\nabout the GATS provisions under which the various measures should fall. (See Russia's opening statement at\nthe second meeting of the Panel, para. 19).\n\n7.659. We agree with the European Union that, by merely requiring that a TSO \"shall be\norganized as a legal entity\", Article 14(1) does not restrict or require the legal form through which\na pipeline transport service supplier may supply services in Croatia. To our mind, pursuant to\nArticle 14(1) of Croatia's Gas Market Act, a TSO can take any legal form as long as it is organized\nindependently from other activities in the gas sector. Similarly, merely asserting that a TSO is a\n\"legal entity\"1146 does not amount to a demonstration that the OU model in Artic le 14 of Croatia's\nGas Market Act \"restricts or requires a specific type of legal entity\" within the meaning of\nArticle XVI:2(e). In fact, it rather connotes that no specific type of legal entity is restricted or\nrequired.\n7.660. Russia further points to Article s 14(3)1147 and 14(4)1148 of Croatia's Gas Market Act, but\ndoes not substantiate how these particular provisions allegedly breach Article XVI:2(e).1149\n7.661. We observe that Article 14(3) enforces the independence requirement between, on the one\nhand, the TSO and, on th e other hand, the production or supply undertaking. Pursuant to that\nprovision, the independence of the TSO \"shall be ensured in a manner that prevents the same\nperson or persons to simultaneously perform\" certain activities, including (i) \"directly or ind irectly\ncontrol\" the production or supply undertaking and \"directly or indirectly control or execute other\nrights\" over the TSO; and (ii) \"directly or indirectly control\" the TSO, and \"directly or indirectly\ncontrol or execute other rights\" over the produc tion or supply undertaking. Article 14(4) applies\nthe prohibitions in Article 14(3) to \"the use of voting rights\", \"the right to appoint members of the\nsupervisory board, members of the management board or any other body representing the legal\nentity\" or \" owning a majority s take.\" These two provisions address therefore the combination of\nactivities, including services, that an entity can or cannot carry out simultaneously by preventing\nan entity to control (or \"execute other rights over\") another entity. Th ese provisions, however, do\nnot speak to the legal form of either entity. Hence, we see nothing in Articles 14(3) and 14(4)\nwhich would \"restrict or require specific types of legal entity\" through which a service supplier may\nsupply pipeline transmission services in Croatia.\n7.662. Russia also argues that, \"pursuant to Article 14, a VIU is required to fully divest control (or\nis restricted from acquiring control), including majority ownership, of its TSO.\"1150 Russia argues:\nArticle 14 restricts – to the point of non existence – the specific types of legal entity\nthrough which a foreign VIU may supply transmission services in Croatia. In other\nwords, the service supplier is prohibited from providing transmission services through\n\n1146 Russia's first written submission, para. 183.\n1147 Article 14 is entitled \"Separation of the transmission system and the transmission system operator\".\nArticle 14(3) stipulates that:\nThe independence of the transmission system operator shall be ensured in a manner that\nprevents the same person or persons to simultaneously perform one of the following activities:\n1. directly or indirectly control the energy undertaking performing any of the activities of\nproduction, trade or supply of gas and the activity of the production of natural gas, and directly\nor indirectly control or execute other rights over the transmission system operator or the\ntransmission system,\n2. directly or indirectly control the transmission system operator or the transmission system, and\ndirectly or indirectly control or execute other rights over the energy undertaking performing any\nof the activities of production, trade, supply and the activity of the production of natural gas,\n3. appoint members of the supervisory board, members of the management board or any other\nbody which represents the energy undertaking in case of transmission system operator or the\ntransmission system, and directly or indirectly control or execute other rights over the energy\nundertaking performing any of the activities of production, trade or supply and the activity of the\nproduction of natural gas and\n4. act as a member of the supervisory board, the management board or any other body which\nrepresents the energy undertaking or performs any of the activities of production, trade or\nsupply and the activity of the production of natural gas, transmission system operator or\ntransmission system.\n1148 Article 14(4) stipulates as follows:\nThe prohibitions from paragraph 3 of this Article shall in particular apply to:\n1. the use of voting rights,\n2. the right to appoint members of the supervisory board, members of the management board or\nany other body representing the legal entity or\n3. owning a majority stake.\n1149 Russia's first written submission, para. 182.\n1150 Russia's first written submission, para. 184.\n\nany \"form of commercial presence\" in Cro atia. Similarly, the TSO may not be\ncontrolled, including through majority ownership, by a foreign VIU.1151\n7.663. As noted in paragraph 7.646, the concepts \"specific types of legal entity\" and \"forms of\ncommercial presence\" are not synonymous and cannot be used interchangeably. We also recall our\nconclusion above, in paragraph 7.642, that Article XVI:2(e) covers measures which restrict or\nrequire the legal form a service supplier may take to supply a service under the applicable law of\nthe Member concerned, but does not cover any measure which affects a legal entity, either by\nrequiring a legal entity to do something or by restricting a legal entity from doing something. To\nus, the mere fact that an entity may (or may not) own or control another entity is not sufficient to\nmake the former entity (or the l atter) a \"specific type of legal entity\" within the meaning of\nArticle XVI:2(e) because ownership or control per se does not speak to the legal form of either\nentity.1152 As noted above, Article 14 of Croatia's Gas Market Act restricts the combination of\nactivities, including services, that an entity can or cannot carry out simultaneously in Croatia 1153,\nbut it does not address the legal form of the entities concerned.1154\n7.664. Moreover, if Russia is to be understood as arguing that, by preventing a VIU from\nsupplying c ertain services, the measure at issue indirectly \"restricts the specific type of legal\nentity\" through which such service may be supplied, acceptance of Russia's argument would mean\nin fine that any measure affecting the supply of a service through commerc ial presence could fall\nunder Article XVI:2(e). We explained above why, in our view, Russia's proposed interpretation of\nArticle XVI:2(e) is incorrect. We recall that, as explained by a previous panel, \"the scope of the\nmarket access obligation does not ex tend generally to 'all measures affecting the supply of\nservices'\", but applies \"to six carefully defined categories of measures\". 1155 We also refer to our\nconclusion above that Article XVI:2(e) covers measures which restrict or require the legal form a\nservice supplier may take to supply a service under the applicable law of the Member concerned.\nThus, while a measure restricting the types of service that a service supplier is allowed to supply in\nthe host Member may \"affect trade in services\", it is not, for that reason, a measure falling within\nthe \"carefully defined\" scope of Article XVI:2(e).\n\n1151 Russia's first written submission, para. 184. See also Russia's second written submission, para. 107.\nPursuant to Article 3(55) of Croatia's Gas Market Act, a VIU is \"a gas undertaking or a group of undertakings\nunder the direct or indirect control of the same person or persons and performing at least one of the following\nactivities: transmission of gas, distribution of gas, storage of gas and operating LNG facility and one of the\nfollowing activities: production, trade or supply of gas, or production of natural gas\". (Croatia's Gas Market Act,\n(Exhibit RUS-45), Article 3(55)). We note that Russia does not further substantiate why, in its view, a VIU is a\nspecific type of legal entity within the meaning of Article XVI:2(e). (Russia's first written submission,\npara. 183).\n1152 We note that Japan disagrees with Russia's view that \"measures restricting the vertical structure of\na service supplier (e.g., the structure of a group of companies, or the relationship of ownership or control –\nthrough capital or management – in a group of companies) in the pipeline sector would be prohibited under\nGATS Article XVI:2(e)\". For Japan, Article XVI:2(e) does not address \"the broader structure of the group of\ncompanies, or the assignment of ownership or control.\" (Japan's third-party submission, paras. 13-14; and\nresponse to Panel question No. 9, paras. 24-25. See also European Union's second written submission,\npara. 12).\n1153 We also recall that, as noted above in our assessment of Russia's claim against the unbundling\nmeasure in the Directive, it is not entirely accurate to conclude that the OU model prevents a VIU from\nsupplying its pipeline transport services to the EU market through a commercial presence per se. Rather, we\nfind it more accurate to conclude that the OU model imposes the legal necessity for VIUs to make a choice\nbetween continuing to perform any of the functions of production or supply, on the one hand, or continuing to\nsupply pipeline transport services through commercial presence, on the other hand. However, this choice\nrelates to the combination of services that an entity may or may not supply simultaneously and, for the\nreasons explained above, this kind of measure does not fall within the scope of Article XVI:2(e) of the GATS.\n1154 This view is also shared by Japan:\n[U]nbundling requirements by Croatia, Hungary and Lithuania in this case concern the\ncombination of services (e.g., supply and transmission, or operating and owning) that a group of\ncompanies having a certain vertical structure can provide, regardless of the corporate form of the\nindividual companies themselves. In other words, the unbundling measure s do not restrict the\ncorporate structure of the service supplier. In fact, a s ervice supplier may belong to a VIU as\nlong as the other companies in the same VIU do not engage in the restricted combination of\nservices. (Japan's third -party submission, para. 15; and response to Panel question No. 9,\npara. 26).\n1155 Panel Report, China – Electronic Payment Services, para. 7.652.\n\n7.665. On the basis of the foregoing, we find that Russia has not demonstrated that the OU model\nimplemented in Croatia's national law restricts or requires the \"specific ty pes of legal entity\"\nthrough which a service supplier may supply pipeline transport services in Croatia.\n7.666. Concerning the ISO model, Russia challenges Articles 15 to 17 of Croatia's Gas Market Act.\nRussia's arguments with respect to how these different provi sions violate Article XVI:2(e) are\nsuccinct. Russia refers to the definition of the \"independent system operator\" contained in the Act\non the Regulation of Energy Activities 1156 and argues that, pursuant to that definition, the VIU\nmust \"relinquish control\" of the TSO to the ISO. According to Russia, as per Article 151157, \"the VIU\nis required to arrange a separate legal entity to supply the services through commercial presence\nin the form of an ISO.\"1158\n7.667. We recall that, under the ISO model, the TSO, i.e. the pipel ine transport service supplier,\nis required to undergo ownership unbundling, while the VIU can continue to own the transmission\nsystem.\n7.668. Pursuant to Article 15(3)1 of Croatia's Gas Market Act, the ISO must therefore \"meet[] all\nthe requirements of article 14(3)\" of the same Act. As observed above, the mere requirement that\na legal entity be \"established as an independent company\" does not speak to the legal form of that\nlegal entity.1159 By requiring the VIU to relinquish control of the TSO, this provision sec ures the\nseparation between two entities, namely the VIU – which owns the transmission system – and the\nISO which operates that transmission system, i.e. which supplies pipeline transport services. As\nobserved above with respect to the OU model in Croatia' s Gas Market act, a TSO can take any\nlegal form as long as it is organized independently from other activities in the gas sector; hence,\nthis provision addresses the combination of activities, including services, that an entity can or\ncannot carry out simultaneously. Moreover, the mere fact that an entity may (or may not) own or\ncontrol another entity is not sufficient to make the former entity (or the latter) a \"specific type of\nlegal entity\" within the meaning of Article XVI:2(e) because ownership or cont rol per se does not\nspeak to the legal form of either entity. Thus, Article 15 of Croatia's Gas Market Act is not a\nmeasure restricting or requiring the \"specific types of legal entity\" through which a service supplier\nmay supply a service within the meaning of Article XVI:2(e).\n\n1156 Pursuant to Article 3(7) of the Act on the Regulation of Energy Activities, an ISO is \"an independent\noperator of a transmission/transport system, established as an independent company that carries out the\nactivities of a transmission/transport system operator, whereas the facilities of a transmission/transport\nnetwork remain in the ownership of a vertically integrated undertaking.\" (Croatia's Act on the Regulation of\nEnergy Activities of 25 October 2012, (Croatia's Act on the Regulation of Energy Activities), (Exhibit RUS-46),\nArticle 3(7)).\n1157 Article 15, entitled \"Requirements for designating an independent system operator\", provides as\nfollows:\n(1) Notwithstanding the provisions of Article 14 of this Act, the Agency may, at the proposal of\nthe owner of the transmission system or the Agency, designate an independent system operator.\n(2) The certification of the independent system operator shall be performed by the Agency under\nthe conditions and in the manner prescribed by this Act.\n(3) An independent system operator may be designated only if the following conditions are met:\n1. the proposed operator meets all the requirements of article 14(3) of this Act,\n2. the proposed operator has the financial, material and technical capacity and staff necessary\nfor the performance of its duties,\n3. the proposed operator has undertaken to harmonize its system with the ten-year development\nplan of the transmission system monitored by the Agency,\n4. the proposed operator has p roven its ability to meet obligations as set out in Regulation (EC)\n715/2009 and the ability to establish cooperation with transport system operators at the regional\nand European level, and\n5. the owner of the transmission system has demonstrated its ability to meet the obligations laid\ndown in Article 16(2) of this Act. To this end, all draft agreements with the proposed operator or\nanother competent entity shall be delivered to the Agency.\n1158 Russia's first written submission, para. 186.\n1159 In response to a question by the Panel, Russia, argues that, based on its ordinary meaning, a\n\"company\" \"easily satisfies the definition of 'legal entity' within the meaning of the GATS\". (Russia's response\nto Panel question No. 177(a), para. 75). The European Union considers that the ordinary meaning of that word\nindicates that a company \"takes the form of a particular 'type of legal entity', but is not a specific type of legal\nentity itself, in the sense of Article XVI:2(e) of the GATS.\" (European Union's response to Panel question\nNo. 166(a), paras. 42-44). In our view, referring to a \"company\" as a \"legal entity\" does not necessarily mean\nthat a \"company\" is a \"specific type of legal entity\" within the meaning of Article XVI:2(e) of the GATS.\n\n7.669. We note that Russia does not make any specific argument with respect to Article 16 of\nCroatia's Gas Market Act and we shall therefore refrain from examining this provision.\n7.670. Russia further alleges that Article 17 of Croatia's Gas Market Act contains \"additional\nrestrictions on the form of the legal entity that may provide transmission services\". 1160 Russia\nrefers to Article 17(1) and (2), but does not substantiate what these \"additional restrictions\"\nallegedly entail for the service supplier . We note that Article 17 of Croatia's Gas Market Act lays\nout the rules for the independence of the owner of the transmission system. To us, and as\ndiscussed in mo re detail in paragraphs 7.460 to 7.466 above, the owner of the transmi ssion\nsystem is not a service supplier within the meaning of the GATS. Hence, Russia has not made a\nprima facie case that Article 17 restricts or requires \"specific types of legal entity … through which\na service supplier may supply a service.\"\n7.671. On the bas is of the foregoing, we find that Russia has not demonstrated that the ISO\nmodel implemented in Croatia's national law restricts or requires the \"specific types of legal entity\"\nthrough which a service supplier may supply pipeline transport services in Croatia.\n7.672. With respect to the ITO model , Russia focuses on Article 3(6) of Croatia's Act on the\nRegulation of Energy Activities and on Article 18 of Croatia's Gas Market Act.1161\n7.673. Russia points to the definition of an ITO contained in Article 3(6) of Croatia's Act on the\nRegulation of Energy Activities and argues that the reference to \"an independent company\nseparate from\" the VIU in that definition means that the ITO is \"possibly organized in the form of a\nsubsidiary.\"1162\n7.674. The European Union responds that Article 3(6) does not entail a requirement to use a\nspecific type of legal entity, but only requires that the TSO be \"independent\" and thus \"separate\nfrom a vertically integrated undertaking.\"1163\n7.675. To us, the requirement that the ITO be \"established as an independen t\ntransmission/transport operator from a vertically integrated undertaking\" does not in and of itself\nrestrict or require the legal form that a pipeline transport service supplier may take to supply\nservices in Croatia. The fact that the ITO may be owned b y the VIU does not modify our\nconclusion, since, as noted above, ownership or control per se does not speak to the legal form of\neither entity.\n7.676. We note that, in response to a question by the Panel, both parties consider that a\n\"subsidiary\" is a \"specific t ype of legal entity\" within the meaning of Article XVI:2(e). 1164 The\nparties provide different definitions of the term \"subsidiary\". While Russia focuses on \"control\", the\nEuropean Union puts the emphasis on the fact that the subsidiary has a \"separate legal\npersonality\" from the parent company. However, we are of the view that the mere fact that an\nentity is controlled by another entity or has a separate legal personality , does not speak to the\nlegal form of either entity. Hence, to the extent that these char acteristics would define a\n\n1160 Russia's first written submission, fn 248. Pursuant to Article 17(1), \"the owner of the transmission\nsystem that is a part of the structure of the vertically integrated undertaking shall be independent at least in\nterms of its legal form, organization and decision-making capabilities and shall be independent of other\nactivities not related to the transmission of gas\". Pursuant to Article 17(2), \"[t]he independence of the owner\nof the transmission system referred to in paragraph 1 of this Article shall be secured as follows: 1. persons\nresponsible for the management of the transmission system owner may not participate in structures of the\nvertically integrated entity that are, directly or indirectly, responsible for the daily operation of gas production,\ngas distribution and gas supply\".\n1161 Russia's first written submission, paras. 187-188.\n1162 Russia's first written submission, para. 188 (referring to Article 3(6) of Croatia's Act on the\nRegulation of Energy Activities, (Exhibit RUS-46)). Pursuant to this provision, an ITO is \"an independent\ntransmission/transport operator, established as an independent company separate from a vertically integrated\nundertaking, which may be owned by that undertaking, but has to be equipped with all financial, physical and\nhuman resources necessary for carrying out its activity.\"\n1163 European Union's second written submission, para. 16.\n1164 According to Russia, a \"subsidiary\" is defined as \"[a]n enterprise controlled by another (called the\nparent) through the ownership of greater than 50 per cent of its voting stock\". (Russia's response to Panel\nquestion No. 166(b), para. 76). For the European Union, a subsidiary is \"an entity for which the law determines\nthat it is legally distinct, and thus has a separate legal personality, from the parent entity (e.g. a holding)\".\n(European Union's response to Panel question No. 166(b), para. 45).\n\n\"subsidiary\", they would not be sufficient in and of themselves to find that a subsidiary is a\n\"specific type of legal entity\" within the meaning of Article XVI:2(e). 1165 Moreover, merely alleging\nthat the ITO is \"possibly organized in the form of a subsidiary\" is not enough in and of itself to\nestablish that the ITO is required to take a particular legal form. 1166 Therefore, Russia's\ndemonstration does not reach the level required for us to conclude that Article 2(6) of Croatia's Act\non the Regulation of Energy Activities \"restricts or requires a specific type of legal entity\" within\nthe meaning of Article XVI:2(e).1167\n7.677. Russia further takes issue with Article 18 of Croatia's Gas Market Act (\"Requirements for\ndesignating an independent tran smission operator – assets, equipment, staff and identity\"), in\nparticular Articles 18(4) and (6), which, in Russia's view, restrict the specific types of legal entity\nor forms of commercial presence through which the VIU may supply transmission services i n\nCroatia, contrary to the requirements of Article XVI:2(e). 1168 The European Union responds that\nthis is not a measure within the scope of Article XVI:2(e) because the essence of this requirement\nis that the ITO be \"clearly separated\" from the parent company and any type of legal entity is\npermitted.1169\n7.678. Russia quotes Article 18(4) 1170, but provides limited substantiation for its proposition that\nthis provision restricts or requires \"a specific type of legal entity\" within the meaning of\nArticle XVI:2(e) of the GAT S. We understand that Article 18(4) prevents production or supply\nsubsidiaries in the VIU from having \"ownership interest\" in the TSO. To our mind, this provision\ndoes not speak to the legal form of the TSO.\n7.679. In addition, merely requiring an entity to have a \"special corporate entity, communication,\nbrand name and business premises clearly separating it from the parent company\" (Article\n18(6)1171) does not, in our view, restrict or require the legal form a TSO may take to supply\n\n1165 In fact, the European Union itself considers that the mere requirement that a service supplier (in\ncasu an ITO) be \"separate\" from the parent undertaking is not a measure falling within the scope of\nArticle XVI:2(e). (See European Union's second written submission, para. 15). Hence, we have difficulties\nunderstanding the European Union's position that a \"subsidiary\" is a \"specific type of legal entity\" within the\nmeaning of Article XVI:2(e) on the ground that a subsidiary has a \"separate\" legal personality from the parent\nentity.\n1166 Russia's first written submission, para. 188. We observe that Russia does not point to any provision\nin Croatia's Gas Market Act which would refer to the ITO as a \"subsidiary\".\n1167 We also note that, in response to a question by Russia on the existence, nature and extent of the\nfinancial benefits accruing to a VIU under the ISO and ITO models, the European Union states that \"[t]he ITO\nis a subsidiary of the VIU\". (European Union's response to Russia's question No. 15, para. 8). We understand\nthat this statement by the European Union, made in the context of a discussion concerning the financial\nbenefits accruing to the VIU under the ISO and ITO models, relates to the fact that the VIU owns the ITO, but\ndoes not address the legal form of the ITO. This being said, we note that, on the one hand, the European Union\nasserts that \"the legal form that the entity providing transmission pipeline transport services can take is not\ndisciplined by the Directive under any of the unbundling models\" and that \"any type of legal entity is\npermitted\" under the ITO provisions of Croatia's Gas Market Act and, on the other hand, the European Union\ncontends that \"[t]he ITO is a subsidiary\" and that a \"subsidiary\" is a type of legal entity within the meaning of\nArticle XVI:2(e). (European Union's first written submission, para. 110; second written submission, para. 15;\nresponse to Russia's question No. 15, para. 8; and response to Panel question No. 166(b), para. 45). In any\nevent, these statements by the European Union do not cause us to question our view that, pursuant to the\nlegal test we have developed, Russia has not demonstrated that the provisions of Croatia's Gas Market Act\nspeak to the legal form of the ITO, hence, restrict or require a \"specific type of legal entity\" within the meaning\nof Article XVI:2(e).\n1168 Russia's first written submission, para. 188.\n1169 European Union's second written submission, para. 15.\n1170 Article 18(4) of Croatia's Gas Market Act provides as follows:\n(4) The subsi diaries within the structure of a vertically integrated undertaking performing the\nactivities of gas production and the production of natural gas or gas supply shall not, directly or\nindirectly, have ownership interests in the independent transmission operator.\nThe independent transmission operator shall not, directly or indirectly, have ownership interests\nin a subsidiary within the structure of the vertically integrated undertaking performing activities\nof gas production and natural gas production or gas supply, not shall it have the right to receive\ndividends or other financial benefit from this subsidiary. (Croatia's Gas Market Act, (Exhibit RUS -\n45), Article 18(4)).\n1171 Croatia's Gas Market Act, (Exhibit RUS-45), Article 18(6). This provision stipulates as follows:\nThe independent transmission operator shall have a special corporate identity, communication,\nbrand name and business premises clearly separating it from the parent company in the system\nof the vertically integrated undertaking and not misleading as to the identity of the vertically\n\npipeline transport services in Croatia. As indicated in the second sentence of Article 18(6), this\nprovision enforces a separation requirement between two entities so as to, in fine , \"clearly\ndistinguish the activities or services\" of the ITO from the activities or services of other parts of the\nVIU. Article 18(6) does not speak to the legal form of the ITO.\n7.680. On the basis of the above, we find that Russia has not demonstrated that the ITO model\nimplemented in Croatia's national law restricts or requires the \"specific types of legal entit y\"\nthrough which a service supplier may supply pipeline transport services in Croatia.\n7.681. In light of the foregoing analysis, w e conclude that Russia has not demonstrated that the\nunbundling measure implemented in Croatia's national law is inconsistent with A rticle XVI:2(e) of\nthe GATS.1172\nHungary\n7.682. Hungary has implemented the ISO and ITO models, in addition to the OU model.\n7.683. We must observe at the outset that Russia's arguments in support of its claim that\nHungary's unbundling measure is incompatible with Article XVI:2(e) of the GATS are succinct.\nRussia refers to the provisions in Hungary's Gas Act implementing the three unbundling models,\nwhich, in its view, are \"closely modelled after\", \"similar to\" or \"closely resemble\" the corresponding\nprovisions in the Directive, and concludes that \"[a]s in the case of Croatia, the provisions of\nHungary's law setting forth the respective unbundling models … each restricts or requires specific\ntypes of legal entity\" in a manner inconsistent with Article XVI:2(e). 1173 Russia does not really\nsubstantiate how the provisions in Hungary's Gas Act allegedly breach Article XVI:2(e).1174 We\nmust recall that, as explained by the Appellate Body, it is not sufficient for a complaining party to\n\"merely to file an entire piece of legislation and expect a panel to discover, on its own, what\nrelevance the various provisions may or may not have for a party's legal position.\"1175\n7.684. Concerning the OU m odel, Russia asserts that Section 121/H of Hungary's Gas Act\n\"prohibits a VIU from providing services through any type of legal entity or form of commercial\npresence in Hungary\" 1176, but does not further substantiate its legal position. To the extent that\nRussia's claim with respect to Hungary's implementation of the OU model appears to be based on\nthe same proposition as Russia's claim with respect to the OU model in Croatia's Gas Market Act,\n\nintegrated undertaking or any parts thereof. It may only use signs, designs, names, letters,\nnumbers, shapes and images that clearly distinguish the activities or services of the independent\ntransmission operator from those performed by the vertically integrated undertaking.\n1172 In light of the foregoing, we do not find it necessary to address Russia's argument that, in addition\nto violating Article XVI:2(e), \"the provisions of Croatia's law regarding each unbundling model … do just the\nopposite of what the horizontal limitation requires\". (Russia's first written submission, para. 191, (referring to\nSchedule of Specific Commitments of Croatia, GATS/SC/130 (22 December 2000), (Exhibits EU-16/RUS-37),\np. 2). We also note that Russia does not point to any provision in Croatia's Gas Market Act which would refer to\nTSOs as \"branch offices\" and does not explain whether, pursuant to Croatian law, TSOs should be viewed as\n\"branch offices\".\n1173 Russia's first written submission, paras. 192 and 194. See also Russia's second written submission,\npara. 107.\n1174 Russia also refers to two TSO supplying transmission services in Hungary, namely FGSZ\nFöldgázszállító Zártköruen Muködo Részvénytársaság (FGSZ) and MOL Magyar Olaj-és Gázipari Nyrt (MOL).\n(See Russia's first written submission, para. 193) Beyond asserting that FGSZ and MOL are a \"type of legal\nentity\" and a \"service supplier\" (Russia's first written submission, para. 194). Russia does not further explain\nthe relevance of these two examples for its claim that the unbundling measure in Hungary's national\nimplementing law is incompatible with Article XVI:2(e) of the GATS.\n1175 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 191.\n1176 Russia's first written submission, para. 194 (referring to Hungary's Gas Act, (Exhibits EU-155/RUS-\n47)). We note that Section 121/H, while using a different wording, implements essentially the same\nrequirement as Article 14 of Croatia's Gas Market Act discussed above. In particular, paragraph (1)(b) of\nSection 121/H of Hungary's Gas act states as follows:\nthe same person or persons are entitled neither: ba) directly or indirectly to exercise control over\na company performing any of the functions of production or supply, and directly or indirectly to\nexercise control or exercise any right over a transmission system operator or over a transmission\nsystem, nor bb) directly or indirectly to exercise control over a transmission system operator or\nover a transmission system, and directly or indirectly to exercise control or exercise any right\nover a company performing any of the functions of production or supply of natural gas.\nHungary's Gas Act, (Exhibits EU-155/RUS-47), Section 121/H).\n\nwe refer to our discussion above, in particular in paragraphs 7.663 and 7.664, which, in our view\nis similarly relevant for the OU model in Hungary's Gas Act. This also leads us to conclude that\nRussia has not demonstrated that the OU model implemented in Hungary's Gas Act is inconsistent\nwith Article XVI:2(e) of the GATS.\n7.685. Russia claims that the ISO model in Section 121/I of Hungary's Gas Act \"requires that the\nservices be supplied through an independent legal entity in the form of an ISO separate from the\nVIU, and also restrict (or requires) the specific types of legal entity permitted\". 1177 Russia does not\nfurther substantiate how the text of S ection 121/I supports its legal position that the ISO model is\ninconsistent with Article XVI:2(e).\n7.686. We recall that, under the ISO model, the TSO, i.e. the pipeline transport service supplier,\nis required to undergo ownership unbundling, while the VIU can c ontinue to own the transmission\nsystem. Accordingly, pursuant to Section 121/I(1)a) of Hungary's Gas Act, the ISO must \"meet the\nrequirements set out in Paragraphs b), c) and d) of Subsection (1) of Section 121/H.\" 1178 We\ntherefore refer to our finding with r espect to Section 121/H of Hungary's Gas Act above, and also\nrecall our discussion and conclusion above concerning the ISO provisions in Croatia's Gas Market\nAct.\n7.687. To us, the requirement, in Section 121/I(1)a) of Hungary's Gas Act, that the ISO be an\n\"independent legal entity… separate from the VIU\" does not in and of itself speak to the legal form\nof the ISO. Thus, Russia has not demonstrated that the ISO model in Hungary's Gas Act is\ninconsistent with Article XVI:2(e) of the GATS.\n7.688. With respect to the ITO model, Russia argues that \" the ITO provisions in Sections 121/B -\n121/G impose unwarranted restrictions on the types of legal entity by requiring that a VIU supply\nservices through a separate subsidiary or other form of commercial presence in the form o f an\nITO.\"1179 Russia does not further substantiate how the text of Sections 121/B -121/G supports its\nlegal position. Referring in particular t o our observations in paragraph 7.676 above, we consider\nthat an allegation that services are required to be supplied \"through a separate subsidiary or other\nform of commercial presence\" is not sufficient in and of itself to show that a measure restricts or\nrequires a specific t ype of legal entity within the meaning of Article XVI:2(e). In response to a\nquestion by the Panel1180, Russia further explains that \"[t]here is no provision in Hungary’s Gas Act\nthat expressly requires a VIU, when adopting the ITO model, to supply its pipeli ne transport\nservices through a separate 'subsidiary'.\" 1181 Hence, Russia's response to our question appears to\ncontradict Russia's assertions in its first written submission.1182\n7.689. Furthermore, in response to the same question by the Panel, Russia submits that it \"should\nalso have identified Section 117(1) of the Gas Act\" 1183 which, in Russia's view, \"expressly restricts\nthe specific types of legal entity through which a service supplier may supply its pipeline transport\nservices in the form of an ITO in Hungary.\"1184\n7.690. We have difficulties following Russia's allegations under this claim. Section 117(1), for\nwhich Russia now appears to make an allegation of incompatibility, was identified in response to a\nquestion by the Panel concerning other provisions of Hungary's Gas Act. We also note that this\n\n1177 Russia's first written submission, para. 194, (referring to Hungary's Gas Act, (Exhibits EU-155/RUS-\n47)).\n1178 Hungary's Gas Act, (Exhibits EU-155/RUS-47), Section 121/I.\n1179 Russia's first written submission, para. 194, (referring to Hungary's Gas Act, (Exhibits EU-155/RUS-\n47)). We note, like Russia, that the term \"Independent Transmission Operator\" or \"ITO\" does not appear in the\nGas Act, which uses instead the terms the \"transmission system operator\" or \"transmission system operator\nmember,\" including in the ITO provisions. (See Russia's response to Panel question No. 165, para. 68). We do\nnot consider, however, that this different wording has a material impact on our assessment of Russia's claim\nand the parties do not argue otherwise.\n1180 Panel question No. 165 to Russia, (referring to Russia's first written submission, para. 194).\n1181 Russia's response to Panel question No. 165, para. 68.\n1182 Russia's first written submission, para. 194; and second written submission, para. 107.\n1183 Russia's response to Panel question No. 165, para. 69, (referring to Hungary's Gas Act, (Exhibits\nEU-155/RUS-47), pp. 37-38). Section 117(1) stipulates in relevant parts: \"The transmission system operator\nshall function as a business association operating in the form of a limited company\". This provision is contained\nin Chapter VI (\"Authorization Procedures\") of Hungary's Gas Act, (Exhibits EU-155/RUS-47).\n1184 Russia's response to Panel question No. 165, para. 73, (referring to Hungary's Gas Act, (Exhibits\nEU-155/RUS-47)), pp. 37-38.\n\nnew allegation comes at a late stage in these proceedings. 1185 Furthermore, Section 117(1) is\ncontained in Chapter VI (\"Authorization Procedures\") of Hungary's Gas Act and Russia does not\nexplain how this Section implements the ITO model (or any other model) . Finally, Russia also\nasserts that Section 117(1) is \"consistent with\" Hungary's horizontal market access limitation\ninscribed in its Schedule. 1186 We would agree with the European Union that, by arguing that\nSection 117(1) is \"consistent\" with that horizontal limitation, Russia seems to acknowledge that\nthis provision is not inconsistent with Article XVI:2(e).1187\n7.691. In light of the foregoing, we find th at Russia has not demonstrated that the ITO model in\nHungary's Gas Act is inconsistent with Article XVI:2(e) of the GATS.\n7.692. We therefore conclude that Russia has not demonstrated that the unbundling measure\nimplemented in Hungary's national law is inconsistent with Article XVI:2(e) of the GATS.1188\nLithuania\n7.693. We recall that Lithuania has implemented only the OU model.\n7.694. Russia challenges Articles 40 to 43 in Chapter 8 (\"Unbundling of activities and accounts\")\nof the Law on Natural Gas 1189 implementing the OU model . Ru ssia refers to Article 40(1)\n(\"Activities subject to unbundling\") which provides for the obligation to separate the activities of\ngas production and supply from transmission 1190, Article 41 (\"Unauthorized control\"), in particular\nArticle 41(1)1191 and 41(4).1192 Russia also takes issue with an alleged \"additional requirement not\nfound in the Directive\" and contained in Article 41(2) of the Law on Natural Gas. 1193 According to\nRussia, this provision \"expressly prohibits any third -country undertaking that supplies natura l gas\n\n1185 Russia made this allegation in response to a question by the Panel after the second substantive\nmeeting.\n1186 Russia's response to Panel question No. 165, para. 71, (referring to Hungary's horizontal limitation\nstipulating in relevant parts that \"[c]ommercial presence should take the form of limited liability company,\njoint-stock company or representative office …\". (See Schedule of Specific Commitments of Hungary,\nGATS/SC/40 (15 April 1994), (Exhibits EU-17/RUS- 36), p. 1)).\n1187 European Union's comments on Russia's response to Panel question No. 165, para. 30.\n1188 Consequently, we do not consider it necessary to assess the relevance for that measure of the\nmarket access limitation inscribed in the horizontal part of Hungary's Schedule. (See, above para. 7.360).\n1189 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev).\n1190 Pursuant to Article 40(1) of the Lithuania's Law on Natural Gas, (Exhibit RUS-136rev): \"The\nactivities of natural gas transmission carried out in the Republic of Lithuania must be separated from the\nactivities of natural gas production and supply by separating the assets of a transmission system and/or a\ntransmission system operator from natural gas undertakings engaged in the activities of production and/or\nsupply.\".\n1191 Pursuant to Article 41(1) of Lithuania's Law on Natural Gas, (Exhibit RUS-136rev):\n1. The same person or persons shall not be entitled:\n1) directly or indirectly to exercise control over a production or supply undertak ing and, at the\nsame time, exercise direct or indirect control or any control or management right over a\ntransmission system operator or transmission system;\n2) directly or indirectly to exercise control over a transmission system operator or transmission\nsystem and, at the same time, exercise direct or indirect control or any control or management\nright over a production or supply undertaking;\n3) to appoint members of the supervisory board or the board of a transmission system operator\nor bodies representing an undertaking and, at the same time, exercise direct or indirect control\nor any control or management right over a production or supply undertaking.\n1192 Pursuant to Article 41(4) of the Law on Natural Gas (which Russia erroneously refers to as\nArticle 41(3) in para. 199 of its first written submission):\nThe rights referred to in paragraphs 1 and 2 of this Article shall include, in particular:\n1) the power to exercise voting rights;\n2) the power to appoint members of supervisory bodies, administrative bodies and other\nbodies legally representing the undertaking;\n3) the management and holding of a majority share.\n1193 Russia's first written submission, para. 198. Article 41(2) of the Law on Natural Gas reads as\nfollows: \"A undertaking performing any of the functions of production or supply in any other country whose\ntransmission system is connected to the natural gas transmission system of the Republic of Lithuania shall not\nbe entitled directly or indirectly to exercise control or exercise any right over a transmission system operator\".\n\nto Lithuania via a connection between the two countries' transmission systems (i.e. via pipelines)\nfrom any possibility of exercising control or any right over the TSO in Lithuania.\"1194\n7.695. The European Union submits that Article 41(2) is not an additiona l requirement but merely\nspecifies what is already the case under the Directive, namely that the prohibition established\nunder Article 41(1) is also applicable in cases where the undertakings perform the respective\nproduction or supply activities in any other countries which are interconnected with Lithuania.1195\n7.696. Turning to this last issue first, we consider that, as Russia's challenge under\nArticle XVI:2(e) is directed against Lithuania's Law on Natural Gas, the question whether\nArticle 41(2) is \"an additional requirement\" not contained in the Directive is not pertinent. Our task\nis to assess the compatibility of Lithuania's Law with Article XVI:2(e), not the compatibility of that\nLaw with the Directive.\n7.697. According to Russia, \"[i]n terms of Article XVI:2(e), Lithuanian law restricts – to the point\nof nonexistence – the specific types of legal entity through which a foreign VIU may supply\ntransmission services in Lithuania.\"1196 While Russia provides limited su bstantiation for its legal\nposition, we understand nonetheless that the gist of Russia's arguments concerning the OU model\nimplemented in Lithuania's Law on Natural Gas is similar to that underlying its claims against the\nOU model implemented by Croatia and Hungary.\n7.698. We observe that Article 40 of Lithuania's Law on Natural Gas calls for \"separating the\nassets\" of a TSO from undertakings engaged in production and/or supply. Article 41(1) provides\nthat the \"same person or persons\" may not exercise control ove r a production or supply\nundertaking and, at the same time, exercise control or management rights over a TSO (and vice-\nversa). Article 41(2) contains the same type of requirement as Article 41(1), with the added\nclarification that prohibition for a product ion or supply undertaking to \"directly or indirectly\nexercise control or exercise any right\" over a TSO shall also apply in cases where such undertaking\nis situated in \"any other country whose transmission system\" is connected with Lithuania's natural\ngas transmission system. Article 41(4) further specifies the \"rights\" that \"the same person or\npersons\" shall not be entitled to exercise pursuant to Articles 41(1) and 41(2).\n7.699. To us, the OU model implemented in Lithuania's national law calls for the same analy sis as\nthat made with respect to the OU model implemented in the national laws of Croatia and Hungary\nand we therefore refer to our discussion above, in particular paragraphs 7.663 and 7.664. This\nalso leads us to conclude that Russia has not demonstrated that the OU model implemented in\nLithuania's Law on Natural Gas is inconsistent with Article XVI:2(e) of the GATS.\n7.700. Russia further refers to the Law on Implementation 1197, in particular the two procedures\navailable for complying with the unbundling requirement, namely the \"reform of control\" procedure\n(Article 3) and the \"reo rganisation\" procedure (Article 4). 1198 Russia argues that Article 3(1)\n\"appears to require that the VIU divest ownership of its TSO\". 1199 We fail to see, and Russia does\n\n1194 Russia's first written submission, para. 198.\n1195 European Union's first written submission, para. 114; and second written submission, paras. 17-18.\n1196 Russia's first written submission, para. 203; and second written submission, para. 107.\n1197 Lithuania's Law on Implementation, (Exhibit RUS-22).\n1198 Russia does not develop specific arguments with respect to Article 4 of Lithuania's Law on\nImplementation.\n1199 Russia's first written submission, para. 200. Article 3(1) of Lithuania's Law on Implementation\nstipulates as follows:\nIn order to achieve compliance with the requirements of Chapter Eight \"Unbundling of Activities\nand Accounts\" of the Law on Natural Gas, non -compliant natural Gas undertakings may see\ncompliance with the requirements of Chapter Eight \"Unbundling of Activities and Accounts\" of the\nLaw on Natural Gas by reforming the control of an undertaking on their own initiative. Reforming\nof control of the natural gas undertaking shall be effected through transactions (transfer of\nassets or shares, assignment of rights, transfer of shareholders' rights, shareholders agreement,\nincreasing or decreasing of the authorised capital or any other) made in accordance with the\nprocedure established in paragraph 2 of this Article. (Lithuania's Law on Implementation (Exhibit\nRUS-22), Article 3(1))\n\nnot further substantiate, how and why an alleged requirement to divest restricts or require s\n\"specific types of legal entity\" within the meaning of Article XVI:2(e).1200\n7.701. In light of the foregoing, we conclude that Russia has not demonstrated that the\nunbundling measure implemented in Lithuania's national law is inconsistent with Article XVI:2(e) of\nthe GATS.\n7.5.2.4 Russia's claims under Article XVI:2(f) of the GATS\n7.5.2.4.1 Introduction\n7.702. Russia submits that the national implementing laws of Croatia, Hungary and Lithuania set\nforth formal limitations on the participation of foreign capital relating to TSOs within th e meaning\nof Article XVI:2(f), in contradiction with the mode 3 market access commitments undertaken by\nthese three Members under sector 11.G in their respective Schedules.1201\n7.703. The text and legal standard to establish a violation under any of the six subparag raphs\ncontained in Article XVI:2 of the GATS are set out in paragraph s 7.232 and 7.233 above. Pursuant\nto that legal standard, in order to establish a prima facie case of violation of Article XVI:2(f) of the\nGATS, Russia is required to demonstrate that:\na. Croatia, Hungary and Lithuania have undertaken market access commitments i n their\nrespective GATS Schedules with respect to the sector(s) and mode(s) identified by\nRussia; and that\nb. The unbundling measure in the national implementing laws of Croatia, Hungary and\nLithuania constitutes an impermissible limitation within the meaning of Article XVI:2(f).\n7.704. We concluded, in paragraph 7.360 above, that Croatia and Lithuania have undertaken a\nfull market access commitment for mode 3 under sector 11.G, \"Pipeline Transport [Services]\" , and\nthat Hungary has undertaken not to maintai n any limitation pursuant to Article XVI:2(f) of the\nGATS for mode 3 in that same sector. Accordingly, we turn now to the second element of the legal\nstandard, namely whether Russia has demonstrated that the unbundling measure in the national\nimplementing laws of Croatia, Hungary and Lithuania constitutes an impermissible limitation on\nthe participation of foreign capital within the meaning of Article XVI:2(f) of the GATS.\n7.5.2.4.2 Analysis by the Panel\n7.705. Russia claims that the unbundling rule in each of the implement ing laws of Croatia,\nHungary and Lithuania expressly prohibits a supply undertaking from owning a majority share in\nthe TSO or transmission system. According to Russia, a limitation on the ability of investors to hold\nmajority ownership is the same as a \"m aximum percentage of capital that can be held\". 1202 Russia\nalso submits that Article XVI:2(f) does not forbid measures containing majority ownership\nprohibitions that apply only to foreign capital investment, but forbids any and all measures\n\n1200 In relation to its allegation concerning Article 3 of Lithuania's Law on Implementation, Russia also\nexplains that Gazprom, which used to own 37.1 % of the shares in the VIU Lietuvos dujos, formerly\nresponsible for supplying the Lithuanian market with natural gas, sold its share in the new TSO Amber Grid to\nthe Lithuanian Ministry of Energy following enactment of the unbundling measure in Lithuania. According to\nRussia, while a VIU may choose between two OU methods set out in Articles 3 and 4 of the Law on\nImplementation, in reality, the \"example demonstrates\" that Gazprom, was required \"to fully divest\" its shares.\n(See Russia's first written submission, paras. 201-203). The European Union considers that Russia engages in\nspeculations in respect of Lietuvos' decision when seeking to comply with the unbundling requirement in\nLithuania's law. In particular, according to the European Union, there were no circumstances or conditions\nwhich may have forced Lietuvos' shareholders to sell their shares in Lietuvos dujos. (See European Union's first\nwritten submission, paras. 115-118). In our view, these facts are not relevant for the purpose of assessing\nRussia's claim against the unbundling measure implemented in Lithuania's national law under Article XVI:2(e).\n1201 Russia's first written submission, para. 224; and second written submission, para. 113.\n1202 Russia's first written submission, paras. 221 and 223; opening statement at the first meeting of the\nPanel, para. 13; second written submission, paras. 112-113; and opening statement at the second meeting of\nthe Panel, para. 30.\n\nimposing majority ownership prohibitions on foreign capital investment, including measures that\nalso impose majority ownership prohibitions on domestic investment.1203\n7.706. The European Union argues that measures prohibited under Article XVI:2(f) of the GATS\nare essentially of a q uantitative nature and must impose a quantitative maximum ceiling for\nforeign investment in order to fall within the scope of that provision. 1204 According to the European\nUnion, prohibited limitations must specifically target foreign investment, which means that\nmeasures which apply without distinction to domestic and foreign investment are not covered by\nsub-paragraph (f).1205 The European Union submits that the Croatian, Hungarian and Lithuanian\nmeasures challenged by Russia are not covered by Article XVI:2(f) because they apply without\ndistinction to domestic and foreign investment.1206\n7.707. We recall that Article XVI:2(f) of the GATS applies to \"limitations on the participation of\nforeign capital in terms of maximum percentage limit on foreign share-holding or the total value of\nindividual or aggregate foreign investment .\" To our mind, a measure must fulfil two conditions in\norder to constitute an impermissible limitation within the meaning of Article XVI:2(f) of the GATS.\nFirst, the measure must be a limitation on th e \"participation of foreign capital .\" Second, and as\nobserved by a previous panel, the measure must take one of the two forms provided for in that\nprovision, namely (i) a maximum percentage of capital that can be held by foreign investors; or\n(ii) a total value of foreign investment, either by an individual investor or foreign investors as a\nwhole.1207\n7.708. We turn to the first question, namely whether the measures at issue amount to a limitation\non the \"participation of foreign capital\" within the meaning of Artic le XVI:2(f) of the GATS . If we\nfind that the measures at issue meet this first condition, we shall then examine whether those\nmeasures take one of the two forms provided for in that provision.\n7.5.2.4.2.1 Whether the measures at issue limit \"the participation of foreign capital\"\n7.709. The European Union argues Article XVI:2(f) is specifically concerned with limitations tied to\nthe fact that the capital originates outside the Member adopting the limitation. 1208 In contrast,\nRussia posits that Article XVI:2(f) forbids any and all measures that impose majority ownership\nprohibitions on foreign capital, and considers the fact that the measure also forbids domestic\nmajority ownership irrelevant.1209\n7.710. The issue before the Panel is therefore whether Article XVI:2(f) prohibits limitations on the\nparticipation of foreign capital due to the foreign origin of the capital or whether this provision\nencompasses any limitation on capital participation, regardless of the origin (domestic or foreign)\nof the capital. This is a novel issue for which no previous panel or Appellate Body guidance exists.\n7.711. We turn to the text of Article XVI:2(f) and observe that the \"capital\", the participation of\nwhich is subject to a limitation is preceded by the word \"foreign\". Moreover, the two forms which a\nmeasure falling under this provision may take are also qualified by the word \"foreign\" (\"foreign\nshare-holding\" and \"foreign investment\"). Consistent with the principle of effective treaty\ninterpretation, the word \"foreign\", which is used three times in Article XVI: 2(f), must be given\nmeaning and effect.1210\n\n1203 Russia's second written submission, para. 116.\n1204 European Union's first written submission, para. 143.\n1205 European Union's first written submission, para. 144; and second written submission, paras. 26-27.\nThis view is shared by Japan which submitted that the use of the term \"foreign\" to qualify \"capital\" clearly\nindicates that this provision does not cover all limitations on capital participation, but specifically concerns\nlimitations tied to the origin of the capital and, more particularly, to the fact that the capital originates outside\nthe Member adopting the limitation. (Japan's third-party submission, para. 18; and response to Panel question\nNo. 10, para. 28).\n1206 European Union's first written submission, paras. 147-154.\n1207 Panel Report, China – Publications and Audiovisual Products, para. 7.1360.\n1208 European Union's second written submission, para. 26.\n1209 Russia's second written submission, para. 116.\n1210 According to the Appellate Body:\nOne of the corollaries of the 'general rule of interpretation' in the Vienna Convention is that\ninterpretation must give meaning and effect to all the terms of the treaty. An interpreter is not free to adopt a\n\n7.712. The ordinary meaning of \"foreign\" is \"[b]elonging to, coming from, or characteristic of,\nanother country or nation\". 1211 The ordinary meaning of the word \"foreign\" indicates that\nArticle XVI:2(f) covers limitation s on the participation of capital \"belonging to\", or \"coming from\"\nanother country or nation. Similarly, the share -holding whose maximum percentage level may be\nlimited, as well as the individual or aggregate investment whose total value may also be limited\nwithin the meaning of Article XVI:2(f) \"belongs to\" or \"comes from\" another country or nation. The\nparties concur that limitations targeting foreign capital due to its foreign origin fall under the scope\nof this provision. Parties disagree, however, on wheth er Article XVI:2(f) also encompasses\nlimitations applying without distinction to domestic and foreign investment.\n7.713. Turning to the context of Article XVI:2(f), which includes the rest of Article XVI:2, we note\nthat the word \"foreign\" is absent from the other five limitations listed in Article XVI:2. The fact that\nthese provisions are drafted in an origin -neutral manner suggests that they apply to the listed\nlimitations regardless of the origin of services and service suppliers. We note that this\ninterpretation was endorsed by a previous panel. 1212 To us, the fact that subparagraphs (a) to (e)\nare drafted in an origin -neutral manner and cover limitations applying to both foreign and\ndomestic services and service suppliers supports the view that the explicit origi n-based distinction\nfound in subparagraph (f) indicates that, in contrast, this provision encompasses limitations on the\nparticipation of foreign capital due to the foreign origin of the capital . In other words, if the\ndrafters of the GATS had intended Art icle XVI:2(f) to cover discriminatory and non -discriminatory\ncapital limitations, they would not have inserted the word \"foreign\" in Article XVI:2(f).\n7.714. In response to a question by the Panel seeking Russia's view on the fact that only\nArticle XVI:2(f) contains the word \"foreign\" (three times) while the other five sub -paragraphs are\norigin-neutral, Russia submits that the reference to joint-ventures in Article XVI:2(e) indicates that\nthis provision is also inherently discriminatory as, according to Russia, th is business form is very\nlikely applicable only to foreign service suppliers. 1213 Russia also argues that the words\n\"monopolies\" and \"exclusive service suppliers\" in Article XVI:2(a) are not necessarily origin-neutral\nbecause, according to Russia, it does not seem likely that a Member would establish a foreign\nperson as a monopoly service supplier or exclusive service supplier in its territory.1214\n7.715. We do not find Russia's arguments entirely convincing. While in practice, joint -ventures\nmay often refer to an asso ciation between a domestic and a foreign firm, and monopolies and\nexclusive service suppliers may tend to be of domestic origin, none of these concepts is \"expressly\ndiscriminatory\". The ordinary meaning of \"joint -venture\"1215 indicates that this term tends t o be\norigin-neutral and, therefore, can also refer to an association between two domestic firms. Also, in\npractice, nothing would prevent a monopoly and/or exclusive service suppliers from being of\nforeign origin.1216 The fact that these situations may be les s frequent or even uncommon does not\ncontradict the view that, on their face, these provisions are origin -neutral, contrary to\nsubparagraph (f) which is \"expressly discriminatory\".1217\n7.716. We also recall that, as evidenced by the terms \"are defined as\" in the chapeau of\nArticle XVI:2, this provision contains a closed or exhaustive list of measures which, unless\nscheduled, shall not be maintained or applied in sectors and modes where market access\n\nreading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.\n(Appellate Body Report, US – Gasoline, p. 23, DSR 1996:I, 3, at p. 21).\n1211 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 1, p. 1015.\n1212 The panel in China – Electronic Payment Services found that \"the wording of the quantitative\nmeasures described in subparagraphs (a)-(d) contains nothing that would suggest that measures having\ndiscriminatory aspects are for this reason excluded\", thus indicating that those provisions encompass non-\ndiscriminatory limitations. (Panel Report, China – Electronic Payment Services, para. 7.654).\n1213 Russia's response to Panel question No. 89, para. 392 (referring Panel Report in China – Electronic\n1214 Russia's response to Panel question No. 89, paras. 393-394.\n1215 A \"joint venture\" is defined as \"[a] business undertaking by two or more persons engaged in a\nsingle defined project\" (Black's Law Dictionary, 9th ed., B.A. Garner (ed.) (West Group, 2009), p. 915).\n1216 The GATS definitions of \"monopoly supplier of a service\" (Article XXVIII(h) of the GATS) and\n\"exclusive service suppliers\" (Article VIII:5 of the GATS) do not make any reference to the origin (domestic or\nforeign) of those suppliers.\n1217 As observed by the panel in China – Electronic Payment Services, \"subparagraph (f) … is expressly\ndiscriminatory\". (Panel Report, China – Electronic Payment Services, para. 7.653).\n\ncommitments have been undertaken. 1218 Another panel also noted that th is provision applies to\n\"six carefully defined categories of measures\". 1219 The fact that Article XVI:2 encompasses an\nexhaustive and carefully defined list of measures enables Members \"wishing to undertake specific\ncommitments on market access, as well as al l the other Members, to understand precisely the\nscope of such commitments \".1220 Following the guidance by previous panels, we consider that the\npresence of the word \"foreign\" in Article XVI:2(f), while this word is absent from the other\nsubparagraphs in Arti cle XVI:2 must be given meaning and effect. We therefore agree with the\nEuropean Union and Japan that Article XVI:2(f) is not concerned with all limitations on capital\nparticipation, but is specifically concerned with limitations on foreign capital due to its foreign\norigin.1221\n7.717. Russia also argues that the presence of the word \"foreign\" in Article XVI:2(f) is explained\nby the fact that \"governments have historically tended to impose restrictions on foreign direct\ninvestment\" and concludes that it was these types of concerns that the drafters of the GATS\nsought to address in Article XVI:2(f). 1222 Russia does not explain, however, why this alleged\nhistorical trend would support an interpretation whereby the word \"foreign\" would now be erased\nfrom subparagraph (f) . If anything, the fact that governments used to impose restrictions on\nforeign direct investment1223 would rather support an interpretation that Article XVI:2(f) concerns\nlimitations on the participation of foreign capital due to its foreign origin.\n7.718. In our v iew, limitations falling within the scope of Article XVI:2(f) must target foreign\ncapital participation due to the foreign origin of the capital; limitations applying without distinction\nto both foreign and domestic capital participation are not covered by this provision. We wish to\nclarify that we do not mean to say that only limitations which explicitly refer to foreign capital\nparticipation fall under subparagraph (f). For example, a measure articulating a condition in\nrelation to domestic capital partic ipation may be encompassed within the scope Article XVI:2(f) if\nsuch measure targets foreign capital participation due to the foreign origin of the capital (e.g.\ndomestic capital participation shall be no less than X per cent).\n7.719. We examine now whether the u nbundling measure in the national implementing laws of\nCroatia, Hungary and Lithuania limit s the \"participation of foreign capital\" within the meaning of\nArticle XVI:2(f) of the GATS.\nAssessment of the measures at issue\n7.720. Russia claims that the unbundling me asure in the implementing laws of Croatia, Hungary\nand Lithuania each sets forth limitations on the participation of foreign capital in violation of\nArticle XVI:2(f) of the GATS. 1224 The European Union responds that the measures challenged by\n\n1218 Panel Report, China – Publications and Audiovisual Products, para. 7.1353.\n1219 Panel Report, China – Electronic Payment Services, para. 7.652.\n1220 Panel Report, Argentina – Financial Services, para. 7.418. (footnote omitted)\n1221 European Union's second written submission, para. 26; and Japan's third-party submission,\npara. 18.\n1222 Russia's response to Panel question No. 89, para. 390; and second written submission, para. 118. In\norder to support that view, Russia refers to a 2003 OECD Report and a 2010 World Bank report, both of which\nfound, according to Russia, that most economies had \"specific restrictions that hindered foreign investment\".\n(OECD Economic Outlook No. 73, Chapter 7, \"Foreign direct investment restrictions in OECD countries\" (OECD\n2003), (Exhibit RUS-154); and World Bank, Investing Across Borders 2010, pp. 7-20, (Exhibit RUS-155)).\n1223 The 2010 World Bank report provided by Russia is based on the results of a survey conducted\nbetween April and December 2009 in 87 economies. As noted by Russia, the World Bank found that, while\nthere were few restrictions on foreign ownership in the primary sectors and manufacturing, \"services – such as\nmedia, transportation, and electricity – have stricter limits on foreign participation.\" We observe that the report\nfurther indicates that, in sectors such as banking, insurance and media \"laws often limit the share of foreign\nequity ownership allowed in enterprises\". (See Russia's response to Panel question No. 89, para. 390; and\nWorld Bank, Investing Across Borders 2010, pp. 7-20, (Exhibit RUS-155), p. 8). Similarly, the 2003 OECD\nEconomic Outlook also finds that \"FDI restrictions are concentrated in services sectors\". (OECD Economic\nOutlook No. 73, Chapter 7, \"Foreign direct investment restrictions in OECD countries\" (OECD 2003), (Exhibit\nRUS-154), p. 2).\n1224 Russia's first written submission, para. 224; and second written submission, para. 113. In response\nto a question by the Panel asking Russia to clarify the scope of the challenged measures, Russia responded\nthat, under Article XVI:2(f) of the GATS, it:\n[C]hallenges the unbundling measures in Croatia, Hungary and Lithuania’s implementing laws\nbecause each improperly imposes ownership prohibitions on majority capital investment,\nincluding foreign capital. In Russia’s view, these violations are also de facto in nature. In\n\nRussia apply wit hout distinction to foreign and domestic investors and, therefore, fall outside the\nscope of Article XVI:2(f).1225\n7.721. Keeping in mind the interpretation of Article XVI:2(f) set forth above, we must determine\nwhether Russia has demonstrated that the measures at issue negatively impact foreign capital due\nto the foreign origin of the capital. Russia challenges the following provisions in the implementing\nlaws of Croatia, Hungary and Lithuania: (i) Article 14(4) of Croatia's Gas Market Act, (ii)\nSection 120/A, Section 121/B, Section 121/H and Section 123(4) of Hungary's Gas Act; and (iii)\nArticle 41(4)(3) of Lithuania's Law on Natural Gas.\n7.722. Article 14(3) of Croatia's Gas Market Act prevents the same person or persons to \"directly\nor indirectly control the energy undertaking performing any of the activities of production, trade or\nsupply of gas and the activity of the production of natural gas, and directly or indirectly control or\nexecute other rights over the transmission system operator or the transmission system\" (Article\n14(3)(1)). Conversely, Article 14(3)(2) prevents the same person or persons to \"directly or\nindirectly control the transmission system operator or the transmissi on system, and directly or\nindirectly control or execute other rights over the energy undertaking performing any of the\nactivities of production, trade, supply and the activity of the production of natural gas\". Pursuant\nto Article 14(4), \"[t]he prohibitio ns from paragraph 3 [of Article 14] shall apply to … owning a\nmajority stake\".1226\n7.723. Pursuant to Section 120/A(3) of Hungary's Gas Act , a system operator \"may not acquire\nany share in any other authorized operator engaged in activities other than his own activi ties.\"\nSection 121/B provides in relevant parts that \" [s]ubsidiaries of vertically integrated natural gas\ncompanies performing functions of production or supply of natural gas shall not have any direct or\nindirect shareholding in the transmission system op erator\". Pursuant to Section 121/H, the same\nperson or persons cannot exercise control over an undertaking performing production or supply\nand \"exercise any right\" over a TSO. Such \"right\" includes \"the holding of a majority share\".\nPursuant to Section 123(4), \"any company that is involved in the extraction of natural gas … or in\nthe supply of natural gas …, and any shareholders exercising control in such companies may not\nacquire any share – directly or indirectly – in a transmission system operator where such share\nconstitutes entitlement to exercise control.\"1227\n7.724. Article 40 of Lithuania's Law on N atural Gas sets forth the OU model. Pursuant to\nArticle 41(4)(4) of that Law, the \"rights\" that a person or persons directly or indirectly controlling\nan undertaki ng engaged in production or supply of natural gas cannot exercise include \"the\nmanagement and holding of a majority share\" in a TSO.1228\n7.725. We observe that, on their face, the provisions cited by Russia are origin -neutral. These\nprovisions prohibit production/su pply undertakings from owning /holding \"a majority share\", \"any\nshare\", \"any direct or indirect shareholding\", \"the holding of a majority share\", in a TSO.\nConversely, TSOs are prevented from owning/holding \"a majority share\", \"any share\", \"any direct\nor in direct shareholding\" in a production/supply undertaking. Russia itself describes these\nprovisions as \"not specific to foreign investors\" 1229 and asserts that they preclude \"any investor\n(foreign or domestic) who is also 'directly or indirectly' in control of production or supply services\nfrom owning more than 50% of a TSO in the country .\"1230 Russia considers, however, that the fact\n\nprohibiting majority ownership, the measures do not distinguish on the basis of origin, as would\ntypically demonstrate a de jure violation. The effect of the measures is to prohibit foreign\nmajority ownership, thereby resulting in de facto discrimination. (Russia's response to Panel\nquestion No. 5, para. 26).\nWe note, however, that Russia does not develop this de facto discrimination claim in these proceedings.\nWe shall therefore not consider this issue further.\n1225 Japan supports the view that, as the unbundling measures at issue are not specifically tied to the\norigin of the capital, but apply equally to domestic and foreign investors, they do not constitute a violation of\nArticle XVI:2(f). (Japan's third-party submission, para. 18).\n1226 Croatia's Gas Market Act, (Exhibit RUS-45), Articles 14(3) and (4).\n1227 Hungary's Gas Act, (Exhibits EU-155/RUS-47). We recall that Section 123(4) of Hungary's Gas Act is\nreferred to as Section 194(4) in Russia's first written submission and Exhibit RUS-47.\n1228 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev).\n1229 Russia's first written submission, para. 226 (regarding Croatia); para. 228 (regarding Hungary), and\npara. 230 (regarding Lithuania).\n1230 Russia's first written submission, para. 226 (regarding Croatia); para. 228 (regarding Hungary), and\npara. 230 (regarding Lithuania).\n\nthat these laws \"prohibit both domestic and foreign majority ownership is irrelevant .\"1231 We\ndisagree with Russia. As established above, Article XVI:2(f) covers limitations negatively impacting\nforeign capital due to the foreign origin of the capital, but does not cover limitations that apply\nwithout distinctions to foreign and domestic capital.1232\n7.726. In light of the foregoing, we find that R ussia has not demonstrated that the measures at\nissue limit the \"participation of foreign capital\" within the meaning of Article XVI:2(f) of the GATS.\nHaving found that the measures at issue do not amount to limitations \"on the participation of\nforeign cap ital\" within the meaning of Article XVI:2(f) of the GATS , we refrain from assessing\nwhether those measures take one of the two forms provided for in that provision.\n7.727. We therefore conclude that Russia has not demonstrated that the unbundling measure in\nthe national implementing laws of Croatia, Hungary and Lithuania is inconsistent with\nArticle XVI:2(f) of the GATS.\n7.5.2.5 Conclusion\n7.728. In view of the foregoing analysis, we conclude that Russia has not demonstrated that the\nunbundling measure in the national implementing laws of Croatia and Lithuania is inconsistent with\nArticle XVI:2(a) of the GATS. We further conclude that Russia has not demonstrated that the\nunbundling measure in the national implementing laws of Croatia, Hungary and Lithuania is\ninconsistent with Article XVI:2(e) and (f) of the GATS. As we have not found an inconsistency with\nArticle XVI:2(a), (e) or (f) of the GATS, we do not consider it necessary to examine the European\nUnion's defence under Article XIV(a) or (c) of the GATS.\n7.6 The public body measure\n7.6.1 Introduction\n7.729. In this section we examine Russia's claim against the public body measure in the national\nimplementing laws of Croatia, Hungary and Lithuania. We have set out the descripti on of the\npublic body measure above .1233 Russia challenges the pub lic body measure under Article XVII of\nthe GATS. The European Union argues that the public body measure is not inconsistent with Article\nXVII of the GATS, and that , in case we find otherwise, it is justified under Article XIV(c) of the\nGATS. We first exami ne whether Russia has demonstrated that the public body measure is\ninconsistent with Article XVII of the GATS. I n the event we find an inconsistency with Article XVII\nof the GATS, we will assess the European Union's defence under Article XIV(c) of the GATS.\n7.6.2 Russia's claim under Article XVII of the GATS\n7.6.2.1 Introduction\n7.730. Russia argues that the public body measure in the national implementing laws of Croatia,\nHungary and Lithuania \"exempts\" pipeline transport service suppliers owned and controlled by\nmember State governments from the requirement to unbundle. 1234 Russia submits that, by not\nextending the same \"exemption\" to service suppliers of other Members, the public body measure\nmodifies the conditions of competition to the detriment of like service suppliers of other Members,\nin breach of Article XVII of the GATS. 1235 Russia also argues that the implementation of the public\nbody measure by Croatia, Hungary and Lithuania results in the violation of Article XVII of the GATS\n\n1231 Russia's second written submission, para. 120; and response to Panel question No. 89, para. 395.\n1232 As noted above, Russia claims that the measures at issue also result in de facto discrimination, but\ndoes not develop this claim in these proceedings. We shall therefore not consider this issue further.\n1233 See, above paras. 2.32-2.33.\n1234 Russia's first written submission, paras. 233, 269, 272, 275, 277 and 280; responses to Panel\n1235 Russia's first written submission, paras. 275, 277, 280 and 284; and second written submission,\nparas. 177-178.\n\nbecause the governments of Croatia, Hungary a nd Lithuania own and control both the TSO and\nsupply undertaking within their respective territories.1236\n7.731. The European Union contests Russia's claim that the public body measure is inconsistent\nwith Article XVII. According to the European Union, the public b ody measure requires an\nexamination of whether the two public bodies are truly separate in addition to verifying whether\nthe entities concerned comply with the unbundling requirements, and therefore the public body\nmeasure does not constitute an \"exemption \" from the requirement to unbundle. 1237 The European\nUnion submits that the public body measure does not prevent service suppliers controlled by public\nbodies of third countries from relying on this measure when they apply to be certified as TSOs. 1238\nIn the Eur opean Union's view, the fact that the governments of Croatia, Hungary and Lithuania\neach control, at present, a TSO as well as an undertaking performing production or supply, does\nnot imply that third-country operators may not rely on the public body measu re nor that any TSO\nowned by third country persons would be in a less favourable competitive position.1239\n7.732. We recall that the measure challenged by Russia consists of the national implementing\nlaws of Croatia, Hungary and Lithuania. While all three national laws implement Article 9(6) of the\nDirective in the territories of Croatia, Hungary and Lithuania, they are legally distinct from each\nother, as well as from Article 9(6) of the Directive. However, we note that the parties have\ndeveloped a significant part of their argumentation solely on the basis of Article 9(6) of the\nDirective, without clearly distinguishing Article 9(6) of the Directive and each of the national\nimplementing laws. In light of the manner the parties developed their arguments, we will con duct\na joint assessment of Russia's claim concerning each of the three national implementing laws. We\nemphasize, however, that Article 9(6) of the Directive is not a measure at issue in this dispute.1240\n7.6.2.2 Analysis by the Panel\n7.733. In accordance with the legal stan dard under Article XVII of the GATS, as set out in\nparagraphs 7.234 and 7.235 above, we proceed to assess Russia's claim by examining whether\nRussia has demonstrated that (a) Croatia, Hungary, and Lithuania have assumed national\ntreatment commitments in the relevant sector(s) and mode(s) in their GATS Schedules; (b) the\npublic body measure affects the supply of services in the relevant sector(s) and mode(s); (c) the\nrelevant services and service suppliers are like; and (d) the public body measure fails to accord to\nservices and service suppliers of any other Member treatment n o less favourable than that\naccorded by the Member concerned to its own like services and service suppliers.\n\n1236 Russia's first written submission, paras. 235 and 285–303; response to Panel question No. 5,\npara. 29; and second written submission, paras. 188–197.\n1237 European Union's first written submission, paras. 225-226.\n1238 European Union's first written submission, para. 228; and second written submission, paras. 52-53.\n1239 European Union's first written submission, para. 231.\n1240 In its second written submission, Russia requests the Panel to find inter alia that the European\nUnion and its member States have violated their obligations under Article XVII:1 of the GATS, because \"Article\n9(6) of the Directive\", exempts government-controlled pipeline transport services and service suppliers from\nthe unbundling requirements \"as evidenced by the Croatian, Hungarian and Lithuanian government exemption\nmeasures\". (Russia's second written submission, para. 487). (emphasis added) We observe that this request\nfor findings is different from the request for findings in Russia's first written submission, where Russia asks the\nPanel to find that the European Union and its member States violate their WTO obligations under Article XVII of\nthe GATS because \"Croatia, Hungary and Lithuania's government exemption measures, adopted pursuant to\nArticle 9(6) of the Directive, arbitrarily exempt government-controlled pipeline transport services and service\nsuppliers from the unbundling requirements\". (Russia's first written submission, para. 810). (emphasis added)\nMoreover, Russia's request for findings in its second written submission is not based on the claim Russia\ndeveloped in these proceedings which is that the national laws of Croatia, Hungary and Lithuania implementing\nArticle 9(6) of the Directive are inconsistent with Article XVII of the GATS. (Russia's first written submission,\nparas. 269-285; response to Panel question No. 5, paras. 28-29; and second written submission, paras. 167-\n168). Consequently, it is the national implementing laws of Croatia, Hungary and Lithuania that constitute the\nmeasure at issue challenged by Russia, and not Article 9(6) of the Directive, as would appear from Russia's\nrequest for findings in its second written submission.\n\n7.6.2.2.1 National treatment commitments by Croatia, Hungary and Lithuania in the\nrelevant sector(s) and mode(s)\n7.734. We have determined above that Croatia, Hungary and Lithuania undertook national\ntreatment commitments in their respective GATS Schedules for sector 11.G, \"Transport Pipeline\n[Services]\", for mode 3.1241\n7.6.2.2.2 Affecting the supply of services in the relevant sector(s) and mode(s)\n7.735. The second element of our Article XVII enquiry calls for an analysis of whether Russia has\ndemonstrated that the public body measure \"affects the supply of services\" in the relevant\nsector(s) and mode(s). As we have concluded above, the re levant sector for the purposes of our\nenquiry is sector 11.G, \"Transport Pipeline [Services]\". 1242 Furthermore, as clarified by Russia, the\nrelevant mode of supply for its GATS claims is mode 3 (commercial presence). 1243 Russia submits\nthat the public body measure, which Russia considers to be an \"aspect of the unbundling\nmeasure\"1244, \"affects\" the supply of pipeline transport services via mode 3 for the same reasons\nas the unbundling measure.1245 The European Union does not contest Russia's arguments.\n7.736. We recall that the Appellate Body has clarified, in the context of Article I:1 of the GATS,\nthat the ordinary meaning of the term \"affecting\" implies a measure that has \"an effect on\", which\nindicates a broad scope of applicatio n, wider in coverage than such terms as \"regulating\" or\n\"governing\".1246 As considered by the panel in China – Electronic Payment Services, while the\nclarification of the Appellate Body was made in relation to the term \"affecting\" in the context of\nArticle I: 1 of the GATS, it is equally relevant and persuasive when looked at in the context of\nArticle XVII analysis.1247 Accordingly, we need to determine whether, as a minimum threshold, the\npublic body measure has \"an effect on\"1248 the supply of pipeline transport services.\n7.737. As set out above, the public body measure is applicable in situations where public bodies\nexercise control over, on the one hand, a TSO or transmission system, and on the other hand, an\nundertaking performing the function of natural gas production and/or supply.1249 We recall that, for\nthe purposes of the present dispute, we consider that TSOs supply pipeline transport services in\nthe European Union and that natural or juridical persons from non -EU countries can and do supply\npipeline transport services through the commercial presence of such TSOs.1250 Thus, by prescribing\nrules that concern TSOs, the public body measure affects suppliers of pipeline transport services,\nand consequently, has \"an effect on\" the supply of pipeline transport services within the meaning\nof Article XVII.\n7.6.2.2.3 Like services and service suppliers\n7.738. We note that, in the context of the public body measure, Russia argues that LNG services\nand service suppliers and pipeline transport services and service suppliers are like within the\nmeaning of Article XVII. 1251 It is therefore not clear whether the relevant services and service\nsuppliers, for purposes of Russia's claim under Article XVII against the public body measure,\ninclude both pipeline transport services and service suppliers and LNG se rvices and service\nsuppliers. We consider it helpful to determine the scope of the likeness enquiry to be conducted\nbefore turning to the actual assessment of likeness.\n7.739. In this regard, we note that the public body measure concerns unbundling where public\nbodies exercise control over, on the one hand, a TSO or transmission system, and on the other\nhand, an undertaking involved in production or supply activities. Both parties agree that LNG\n\n1241 See above para. 7.371.\n1242 See above para. 7.291.\n1243 Russia's response to Panel question No. 56, para. 285.\n1244 Russia's first written submission, para. 233.\n1245 Russia's first written submission, para. 237 (referring to section VII.C of its first written submission).\n1246 Appellate Body Report, EC – Bananas III, para. 220.\n1247 Panel Report, China – Electronic Payment Services, para. 7.681 and fn 873 to para. 6.781.\n1248 Appellate Body Report, EC – Bananas III, para. 220.\n1249 See above paras. 2.32 and 2.33.\n1250 See above paras. 7.263 and 7.407.\n1251 Russia's first written submission, paras. 254–261.\n\nservice suppliers are not subject to unbundling 1252 and, consequently, they are not subject to the\npublic body measure. We also observe that Russia does not develop any arguments with respect to\nthe application of the public body measure to LNG service suppliers. For these reasons, we find\nthat only pipeline transport service s and service suppliers are relevant for Russia's claim against\nthe public body measure under Article XVII.\n7.740. Russia argues that the public body measure distinguishes between foreign and domestic\nservices and service suppliers based \"exclusively on origin\", and therefore the relevant services\nand service suppliers are presumed to be like.1253 Russia further submits that, \"to the extent a\n'more detailed analysis' is considered necessary\", such an analysis demonstrates that domestic\npipeline transport services an d service suppliers and those of other Members are in a competitive\nrelationship with each other and thus satisfy the likeness requirement pursuant to Article XVII. 1254\nThe European Union contests Russia's arguments that the public body measure distinguishes\nbetween foreign and domestic service suppliers based exclusively on origin. 1255 However, the\nEuropean Union does not contest Russia's arguments that the relevant services and service\nsuppliers are like within the meaning of Article XVII.\n7.741. We recall that, acco rding to the Appellate Body, \"where a measure provides for a\ndistinction based exclusively on origin, there will or can be services and service suppliers that are\nthe same in all respects except for origin and, accordingly, 'likeness' can be presumed\". 1256 In our\nview, the text of the public body measure, as implemented in the national laws of Croatia,\nHungary and Lithuania, does not, on its face, distinguish between service suppliers based\nexclusively on origin. The relevant provisions of the national impleme nting laws of Croatia,\nHungary and Lithuania refer to \" two separate public authorities \"1257, \"economic operators defined\nby law acting in the name of Hungary or other public bodies\"1258 and \"a Member State or another\npublic body \".1259 The references to \"two separate public authorities\", \"other public bodies\" and\n\"another public body\" in the mentioned laws may be read as covering both domestic public bodies\n(or authorities) and foreign public bodies (or authorities). Therefore, we see n o support in the text\nof the national laws of Croatia, Hungary and Lithuania for the proposition that such laws\ndistinguish between service suppliers based exclusively on origin. In these circumstances, we do\nnot consider that the relevant domestic service s and service suppliers can be presumed to be like\nservices and service suppliers of any other Member within the meaning of Article XVII.\n7.742. In the context of its \"more detailed analysis\" of likeness, Russia argues that \"domestic and\nthird-country pipeline t ransport services are closely similar if not identical\", referring to the\nindustry definition of natural gas pipeline transport service and sector 11.G of the Schedules of\nCroatia, Hungary and Lithuania.1260 Russia further asserts that foreign -owned and controlled TSOs\nsupply the same directly competitive pipeline transport services as domestic suppliers. 1261 In\nRussia's view, the natural gas and the services for supplying that gas serve the same end -uses\nand there is no known indication that consumers prefer dom estic or certain third -country gas or\nrelated services.1262\n7.743. We recall that, as determined above, foreign service suppliers established as TSOs in the\nEuropean Union supply identical pipeline transport services, and are like service suppliers within\nthe meani ng of Article II:1 of the GATS. 1263 Based on the same considerations, we find that\ndomestic suppliers of pipeline transport services and pipeline transport service suppliers of other\nMembers established as TSOs in Croatia, Hungary and Lithuania are like service suppliers within\n\n1252 Russia's response to Panel question No. 1, para. 4; and European Union's first written submission,\nparas. 433 and 452.\n1253 Russia's first written submission, paras. 234 and 248.\n1254 Russia's first written submission, para. 252. (footnote omitted)\n1255 European Union's first written submission, para. 228.\n1256 Appellate Body Report, Argentina – Financial Services, para. 6.38. The Appellate Body referred to\nthe establishment of likeness in this manner as the \"presumption approach\". (Appellate Body Report, Argentina\n– Financial Services, para. 6.35).\n1257 Croatia's Gas Market Act, (Exhibit RUS-45), Article 14(6). (emphasis added)\n1258 Hungary's Gas Act, (Exhibits EU-155/EU-47), Section 121/H(4). (emphasis added)\n1259 Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 41(5). (emphasis added)\n1260 Russia's first written submission, paras. 254-255.\n1261 Russia's first written submission, para. 255.\n1262 Russia's first written submission, para. 255.\n1263 See above paras. 7.421 and 7.422.\n\nthe meaning of Article XVII of the GATS. 1264 In our view, this conclusion is not affected by the fact\nthat, in the context of this measure, certain TSOs are controlled by public bodies.\n7.6.2.2.4 Less favourable treatment\n7.744. Scrutinizing the text of A rticle XVII of the GATS, the Appellate Body has considered that\nthe \"treatment no less favourable\" standard calls for an examination of whether a measure\nmodifies the conditions of competition between, on the one hand, domestic services and service\nsuppliers, and on the other, services and service suppliers of any other Member.1265 If the measure\nat issue modifies the conditions of competition to the detriment of services and service suppliers of\nany other Member, it will be inconsistent with Article XVII. 1266 Thus, in the present case, we shall\nassess whether Russia has demonstrated that the public body measure modifies the conditions of\ncompetition to the detriment of service suppliers of any other Member in comparison to like\ndomestic service suppliers.\n7.745. Under Article XVII, a measure can modify the conditions of competition to the detriment of\nservices and service suppliers of any other Member by according to services and service suppliers\nof any other Member, either formally identical treatment or formally diff erent treatment to that it\naccords to domestic services and service suppliers.1267\n7.746. We note that Russia bases its claim on the interpretation of the text of the public body\nmeasure, as well as on the fact that the governments of Croatia, Hungary and Lithuania own and\ncontrol both a TSO and supply undertaking within their respective territories. 1268 Therefore, in our\nassessment of whether the public body measure modifies the conditions of competition to the\ndetriment of service suppliers of any other Member in com parison to like domestic service\nsuppliers, we will examine closely its design, structure and expected operation.\n7.747. As Russia brings its challenge on the basis of the interpretation of the text of the public\nbody measure in the implementing national laws of Croatia, Hungary and Lithuania , we will also\nestablish the meaning and scope of the public body measure in these national implementing laws,\nas the municipal law s at issue. The Appellate Body has observed that, \"[a]s part of their duties\nunder Article 11 of the DSU, panels have the obligation to examine the meaning and scope of the\nmunicipal law at issue in order to make an objective assessment of the matter before it.\" 1269 We\nfurther recall that, \"under the usual allocation of the burden of proof, a respondi ng Member's\nmeasure will be treated as WTO -consistent, until sufficient evidence is presented to prove the\ncontrary\".1270 In these proceedings, Russia, as the complaining party, bears the burden of\n\n1264 We note that, in the context of the public body measure, Russia argues that LNG service suppliers\nand pipeline transport service suppliers are like within the meaning of Article XVII of the GATS. (Russia's first\nwritten submission, paras. 254-261). We do not consider LNG service suppliers to be relevant for our\nassessment of Russia's claims against the public body measure because the public body measure only concerns\nTSOs, that is pipeline transport service suppliers. LNG system operators (LNG service suppliers) are not subject\nto the requirement to unbundle (see above paras. 2.34 and 2.35), and consequently are not subject to the\npublic body measure. We also observe that Russia does not develop any arguments with respect to the\napplication of the public body measure to LNG service suppliers.\n1265 Appellate Body Report, Argentina – Financial Services, paras. 6.103-6.104.\n1266 Appellate Body Report, Argentina – Financial Services, para. 6.106.\n1267 Article XVII:3 of the GATS provides as follows:\nFormally identical or formally different treatment shall be considered to be less favourable if it modifies\nthe conditions of competition in favour of services or service suppliers of the Member compared to like services\nor service suppliers of any other Member.\n1268 We note that Russia divided its claim against the public body measure in the national implementing\nlaws of Croatia, Hungary and Lithuania into de facto and de jure claims. (Russia's first written submission,\nparas. 269-285; response to Panel question No. 5, paras. 28-29; and second written submission, paras. 167-\n168). We find it appropriate to conduct a single analysis of the consistency of this measure with Article XVII of\nthe GATS based on its design, structure and expected operation.\n1269 Appellate Body Report, US – Shrimp II (Viet Nam), para 4.31 (quoting Appellate Body Report, US –\nCountervailing and Anti-Dumping Measures (China), para. 4.98).\n1270 Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II), para. 66. (emphasis\noriginal)\n\nproviding sufficient evidence that the public body measure is inconsistent with Article XVII,\nincluding on the basis of its meaning and scope as municipal law.1271\n7.748. As regards the evidentiary elements that may be used in establishing the meaning and\nscope of municipal law, the Appellate Body has clarified as follows:\nA party asserting that another party's municipal law is inconsistent \"as such\" with\nrelevant WTO obligations bears the burden of introducing evidence as to the meaning\nof such law to substantiate that assertion. 1272 When a municipal law is challenged \"as\nsuch\", the starting point for the analysis will be the text of that municipal law, on its\nface.1273 A complainant may seek to support its understanding of the meaning of the\nmunicipal law on the basis of the text of that municipal law only. A complainant may\nalso seek to support its understanding of the meaning of the municipal law at issue\nwith additional elements such as \"evidence of the consistent application of such laws,\nthe pronouncements of domestic courts on the meaning of such laws, the opinions of\nlegal e xperts and the writings of recognized scholars\". 1274 Likewise, in addition to\nsetting out its understanding of the text of the municipal law at issue, the respondent\nmay submit evidence relating to such additional elements to rebut the complainant's\narguments. In conducting its independent assessment of the meaning of the municipal\nlaw at issue, a panel must undertake a holistic assessment of all the relevant\nelements before it.1275, 1276\n7.749. We recall that the Appellate Body has held that the \"treatment no less favoura ble\"\nstandard calls for an examination of whether a measure modifies the conditions of competition\nbetween, on the one hand, domestic services and service suppliers, and on the other, services and\nservice suppliers of any other Member. 1277 Therefore, Russia needs to demonstrate that the public\nbody measure modifies the conditions of competition to the detriment of service suppliers of any\nother Member in comparison to like domestic service suppliers.\n7.750. Bearing these considerations in mind, we proceed with our a ssessment of whether the\npublic body measure modifies the conditions of competition to the detriment of service suppliers of\nany other Member in comparison to like domestic service suppliers, in accordance with the\nanalytical framework set out above in paragraphs 7.746 and 7.747.\n7.751. We understand Russia to argue that the alleged modification of the conditions of\ncompetition to the detriment of service suppliers of any other Member in comparison to like\ndomestic service suppliers stems from the alleged competitive advantage granted to domestic\nservice suppliers as a result of bein g \"exempted\" from the requirement to unbundle. 1278 In the\nspecific circumstances of this claim, and based on our understanding of Russia's arguments, in\norder for its claim to succeed, Russia needs to demonstrate two elements: (i) that the public body\nmeasure is an \"exemption\" from the requirement to unbundle , and (ii) that it applies only to\ndomestic service suppliers, excluding like service suppliers of other Members , and hence modifies\nthe conditions of competition to the detriment of service suppliers of any other Member.\n7.752. Below, we examine each of these elements separately. However, we wish to stress that\nneither of them, taken separately, is sufficient for Russia to demonstrate that the public body\nmeasure is inconsistent with Article XVII. Rather, t hese two elements represent distinct yet\nintegral aspects of a demonstration that the public body measure modifies the conditions of\n\n1271 It is well established that \"[t]he party asserting that another party's municipal law, as such, is\ninconsistent with relevant treaty obligations bears the burden of introducing evidence as to the scope and\nmeaning of such law to substantiate that assertion\". (Appellate Body Report, US – Carbon Steel, para. 157).\n1272 (footnote original) The nature and extent of the evidence required to satisfy the burden of proof will\nvary from case to case. (Appellate Body Report, US – Carbon Steel, para. 157)\n1273 (footnote original) Appellate Body Report, US – Corrosion Resistant Steel Sunset Review, para. 168.\n1274 (footnote original) Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China),\n1275 (footnote original) Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China),\npara. 4.101.\n1276 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.156.\n1277 Appellate Body Report, Argentina – Financial Services, paras. 6.103-6.104.\n1278 Russia's first written submission, paras. 275, 277, 280 and 284; and second written submission,\nparas. 177-178.\n\ncompetition to the detri ment of service suppliers of any other Member in comparison to like\ndomestic service suppliers.\n7.753. We begin our assessment with the first element of Russia's claim and examine whether\nRussia has demonstrated that the public body measure constitutes an \"exemption\" from the\nrequirement to unbundle.\nWhether the public body measure is an \"exemption\" from the requirement to\nunbundle\n7.754. In Russia's view, the public body measure provides an \"exemption\" from the requirement\nto unbundle to service suppliers controlled by domestic public bodies. 1279 Russia alleges that the\npublic body measure treats \"two separate public bodies\" as \"deemed not to be\" the same person\nor persons, while, in reality, they are the same person in the form of the same member State\ngovernment.1280 Thus, according to Russia, provided the member State government arranges for\ncontrol over, on the one ha nd, a TSO or transmission system, and on the other, an undertaking\ninvolved in supply or production activities, to be exercised by \"two separate public bodies\", the\ngovernment is exempted from the requirement to unbundle.1281\n7.755. The European Union opposes Russi a's characterization of the public body measure as an\n\"exemption\" from the requirement to unbundle. According to the European Union, the public body\nmeasure is meant to ensure that the principle of non -discrimination between public and private\nsectors is r espected in the implementation of effective unbundling. 1282 The European Union\nsubmits that the public body measure requires an examination of whether the two public bodies\nexercising control over, on the one hand , a TSO or transmission system, and on the oth er hand,\nan undertaking involved in supply or production activities, are \"truly separate\" in addition to\nascertaining that these two public bodies meet the unbundling requirement.1283\n7.756. We recall that, under the unbundling measure, the function of transmission network\noperation must be separated from the function of natural gas production and/or supply on the\nbasis of one of the applicable unbundling models: the OU model, the ITO model or the ISO\nmodel.1284 The OU model, as implemented in the national laws of Croa tia, Hungary and Lithuania,\nprohibits the same person or persons from directly or indirectly exercising control over, on the one\nhand, a TSO or transmission system, and on the other, an undertaking performing any of the\nfunctions of production or supply.1285 Pursuant to the public body measure, as implemented in the\nnational laws of Croatia, Hungary and Lithuania, where the person subject to the ownership\nunbundling requirement is a public body, two separate public bodies exercising control over a TSO\nor a tra nsmission system on the one hand, and over an undertaking performing any of the\nfunctions of production or supply on the other, shall be deemed not to be the same person or\npersons.1286 Thus, the public body measure in these national implementing laws sets ou t a legal\n\n1279 Russia's first written submission, paras. 233, 269, 272, 275, 277 and 280; responses to Panel\n1280 Russia's response to Panel question No. 1, para. 3. See also Russia's first written submission,\npara. 245; and opening statement at the first meeting of the Panel, para. 29.\n1281 Russia's opening statement at the first meeting of the Panel, para. 29.\n1282 European Union's first written submission, para. 223 (referring to the Directive 2009/73/EC, (Exhibit\nEU-5), Recital (20)).\n1283 European Union's first written submission, paras. 226 and 228; and second written submission,\npara. 49.\n1284 Commission Staff Working Paper, Interpretative Note on Directive 2009/72/EC Concerning Common\nRules for the Internal Market in Electricity and Directive 2009/73/EC Concerning Common Rules for the\nInternal Market in Natural Gas – The Unbundling Regime (22 January 2010), (Commission Interpretative Note\non the Unbundling Regime), (Exhibits EU-42/RUS-19), p. 4.\n1285 See above para. 2.11.\n1286 Article 14(6) of Croatia's Gas Market Act, Section 121/H(4) of Hungary's Gas Act and Article 41(5)\nof Lithuania's Law on Natural Gas implementing Article 9(6) of the Directive. The wording of the national\nimplementing laws differs, to various degrees, from that of Article 9(6) of the Directive. The national\nimplementing laws also differ in wording among each other. The text of Article 9(6) of the Directive, as well as\nthe national implementing laws, is provided below.\n\nArticle 9(6) of the Directive contains the following rule:\n\nregime for service suppliers controlled by public bodies that is different from the ownership\nunbundling requirement provided by the unbundling measure for all other service suppliers.1287\n7.757. In our view, however, the mere fact that the public body me asure in the national\nimplementing laws of Croatia, Hungary and Lithuania sets a legal regime that is different from the\nownership unbundling requirement does not necessarily mean that this measure is an exemption\nfrom this requirement. Such a conclusion can only be reached on the basis of a rigorous scrutiny of\nthe design, structure and expected operation of the public body measure, as well as its\nrelationship with the unbundling measure.\n7.758. We note that the ordinary meaning of the word \"exemption\" is \"the action of exempting, or\nthe state of being exempted from a liability, obligation, penalty, law, or authority\". 1288 \"To\nexempt\", in turn, means \"to grant to (a person, etc.) immunity or freedom from a liability to which\nothers are subject\", such as \"a burden, d uty, or obligation, a burdensome state or condition\". 1289\nTherefore, an assessment of whether the public body measure constitutes an exemption from the\nownership unbundling requirement involves a determination of whether it \"releases\" service\nsuppliers controlled by public bodies from the prohibition of exercising control over, on the one\nhand, a TSO or transmission system, and on the other, an undertaking performing the function of\nnatural gas production and/or supply.\n7.759. We recall that, in arguing that the pub lic body measure constitutes an \"exemption\" from\nthe requirement to unbundle, Russia focuses on the words \"shall be deemed not to be the same\nperson or persons\" used in Article 9(6) of the Directive. In Russia's view, even though a \"separate\"\npublic body e xercising control over a TSO or transmission system and a \"separate\" public body\n\nFor the implementation of this Article, where the person referred to in points (b), (c) and (d) of\nparagraph 1 is the Member State or another public body, two separate public bodies exercising\ncontrol over a transmission system operator or over a transmission system on the one hand, and\nover an undertaking performing any of the functions of production or supply on the other, shall\nbe deemed not to be the same person or persons. (Directive 2009/73/EC, (Exhibit EU -5), Article\n9(6)) (emphasis added)\n\nArticle 14(6) of Croatia's Gas Market Act provides as follows:\n\nTwo separate public authorities that control the transmission system operator or the transmission\nsystem and that control the energy undertaking performing any of the activities of production,\ntrade or supply and the activity of the production of natural gas shall not be considered the same\nperson or persons within the meaning of [the relevant ownership unbundling provisions of the\nGas Market Act]. (Croatia's Gas Market Act, (Exhibit RUS-45), Article 14(6)). (emphasis added)\n\nSection 121/H/4 of Hungary's Gas Act states that:\n\nThe obligation set out in [the relevant ownership unbundling provisions of the Gas Act] shall be\ndeemed to be fulfilled in a situation where economic operators defined by law acting in the name\nof Hungary or other public bodies exercising control over a transmission system operator or over\na transmission line on the one hand, and over a company performing any of the functions of\nproduction or supply of natural gas on the other. (Hungary's Gas Act, (Exhibits EU-155/RUS-47),\nSection 121/H(4).\n\nArticle 41(5) of Lithuania's Law on Natural Gas is worded as follows:\n\nWhere the person referred to in [the relevant ownership unbundling provisions of the Law on\nNatural Gas] is a Member State or ano ther public body, two separate public bodies exercising\ncontrol over a transmission system operator or over a transmission system on the one hand, and\nover an undertaking performing any of the functions of production or supply on the other, shall\nbe deemed not to be the same person or persons. (Lithuania's Law on Natural Gas, (Exhibit RUS-\n136rev), Article 41(5)). (emphasis added)\n\n1287 According to Russia, the \"exemption\" pursuant to Article 9(6) of the Directive covers \"the general\nand full ownership unbundling provisions of Article 9, as well as the ISO and ITO provisions of Article 14 and\nChapter IV, respectively\". (Russia's first written submission, para. 270). The European Union does not discuss\nthe relationship between the public body measure and the ISO and ITO models.\n1288 Oxford English Dictionary Online, definition of \"exemption, n.2.a\"\nhttp://www.oed.com/view/Entry/66070?redirectedFrom=exemption (accessed 3 August 2017).\n1289 Oxford English Dictionary Online, definition of \"exempt, v.4.d\"\nhttp://www.oed.com/view/Entry/66066?rskey=UdEDfX&result=2&isAdvanced=false (accessed 3 August 2017).\n\nexercising control over an undertaking involved in production or supply activities are part of the\nsame member State government, they are \"deemed\", for purposes of the unbundl ing measure,\n\"not to be the same person or persons\". 1290 Russia contends that the public body measure thus\ncreated a \"legal fiction\" to preserve the right of EU member States under the Treaty on the\nFunctioning of the European Union to continue owning and controlling the entire VIU.1291\n7.760. In our view, words such as \"shall not be considered the same person or persons\" and\n\"shall be deemed not to be the same person or persons\" in the text of the public body measure\nmay indicate that, while the government in question is one and the same person, it is considered\nas consisting of two persons for the purposes of the ownership unbundling requirement. In this\nsense, the public body measure could be understood as creating a \"legal fiction\". We also note\nthat, when assess ing a \"deeming\" provision in municipal law, the Appellate Body in US – FSC\n(Article 21.5 - EC) ignored the \"legal fiction\" created by that provision and found that the legal\nconsequences prescribed by that provision did not correspond to the factual situat ion described\ntherein.1292 Deriving guidance from this approach of the Appellate Body, we consider that,\nsimilarly, in the present case, we should examine relevant facts and evidence, as submitted to us\nby the parties.\n7.761. We observe that, pursuant to the public body measure in the national implementing laws\nof Croatia, Hungary and Lithuania, the ownership unbundling requirement will be fulfilled (i.e. the\ntwo public bodies will be \"deemed\" not to be the same person or persons) when the public body\nexercising control over a TSO or transmission system and the public body exercising control over\nan undertaking performing the function of natural gas supply and/or production are \"separate\".1293\nTherefore, in determining whether, by treating the same government as not bei ng one person, the\npublic body measure creates a \"legal fiction\", and by that means exempts service suppliers\ncontrolled by public bodies from the requirement to unbundle, it is relevant for us to examine the\nrole of the word \"separate\" used in the text of this measure. In particular, as part of our holistic\nassessment of the design, structure and expected operation of the public body measure, we\nconsider it important to establish whether this word imposes a requirement that the public bodies\nin question be \"separate\", and if so, how this requirement compares with the ownership\nunbundling requirement.\n7.762. We understand Russia to argue that a government, by virtue of its nature, is not able to\neffectively \"unbundle\" within the meaning of the Directive. 1294 We furth er understand that, in\nRussia's view, this is confirmed by the fact that, despite being controlled by two \"separate\"\nministries, the \"central government[s]\" of Hungary and Lithuania retain control over a TSO and\nsupply undertaking in their territories.1295\n\n1290 Russia's second written submission, para. 175.\n1291 Russia's response to Panel question No. 179, para. 155.\n1292 The Appellate Body held that \"because the manufacturer and distributor are related, the measure\ndeems the foreign economic process requirement to have been met in the sales transaction between the\nrelated parties, when, in fact, it was not met\". (Appellate Body Report, US – FSC (Article 21.5 - EC),\npara. 159).\n1293 Croatia's Gas Market Act, (Exhibit RUS-45), Article 14(6); and Lithuania's Law on Natural Gas,\n(Exhibit RUS-136rev), Article 41(5). We note, however, that the text of Section 121/H(4) of Hungary's Gas Act\ndoes not contain the word \"separate\". While none of the parties provided any arguments regarding the\nrelevance of this omission, it is also uncontested that Section 121/H(4) implements Article 9(6) of the\nDirective, which contains the word \"separate\". For the texts of the relevant provisions of the national\nimplementing laws at issue see above fn 1286.\n1294 Russia's response to Panel question No. 1, para. 3. See also Russia's second written submission,\nparas. 192-195; and opening statement at the first meeting of the Panel, para. 29.\n1295 Russia's second written submission, paras. 188-195. See also Russia's first written submission,\nparas. 285–305. In support of its arguments, Russia refers to the Commission's certification opinions\nconcerning MGT in Hungary and Amber Grid in Lithuania. We discuss Russia's arguments below in\nparagraphs 7.777. through 7.782. We note that Russia submits these arguments in the context of developing\nits claim on the basis of the ownership and control by the governments of Croatia, Hungary and Lithuania of a\nTSO and supply undertaking within their respective territories. (Russia's second written submission, paras.\n188-197). We recall that we have found that the aspect of Russia's claim that concerns the ownership and\ncontrol by the government of Hungary of a TSO and supply undertaking in its territory falls outside our terms\nof reference. (See above para. 7.215). We understand that Russia relies on the Commission's certification\nopinion concerning MGT in Hungary not only to prove that, in its view, the government of Hungary owns and\ncontrols a TSO and supply undertaking in its territory but also as a support for its more general proposition\nthat a government cannot unbundle. We thus consider that our decision that the aspect of Russia's claim\n\n7.763. We understand the European Union to argue that the word \"separate\" used in the text of\nthe public body measure constitutes a requirement that must be fulfilled by the two public bodies\nin question in order to be able to rely on the public body measure. 1296 Russia does not contest this\nargument but submits that, like Article 9(6) of the Directive, the national implementing laws of\nCroatia, Hungary and Lithuania do not define their \"key terms\", including the word \"separate\". 1297\nIn Russia's view, the public body measure thus leaves the European Union and the member States\na broad discretion to interpret these terms \"as desired\".1298\n7.764. In support of its arguments that the public body measure requires an assessment of\nwhether the two public bodies in question comply with th e unbundling requirement and are \"truly\nseparate\"1299, the European Union provides four certification opinions of the Commission where the\nCommission allegedly conducted such an assessment. We observe that the Commission's\ncertification opinions are based on the application by the Commission of Article 9(6) of the\nDirective, rather than national implementing laws of Croatia, Hungary and Lithuania. We recall that\nArticle 9(6) of the Directive is not a challenged measure. 1300 However, as the national laws in\nquestion implement Article 9(6) of the Directive, the evidence regarding the meaning and scope of\nArticle 9(6) of the Directive may be relevant for our assessment to the extent that such evidence\nmay clarify the meaning and scope of the national implementing laws.1301\n7.765. The Commission's certification opinions provided by the European Union concern the\ninterpretation of the word \"separate\" used in the text of Article 9(6) of the Directive. We recall that\nthe same word is used in the national implementing laws of Croat ia and Lithuania. In our view,\ngiven that the same word appears both in Article 9(6) of the Directive and national implementing\nlaws, the interpretation of the word \"separate\" by the Commission is relevant for our assessment\nof whether this word imposes a requirement to be fulfilled by the public bodies, and if so, how this\nrequirement compares to the ownership unbundling requirement. Therefore, in our view , the\ninterpretation of the word \"separate\" used in Article 9(6) of the Directive can shed light on th e\nmeaning of the same word, as used in the national implementing laws. Bearing these\nconsiderations in mind, we proceed to the analysis of the Commission's certification opinions\nprovided by the European Union.\n7.766. The European Union relies on the Commission's opinions concerning the certification, under\nArticle 9(6) of the Directive, of the following TSOs: Energinet.dk (Denmark) 1302, Gat Transport\nServices B.V. ( GTS) (the Netherlands) 1303, MGT (Hungary) 1304, and Amber Grid (Lithuania) .1305\nRussia does not directly challe nge the European Union's contention that, in the certification\nopinions under Article 9(6) of the Directive, the Commission conducts an examination of whether\nthe two public bodies comply with the ownership unbundling requirement and are \"truly separate\".\n\nconcerning the ownership and control by the government of Hungary of a TSO and supply undertaking in its\nterritory falls outside our terms of reference does not preclude us from reviewing Russia's arguments and\nevidence related to this general proposition.\n1296 European Union's first written submission, paras. 226 and 228; and second written submission,\npara. 49.\n1297 Russia's first written submission, paras. 271, 275 and 278.\n1298 Russia's first written submission, para. 271.\n1299 European Union's first written submission, paras. 224–226; and second written submission,\npara. 49.\n1300 See above para. 7.732.\n1301 This seems to also be the view of the parties, which, as mentioned above, have developed a\nsignificant part of their arguments on the basis of Article 9(6) of the Directive.\n1302 Commission Opinion of 9 January 2012 pursuant to Article 3(1) of Regulation (EC) No 715/2009 and\nArticle 10(6) of Directive 2009/73/EC - Denmark - Certification of Energinet.dk (gas), C(2012) 88 final,\n(Commission Opinion on the Certification of Energinet.dk), (Exhibit EU-51), pp. 3-5.\n1303 Commission Opinion of 1 July 2013 pursuant to Article 3(1) of Regulation (EC) No 715/2009 and\nArticle 10(6) of Directive 2009/73/EC – the Netherlands - Certification of Gas Transport Services B.V., C(2013)\n4205 final, (Commission Opinion on the Certification of GTS), (Exhibit EU-52), pp. 2-5.\n1304 Commission Opinion of 17 February 2015 pursuant to Article 3(1) of Regulation (EC) No 715/2009\nand Article 10(6) of Directive 2009/73/EC – Hungary – Certification of Magyar Gáz Tranzit Zrt., C(2015) 1046\nfinal, (Commission Opinion on the Certification of MGT), (Exhibits EU-53/RUS-53), pp. 3-4.\n1305 Commission Opinion on the Certification of Amber Grid, (Exhibits EU-54/RUS-50), pp. 1-3.\n\nRussia discusses, however, the Commission's certification opinions concerning MGT and Amber\nGrid when advancing its own position that no effective unbundling applies to public bodies.1306\n7.767. In its opinion concerning the certification of Energinet.dk, a TSO fully owned by the Danish\nState, the Commission noted that Article 9(6) provides the possibility for the State to control\ntransmission activities, as well as generation, production and supply activities, provided however\nthat the respective activities are exercised by separate public entities. Thus, according to the\nCommission, two separate public bodies should be seen as two distinct persons and should be able\nto control generation and supply activities on the one hand and transmission activities on the\nother, provided that it can be demonstrated that they are not under the common influence of\nanother public entity in violation of the rules on ownership unbundling. 1307 In its assessment, the\nCommission found that Energinet.dk is fully owned by the Danish State , which also owns 76.49 %\nof the shares in DONG Energy A/S, which is active in production and supply of natural gas. The\nownership of Energinet.dk is administered by the Danish Minister of Climate, Energy and Building,\nwho exercises control over Energinet. dk and can make decisions on any matters pertaining to\nEnerginet.dk. The ownership of DONG Energy A/S is administered by the Danish Minister of\nFinance.1308\n7.768. The Commission confirmed that two separate ministries controlling, on the one hand,\ntransmission of natural gas, and on the other hand, activities of production and supply of natural\ngas, can under certain circumstances constitute public bodies with a sufficient degree of separation\nas required by Article 9(6) Gas Directive.1309 The Commission established that, according to Danish\nconstitutional law, individual ministers have an independent power of decision in the areas for\nwhich they are responsible, and enjoy a high degree of independence. The minister of finance, who\ncontrols the production and supply inte rests of DONG Energy S.A., has no legal means to give\ninstructions to the minister of climate, energy and building, who controls the transmission\nactivities of Energinet.dk, and vice versa. The ministers are ultimately both legally and politically\nresponsible for their own ministry, and have as a consequence an independent power of decision in\ntheir areas of competence. The Commission also established that the independence of the\nindividual ministers in the areas of their competence also precludes the prime minister from giving\norders or instructions as regards the minister's responsibilities concerning the transmission of\nnatural gas. Having identified several other relevant elements, including the independence of the\nday-to-day running of Energinet.dk and the separateness of its financial resources, the\nCommission considered that the requirements of Article 9(6) of the Gas Directive were complied\nwith.1310\n7.769. In its opinion concerning the certification of GTS, the operator of the entire Dutch onshore\ngas transmission grid owned by the Dutch State, the Commission conducted a similar analysis. The\nCommission enquired whether the Dutch minister of finance, in charge of administering the state\nownership of GTS, and the Dutch ministry of economic affairs (MEA), managing the participation of\nthe Dutch State in two companies active in the production and supply of gas (Energie Beheer\nNederland and GasTerra), were separate and not under the common influence of another public\nentity in violation of the rules on ownership unbundling.1311\n7.770. In its review of the preliminary decision of the Dutch regulatory authority, the Commission\nnoted that, according to the Dutch Constitution, ministers have separate tasks for which they are\npersonally and politically responsible. This includes independent decision -making powers\nconcerning the participation of the State in energy undertakings managed by a ministry. The prime\nminister is responsible only for the areas that are not covered by the ministries. Neither the prime\nminister nor the ministry of finance can give instructions to MEA, or vice versa. The separation of\ncompetences applies throughout the entire organization of a ministry, including each individual\npublic official employed by the ministries concerned. On the basis of this ana lysis, the Commission\nagreed with the conclusion of the Dutch regulatory authority that the structural separation of\n\n1306 Russia's second written submission, paras. 188–195. See also Russia's first written submission,\nparas. 285–305. We discuss Russia's arguments below in paras. 7.777. through 7.782.\n1307 Commission Opinion on the Certification of Energinet.dk, (Exhibit EU-51), p. 4.\n1308 Commission Opinion on the Certification of Energinet.dk, (Exhibit EU-51), p. 4.\n1309 Commission Opinion on the Certification of Energinet.dk, (Exhibit EU-51), p. 4.\n1310 Commission Opinion on the Certification of Energinet.dk, (Exhibit EU-51), pp. 4-5.\n1311 Commission Opinion on the Certification of GTS, (Exhibit EU-52), pp. 2-3.\n\ncompetences provides for a degree of separation between the ministry of finance and MEA\nsufficient to comply with Article 9(6) of the Directive.1312\n7.771. However, the Commission raised concern about a number of explicit tasks and\ncompetences that MEA has with regard to GTS on the basis of the Dutch Gas Act, including the\npower of approval of the bylaws of GTS and the power of approval of special inv estments. The\nCommission noted that complying with the OU model within the State does not only imply\ncompliance with Article 9(6), but also with Article 9(1)(b), (c) and (d) of the Directive, which\nmeans inter alia that the competences of MEA, insofar as i ts power over GasTerra and/or Energie\nBeheer Nederland amounts to control, with regard to GTS may not amount to any right within the\nmeaning of Article 9(1) and (2) of the Directive. On the basis of further analysis of the Dutch Gas\nAct, the Commission rec ommended that, before taking its final certification decision, the Dutch\nregulatory authority should assess in detail the way in which MEA can carry out these two tasks\nand whether or not this gives rise to the incentive and the ability of MEA to influence the TSO\ndecision making in order to favour MEA's generation and supply interests to the detriment of other\nnetwork users.1313\n7.772. In its opinion concerning the certification of MGT, the promoter of the Hungarian section of\nthe natural gas pipeline interconnecting the Slovakian and Hungarian gas systems 100% owned by\nthe Hungarian State, the Commission assessed the separation between the ministry of interior\nexercising control over MGT and the ministry of national development, which exercises control\nover the Hun garian electricity and gas incumbent Magyar Villamos Művek Zrt. ( MVM).1314 The\nCommission found that ministers in Hungary are in charge of their ministries and responsible for\nthe issues assigned to them. Ministers carry out the tasks falling within their com petence\nautonomously, excluding the possibility of exercising influence over multiple ministries by the\nprime minister. Based on its analysis, the Commission concluded that the requirements of\nArticle 9(6) of the Gas Directive were complied with.1315\n7.773. A similar analysis was conducted by the Commission in providing its opinion on the\ncertification of Amber Grid , a TSO in Lithuania, 96.58% of shares in which are ultimately held by\nthe Lithuanian State via the ministry of energy.1316 The Commission found that the Lithuanian\nState also has \"participations\" in energy supply and generation companies, including Litgas, which\nwould fall under the remit of the ministry of finance.1317 The Commission established that the\nministry of energy indirectly holds 23.52% of the shares and votes in Litgas. 1318 The Commission\nwas concerned that the financial incentives of the ministry of energy as a shareholder in a gas\nsupplier may lead it to unduly influence Amber Grid, for instance on issues related to capacity\nallocation, maintenance or investment. The Commission therefore urged the Lithuanian regulatory\nauthority to make the certification of Amber Grid conditional upon the relinquishing by the ministry\nof energy of its indirect shareholding in Litgas.1319\n7.774. Having now examined the Com mission's certification opinions provided by the European\nUnion, we observe that, in all of these opinions, the Commission conducted an assessment of\nwhether a public body controlling a TSO or transmission system and a public body controlling an\nundertaking performing the function of natural gas production and/or supply were separate.\n7.775. Therefore, we consider that the word \"separate\" in the text of the public body measure in\nthe national implementing laws of Croatia, Hungary and Lithuania indeed constitutes a\nrequirement that the public bodies must fulfil in order to be able to rely on the public body\nmeasure. The Commission's assessment indicates that, substantively, this requirement\npresupposes that the two public bodies in question do not exercise any infl uence over each other\nand are not under a common influence of another public body. In the four certification opinions\nanalysed above, the Commission conducted its assessment on the basis of the review of the\ncompetencies, organisational structure and decis ion-making of the public bodies involved, under\nthe law of the State in question.\n\n1312 Commission Opinion on the Certification of GTS, (Exhibit EU-52), p. 3.\n1313 Commission Opinion on the Certification of GTS, (Exhibit EU-52), pp. 4-5.\n1314 Commission Opinion on the Certification of MGT, (Exhibits EU-53/RUS-53), p. 3.\n1315 Commission Opinion on the Certification of MGT, (Exhibits EU-53/RUS-53), p. 4.\n1316 Commission Opinion on the Certification of Amber Grid, (Exhibits EU-54/RUS-50), p. 1.\n1317 Commission Opinion on the Certification of Amber Grid, (Exhibits EU-54/RUS-50), p. 2.\n1318 Commission Opinion on the Certification of Amber Grid, (Exhibits EU-54/RUS-50), p. 2.\n1319 Commission Opinion on the Certification of Amber Grid, (Exhibits EU-54/RUS-50), pp. 2-3.\n\n7.776. As we have established above, the OU model, as implemented in the national laws of\nCroatia, Hungary and Lithuania, prohibits the same person or persons from directly or indi rectly\nexercising control over, on the one hand, a TSO or transmission system, and on the other, an\nundertaking performing any of the functions of production or supply. 1320 The prohibition of this\ncontrol is aimed at ensuring the separation of the function of natural gas transmission from the\nfunction of natural gas supply and/or production.1321 In our view, the Commission's assessment of\nwhether the two public bodies in question do not exercise any influence over each other and are\nnot under a common influence o f another public body, in order to establish that these two public\nbodies are \"separate\", serves to ensure separation between the function of natural gas\ntransmission and the function of natural gas production and/or supply entrusted to each of these\npublic bodies. Thus, even though the \"separation\" requirement applicable to service suppliers\ncontrolled by public bodies differs from the ownership unbundling requirement applicable to all\nother service suppliers, we understand these two requirements as functi onally equivalent in\nensuring separation between the function of natural gas transmission and the function of natural\ngas production and/or supply.\n7.777. We recall that, in support of its proposition that a government cannot effectively unbundle,\nRussia argues that, despite being controlled by two \"separate\" ministries, the \"central\ngovernment[s]\" of Hungary and Lithuania retain control over a TSO and supply undertaking in\ntheir territories.1322\n7.778. In respect of MGT in Hungary, Russia argues that \"it should not matte r that the\ntransmission and supply portions of this service supplier are supplied by different undertakings\n(MGT and MVM) and ostensibly controlled by separate ministries\", as long as both ministries are\nthe integral parts of the Hungarian central government.1323 In Russia's view, the Hungarian central\ngovernment \"clearly\" restricts the alleged autonomy of the minister of national development and\nthe ministry of interior to act independently vis-à-vis MGT and MVM.1324\n7.779. In respect of Amber Grid in Lithuania, Russia contends that allocating control between the\nministry of energy and the ministry of finance over the transmission and supply systems in no way\ndiminishes the Lithuanian central government's ability to directly influence both the supply and\ntransmission.1325\n7.780. Russia also alleges that, as with Hungary and Lithuania, the government of Croatia is able\nto \"coordinate and direct the provision of both transmission and supply services\", acknowledging\nhowever that, in the a bsence of a certification decision, \"little is known about how the Croatian\ngovernment has structured ownership and control of Plinacro and HEP\".1326\n7.781. Russia did not provide any evidence in support of its allegation that the \"central\ngovernment[s]\" of Hungary and Lithuania \"directly influence[] \" both functions of natural gas\ntransmission and supply.1327\n7.782. We acknowledge that, due to its specific nature, a government may not be able to\n\"unbundle\" in the same way as a private undertaking would within the meaning of the Directive.\nThe rules of the Directive applicable to service suppliers controlled by public bodies, often acting in\n\n1320 See above para. 2.11. See also Commission Interpretative Note on the Unbundling Regime,\n(Exhibits EU-42/RUS-19), pp. 7-8.\n1321 Commission Interpretative Note on the Unbundling Regime, (Exhibits EU-42/RUS-19), p. 4.\n1322 Russia's response to Panel question No. 1, para. 3. See also Russia's first written submission,\npara. 245; second written submission, paras. 188–195; and opening statement at the first meeting of the\n1323 Russia's first written submission, paras. 287–289 (referring to Commission Opinion on the\nCertification of MGT, (Exhibits EU-53/RUS-53)).\n1324 Russia's first written submission, paras. 287–289 (referring to Commission Opinion on the\nCertification of MGT, (Exhibits EU-53/RUS-53)).\n1325 Russia's first written submission, paras. 296–298 (referring to Commission Opinion on the\nCertification of Amber Grid, (Exhibits EU-54/RUS-50)).\n1326 Russia's first written submission, para. 302. According to Russia, Plinacro is a TSO in Croatia owned\nand controlled by the government of Croatia and HEP is a gas supplier in Croatia. (Russia's first written\nsubmission, paras. 300–301).\n1327 In addition, we note that the Commission's opinions concerning the certification of MGT in Hungary\nand Amber Grid in Lithuania, reviewed in paragraphs 7.772 and 7.773 above, do not provide support for this\nproposition.\n\nthe form of separate ministries of the same government, are different from the unbundling rules\napplicable to all other service suppliers.\n7.783. However, as we noted above, a difference in the legal regime does not automatically\namount to an \"exemption\". To the contrary, our analysis shows that the requirement that the\npublic bodies in question be separate serves to ensure the same result – a se paration of the\nfunction of natural gas transmission from the function of natural gas production and/or supply.\nWhile the precise manner in which this separation must be achieved in respect of service suppliers\ncontrolled by public bodies and in respect of all other service suppliers is different, Russia has not\nargued that the mere existence of this difference amounts to a violation of Article XVII of the\nGATS.1328\n7.784. We recall that Article XVII:3 of the GATS makes it clear that formally different treatment of\ndomestic services and service suppliers and like services and service suppliers of any other\nMember is insufficient to establish a viola tion of Article XVII. In order for a violation of Article XVII\nto ensue, it must be shown that such formally different t reatment modifies the conditions of\ncompetition in favour of domestic services and service suppliers compared to like services and\nservice suppliers of any other Member.\n7.785. Thus, we consider that, even if Russia were to prove that the public body measure app lies\nonly to domestic service suppliers (the issue we examine below), the fact that this measure would\nprovide formally different treatment to domestic service suppliers and like service suppliers of\nother Members would not be sufficient to demonstrate tha t it violates Article XVII. Russia would\nstill need to demonstrate that this formally different treatment \"modifies the conditions of\ncompetition in favour of\" domestic services and service suppliers compared to like services and\nservice suppliers of any other Member.1329\n7.786. In concluding, we recall that, as established above, the public body measure provides\ndifferent rules for service suppliers controlled by public bodies than those prescribed by the\nunbundling measure for all other service suppliers. However, we have found these rules to be\nfunctionally equivalent to those provided by the unbundling measure in ensuring a separation of\nthe function of natural gas transmission from the function of natural gas production and/or supply.\n7.787. Being designed to ensure a separation of the function of natural gas transmission from the\nfunction of natural gas production and/or supply, the public body measure thus cannot be\nconsidered as \"releasing\" service suppliers controlled by public bodies from the prohibition of\nexercising control over, on the one hand, a TSO or transmission system, and on the other, an\nundertaking performing the function of natural gas production and/or supply. Therefore, we\nconclude that Russia has not established that the public body measure \"exempts\" service suppliers\ncontrolled by public bodies from the requirement to unbundle.\n7.788. In the specific circumstances of this dispute and for reasons of completeness , we find it\nuseful to continue with our analysis of alleged less favourable treatment by examining the parties'\narguments concerning the issue of whether the public body measure applies exclusively to\ndomestic service suppliers.\nWhether the public body measure applies exclusively to domestic service suppliers\n\n1328 We recall that Russia argues that the public body measure modifies the conditions of competition to\nthe detriment of service suppliers of any other Member in comparison to like domestic service suppliers\nbecause, in its view, this measure grants an \"exemption\" to domestic service suppliers. (Russia's first written\nsubmission, paras. 275, 277, 280 and 284; and second written submission, paras. 177-178).\n1329 We note that the Appellate Body in Argentina – Financial Services observed as follows:\nIn our view, while Article XVII:3 refers to the modification of conditions of competition in favour\nof domestic services or service suppliers, the legal standard set out in Article XVII:3 calls for an\nexamination of whether a measure modifies the conditions of competition to the detriment of\nservices or service suppliers of any other Member. Less favourable treatment of foreign services\nor service suppliers and more favourable treatment of like domestic services or service suppliers\nare flip-sides of the same coin. (Appellate Body Report, Argentina – Financial Services,\npara. 6.103).\n\n7.789. We have addressed the first element of Russia's claim – whether the public body measure\nis an \"exemption\" from the requirement to unbundle. We now turn to examine the other element\nof Russia's claim – whether the public body measure applies exclusively to domestic service\nsuppliers. We recall Russia's position that the public body measure in the national implementing\nlaws of Croatia, Hungary and Lithuania grants an \"exemption\" from the requirement to unbundle\nto service suppliers controlled by domestic public bodie s.1330 Thus, according to Russia, the\n\"exemption\" provided by the public body measure applies only to service suppliers controlled by\ndomestic public bodies, excluding service suppliers of other Members.1331\n7.790. Russia does not indicate whether, as a result of the a lleged \"exemption\", service suppliers\ncontrolled by foreign public bodies would be excluded from the scope of this measure or whether\nforeign service suppliers not controlled by public bodies would be excluded from its scope. 1332 In\nother words, Russia does n ot specify whether it compares the treatment of service suppliers\ncontrolled by domestic public bodies with the treatment of service suppliers controlled by foreign\npublic bodies or with the treatment of foreign service suppliers not controlled by public bodies.1333\n7.791. In paragraph 7.756 above, we have determined that the public body measure in the\nnational implementing laws of Croatia, Hungary and Lithuania sets out a legal regime for service\nsuppliers controlled by public bodies that is different from the ownership unbundling requirement\nprovided by the unbundling measure for all other service suppliers. Thus, on its face, the only\ncategory of service suppliers subject to the public body measure is service suppliers controlled by\npublic bodies. Service suppliers not controlled by public bodies are subject to the OU model, as\nwell as the other two unbundling models, where applicable. Therefore, in our analysis below, we\nwill assess whether Russia has demonstrated that the public body measure applies exclusively to\n\n1330 Russia's first written submission, paras. 233, 235 and 269–303; second written submission,\nparas. 176–197; and response to Panel question No. 5, para. 29.\n1331 Russia's first written submission, paras. 275, 277, 280 and 284; and second written submission,\nparas. 177-178.\n1332 We note that, in its panel request, Russia describes this claim as follows:\nThe Directive also provides that, when the owner of the VIU is the Member State or another\npublic body, two separate public bodies exercising control over the TSO and over an undertaking\nperforming production or supply functions shall be deemed not to be the same person or\npersons. In reality, this measure permits a Member State governm ent to own and control both\nthe TSO and the production or supply portions of the VIU, whereas third -country service\nsuppliers, including those of Russia, may not. (Russia's panel request, p. 2) (footnote omitted)\nIn its first written submission, Russia argues that the public body measure \"arbitrarily exempts\ngovernment-owned and controlled VIUs from the requirements of the unbundling measure\" and thus \"provides\npipeline transport services and service suppliers of other Members formally different treatment than like\ngovernment-controlled services and service suppliers\". (Russia's first written submission, paras. 233-234).\nRussia similarly alleges that \"[a]fter all, as a legal matter, the service suppliers actually owned and controlled\nby the respective governments are all exempt from the unbundling requirements entirely because they are\ndomestic (government-owned) rather than third-country entities\". (Russia's first written submission,\npara. 250). In its second written submission, Russia first argues that, \"[p]rovided the government arranges for\ncontrol to be exercised by 'two separate public bodies,' … it is exempted from the unbundling requirements\"\nand then concludes that this measure \"expand[s] the competitive opportunities of government-controlled\nservice suppliers to supply both transmission and supply/production services, while denying those same\nopportunities to other Members' service suppliers, including those of Russia\". (Russia's second written\nsubmission, paras. 175 and 178). The resulting ambiguity, however, concerns only our determination of\nwhether the public body measure applies exclusively to domestic service suppliers. It has no impact on our\nassessment of whether the public body measure is an \"exemption\" from the requirement to unbundle and does\nnot affect our conclusion that Russia has not demonstrated so.\n1333 At the same time, we observe that Russia does not assert that domestic service suppliers not\ncontrolled by public bodies may be certified on the basis of the public body measure. Likewise, aside from its\nallegations that service suppliers controlled only by domestic public bodies may be certified under this\nmeasure, Russia does not develop any arguments that, in its operation, the public body measure excludes\nforeign service suppliers not controlled by public bodies. In other words, we do not see in Russia's submissions\nany arguments that, in Russia's view, the public body measure excludes foreign service suppliers not controlled\nby public bodies any more than it excludes domestic service suppliers not controlled by public bodies. There is\nno evidence on the record that would allow us to reach such a conclusion. In any event, even if Russia were to\nbe understood as arguing that, by allegedly providing an \"exemption\" from the requirement to unbundle to\nonly service suppliers controlled by domestic public bodies, the public body measure modified the conditions of\ncompetition to the detriment of foreign service suppliers not controlled by public bodies, our conclusion above\nthat Russia has not demonstrated that this measure constitutes an \"exemption\" from the requirement to\nunbundle means that Russia's claim understood this way would not succeed.\n\nservice suppliers controlled by domestic public bodies (domestic service suppliers) and excludes\nservice suppliers controlled by foreign public bodies (foreign service suppliers).1334\n7.792. We commence our examination by observing that, as we have determined in\nparagraph 7.741, the text of the public body measure in the national impl ementing laws of\nCroatia, Hungary and Lithuania is origin -neutral. Thus, on its face, the public body measure, as\nimplemented in the national laws of Croatia, Hungary and Lithuania, can be read as covering\nservice suppliers controlled by domestic public bo dies, as well as service suppliers controlled by\nforeign public bodies.\n7.793. However, we recall that the Appellate Body has underscored that the text of the municipal\nlaw is only the starting point in establishing its meaning and scope. 1335 As further clarified b y the\nAppellate Body, a complainant may seek to support its understanding of the meaning and scope of\nthe municipal law on the basis of additional elements such as evidence of the consistent\napplication of the municipal law at issue, the pronouncements of domestic courts on the meaning\nof such law, the opinions of legal experts and the writings of recognized scholars. 1336 Thus, taking\ninto account this clarification, we continue our analysis to examine whether Russia has provided\npertinent evidence with respect to such other elements. We shall also consider evidence submitted\nby the European Union in order to rebut Russia's arguments.\n7.794. We note that, aside from the text of the national implementing laws of Croatia, Hungary\nand Lithuania, Russia does not provide any direct evidence in support of its understanding of the\nmeaning and scope of these laws. Russia relies, instead, on the evidence pertaining to the\nmeaning and scope of Article 9(6) of the Directive. We recall that Article 9(6) of the Directive is\nnot a challenged measure.1337 However, the national laws in question implement Article 9(6) of the\nDirective. Therefore, as we have already noted, evidence regarding the meaning and scope of\nArticle 9(6) of the Directive may be relevant for our assessment to the ex tent that such evidence\nmay clarify the meaning and scope of the national laws. 1338 Thus, we will take into account\nevidence regarding the meaning and scope of Article 9(6) of the Directive inasmuch as it can shed\nlight on the meaning and scope of the national implementing laws at issue.\n7.795. We recall that Article 9(6) of the Directive provides as follows:\nFor the implementation of this Article, where the person referred to in points (b), (c)\nand (d) of paragraph 1 is the Member State or another public body , two separate\npublic bodies exercising control over a transmission system operator or over a\ntransmission system on the one hand, and over an undertaking performing any of the\nfunctions of production or supply on the other, shall be deemed not to be the same\nperson or persons.1339 (emphasis added)\n7.796. Russia argues that Recital (20) of the Directive, the Explanatory Memorandum of the\nCommission to the Proposal of the Directive, and the Commission Interpretative Note on the\nUnbundling Regime demonstrate that Article 9(6) of the Directive covers only EU public bodies. 1340\nWe understand that, on this basis, Russia draws the same conclusion in respect of the national\nimplementing laws of Croatia, Hungary and Lithuania.\n7.797. We observe that the relevant part of Recital (20) of the Directive provides as follows:\n\n1334 We note that the European Union understands Russia's claim in the same manner, arguing that the\npublic body measure in the national implementing laws of Croatia, Hungary and Lithuania applies to service\nsuppliers controlled by domestic public bodies, as well as those controlled by foreign public bodies. (European\nUnion's second written submission, paras. 52-53). In the course of the panel proceedings, Russia has been\nengaging with the arguments provided by the European Union and has not indicated that they are premised on\nan incorrect understanding of its claim.\n1335 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.156.\n1336 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.156.\n1337 See para. 7.732.\n1338 This seems to also be the view of the parties, which, as mentioned above, have developed a\nsignificant part of their arguments on the basis of Article 9(6) of the Directive.\n1339 Directive 2009/73/EC, (Exhibit EU-5), Article 9(6).\n1340 Russia's response to Panel question No. 7(a), paras. 64–69.\n\nWith regard to ownership unbundling and the independent system operator solution,\nprovided that the Member State in question is able to demonstrate that the\nrequirement is complied with, two separate public bodies should be able to control\nproduction and supply activities on the one hand and transmission activities on the\nother.1341 (emphasis added)\n7.798. Russia contends that the reference to \"the Member State in question\" in the text of Recital\n(20) means that \"another public body\" in Article 9(6) should be understood as a public body of an\nEU member State.1342\n7.799. Russia also refers to the following part of the Explanatory Memorandum of the Commission\nto the Proposal of the Directive:\nIn keeping with Article 295 EC, the proposal applies in the same way to publicly and\nprivately owned companies. This means that irrespective of its public or private\nnature, no person or group of persons would be able alone or jointly to influence the\ncomposition of the boards, the voting or decision making of either transmission\nsystem operators or the supply or production companies. This ensures that where\nsupply or production activities are in public ownershi p, the independence of a publicly\nowned transmission system operator is still guaranteed; but these proposals do not\nrequire state owned companies to sell their network to a privately owned company .\nFor instance, to comply with this requirement, any public entity or the State could\ntransfer the rights (which provide the \"influence\") to another publicly or privately\nowned legal person. The important thing is that in all cases where unbundling is\ncarried out, the Member State in question must demonstrate that in practice, the\nresults are truly effective and that the companies operate entirely separate from one\nanother, providing a real level -playing field across the whole of the EU .1343 (emphasis\nadded)\n7.800. According to Russia, the italici zed text supports its positi on that Article 9(6) of the\nDirective does not cover TSOs controlled by a non-EU public body.1344\n7.801. Similarly, Russia relies on the Commission Interpretative Note on the Unbundling\nRegime1345, the relevant part of which provides:\nThe rules on unbundling apply equally to private and public entities. For the purpose\nof the rules on ownership unbundling, two separate public bodies should therefore be\nseen as two distinct persons and should be able to control generation and supply\nactivities on the one hand and tra nsmission activities on the other provided they are\nnot under the common influence of another public entity in violation of the rules on\nownership unbundling provided for in Article 9 Electricity and Gas Directives; the\npublic bodies concerned must be trul y separate. In these cases, the Member State in\nquestion will need to be able to demonstrate that the requirements of ownership\nunbundling of Article 9 Electricity and Gas Directives are enshrined in national law and\nare duly complied with.1346 (emphasis added)\n7.802. The European Union disagrees with Russia that Recital (20) of the Directive and the\ndocuments referred to above support the interpretation of Article 9(6) of the Directive (and by\nimplication the national implementing laws) advocated by Russia. Accordin g to the European\nUnion, in the certification procedure under the Directive, including under Article 9(6), the TSO\nseeking certification must demonstrate to the regulatory authority in the EU member State that it\ncomplies with the relevant requirements.1347 The European Union argues that, since ultimately it is\n\n1341 Directive 2009/73/EC, (Exhibit EU-5), Recital (20).\n1342 Russia's response to Panel question No. 7(a), para. 67.\n1343 Russia's response to Panel question No. 7(a), para. 68 (referring to European Commission, Proposal\nfor a Directive of the European Parliament and of the Council amending Directive 2003/55/EC concerning\ncommon rules for the internal market in natural gas, COM(2007) 529 final, 2007/0196 (COD)\n(19 September 2007), (Commission Proposal for the Directive), (Exhibit RUS-119), p. 6).\n1344 Russia's response to Panel question No. 7(a), para. 69.\n1345 Russia's response to Panel question No. 7(a), para. 67; and second written submission, para. 180.\n1346 Commission Interpretative Note on the Unbundling Regime, (Exhibits EU-42/RUS-19), p. 10.\n1347 European Union's response to Panel question No. 14(c), para. 33.\n\nthe EU member State that has to ensure that the TSO operating on its territory is compliant with\nthe unbundling rules, explanatory documents on unbundling, as well as Recital (20) of the\nDirective, refer to the obligations of the EU member States. 1348 Thus, the European Union submits\nthat, \"[e]ven if the TSO or system owner is controlled by (a) third country person(s), it is for the\nEU Member State where the TSO operates to ultimately ensure compliance with unbundling\".1349\n7.803. Russia challenges this explanation, alleging that the European Union has cited no actual\nevidence showing that there was any intention at the time of inclusion of Article 9(6) of the\nDirective for \"the Member State … to demonstrate\" complia nce on behalf of a third -country\ngovernment.1350\n7.804. We observe that, as quoted above, Article 9(6) of the Directive refers to \"the Member\nState or another public body\". We understand that, relying on the references to \"the Member State\nin question\" in Recital (2 0) of the Directive, the Explanatory Memorandum of the Commission to\nthe Proposal of the Directive, and in the Commission Interpretative Note on the Unbundling\nRegime, Russia contends that the phrase \"another public body\" in Article 9(6) of the Directive\nshould be understood as meaning a public body of an EU member State.\n7.805. Commencing our own analysis, we observe that Recital (20) of the Directive and the two\ndocuments cited by Russia explicitly refer to \"the Member State in question\" in the context of the\nlatter's obligation to ensure effective compliance with the unbundling requirement. In our view, the\nquestion raised by Russia's arguments is whether it can be inferred from the explicit reference to\nthe \"Member State\" in this obligation that only the publi c bodies of this State may seek application\non the basis of Article 9(6) of the Directive. For the reasons explained below, we consider that,\nwhile plausible, this is not the only inference that may be drawn.\n7.806. We observe that the Commission Interpretative Note on the Unbundling Regime states, in\nthe relevant part, that \"the Member State in question will need to be able to demonstrate that the\nrequirements of ownership unbundling of Article 9 Electricity and Gas Directives are enshrined in\nnational law and are duly complied with\".1351 This statement thus speaks of two obligations of \"the\nMember State in question\": (i) the obligation to demonstrate that the ownership unbundling\nrequirements are \"duly complied with\"; a nd (ii) the obligation to demonstrate that such\nrequirements are \"enshrined\" in national law. As mentioned above, the reference to \"the Member\nState in question\" in the former obligation could imply that only the public bodies of an EU\nmember State may req uest certification on the basis of Article 9(6) of the Directive. However, in\nour view, the reference to \"the Member State in question\" in the latter obligation could suggest\nthat public bodies of other States, including non -EU States, may request certific ation on the basis\nof Article 9(6) of the Directive.\n7.807. As \"the Member State in question\" will be able to comply with its latter obligation even if\nthe public bodies seeking certification under Article 9(6) of the Directive are not the public bodies\nof this member State, it could be inferred that the reference to \"the Member State in question\"\ndoes not necessarily imply any limitation on the origin of public bodies that may seek certification\nunder Article 9(6). In light of this , we consider that the referenc e to \"the Member State in\nquestion\" in the Commission Interpretative Note on the Unbundling Regime allows different\ninferences as to whether the phrase \"another public body\" in Article 9(6) of the Directive covers\npublic bodies of non-EU States, leaving the meaning and scope of this phrase ambiguous.\n7.808. In our view, this ambiguity is not resolved by Recital (20) of the Directive and the\nExplanatory Memorandum of the Commission to the Proposal of the Directive. The latter document\nstates, in relevant part, that \"[t]he important thing is that in all cases where unbundling is carried\nout, the Member State in question must demonstrate that in practice, the results are truly effective\nand that the companies operate entirely separate from one another, providing a re al level-playing\nfield across the whole of the EU\". 1352 The quoted passage does not unambiguously indicate that\n\"the Member State in question\" must demonstrate \"effective\" compliance with the requirement to\nunbundle only on behalf of its own public bodies. Li kewise, we consider that Recital (20) of the\n\n1348 European Union's response to Panel question No. 14(c), para. 33.\n1349 European Union's response to Panel question No. 14(c), para. 33.\n1350 Russia's opening statement at the second meeting of the Panel, para. 68.\n1351 Commission Interpretative Note on the Unbundling Regime, (Exhibits EU-42/RUS-19), p. 10.\n1352 Commission Proposal for the Directive, (Exhibit RUS-119), p. 6.\n\nDirective does not clarify the origin of public bodies in respect of which \"the Member State in\nquestion\" should be able to demonstrate that the ownership unbundling requirement is complied\nwith.\n7.809. We recall that the European Union advances its own explanation as to why Recital (20) of\nthe Directive and the two documents relied on by Russia refer to \"the Member State in question\".\nAccording to the European Union's explanation, this reference denotes the ultimate re sponsibility\nof the member State in which a TSO controlled by a public body operates to ensure compliance of\nthis TSO with the unbundling requirement, without implying any limitation on the origin of the\npublic body controlling such a TSO. 1353 While arguing t hat the European Union has not provided\nany evidence to support its position, Russia does not offer any arguments refuting this\nexplanation. In light of our own analysis, we do not find the explanation provided by the European\nUnion implausible. We further consider that it is Russia who bears the burden of introducing\nevidence that the public body measure is inconsistent with Article XVII of the GATS, including with\nrespect to its meaning and scope. 1354 Therefore, to the extent the parties advance divergent\ninterpretations of the public body measure, it is, in our view, insufficient for Russia to simply point\nto the absence of evidence supporting the European Union's interpretation. Rather, as the\ncomplainant, Russia needs to prove the interpretation of the pub lic body measure it relies on in\nadvancing its claim that this measure is inconsistent with Article XVII.\n7.810. Russia further argues that, in the certification opinions concerning Lithuania and Hungary\nunder Article 9(6) of the Directive, the Commission titles the relevant section of its opinion\n\"Separation within the State\", which in Russia's view, means that it is only within an EU member\nState government that this \"[s]eparation\" is contemplated. 1355 We understand that, on this basis,\nRussia draws the conclusion that the public body measure covers only service suppliers controlled\nby public bodies of EU member States. We are not persuaded that the mentioned certification\nopinions support Russia's interpretation of Article 9(6) of the Directive. We consider that th e mere\nreference to \"the State\" does not necessarily mean it is a reference to an EU member State. In our\nview, this reference may also cover non -EU States. As the certification opinions in question\nconcern EU member States (in casu, Hungary and Lithuania), the reference to \"the State\" in those\nopinions is ultimately a reference to the EU member State. However, it does not follow from this\nfact that the word \"State\" means an EU member State, and therefore, limits the scope of the\npublic body measure exclusi vely to service suppliers controlled by public bodies of EU member\nStates.\n7.811. We observe that neither party has referred to any domestic court pronouncements\nregarding the meaning of Article 9(6) of the Directive or the national implementing laws at issue.\nFurthermore, aside from referring to the titles of cert ain sections in the Commission certification\nopinions, which we have examined in the previous paragraph, Russia has provided no evidence of\nthe application of Article 9(6) of the Directive, or the nation al implementing laws at issue, in\nsupport of its arguments that the public body measure applies exclusively to service suppliers\ncontrolled by public bodies of EU member States. However, we note that the European Union has\nprovided evidence of the alleged application of the term \"public body\" by the Commission in the\nmerger control context.\n7.812. According to the European Union, the Commission Merger Jurisdictional Notice1356 refers to\n\"Member States or other public bodies\" and has been applied to undertakings owned by the\nChinese state in several merger control decisions. 1357 The European Union thus argues that this\n\n1353 European Union's response to Panel question No. 14(c), para. 33.\n1354 See para. 7.747 above.\n1355 Russia's second written submission, para. 181 (referring to Commission Opinion on the Certification\nof Amber Grid, (Exhibits EU-54/RUS-50), p. 2; and Commission Opinion on the Certification of MGT, (Exhibits\nEU-53/RUS-53), p. 3)).\n1356 Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the\ncontrol of concentrations between undertakings, 2008/C 95/01, (Commission Merger Jurisdictional Notice),\n(Exhibit EU-101).\n1357 European Union's second written submission, paras. 54-55; and response to Panel question No. 236,\nparas. 312–315.\n\ndemonstrates that the reference to \"another public body\" in Art icle 9(6) of the Directive was\nintended to extend to third-country public bodies.1358\n7.813. Russia contests the relevance of the evidence introduced by the European Union regarding\nthe alleged application of the term \"public body\" in the merger control context, su bmitting that the\nCommission Merger Jurisdictional Notice and the Commission's decisions referred to by the\nEuropean Union do not define the concept of \"public body\". 1359 We observe that paragraph 193 of\nthe Commission Merger Jurisdictional Notice refers to \" Member States (or other public bodies)\",\nand in the relevant part clarifies as follows:\nMember States (or other public bodies) are not considered as \"undertakings\" under\nArticle 5(4) simply because they have interests in other undertakings which satisfy the\nconditions of Article 5(4). Therefore, for the purposes of calculating turnover of State -\nowned undertakings, account is only taken of those undertakings which belong to the\nsame economic unit, having the same independent power of decision.1360\n7.814. We are satisf ied that, in the two decisions cited by the European Union, the Commission\nassessed whether the decision -making of China's state -owned companies involved in a\nconcentration was independent referring inter alia to paragraph 193 of the Commission Merger\nJurisdictional Notice.1361 Thus, we confirm that, while neither the Commission Merger Jurisdictional\nNotice nor the Commission's decisions referred to by the European Union define the concept of the\n\"public body\", the Commission applied the phrase \"Member States (or other public bodies)\" to\nChina's state-owned undertakings in the merger control context.\n7.815. We are mindful that the application of the same term (\"public bodies\") in the merger\ncontrol context may not be automatically transposable into the public body me asure context.\nHowever, in our view, this does not render the evidence of such application adduced by the\nEuropean Union irrelevant for our analysis, as Russia appears to suggest. 1362 We consider that the\napplication of the term \"public bodies\" to non-EU entities in the merger control context constitutes\nindirect evidence that the term \"public body\" may conceivably cover non -EU public bodies, also in\nthe context of the public body measure.\n7.816. Thus, having carefully reviewed the arguments and evidence presented by the parties, we\nconsider that Russia has not demonstrated that the phrase \"another public body\" used in\nArticle 9(6) of the Directive covers only service suppliers controlled by EU public bodies.\nConsequently, evidence pertaining to the meaning and scope of Article 9(6) of the Directive does\nnot support Russia's position that the national implementing laws of Croatia, Hungary and\nLithuania apply only to service suppliers controlled by domestic public bodies. We also recall that,\naside from the text of the national implementing laws, Russia has provided no direct evidence\nsupporting its claim that the references to \"two separate public authorities\", \"other public bodies\"\nand \"another public body\" in the national implementing laws of Croatia, Hungary and Lith uania,\nrespectively, cover only domestic public bodies.\n7.817. We now turn to the issue of whether in advancing its claim on the basis of the alleged\nownership and control by the governments of Croatia, Hungary and Lithuania of a TSO and supply\nundertaking withi n their respective territories, Russia has demonstrated that the public body\nmeasure in practice operates to exclude service suppliers controlled by foreign public bodies.\n7.818. Russia explains the basis for its claim as follows:\n\n1358 European Union's second written submission, para. 55; and response to Panel question No. 236,\nparas. 312–315.\n1359 Russia's opening statement at the second meeting of the Panel, paras. 62-63. See also Russia's\ncomments on the European Union's response to Panel question No. 236, para. 245.\n1360 Commission Merger Jurisdictional Notice, (Exhibit EU-101), para. 193.\n1361 Commission Decision of 31 March 2011 on China National Bluestar/Elkem notification pursuant to\nArticle 4 of Council Regulation No. 139/2004, Case COMP/M.6082, (Exhibit EU-104), para. 8 and fn 4; and\nCommission Decision of 19 May 2011 on DSM/Sinochem/JV notification pursuant to Article 4 of Council\nRegulation (EC) No. 139/2004, Case COMP/M.6113, (Exhibit EU-106), para. 9 and fn 4.\n1362 Russia's comments on the European Union's response to Panel question No. 236, para. 245.\n\nThe governments of Croatia, Hungary and Lithuania each owns and controls the entire\npipeline transport service supplier supplying both transmission and supply services to\nall or a portion of the natural gas market within their respective territories. These\nMember States do so through t heir government exemption measures adopted\npursuant to Article 9(6) of the Directive. Accordingly, as implemented, Croatia,\nHungary and Lithuania's government exemption measures provide their respective\ndomestic, government -controlled services and service suppliers different treatment\nthan they do like services and service suppliers of other Members.1363\n7.819. We thus understand Russia to argue that, because the implementation of the public body\nmeasure in Croatia, Lithuania and Hungary results in the governments of these EU member States\nowning and controlling a TSO and supply undertaking within their territories, service suppliers\ncontrolled by foreign public bodies are effectively prevented from making use of the public body\nmeasure in these EU member States. 1364 As we have determined above, the aspect of Russia's\nclaim that concerns the ownership and control by the government of Hungary of a TSO and supply\nundertaking in its territory falls outside our terms of reference and we shall therefore not consider\nit further.1365\n7.820. In respect of the alleged ownership and control by the governments of Croatia and\nLithuania of a TSO and supply undertaking within their respective territories, Russia only argues\nthat this ownership and control are based on the application of the \"ine ffective\" concept of\nunbundling.1366 However, Russia has not argued that the fact that the governments of Croatia and\nLithuania own and control a TSO and supply undertaking within their respective territories actually\nprevents service suppliers controlled by foreign public bodies from being certified on the basis of\nthe public body measure in these member States. Furthermore, Russia has developed no other\narguments that the public body measure in practice operates to exclude from its scope service\nsuppliers co ntrolled by foreign public bodies, and, in response to a question by the Panel,\nconfirmed that no Russian entity sought certification under the public body measure.1367\n7.821. We recall that, on the basis of our analysis of the meaning and scope of the public body\nmeasure, in light of the arguments of the parties and pertinent evidence, including the references\nto \"the Member State in question\" in Recital (20) of the Directive, the Explanatory Memorandum of\nthe Commission to the Proposal of the Directive, and the Co mmission Interpretative Note on the\nUnbundling Regime, we have concluded that Russia has not demonstrated that the public body\nmeasure in the national laws of Croatia, Hungary and Lithuania applies only to service suppliers\ncontrolled by domestic public bodies.\n7.822. Based on our examination of Russia's arguments with respect to the additional basis for its\nclaim, we further conclude that Russia has not demonstrated that the public body measure in the\nnational laws of Croatia, Hungary and Lithuania in practice o perates to exclude service suppliers\ncontrolled by foreign public bodies.\n7.6.2.3 Conclusion\n7.823. As indicated in paragraph 7.751 above, in the specific circumstances of this claim, and\nbased on our understanding of Russia's arguments, in order for its claim to succeed, Russia needs\n\n1363 Russia's first written submission, para. 285. See also Russia's second written submission, para. 188.\n1364 Russia's first written submission, paras. 233–235 and 285–303; response to Panel question No. 5,\npara. 29; and second written submission, paras. 188–197.\n1365 See above para. 7.215.\n1366 Russia's second written submission, paras. 192–195.\n1367 Russia's response to Panel question No.7(c), paras. 73-74. The European Union further confirms\nthat there have been no instances where a TSO controlled by a public body from a third country sought the\napplication of Article 9(6) of Directive or the corresponding national implementing provisions. (European\nUnion's response to Panel question No. 14(a), para. 31). Russia explains that no Russian entity has sought\ncertification on the basis of Article 9(6) of the Directive or the corresponding provisions in the national\nimplementing laws due to the following reasons: there is no objective indication that the public bodies of non-\nEU countries, including Russian, could make use of this provision; the term \"public body\" is \"intentionally\nvague\" to ensure that the member states can own and control their entire transmission and supply systems\nand comply with \"the Directive's technical requirements\"; and there are no Russian TSOs operating within the\nEU that could possibly be considered a \"public body\" within the meaning of Article 9(6) of the Directive.\n(Russia's response to Panel question No. 7(c), paras. 73-74).\n\nto demonstrate two elements: (i) that the public body measure is an \"exemption\" from the\nrequirement to unbundle, and (ii) that it applies only to domestic service suppliers, excluding like\nservice suppliers of other Members, and hence modifies the conditions of competition to the\ndetriment o f service suppliers of any other Mem ber. The analysis conducted above leads us to\nconclude that Russia has demonstrated neither of these elements. Therefore, we find that Russia\nhas not demonstrated that the public body measure in the national implementing laws of Croatia,\nHungary and Lithuania modifies the conditions of competit ion to the detriment of service suppliers\nof other Members in comparison to like domestic service suppliers, and is, for this reason,\ninconsistent with Article XVII of the GATS. As we have not found an inconsistency with Article\nXVII, we do not consider it necessary to examine the European Union's defence un der Article\nXIV(c) of the GATS.\n7.7 The LNG measure\n7.7.1 Introduction\n7.824. As noted above in section 2.2.4, the LNG measure challenged by Russia stems from the\nprovisions of the Directive defining a \"LNG facility\" and \"LNG system operator\". LNG facilities are\nterminals used for the importation, offloading, and regasification of LNG in the European Union.1368\nLNG system operators are responsible for operating a LNG facility and carry out the importation,\noffloading, and regasification of LNG.1369\n7.7.2 Russia's claim under Article I:1 of the GATT 1994\n7.7.2.1 Introduction\n7.825. Russia's claim under Article I:1 of the GATT 1994 arises from the fact that, as a\nconsequence of how LNG facilities and LNG system operators are defined in the Directive, LNG\nsystem operators are not subject to the requirement to unbundle applicable t o TSOs.1370 Russia\nargues that, because LNG system operators are not required to unbundle and TSOs are required to\ndo so, LNG imported into the European Union via LNG facilities receives an advantage within the\nmeaning of Article I:1 of the GATT that is not accorded to Russian natural gas imported into the\nEuropean Union via pipelines.1371\n7.826. The European Union submits that Russia has not demonstrated how the different rules\napplicable to LNG system operat ors impact the competitive opportunities of natural gas imported\nfrom Russia.1372 The European Union also argues that LNG and natural gas are not like products\nwithin the meaning of Article I:1 of the GATT 1994. 1373 According to the European Union, due to\nthe specific nature of LNG facilities, in comparison to transmission networks, the non-application of\nthe unbundling requirement of the Directive to LNG system operators does not grant any\nadvantage to LNG imported into the European Union via LNG facilities. 1374 The European Union\nfurther points out that the Directive requires third-party access to all LNG facilities in the European\nUnion, regardless of ownership. 1375 The European Union thus maintains that nothing prevents\nRussian gas from being imported via LNG facilities in the European Union.1376\n7.7.2.2 Analysis by the Panel\n7.827. In light of the legal standard under Article I:1 of the GATT 1994, as set out in\nparagraphs 7.236 and 7.237 above, our analysis below will focus on whether Russia has\n\n1368 Directive 2009/73/EC, (Exhibit EU-5), Article 2(11).\n1369 Directive 2009/73/EC, (Exhibit EU-5), Article 2(12).\n1370 See above section 2.2.4.\n1371 Russia's first written submission, paras. 391–396; responses to Panel question No. 1 paras. 1 and 5,\nNo. 6, paras. 54–63, and No. 184, paras. 200-201; and second written submission, para. 273.\n1372 European Union's first written submission, paras. 440 and 446; and second written submission,\npara. 150.\n1373 European Union's first written submission, paras. 360 and 437; and second written submission,\nparas. 147–149.\n1374 European Union's first written submission, paras. 427-434 and 441; response to Panel question\n1375 European Union's first written submission, paras. 442 and 444.\n1376 European Union's first written submission, para. 442; and second written submission, para. 153.\n\nestablished the following elements: (a) that the LNG measure falls within the scope of Article I:1;\n(b) that the relevant imported products are like products; (c) that the LNG measure confers an\n\"advantage, favour, privilege, or immunity\" on a product originating in the territory of any\ncountry; and (d ) that the advantage so accorded is not extended \"immedia tely\" and\n\"unconditionally\" to like Russian products.\n7.7.2.2.1 Scope of Article I:1 of the GATT 1994\n7.828. Russia asserts that the LNG measure is a law, regulation or requirement affecting the\ninternal sale, offering for sale, purchase, transportation, distribution or use of natural gas imported\nfrom Russia and other third -countries within the meaning of Article III:4 of the GATT 1994, and\nconsequently, falls within the scope of Article I:1 of the GATT 1994. 1377 The European Union does\nnot contest Russia's arguments that the LNG measure falls within the scope of Article I:1 of the\nGATT 1994.\n7.829. As observed by the Appellate Body, Article I:1 of the GATT 1994 \"incorporates all matters\nreferred to in paragraphs 2 and 4 of Article III\". 1378 Thus, in light of Russia's arguments, we need\nto determine whether the LNG measure falls within the scope of the \"matters\" referred to in Article\nIII:4 of the GATT 1994 in order to determine whether it falls within the scope of Article I:1 of the\nGATT 1994. For a measure to fall within the scope of Arti cle III:4 of the GATT 1994, such a\nmeasure must constitute a law, regulation or requirement \"affecting\" the \"internal sale, offering for\nsale, purchase, transportation, distribution or use\" of imported natural gas.1379\n7.830. We note that the parties do not disagree that the Directive constitutes a law, regulation or\nrequirement within the meaning of Article III:4 of the GATT 1994. In our view, the Directive is\nundeniably a law, regulation or requirement within the meaning of this provision. However, a s\nclarified by the Appellate Body, it is \"not any 'laws, regulations and requirements' which are\ncovered by Article III:4, but only those which \"' affect' the specific transactions, activities and uses\nmentioned in that provision\".1380 According to the Appellate Body, \"the word 'affecting' operates as\na link between identified types of government action ('laws, regulations and requirements') and\nspecific transactions, activities and uses relating to the products in the marketplace ('internal sale,\noffering for sale, purchase, transportation, distribution or use')\".1381\n7.831. Turning to the question of whether the LNG measure \"affects\" any of the transactions,\nactivities or uses mentioned in Article III:4 of the GATT 1994, we recall that, as a consequence of\nhow LNG facilities and LNG system operators are defined in the Directive, LNG system operators\nare not subject to the requirement to unbundle. As applicable to TSOs, the obligation to unbundle\nrequires a separation of gas transmission function from the function of gas production and /or\nsupply on the basis of one of the applicable unbundling models, including ownership unbundling.\nUnder the OU model, the same person is prohibited from directly or indirectly exercising control\nover, on the one hand, a TSO or transmission system, and on the other, an undertaking\nperforming any of the functions of production or supply. 1382 Applied mutatis mutandis to LNG\nsystem operators, the unbundling obligation would require a separation of the function of LNG\nsystem operation from the function of LNG production and/or supply. As LNG system operators are\nnot subject to the requirement to unbundle, it means that, in practice, an LNG supply undertaking\nmay exercise control over an LNG system operator.\n7.832. Russia submits that, as a consequence of the non-applicability of the unbundling obligation\nto LNG system operators, \"LSOs and their foreign production -supply owners can thereby reduce\ntheir costs and otherwise [increase] competitive opportunities for the sale, purchase and\ntransportation of their natural gas products on the EU market\". 1383 We understand that, on this\n\n1377 Russia's first written submission, paras. 342, 364-365 and 382; and second written submission,\npara. 271.\n1378 Appellate Body Reports, EC – Seal Products, para. 5.80.\n1379 Panel Report, Argentina – Financial Services, para. 7.1015.\n1380 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 208. (emphasis original)\n1381 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 208.\n1382 See above para. 2.11. See also Commission Interpretative Note on the Unbundling Regime,\n(Exhibits EU-42/RUS-19), pp. 7–8.\n1383 Russia's response to Panel question No. 113, para. 467.\n\nbasis, Russia argues that the LNG measure affects the internal sale, offering for sale, purchase,\ntransportation, distribution or use of natural gas.1384\n7.833. In our view, it is conceivable that the ability of a n LNG supply undertaking to exercise\ncontrol over an LNG system operator could allow such an undertaking to adjust its costs associated\nwith the internal sale of imported LNG. The LNG measure may, as a result, affect imported LNG\nsupplied by such an undertaking and gas imported into the European Union via pipelines.\nTherefore, we consider that the LNG measure affects the internal sale of imported natural gas in\nthe European Union and consequently falls within the scope of the \"matters\" referred to in\nArticle III:4 of the GATT 1994. On this basis, we find that the LNG measure falls within the scope\nof Article I:1 of the GATT 1994.\n7.7.2.2.2 Like products\n7.834. Russia argues that natural gas imported from Russia and LNG imported from other\ncountries are like products within the meaning of Article I:1 of the GATT 1994. 1385 For Russia, LNG\nis natural gas and the only difference betw een the two is the method of importation and the form\nin which LNG is imported. 1386 According to Russia, n atural gas is converted into liquid form to\nfacilitate long distance ocean transport, and w hen LNG reaches the European Union it is\nnecessarily reconverted to its gaseous state (regasified) for insertion in the transmission system\nand marketing to consumers.1387 Thus, natural gas imported via pipelines and in the form of LNG is\n\"marketed in an equally close, competitive relationship\". 1388 On this basis, Russia c oncludes that\nnatural gas imported from Russia and LNG imported from other countries are \"identical in terms of\nphysical characteristics and perfectly substitutable in terms of consumer perceptions and end uses,\nas required to satisfy the like products standard under Article I:1\".1389\n7.835. The European Union submits that LNG and natural gas are not like products within the\nmeaning of Article I:1 of the GATT 1994. 1390 For the European Union, LNG and natural gas are at\ndifferent stages in production, and therefore do no t constitute \"like or directly competitive\nproducts\".1391 The European Union contends that the physical characteristics of LNG and natural\ngas are different: LNG is liquid, while natural gas is in gaseous form. 1392 The European Union also\nalleges that LNG and natural gas have different end -uses, pointing to the use of LNG as a\ntransport fuel. 1393 Furthermore, in the European Union's view, consumers of LNG purchase this\nproduct in order to transport it by ships or trucks and trade or store LNG.1394 In addition, according\nto the European Union, LNG and natural gas have a different tariff classification: in the\nHarmonized Commodity Description and Coding System of the World Customs Organization (HS),\nLNG is classified under s ubheading 2711.11 while natural gas is classified under subheading\n2711.21.1395\n7.836. Russia submits that the Directive treats natural gas as including LNG. 1396 Responding to\nthe European Union's arguments that the end -uses of LNG and natural gas are diffe rent, Russia\nalso contends that, ultimately, both types of natural gas will be used by consumers \"to heat their\n\n1384 Russia's second written submission, para. 271.\n1385 Russia's first written submission, para. 366.\n1386 Russia's first written submission, para. 348; response to Panel question No. 109, para. 435; and\nsecond written submission, para. 272.\n1387 Russia's response to Panel question No. 109(a), para. 435.\n1388 Russia's first written submission, para. 348.\n1389 Russia's first written submission, paras. 348 and 366; and second written submission, para. 272.\n1390 European Union's first written submission, paras. 360 and 437; and second written submission,\nparas. 147–149.\n1391 European Union's second written submission, para. 148 (referring to Appellate Body Report, US –\nLamb, paras. 77-96).\n1392 European Union's second written submission, para. 149.\n1393 European Union's second written submission, para. 149; and responses to Panel question\n1394 European Union's second written submission, para. 149.\n1395 European Union's second written submission, para. 149.\n1396 Russia's panel request, fn 2 (stating that \"'[n]atural gas' includes liquefied natural gas ('LNG'),\nconsistent with the provisions of the Directive.\"); and response to Panel question No. 109(e), paras. 443–444\n(referring to Directive 2009/73/EC, (Exhibit EU-5), Articles 1(2), 2(1) and 2(7)).\n\nhomes, for example, or cook their food\". 1397 Thus, for Russia, \"in the eyes of the consumer\", the\nend use of both types of natural gas is exactly the same.1398\n7.837. We consider that our assessment of likeness under Article I:1 of the GATT 1994 may be\ninformed by the analytical framework set out by the Appellate Body for a determination of likeness\nunder Article III:4 of the GATT 1994. 1399 We recall that the Appellate Body has found that a\ndetermination of whether the products at issue are like for the purposes of Article III:4 of the\nGATT 1994 involves an assessment, on a case -by-case basis, of the nature and extent of the\ncompetitive relationship between and among these p roducts, taking into account all relevant\nevidence, including the following criteria: (a) the properties, nature and quality of the products;\n(b) the end-uses of the products; (c) consumers' tastes and habits in respect of the products; and\n(d) the tariff classification of the products.1400\n7.838. The Appellate Body has further explained that panels must examine all the relevant\nevidence and determine whether that evidence, as a whole, indicates that the products in question\nare like.1401 We follow this analytical fram ework in our assessment of whether LNG imported from\nthird countries and natura l gas imported from Russia are like products within the meaning of\nArticle I:1 of the GATT 1994.\n7.839. While the parties disagree on w hether LNG and natural gas are like products on the basis\nof the likeness criteria mentioned in the previous paragraph, we consider that the main point of\ncontention between the parties concerns the significance of the fact that LNG may be reconverted\ninto gas at a n LNG facility in the European Union for its subsequent transportation and supply via\npipelines. Therefore, we address this issue before turning to the analysis based on the four\nlikeness criteria mentioned in the previous paragraph.\n7.840. We understand that, for Russia, the fact that LNG may be reco nverted into gas at a n LNG\nfacility means that LNG and natural gas are indistinguishable and therefore like1402, whereas the\nEuropean Union considers that LNG and natural gas are at different stages in production.1403\n7.841. Based on the evidence on the record, we und erstand that natural gas may be converted\ninto LNG through the process of liquefaction, which facilitates its long -distance transportation by\nseagoing vessels.1404\n7.842. We also understand that LNG, in turn, may be reconverted back into gas (regasified) at a n\nLNG facility to enable its transportation and supply via pipelines. 1405 The parties do not contest\nthat a certain amount of LNG imported into the European Union undergoes regasification for the\npurposes of transporting and supplying regasified LNG via pipeli nes in the European Union.1406 The\nparties also agree that a certain amount of LNG imported into the European Union is not regasified\nfor the purposes of its transportation and supply via pipelines in the European Union, and is\ninstead used in its liquid form as a transport fuel.1407 Thus, LNG imported into the European Union\n\n1397 Russia's opening statement at the first meeting of the Panel, para. 50.\n1398 Russia's opening statement at the first meeting of the Panel, para. 50.\n1399 We also note that this approach is consistent with the observations made by the Panel in US –\nPoultry (China). (Panel Report, US – Poultry (China), paras. 7.424-7.425).\n1400 Appellate Body Report, EC – Asbestos, paras. 99 and 101-102.\n1401 Appellate Body Report, EC – Asbestos, para. 103.\n1402 See Russia's response to Panel question No. 109, paras. 432–442. We also note that, similarly,\nColombia is of the opinion that LNG is natural gas that is converted to liquid form for ease of storage or\ntransport, which does not \"necessarily\" imply that these products would not be able to compete in the same\nmarket. (Colombia's third-party statement, para. 12)\n1403 European Union's second written submission, para. 148.\n1404 Russia's first written submission, para. 348; and European Union's first written submission,\npara. 285 and 428. See also Gas Strategies, Industry Glossary (excerpts)\nhttp://www.gasstrategies.com/industry-glossary (accessed 3 August 2017), (Gas Strategies industry glossary),\n(Exhibit RUS-268) definition of \"LNG (Liquefied Natural Gas)\"; and UNECE glossary for transport statistics,\n(Exhibit RUS-41), p. 101.\n1405 Russia's first written submission, para. 348; and European Union's first written submission, para.\n285. See also Gas Strategies industry glossary, (Exhibit RUS-268), definition of \"LNG (Liquefied Natural Gas)\".\n1406 Russia's response to Panel question No. 109, paras. 439 and 442; and European Union's first written\nsubmission, para. 429.\n1407 European Union's second written submission, para. 149; responses to Panel question No. 109(c),\npara. 282, and No. 188, para. 130; and Russia's response to Panel question No. 187, paras. 207–209. See also\n\nmay be either regasified and then transported and supplied via pipelines in the same way as\nnatural gas that was never liquefied and imported into the European Union as such, or it may be\nused as a transport fuel without prior regasification.\n7.843. We consider that the fact that a certain amount of imported LNG is reconverted into gas in\nthe European Union does not mean that LNG cannot be distinguished from natural gas. Contrary to\nRussia's initial arguments, not all LNG imported into the European Union undergoes regasification\nin order to be transported and supplied via pipelines. 1408 The fact that LNG can be used as a\ntransport fuel without prior regasification indicates that LNG is not simply a tem porary physical\nstate of natural gas that enables its transportation by seagoing vessels but can be considered a\nseparate product distinguishable from natural gas. This, in our view, is also confirmed by the HS,\nwhich distinguishes between LNG and natural gas, classifying them under different\nsubheadings.1409 We thus disagree with Russia's position that LNG is indistinguishable from natural\ngas and is, for this reason, like natural gas within the meaning of Article I:1 of the GATT 1994.\n7.844. We also consider that the provisions of the Directive allegedly treating natural gas as\nincluding LNG do not change our conclusion that LNG is distinct from natural gas in the context of\nour likeness analysis. 1410 We recall that Russia's claim against the LNG measur e stems from the\nregulation, under the Directive, of LNG system operators in comparison with TSOs, rather than\nnatural gas or LNG. When prescribing the rules for gas -related infrastructure and the operators of\nsuch infrastructure, there may have been regul atory reasons for referring to natural gas as\nincluding LNG. While we take the approach of the Directive into account, we do not consider it as\ndefinitive for the purposes of our likeness analysis.\n7.845. As clarified by the Appellate Body, the determination of likeness should be based on an\nassessment of a competitive relationship between and among products \"in the marketplace\" rather\n\nEuropean Commission Memo \"Clean Power for Transport – Frequently Asked Questions\", (Memo/13/24)\n(24 January 2013), (Exhibit RUS-195), pp. 3, 4, 9, 10 and 14. Describing the \"[c]urrent situation\" regarding\nnatural gas vehicles, the European Commission Memo noted that there were \"38 LNG filling stations in the EU,\n22 in United Kingdom, and the rest in Spain, Sweden, Estonia, the Netherlands, Poland and Belgium\".\n(European Commission Memo \"Clean Power for Transport – Frequently Asked Questions\", (Memo/13/24) (24\nJanuary 2013), (Exhibit RUS-195), pp. 3 and 10); with respect to refuelling stations for waterborne transport,\nthe Memo notes that \"LNG infrastructure for fuelling vessels is at a very early stage, with only Norway and\nSweden having developed small-scale LNG terminals for bunkering purposes\" (European Commission Memo\n\"Clean Power for Transport – Frequently Asked Questions\", (Memo/13/24) (24 January 2013), (Exhibit RUS-\n195), p. 9. We consider that these references to LNG filling and refuelling stations for road and waterborne\ntransport demonstrate the use of LNG as a transport fuel as of 24 January 2013. In addition, we note that the\nMemo referred to a number of solutions aimed at expanding the use of LNG as a fuel for road and waterborne\ntransport in the future: for waterborne transport, the Commission proposed that LNG refuelling stations be\ninstalled in all maritime and inland ports of the trans-European transport (TEN-T) core network by 2020 (2025\nfor inland ports) (European Commission Memo \"Clean Power for Transport – Frequently Asked Questions\",\n(Memo/13/24) (24 January 2013), (Exhibit RUS-195), p. 9; for road transport, the Commission proposed that,\nby 2020, along the roads of the Trans-European Transport Core Network refuelling stations are installed every\n400 km (European Commission Memo \"Clean Power for Transport – Frequently Asked Questions\",\n(Memo/13/24) (24 January 2013), (Exhibit RUS-195), p. 10).\n1408 Despite initially alleging that all imported LNG is regasified in the European Union, Russia\nacknowledges that LNG is used as a transport fuel in the European Union. In its response to Panel question\nNo. 187, Russia stated as follows: \"[s]ome small amount of natural gas condensed in the form of LNG has been\nused as fuel for ships\". (Russia's response to Panel question No. 187, para. 207). Russia however emphasizes\nthe small amount of LNG thus used. (See Russia's responses to Panel question No. 109, paras. 435-436, and\nNo. 187, paras. 207-209; second written submission, para. 272; and comments on European Union's response\nto Panel question No. 188, para. 155). In our view, regardless of what that amount may be, it shows that LNG\nis used as such and is not just a temporary physical state of natural gas for the purposes of its transportation\nby seagoing vessels.\n1409 HS Chapter 27, (Exhibit EU-32).\n1410 We note that Article 1(2) of the Directive provides as follows:\nThe rules established by this Directive for natural gas, including LNG , shall also apply in a non -\ndiscriminatory way to biogas and gas from biomass or other types of gas in so far as such gases\ncan technically and safely be injected into, and transported through, the natural gas system.\n(Directive 2009/73/EC, (Exhibit EU-5), Article 1(2)). (emphasis added)\nArticle 2(1) of the Directive, defining \"natural gas undertaking\", lists the functions of such\nundertakings as including the supply of \"natural gas, including LNG\". In a similar vein, Article\n2(7) of the Directive, defines \"supply\" as \"the sale, including resale, of natural gas, including\nLNG, to customers\". (See Directive 2009/73/EC, (Exhibit EU-5), Articles 2(1) and 2(7)).\n\nthan the regulatory objectives of the measure. 1411 Therefore, the references in the Directive to\n\"natural gas, including LNG\" do not change our conclusion that, for the purposes of our likeness\nanalysis, LNG is distinct from natural gas.\n7.846. Having rejected Russia's arguments that LNG is indistinguishable from natural gas and is,\nfor this reason, like natural gas within the meaning of Article I:1 of the GATT 1994, we now turn to\nthe parties' arguments and evidence on whether LNG is like natural gas on the basis of the four\nlikeness criteria identified in paragraph 7.837 above.1412 We also address Russia's argument that\nLNG and natural gas are like products within the meaning of Article I:1 of the GATT 1994 because\nthe Commission allegedly recognized that natural gas and LNG are in a direct competitive\nrelationship.\n7.847. With respect to the properties, nature and quality of LNG and natural gas, we recall that, in\nRussia's view, LNG and natural gas are \"identical in terms of physical characteristics\", while the\nEuropean Union submits that LNG and natural gas d o not share the same properties, nature and\nquality.1413 We consider that the evidence on the record supports the European Union's position.\nLNG is liquid while natural gas is gaseous. 1414 Thus, in terms of physical characteristics, LNG and\nnatural gas do not share the same properties, nature and quality.1415\n7.848. With respect to the end-uses of LNG and natural gas, Russia submits that, ultimately, both\ntypes of natural gas will be used by consumers for the same end -use, \"to heat their homes, for\nexample, or cook their food\".1416 The European Union disagrees with Russia, noting that LNG may\nbe used as a transport fuel. 1417 We understand Russia's position regarding the end -uses of LNG\nand natural gas being the same as premised on the comparison of the end-uses of regasified LNG\nwith natural gas. 1418 We agree that, as far as regasified LNG is concerned, its end -uses are\nidentical to those of natural gas. However, we disagree that the same applies to LNG and natural\ngas. Russia has not provided any evidence that LNG itself, without prior regasification, can be used\nfor domestic heat generation. In this sense, we see that the end-uses of LNG and natural gas may\ndiffer.1419\n\n1411 Appellate Body Report, US – Clove Cigarettes, paras. 111–120.\n1412 We note that we asked Russia to confirm our understanding that Russia is not comparing natural\ngas, which is being transported as such through regular pipelines, to natural gas, which is currently in its final\ngaseous stage but has previously been transported as LNG (Panel question No. 109). In its response, Russia\nindicated that our understanding was not \"exactly correct\", reiterating its position that \"LNG is natural gas\".\n(Russia's response to Panel question No. 109, para. 432). Russia further indicated that \"the like product\ncomparison should be between LNG, as imported, and all other natural gas\". (Russia's response to Panel\nquestion No. 109, para. 434).\n1413 Russia's first written submission, paras. 348 and 366; and European Union's first written\nsubmission, paras. 360 and 437; and second written submission, para. 149.\n1414 This conclusion stems from the definition of the processes of liquefaction and regasification.\nAccording to industry definitions, liquefaction \"consists of chilling natural gas to the point where it becomes\nliquid, at an average temperature of –160º C (–260º F)\", while regasification \"consists of returning LNG to its\nregular gaseous phase at about 5º C using heat exchangers\" (United Nations Economic Commission for Europe,\nStudy on Current Status and Perspectives for LNG in the UNECE Region (UN 2013), (Exhibit RUS-32), pp. 5-6;\nand UNECE LNG Study, (Exhibit RUS-271), Chapter 2, p. 2. See also Gas Strategies industry glossary,\n(Exhibit RUS-268), definition of \"LNG (Liquefied Natural Gas)\")\n1415 We recall that the Appellate Body in EC – Asbestos observed as follows: \"We see the first criterion,\n'properties, nature and quality', as intended to cover the physical qualities and characteristics of the products.\"\n(Appellate Body Report, EC – Asbestos, para. 110). (emphasis added)\n1416 Russia's opening statement at the first meeting of the Panel, para. 50.\n1417 European Union's second written submission, para. 149; and response to Panel question No. 109(c),\npara. 282.\n1418 This is confirmed by Russia's response to Panel question No. 109, where Russia states that \"LNG\nalso serves the same end uses once it has been reconverted, as it inevitably must be\". (Russia's response to\nPanel question No. 109, para. 433).\n1419 We also note, at the same time, that there is no support on the record for a proposition that natural\ngas cannot be used as a transport fuel, which would allow us to conclude that being used as a transport fuel\ndistinguishes the end-use of LNG from the end-use of natural gas. In this regard, we note that the evidence\nprovided by Russia indicates the following uses of natural gas in the European Union: (i) residential and\ncommercial; (ii) industry; (iii) power plants; (iv) transport; (v) other uses. (Inland Sales of Natural Gas in the\nEuropean Union in 2014, http://www.eurogas.org/uploads/2016/flipbook/statistical-report-\n2015/index.html#p=6 (accessed 3 August 2017), (Exhibit RUS-194)). In our view, the \"transport\" use of\nnatural gas may encompass the use of natural gas as a transport fuel. However, this evidence is inconclusive\nbecause it does not distinguish between natural gas and LNG. Russia further indicates that gas consumed as a\n\n7.849. With respect to consumer s' tastes and habits, we note that Russia alleges that LNG and\nnatural gas are perfectly substitutable in terms of consumer perceptions. 1420 The European Union\nargues that LNG \"meets different consumer preferences\" from those of natural gas. 1421 The\nEuropean Union further alleges that consumers of LNG purchase this product in order to transport\nit by ships or trucks and trade or store LNG. 1422 Neither party substantiated its arguments with\nevidence.1423\n7.850. Russia does not assert any arguments regarding the tariff classific ation of LNG and natural\ngas, while the European Union argues that LNG and natural gas have a different tariff\nclassification. We consider that the European Union has established that, at the six -digit level, the\nHS indeed classifies LNG and natural gas un der different subheadings – subheading 2711.11 and\n2711.21, respectively.1424\n7.851. Russia also submits that LNG and natural gas are like products within the meaning of\nArticle I:1 of the GATT 1994 because the Commission recognized that natural gas and LNG are in a\ndirect competitive relationship. 1425 According to Russia, in one of its decisions in competition\nproceedings, the Commission recognized that \"generally from the perspective of gas buyers there\nis no distinction between gas which is transported by pipeline a nd gas which is transported as LNG\nand regasified\" and confirmed \"that, in countries where import infrastructures for LNG are present,\nLNG would constitute a direct competitive constraint to gas imported via pipelines\".1426\n7.852. We observe that, in the decision of the Commission referred to by Russia, the analysis of\nthe Commission concerned the determination of the relevant product market in the context of the\nCommission's assessment of the proposed concentration. We also note that, in the context of that\nassessment, the decision refers to \"gas which is transported as LNG and regasified\". 1427 Thus, the\nCommission's statement about LNG and natural gas being indistinguishable from the perspective\nof gas buyers should be understood as pertaining only to regasified LNG. We consider that t he\nCommission's statement that, in countries where import infrastructure for LNG is present, LNG\nwould constitute a direct competitive constraint to gas imported via pipelines should also be read\nin this light. We recall that, in response to a question by the Panel asking Russia to confirm our\nunderstanding of its arguments, Russia did not indicate that it was arguing that, for the purposes\nof the likeness analysis, the Panel should compare regasified LNG with natural gas. 1428 Therefore,\nwe do not consider that the decision of the Commission referred to by Russia supports its position\nthat LNG and natural gas are like products within the meaning of Article I:1 of the GATT 1994.\n\nfuel for transport is consumed as compressed natural gas. (Russia's response to Panel question No. 187,\npara. 209 (referring to European Commission Memo \"Clean Power for Transport – Frequently Asked\nQuestions\", Memo/13/24 (24 January 2013), (Exhibit RUS-195), p. 10)). On this basis, Russia alleges that\nthere is no difference between natural gas and LNG from the point of view of use. (Russia's response to Panel\nquestion No. 187, para. 209). However, we do not consider that the identity of end-use between CNG and LNG\nnecessarily implies the identity of end-use between natural gas and LNG.\n1420 Russia's first written submission, para. 366.\n1421 European Union's response to Panel question No. 109, para. 280.\n1422 European Union's second written submission, para. 149.\n1423 Russia submits Commission Decision of 16 May 2012 on BP/ Chevron/ Eni/ Sonangol/ Total/ JV\nnotification pursuant to Article 4 of Council Regulation No. 139/2004, Case No COMP/M.6477, (Commission\ndecision on BP/ Chevron/ Eni/ Sonangol/ Total/ JV concentration), (Exhibit RUS-157), in support of its more\ngeneral proposition that LNG and natural gas are in a direct competitive relationship. We discuss this evidence\nin paras. 7.851 through 7.852 below.\n1424 HS Chapter 27, (Exhibit EU-32).\n1425 Russia's response to Panel question No. 109(a), paras. 436-437.\n1426 Russia's response to Panel question No. 109(a), para. 436.\n1427 Commission decision on BP/ Chevron/ Eni/ Sonangol/ Total/ JV concentration), (Exhibit RUS-157),\npara. 17.\n1428 We asked Russia to confirm our understanding that Russia is not comparing natural gas, which is\nbeing transported as such through regular pipelines, to natural gas, which is currently in its final gaseous stage\nbut has previously been transported as LNG (Panel question No. 109). In its response, Russia indicated that\nour understanding was not \"exactly correct\", reiterating its position that \"LNG is natural gas\". (Russia's\nresponse to Panel question No. 109, para. 432). Russia further indicated that \"the like product comparison\nshould be between LNG, as imported, and all other natural gas\". (Russia's response to Panel question No. 109,\npara. 434). While we do not find it necessary to rule on this issue, we observe that, assuming regasified LNG\nand natural gas are like products within the meaning of Article I:1 of the GATT 1994, there is no evidence on\nthe record that would show a discriminatory treatment of natural gas imported via pipelines as compared to\nregasified imported LNG in the European Union. Both natural gas imported via pipelines and regasified\nimported LNG may be transported and supplied via the same pipelines under identical legal regimes.\n\n7.853. We recall that, as a complaining party in these proceedings, Russi a bears the burden of\nmaking a prima facie case that the LNG measure is inconsistent with Article I:1 of the GATT\n1994.1429 This includes a demonstration that the products at issue are like within the meaning of\nArticle I:1 of the GATT 1994.\n7.854. In the course of our analysis above, we have rejected Russia's position that LNG is\nindistinguishable from natura l gas and is, for this reason, like natural gas within the meaning of\nArticle I:1 of the GATT 1994. In terms of the likeness criteria, we have established that LNG and\nnatural gas do not share the same properties, nature and quality and, at the six -digit level, are\nclassified under different subheadings of the HS. Russia has, furthermore, not substantiated its\nallegations that the end-uses and consumer preferences in respect of LNG and natural gas are the\nsame. We have also found that the decision of the Commission referred to by Russia does not\nsupport its position that LNG is like natural gas within the meaning of Article I:1 of the GATT 1994.\nThus, having holistically assessed the arguments of the parties and evidence on the record, we are\nof the view that Russia has not discharged its burden to establish that LNG and natural gas are like\nproducts within the meaning of Article I:1 of the GATT 1994.\n7.855. Therefore, we consider that Russia has not demonstrated that natural gas imported from\nRussia and LNG imported from other countries are like products within the meaning of Article I:1\nof the GATT 1994. In view of this finding, we do not consider it necessary to exami ne further the\nconsistency of the LNG measure with Article I:1 of the GATT 1994.\n7.7.2.3 Conclusion\n7.856. In view of the foregoing, we find that Russia has not demonstrated that the LNG measure\nis inconsistent with Article I:1 of the GATT 1994.\n7.8 The infrastructure exemption measure\n7.8.1 Introduction\n7.857. In the context of the broader category referred to by Russia as \"the infrastructure\nexemption measure\", Russia advances claims under, first, Article X:3(a) of the GATT 1994, then,\nArticle I:1 of the GATT 1994 and Article II:1 of the GATS, and finally, under Article XI:1 of the\nGATT 1994. The European Union rejects all of these claims and has raised no defences in response\nto them. As mentioned in paragraph 2.41 above, we note that the precise nature and relevant\naspects of the infrastructure exemption measure differ for each of Russia's claims. Accordingly, we\nclarify our understanding of the precise aspects of the measure challenged by Rus sia in our\nfindings on each of the claims below\n7.858. We further note that the argumentation pertaining to, and evidentiary underpinnings for ,\nRussia's claims overlap to a large extent. This is particularly the case in respect of aspects of\nRussia's claims under Articles I:1 and X:3(a) of the GATT 1994 and Article II:1 of the GATS , which\ninvolve various aspects of the infrastructure exemption provision in Article 36 the Directive and a\nnumber of NRA and Commission decisions regarding individual infrastructure exe mption requests,\nrelating to: the OPAL pipeline 1430, the NEL pipeline 1431, the Gazelle pipeline 1432, the TAP\n\n1429 The Appellate Body in EC – Hormones explained that, to meet its burden of proof, the complainant\nmust establish a prima facie case, i.e. the one that in the absence of effective refutation by the respondent\nrequires a panel, as a matter of law, to rule in favour of the complainant. (Appellate Body Report, EC –\n Hormones, para. 104). How much and what kind of evidence will be required to establish a prima facie case\nwill necessarily vary from measure to measure, provision to provision, and case to case.\n1430 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82). As explained in the\nCommission Decision, on 25 February 2009, BNetzA (the German NRA) issued two decisions on the exemption\nof the OPAL and NEL pipelines. Both applicants (OPAL NEL Transport GmbH and E.ON Ruhrgas Nord Stream\nAnbindungsgesellschaft mbH) were the planned network operators of the OPAL and NEL pipelines and applied\nto the BnetzA in separate proceedings for the granting of an exemption for the OPAL and NEL pipelines. Hence,\nthe Commission notes, \"BNetzA therefore issued two (essentially identical) decisions\". (Commission decision on\nthe exemption of the OPAL pipeline, (Exhibit RUS-82), paras. 1-2). As further explained in the Commission\nDecision, as a result of BNetzA granting the OPAL exemption, the capacities created via the OPAL were to be\nexempt for a period of 22 years from third party access and tariff regulation. In addition, \"[a]n exemption was\nnot granted for NEL. In response to the refusal to grant the exemption for NEL, neither of the applicants\nappealed against the two decisions of the BNetzA.\" (Ibid. para. 4). See also BNetzA decision on the exemption\n\npipeline1433, the Nabucco pipeline 1434, the Poseidon pipeline 1435, the Dragon LNG facility 1436, the\nSouth Hook LNG facility 1437, and the Gate Terminal LNG facility. 1438 In particular, in advancing its\nclaims under Article II:1 of the GATS and Article I:1 of the GATT 1994, Russia relies, to a\nsignificant degree, on its arguments under Article X:3(a) of the GATT 1994 concerning the alleged\nlack of a uniform, impartial and reasonable administration of Article 36 of the Directive.\n7.859. In light of these considerations, and of the nature and content of the legal provisions in\nquestion, w e considered it appropriate to begin our examination with Russia's claim under\nArticle X:3(a) of the GATT 1994, in order to determine whether Russia has demonstrated that the\nEuropean Union administered the infrastructure exemption measure in a manner contrary to that\nprovision. Next, we address Russia's claims under Articles I:1 of the GATT 1994 and II:1 of the\nGATS. Finally, we address Russia's claim under Article XI:1 of the GATT 1994 , which challenges\ntwo conditions contained in the 2009 OPAL infrastructure exemption decision.\n7.8.2 Russia's claim under Article X:3(a) of the GATT 1994\n7.8.2.1 Introduction\n7.860. Following the legal standard under Article X:3(a) of the G ATT 1994, set out in\nparagraphs 7.240 and 7.241 above, we are required to assess whether Russia has demonstrated\nthe following elements: (i) the infrastructure exemption measure is a law, regulation, judicial\ndecision or administrative ruling of general application; (ii) the infrastructure exemption measure\nis of the kind described in Article X:1 of the GATT 1994; and (iii) the infrastructu re exemption\nmeasure is not administered in a \"uniform, impartial and reasonable manner\".\n\nof the OPAL and NEL pipelines, (Exhibit RUS-61). The infrastructure exemption decisions in OPAL and NEL are\nreferred to as separate decisions in our Report for purposes of clarity.\nWe note that, during the Panel process, the European Union indicated that:\n[T]he Commission has agreed to revise its OPAL decision. On 28 October 2016, the Commission\nadopted a decision agreeing, subject to additional conditions, to a revised exemption framework\nfor the OPAL pipeline. This decision was implemented by way of a settlement agreement between\nGazprom, the OPAL TSO OPAL Gastransport GmbH, Gazprom export, and the German NRA\nBundesnetzagentur. Both the Commission decision and the settlement agreement are currently\nsuspended due to pe nding appeal procedures launched by third parties before domestic courts.\nThree appeals have been filed with the General Court of the European Union and one with a\nGerman court. The suspension of the effects of the revised exemption framework has been\nrequested in all those cases. (European Union's comments on Russia's response to Panel\nquestion No. 231, para. 155).\nIn light of this comment, the Panel asked the European Union to clarify whether the 2009 OPAL\ninfrastructure exemption decision (Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-\n82), para. 89) remained in effect. The European Union confirmed that, as of 12 May 2017, the decision\n\"remains in effect\". (European Union's responses to the Panel's Additional Questions of 10 May 2017, para. 3).\nThe Panel also asked Russia to clarify whether that decision remained the relevant legal instrument pertaining\nto the OPAL pipeline for Russia's claims relating to the infrastructure exemption measure. Russia confirmed\nthat this was the case. (Russia's responses to the Panel's Additional Questions of 10 May 2017, p. 1).\nAccordingly, the Panel's examination focused on the 2009 OPAL infrastructure exemption decision. See also\nEuropean Commission Press Release, \"Gas markets: Commission reinforces market conditions in revised\nexemption decision on OPAL pipeline\" (28 October 2016), (Exhibit RUS-246).\n1431 BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61). See also\nfn 1430.\n1432 Commission decision on the exemption of the Gazelle pipeline I, (Exhibit RUS-81); and Commission\ndecision on the exemption of the Gazelle pipeline II, (Exhibit RUS-87).\n1433 Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10).\n1434 Commission decisions on the exemption of the Austrian, Bulgarian, and Romanian sections of the\nNabucco pipeline, (Exhibits RUS-83, RUS-84 and RUS-85).\n1435 Commission decision on the exemption of the Poseidon pipeline, (Exhibit RUS-86).\n1436 Final views of the UK NRA on the exemption of the Dragon LNG facility, (Exhibit RUS-66); and Letter\nfrom the UK NRA regarding the Commission decision on the exemption of the Dragon LNG facility, (Exhibit\nRUS-101).\n1437 Final views of the UK NRA on the exemption of the South Hook LNG facility, (Exhibit RUS-68); and\nLetter from the UK NRA regarding the Commission decision on the exemption of the South Hook LNG facility,\n(Exhibit RUS-102).\n1438 Commission's comments to the Gate Terminal exemption decision, (Exhibit EU-143).\n\n7.861. The obligations of uniformity, impartiality and reasonableness are legally independent and\nthe WTO Members are obliged to comply with all three requirements. 1439 This me ans that a\nviolation of any one of the three obligations will lead to a violation of the obligations under\nArticle X:3(a).1440\n7.862. Article X:3 of the GATT 1994 establishes certain minimum standards for transparency and\nprocedural fairness in the administration of trade regulations.1441 We recall the Appellate Body's\nstatement that, as allegations that the conduct of a WTO Member is biased or unreasonable are\nserious under any circumstances, such allegations should not be brought lightly, or in a subsidiary\nfashion.1442 The Appellate Body underlined that \"[a] claim under Article X:3(a) of the GATT 1994\nmust be supported by solid evidence; the nature and the scope of the claim, and the evidence\nadduced by the complainant in support of it, should reflect the gravity of the accusations inherent\nin claims under Article X:3(a) of the GATT 1994\".1443\n7.863. Article X:1 of the GATT 1994 makes it clear that Article X does not deal with specific\ntransactions, but rather with rules \"of general application\".1444 Laws, regulations, judicial decisions\nand admini strative rulings of general application described in Article X:1 of the GATT 1994 are\nthose that apply to a range of situations or cases, rather than being limited in their scope of\napplication.1445\n7.864. It is well established that the obligations under Article X:3(a) apply to the administration of\nthe laws, regulations, decisions and rulings of the kind falling within the scope of Article X:1, but\nnot to such laws and regulations themselves.1446 To the extent that such laws and regulations are\ndiscriminatory, they can be examined for their consistency with the relevant provisions of the\nGATT 1994.1447\n7.865. Furthermore, a government's act of administration subject to the provisions of\nArticle X:3(a) includes not only acts of administering the laws and regulations of the kind in\nArticle X:1, but also legal instruments that regulate the application or implementation of such laws\nand regulations. 1448 Moreover, administrative processes leading to administrative decisions may\nalso be included in the scope of the term \"administer\" and hence Article X:3(a).\n\n1439 Panel Report, Thailand – Cigarettes (Philippines), paras. 7.866–7.868 (citing Panel Report, Argentina\n– Hides and Leather, para. 11.86).\n1440 Panel Report, Thailand – Cigarettes (Philippines), para. 7.867 (citing Panel Report, Dominican\nRepublic – Import and Sale of Cigarettes, para. 7.383).\n1441 Appellate Body Report, US – Shrimp, paras. 182-183. The Appellate Body also underlined\nthat:\nInasmuch as there are due process requirements generally for measures that are otherwise\nimposed in compliance with WTO oblig ations, it is only reasonable that rigorous compliance with\nthe fundamental requirements of due process should be required in the application and\nadministration of a measure. (Ibid. para. 182).\n1442 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 217.\n1443 Panel Report, Thailand – Cigarettes (Philippines), para. 7.874 (quoting Appellate Body Report,\nUS – Oil Country Tubular Goods Sunset Reviews, para. 217).\n1444 Appellate Body Report, EC – Poultry, para. 111. See also Panel Report, US – Hot-Rolled Steel,\npara. 7.268.\n1445 Panel Report, EC – Selected Customs Matters, para. 7.116.\n1446 Appellate Body Report, EC – Poultry, para. 115 (quoted in Appellate Body Report, EC – Bananas III,\npara. 200). The panel in Argentina – Hides and Leather also stated that \"Article X:3(a) refers specifically to the\nmethod of application of measures identified in Article X:1.\" (Panel Report, Argentina – Hides and Leather,\npara. 11.73). (emphasis added) That panel also stated that \"[t]he relevant question is whether the substance\nof such a measure is administrative in nature or, instead, involves substantive issues more properly dealt with\nunder other provisions of the GATT 1994.\" (Ibid., para. 11.70). See also Panel Report, US – Byrd Amendment,\npara. 7.143.\n1447 Appellate Body Report, EC – Bananas III, para. 200.\n1448 Appellate Body Report, EC – Selected Customs Matters, para. 200. The Appellate Body stated:\n\"[u]nder Article X:3(a), a distinction must be made between the legal instrument being administered and the\nlegal instrument that regulates the application or implementation of that instrument. While the substantive\ncontent of the legal instrument being administered is not challengeable under Article X:3(a), we see no reason\nwhy a legal instrument that regulates the application or implementation of that instrument cannot be examined\nunder Article X:3(a) if it is alleged to lead to a lack of uniform, impartial, or reasonable administration of that\nlegal instrument\". (emphasis added)\n\n7.866. However, to the extent that a claim of violation under Article X:3(a) is based on an\nadministrative process, the complaina nt must demonstrate how and why certain features of the\nadministrative processes necessarily lead to a lack of uniform, impartial, or reasonable\nadministration of a legal instrument of the kind described in Article X:1.1449 In addition, while it is\nnot inconc eivable that a Member’s actions in a single instance might be evidence of lack of\nuniform, impartial, and reasonable administration of its laws, regulations, decisions and rulings,\nthe actions in question would have to have a significant impact on the over all administration of the\nlaw, and not simply on the outcome in the single case in question. 1450 We consider that, in\ndetermining the proper scope of Article X:3(a), the relevant question is \"whether the substance of\nsuch a measure is administrative in nature or, instead, involves substantive issues more properly\ndealt with under other provisions of the GATT 1994\".1451\n7.867. We also note that Article X:3(a) was not intended to be used to test the consistency of a\nMember’s particular decisions or rulings with the Member’s own domestic law and practice.1452\n7.868. Before us, Russia submits that the European Union's administration of the infrastructure\nexemption measure has not been uniform, impartial or reasonable, as required by Article X:3(a).\nRussia argues that the infrastructu re exemption measure is the specific measure at issue 1453 and\nthat it is the administration of the infrastructure exemption measure that is the subject of this\nclaim.1454 Russia asserts that the Directive (and its predecessor, the Second Energy Package\nDirective) are \"laws… of general application\" within the mea ning of Article X:1 of the\nGATT 1994.1455 It further submits that the measure is \"affecting\" or having an effect on, the sale,\ndistribution and transportation of natural gas within the meaning of Article X:1.1456\n7.869. To establish the administration of the measure in violation of Article X:3(a), Russia\ncompares the Commission's infrastructure exemption decision regarding the OPAL pipeline to its\nexemption decisions in the cases of the Gazelle, TAP, Nabucco and Pos eidon pipelines. Russia\nconsiders that the evaluation by the Commission of the exemption application for the OPAL\npipeline, as compared to evaluation of the Gazelle, TAP, Nabucco and Poseidon pipelines, based on\nthe criteria in Article 36, constitutes the administration, application or putting into practical effect\nof the infrastructure exemption measure. 1457 According to Russia, the Commission has\nadministered the five criteria in the Directive in a manner inconsistent with its own internal\nguidance and decis ions.1458 In particular, Russia compares the Commission's competition analysis\nand the conditions it imposed in each of these decisions; Russia also argues that the Commission\nhas failed to review its decisions despite a change in the circumstances on which they were based.\n7.870. The European Union does not dispute that Article 36 of the Directive (as well as Article 22\nof the S econd Energy Package Directive before it) is a measure of general application. 1459 In\naddition, the European Union argues that Article 36 appli es exclusively upon request of the\nundertaking seeking to benefit from an individual exemption decision, to which specific conditions\nmay be attached, taking account of the particular features of the major infrastructure project at\nstake. For the European Union, individual exemption decisions, and any conditions attached to\nthem, are not measures of general application.1460\n\n1449 Appellate Body Report, EC – Selected Customs Matters, paras. 224-226; and Panel Report, Thailand\n– Cigarettes (Philippines), para. 7.873.\n1450 Panel Report, US – Hot-Rolled Steel, para. 7.268. The panel also considered that it is unlikely that a\nviolation of Article X:3 would be found where actions in the single case in question were, themselves,\nconsistent with more specific obligations under other WTO Agreements.\n1451 Panel Report, Thailand – Cigarettes (Philippines), para. 7.869 (quoting Panel Report, Argentina –\nHides and Leather, para. 11.70). (emphasis original)\n1452 Panel Report, US – Stainless Steel (Korea), para. 6.50.\n1453 Russia's first written submission, para. 535.\n1454 Russia's second written submission, para. 399. For Russia, individual exemption decisions are\ninstances of application of the measure of general application.\n1455 Russia's first written submission, para. 534.\n1456 Russia's first written submission, para. 534.\n1457 Russia's first written submission, paras. 539-672; response to Panel question No. 142, paras. 595-\n597; and second written submission, paras. 399-404.\n1458 Russia's first written submission, paras. 535-538.\n1459 European Union's first written submission, para. 687; and second written submission, para. 283.\n1460 European Union's first written submission, paras. 689 and 693; and second written submission,\npara. 285.\n\n7.871. The European Union asserts that Article X:1 is not applicable to the facts of this dispute\nbecause it has not been proven that Article 36 of the Directive affects the sale, distribution and\ntransportation of natural gas within the meaning of that provision. 1461 According to the European\nUnion, it is incumbent on Russia to prove the effects on the sale, distribution and transportation of\nnatural gas, which cannot be presumed. 1462 The European Union considers that Russia has not\ndemonstrated what effects the measure will produce on the sale, distribution or transportation of\nnatural gas.1463 The European Union argues that Articl e 36 of the Directive may only affect the\nsale, distribution and transportation of natural gas, if at all, as an indirect consequence of\nencouraging the construction of new infrastructure or significant increases of capacity in existing\ninfrastructure.1464\n7.872. The European Union submits that, in case Article 36 of the Directive is found to fall within\nthe scope of Article X:1 of the GATT 1994 \"(quod non)\", the claim of violation of Article X:3(a)\nbrought by Russia cannot succeed, as the European Union administers the infrastructure\nexemption provision in a uniform, impartial and reasonable manner, and Russia has not proved\notherwise.1465\n7.8.2.2 Analysis by the Panel\n7.8.2.2.1 Introduction\n7.873. As set out in paragraph 2.37 above, the infrastructure exemption provision in Article 36 of\nthe Directive (and Article 22 of its predecessor) lays out five criteria to evaluate applications for\ninfrastructure exemptions. In accordance with the legal standard set out in paragraphs 7.240\nand 7.241 above, in our examination of Russia's claim of violation u nder Article X:3(a) of the\nGATT 1994, we consider whether Russia has demonstrated that the infrastructure exemption\nmeasure is (i) a law, regulation, judicial decision or administrative ruling of general application; (ii)\nof the kind described in Article X:1 of the GATT 1994; and (iii) not administered in a \"uniform,\nimpartial and reasonable manner\".\n7.8.2.2.2 Measure of general application\n7.874. The parties do not disagree that Article 36 of the Directive is a measure of \"general\napplication\"1466, and we are similarly of the view that this measure falls within the types of\ninstruments covered by Articles X:3(a) and X:1 of the GATT 1994. 1467 However, in light of the\nparties' arguments, we first clarify whether Russia's claim is directed at Article 36 of the Directive\nitself, or rather at particular infrastructure exemption decisions issued pursuant to that provision.\n7.875. Russia submits that it do es not challenge the individual exemption decisions or any\nconditions attached to them per se under Article X:3(a), but rather that it challenges the\nadministration of the infrastructure exemption measure. 1468 Russia considers that individual\nexemption decisi ons put into practical effect, or apply, the measure as contemplated in\nArticle X:3(a) and as interpreted by the Appellate Body in EC – Selected Customs Matters .1469\nAccording to Russia, e ach decision by the Commission represents a separate application of the\nsame criteria and thus of the measure such that \"[o]ver time, a series of decisions are issued,\neach presumably building on prior decisions, and all of which are supposedly designed to ensure a\nfair and even-handed outcome in each instance.\"1470\n7.876. The Europea n Union submits that this claim focuses on two conditions attached to an\nindividual exemption decision (the OPAL decision) and that the comparison with other individual\n\n1461 European Union's first written submission, para. 687; and second written submission, paras. 283-\n284.\n1462 European Union's first written submission, para. 693.\n1463 European Union's first written submission, para. 690.\n1464 European Union's first written submission, para. 691.\n1465 European Union's first written submission, para. 694.\n1466 Russia's first written submission, para. 534; and European Union's second written submission,\npara. 283.\n1467 See also, above para. 7.520.\n1468 Russia's second written submission, para. 399.\n1469 Russia's response to Panel question No. 138, paras. 576-579.\n1470 Russia's response to Panel question No. 142, para. 595.\n\nexemption decisions is intended to force a review by the Panel of the OPAL decision, ra ther than\nserving as a demonstration of an unreasonable administration of Article 36 of the Directive.1471 The\nEuropean Union considers that individual decisions issued pursuant to the Article are clearly not\nmeasures of general application within the meaning of Article X:1. 1472 It hence contends that, to\nassess how the measure has been administered and applied, the universe of all relevant individual\ndecisions should be taken into consideration.1473\n7.877. Past panels and the Appellate Body have distinguished between inst ruments that apply in\nspecific situations or to a specific company, and those that apply more broadly across a range of\nsituations or unidentified economic operators. In particular, the Appellate Body in EC – Poultry\nupheld a panel finding that an import l icence issued to a specific company did not meet the \"of\ngeneral application\" criterion, noting that \"licences issued to a specific company or applied to a\nspecific shipment cannot be considered to be a measure 'of general application' within the meaning\nof Article X\".1474\n7.878. However, we also note the Appellate Body's caution in EC – Selected Customs Matters\nthat:\n[I]t is important to distinguish between, on the one hand, the measures at issue and,\non the other hand, acts of administration that have been presente d as evidence to\nsubstantiate the claim that the measures at issue are administered in a manner\ninconsistent with Article X:3(a) of the GATT 1994.1475\n7.879. Recalling the paramount importance of distinguishing between the measure at issue and\nthe acts of administra tion presented as evidence to substantiate a claim under Article X:3(a), we\nnote that Article 36 of the Directive applies broadly to economic operators that apply for an\ninfrastructure exemption from certain other generally applicable obligations under the Directive,\nand that there is no disagreement between the parties that this provision of the Directive is a\nmeasure of general application. We therefore consider that the measure of general application\nhere is Article 36 of the Directive. 1476 We understand th at the Commission's decisions regarding\nthe OPAL and other pipelines constitute the alleged acts of \"administration\" which have been\npresented as evidence in order to substantiate Russia's claim under Article X:3(a). While accepting\nthe Commission's decisions as evidence, we retain the discretion to determine their \"relevance and\nprobative value\"1477 in our assessment of Russia's claim.\n7.880. We are thus satisfied that Russia has identified Article 36 of the Directive as the relevant\nmeasure of general application, and next turn to examine whether it affects the sale, distribution\nor transportation or other use of imports within the meaning of Article X:1 of the GATT 1994.\n7.8.2.2.3 Measure of the kind described in Article X:1 of the GATT 1994\n7.881. Russia argues that Article 36 of the Directive affects the sale, distribution and/or\ntransportation of imports because the purpose of this provision is to exempt suppliers of natural\n\n1471 European Union's second written submission, para. 282. The European Union states that the\ncomparison \"is more of a prop to force a review by the Panel of the OPAL decision, than it is a demonstration of\nan unreasonable administration of the exemption\".\n1472 European Union's response to Panel question No. 138, para. 364.\n1473 European Union's response to Panel question No. 139, para. 365.\n1474 Appellate Body Report, EC – Poultry, para. 113 (quoting Panel Report, EC – Poultry, para. 269).\n(footnote omitted) See also Panel Report, US – Hot-Rolled Steel, para. 7.268:\nWhile it is not inconceivable that a Member's actions in a single instance might be evidence of lack of\nuniform, impartial, and reasonable administration of its laws, regulations, decisions and rulings, we\nconsider that the actions in question would have to have a significant impact on the overall\nadministration of the law, and not simply on the outcome in the single case in question.\n1475 Appellate Body Report, EC – Selected Customs Matters, para. 188.\n1476 We recall that, in EC – Selected Customs Matters, in the context of addressing a terms of reference\nchallenge, the Appellate Body clarified that \"the measure at issue in this dispute is not the manner of\nadministration but, rather, the legal instruments identified in the first paragraph of the panel request, as\nadministered collectively or as a whole.\" (Appellate Body Report, EC – Selected Customs Matters, para. 187).\n(emphasis original) Similarly, we consider that the administration we are called upon to examine under\nArticle X:3(a) is of this measure of general application.\n1477 Appellate Body Report, EC – Selected Customs Matters, para. 188.\n\ngas from the substantive requirements of the Directive. 1478 Russia submits that, because any\nreasonable supplier of natural gas would evaluate their prospects for being granted an exemption\nwhen deciding whether to undertake a new infrastructure project, this creates an incentive to\nmove forward with developing an infrastructure project.1479\n7.882. In addition, Russia submits that, particularly in the course of its administration by the\nCommission, the infrastructure exemption measure has an effect on the volume of gas that may\nbe imported free of the Directive’s requirements. Russia offers the capacity cap and gas rele ase\nrequirement imposed in the OPAL exemption decision as an example of how such administration\naffects the sale, distribution, transportation or other use of natural gas. 1480 Russia submits that\nless gas can be sold or transported over the OPAL pipeline than would otherwise be the case,\nwhereas the Commission imposed less restrictive conditions in the case of the Gazelle, TAP,\nNabucco and Poseidon pipelines, meaning the effect or detrimental impact on the sale and\ntransportation of gas via those pipelines is not as great as in the case of the OPAL pipeline.1481\n7.883. The European Union submits that the purpose of Article 36 of the Directive is to incentivize\ninvestment in major new infra structure and that it may only affect the sale, distribution and\ntransportation of natural gas, if at all, as an indirect consequence of fulfilling this purpose. 1482 It\nconsiders that Russia has not explained the measure's effects on the sale, distribution and\ntransportation of natural gas.1483 It further submits that the measure does not create incentives for\ngas of particular sources to be imported into or transported within the European Union. 1484\nSpecifically, regarding the OPAL exemption decision, the European Union submits that the decision\ndoes not restrict the volume of gas that can be tr ansported on the pipeline, but rather that \"[t]he\nrestrictions concern exclusively the supply of pipeline transport services on OPAL by Gazprom and\nrelated companies.\"1485\n7.884. Article X:1 of the GATT 1994 covers a broad range of measures. In light of the\nargumentation of the parties, in this case, we focus on measures \"affecting\" the \"sale, distribution,\ntransportation … or other use\" of imports.\n7.885. We recall that the Appellate Body in EC – Bananas III established that the ordinary\nmeaning of the word \"affecting\" implies a measure that has \"an effect on\", and that the word has a\nbroad scope which is not limited to the scope of terms such as \"regulating\" or \"governing\".1486\n7.886. In addition, the panel in Argentina – Financial Services clarified that the word \"affects\", in\nthe context of Article III:4 of the GATT 1994, also covers measures which affect the conditions of\ncompetition of the products in question on the domestic market, even if their main objective is not\nto regulate the internal sale, offering for sale, purchase or use of the product.1487\n7.887. Furthermore, in China – Publications and Audiovisual Products , when discussing the word\n\"affect\" in the context of Article III:4, the panel included \" measures which create incentives or\ndisincentives with respect to the sale, offer ing for sale, purchase, and use of an imported\nproduct\".1488\n\n1478 Russia relies on the broad interpretation of the term \"affecting\" outlined in Appellate Body Report,\nEC – Bananas III, para. 220. (Russia's response to Panel question No. 143, paras. 598-599; and second\nwritten submission, paras. 392-393).\n1479 Russia's second written submission, para. 393; and response to Panel question No. 224, para. 313.\n1480 Russia's second written submission, para. 393.\n1481 Russia's response to Panel question No. 143, paras. 598-599.\n1482 European Union's first written submission, paras. 690-691.\n1483 European Union's second written submission, paras. 283-284.\n1484 European Union's response to Panel question No. 224, para. 290. The European Union elaborates\nthat it \"does not disagree that, by creating incentives for the construction of new major infrastructure, the\ninfrastructure exemption measure also indirectly incentivizes natural gas imports, in general. Such incentives\nare not linked or dependent on the origin of the gas that will be flown through the new interconnectors.\"\n(European Union's comments on Russia's response to Panel question No. 224, para. 149).\n1485 European Union's second written submission, para. 299.\n1486 Appellate Body Report, EC – Bananas III, para. 220.\n1487 Panel Report, Argentina – Financial Services, para. 7.1023.\n1488 Panel Report, China – Publications and Audiovisual Products, para. 7.1450.\n\n7.888. We observe that Article 36 of the Directive sets out provisions governing the exemption of\ninfrastructure, upon request and for a defined period of time, from other generally applicable\nobligations under the Directive. 1489 We recall our findings, in the context of our examination of\nRussia's claims against the unbundling measure in the Directive under Articles I:1 and III:4, that\nthe unbundling measure affects the internal sale, offering for sale, purc hase, transportation,\ndistribution or use of natural gas.1490\n7.889. We see that Article 36 may exempt certain producers and suppliers from some or all of the\nrules on unbundling and may further determine the particular legal framework applicable in\nrespect of certain infrastructure, including infrastructure designed to import and transport natural\ngas in the European Union.\n7.890. We understand that the infrastructure exemption and any related conditions are rules that\neffectively \"replace\" otherwise applicable rules (su ch as unbundling or third party access ); they\nbecome the binding legal regime pertaining to the infrastructure concerned as long as the relevant\ninfrastructure exemption decision remains operational.\n7.891. Having established that the unbundling measure in the D irective is within the scope of\nArticles I and III:4 of the GATT 1994 , we also consider that the infrastructure exemption provision\nin Article 36 of the Directive affects the sale and transportation of natural gas within the meaning\nof Article X:1 and hence Article X:3(a) of the GATT 1994.\n7.892. We recall that, in response to Panel questioning concerning the scope of the term \"affects\"\nin Articles X:1 and X:3(a) of the GATT 1994, both parties acknowledge that the measure creates\n\"incentives\" for importation, as that term was used in China – Publications and Audiovisual\nProducts.1491 We note this shared view of the parties, and consider it supports our view that the\ninfrastructure exempt ion provision in the Directive affects , in particular, the sale and\ntransportation of imports of natural gas for the purposes of Article X:1 and hence Article X:3(a) of\nthe GATT 1994.\n7.8.2.2.4 Administered in a manner that is not uniform, impartial and reasonable\n7.8.2.2.4.1 Introduction\n7.893. Russia submits that the evaluation by the Commission of each infrastructure exemption\napplication, based on the five criteria set out in Article 36 of the Directive, constitutes the\nadministration, application or putting into practical effect of the infrastructure exemption\nmeasure.1492 Russia further submits that the substantive content of legal instruments that regulate\nthe application or implementation of laws, regulations, decisions, and administrative rulings of the\nkind described in Article X:1 can be challenged under Article X:3(a). 1493 Russia relies on a\ncomparison of five infrastructure exemption decisions (OPAL, Gazelle, TAP, Nabucco and\nPoseidon), asserting that the infrastructure exemption criteria are \"vague\" and grant the NRAs and\nthe Commission significant discretion in evaluating individual applications.1494\n7.894. While maintaining that Russia's claim is outside the scope of Article X:3(a) 1495, the\nEuropean Union submits that uniformity in the administration of the infrastructure exemption\nmeasure is ensured through the existence of a single set of criteria, namely those listed in\nArticle 36(1) of the Directive, detailed procedural rules for examination and decision -making by\nthe competent NRAs (set out in paragraphs 3 to 7 of that Article) and a review procedure by the\nCommission (provided for in paragraphs 8 and 9 of th e Article), designed to ensure consistency at\n\n1489 See, above paras. 2.36-2.41.\n1490 See, above paras. 7.521-7.527 and 7.573.\n1491 See, e.g. European Union's comments on Russia's response to Panel question No. 224, para. 149;\nand Russia's response to Panel question No. 224, para. 313. In Russia's comments on the European Union's\nresponse to Panel question No. 224, para. 228, Russia states: \"Obviously, the measure creates incentives for\nthe construction of major gas infrastructure, as defined in Article 36, as the EU contends. In so doing,\nhowever, as Russia has demonstrated, the measure necessarily also creates an incentive for the sale, offering\nfor sale, purchase and use of imported natural gas.\"\n1492 Russia's response to Panel question No. 142, para. 595; and second written submission, para. 401.\n1493 Russia's response to Panel question No. 142, para. 597.\n1494 Russia's response to Panel question No. 142, para. 594.\n1495 European Union's first written submission, para. 713.\n\nan EU-wide level.1496 The European Union asserts that the OPAL exemption decision is \"perfectly in\nline with the criteria\" in the Directive and Commission practice 1497, pointing out that Article 36\nitself calls for a case-by-case assessment taking into account the factual circumstances of each\ndecision.1498\n7.895. Japan asserts that Russia's argument focuses on the unreasonableness of the OPAL\ninfrastructure exemption decision, and whether the criteria in the Directive were mi sapplied and\nignored. According to Japan, Article X:3(a) of the GATT 1994 covers the general application of\nrules affecting an unidentified number of economic operators, but it does not cover the specific\n\"application\" of such regulations in each case. Furthermore, Japan relies on the panel's analysis in\nUS – Stainless Steel (Korea) to argue that a misapplication of a regulation in a single case does\nnot constitute a violation of Article X:3(a), unless there is evidence that the same misapplication is\narising or will arise in a widespread manner, to the extent it establishes or revises a principle or\ncriteria in future cases . Based on the panel report in US – Hot-Rolled Steel, Japan asserts that it\nshould be assessed whether the complainant has establishe d that the OPAL decision is not a\nsporadic case of misapplication of the Directive but, instead, shows that such misapplication will\narise in a manner constituting non-uniform, partial or unreasonable \"administration\" of the laws\nand regulations of \"general application\".1499\n7.896. As we have already indicated, the Appellate Body has consistently held that a claim under\nArticle X:3(a) must not be directed against the substance of a law itself; rather, such a claim must\nchallenge its administration. 1500 We recall our vie w that t he relevant question in determining\nwhether a measure falls within the scope of Article X:3(a) is \"whether the substance of such a\nmeasure is administrative in nature or, instead, involves substantive issues more properly dealt\nwith under other pro visions of the GATT 1994\".1501 We also recall that the term \"administer\"\nmeans \"putting into practical effect\" or \"applying\" a legal instrument of the kind described in\nArticle X:1.1502\n7.897. In this section, we first examine whether Russia's claim can be properly considered as one\nagainst the administration (rather than the substance) of Article 36 in the Directive . If this is the\ncase, we will proceed to examine whether the administration of the measure satisfies the\nrequirements of Article X:3(a) of the GATT 1994.\n7.8.2.2.4.2 Administered\n7.898. We observe that, in its challenge under Article X:3(a), Russia compares the Commission's\nOPAL decision to decisions on Gazelle, TAP, Nabucco and Poseidon and submits th at the measure\nwas not administered in a uniform, impartial and reasonable manner. We understand Russia to\nallege four main types of discrepancies in relation to its comparison of the decisions:\n\n1496 European Union's first written submission, para. 700-702; and opening statement at the first\nmeeting of the Panel, paras. 90-91. The European Union asserts that the \"impartial and reasonable\nadministration of the measure … is further supported by an obligation to state reasons for individual decisions,\nwhich are subject to judicial review in accordance with general rules. The competent jurisdictions may be either\nthe domestic courts of the Member States or the European Court of Justice, depending on who is the author of\nthe challenged final decision.\" (European Union's opening statement at the first meeting of the Panel, para.\n91). The European Union further refers to Commission Staff Working Document on Article 22 of Directive\n2003/55/EC Concerning Common Rules for the Internal Market in Natural Gas and Article 7 of Regulation (EC)\nNo. 1228/2003 on Conditions for Access to the Network for Cross-border Exchanges in Electricity – New\nInfrastructure Exemptions, SEC(2009) 642 final (6 May 2009), (Commission Explanatory Note on New\nInfrastructure Exemptions), (Exhibit RUS-27), as an interpretive note providing transparency and guidance to\nincrease predictability. (European Union's comments on Russia's response to Panel question No. 216,\npara. 133).\n1497 European Union's second written submission, paras. 287-288.\n1498 European Union's first written submission, para. 697 (referring to Directive 2009/73/EC, (Exhibit\nEU-5), Article 36(3)).\n1499 Japan's third-party submission, paras. 43-48.\n1500 Appellate Body Reports, EC – Bananas III, para. 200; and EC – Poultry, para. 115.\n1501 Panel Report, Thailand – Cigarettes (Philippines), para. 7.869 (quoting Panel Report, Argentina –\nHides and Leather, para. 11.70).\n1502 Panel Report, Thailand – Cigarettes (Philippines), para. 7.983.\n\n1. differences in the Commission's interpretation of criteria i n the competition analysis and\nthe definition of the geographic market in the OPAL decision as compared to the Gazelle,\nTAP, Nabucco and Poseidon decisions1503;\n\n2. differences in the conditions imposed in the OPAL decision as compared to the Gazelle,\nTAP, Nabucco and Poseidon decisions1504;\n\n3. the Commission's alleged failure to review its OPAL decision once the Gazelle pipeline\nhad been completed1505; and\n\n4. the Commission's alleged failure to review its TAP exemption based on subsequent\nchanges in, and acquisitions by, TAP's shareholders.1506\n\n7.899. The discrepancies alleged by Russia pertain to elements of the reasoning contained in\nparticular decisions stemming from the considerations identified in the pertinent criteria in\nArticle 36 of the Directive, and the alleged failure to revisit or re -evaluate that reasoning whe n\nmaterial changes had allegedly occurred.\n7.900. We once again recall the fundamental conceptual distinction between the administration of\na measure, and the substance of a measure, and the need to ascertain whether the substance of\nthe measure is administrative in nature or, instead, involves substantive issues more properly\ndealt with under other provisions of the GATT 19941507 and the Appellate Body's view that \" [t]he\nWTO-consistency of … substantive content must be determined by reference to provisions of the\ncovered agreements other than Article X of the GATT 1994\".1508\n7.901. Having carefully reviewed Russia's claim and the related argumentation of the parties 1509,\nwe do not believe that Russia's claim can properly be consider ed as relating to the administration\nof the infrastructure exemption measure within the meaning of Article X:3(a) of the GATT 1994.\n7.902. The elements of the infrastructure exemption decisions identified in the parties'\nargumentation express the implementation of the content of the criteria and determine t he\nsubstantive legal regime imposed. Our consideration of Russia's arguments leads us to the\nconclusion that such arguments pertain to the substantive content of the criteria guiding the grant\nof the infrastructure exemption, which articulate a set of defined, systematic benchmarks guiding\nthe substantive assessment of the merits of an infrastructure exemption application.\n7.903. To our mind, these are thus substantive, rather than administrative, in nature within the\nmeaning of Article X:3(a). We see that Russia's claim thus concerns the substantive aspects of the\ncriteria set out in Article 36 rather than how they are administered. As the conditions enshrined in\nthe infrastructure exemption criteria in the Directive, and the assessment that occurs thereunder,\nare substantive rather than administrative in nature, we also consider that the Commission's\nalleged failure to re-visit the situations in order to assess the existence and impact of any material\nchange in light of allegedly changed circumstances pursuant to these criteria is also substantive,\nrather than administrative, in nature. Russia's claims pertaining to these elements therefore also\nfall outside the scope of Article X:3(a) 1510 and accordingly, we find that Ru ssia has not\ndemonstrated a violation of Article X:3(a) of the GATT 1994.\n\n1503 Russia's first written submission, paras. 560-573 (regarding OPAL), 574-579 (regarding Gazelle),\n607-609 (regarding TAP), 649-654 (regarding Nabucco), and 663-668 (regarding Poseidon).\n1504 Russia's first written submission, paras. 544-546 (comparing OPAL and Gazelle), 618-627\n(comparing OPAL and TAP), 655-660 (comparing OPAL and Nabucco), and 668-671 (comparing OPAL and\nPoseidon).\n1505 Russia's first written submission, para. 583-593.\n1506 Russia's first written submission, para. 610-617.\n1507 Panel Reports, Argentina – Hides and Leather, para. 11.70 (emphasis added); and Thailand –\nCigarettes (Philippines), para. 7.869.\n1508 Appellate Body Report, EC – Poultry, para. 115. See also Panel Report, US – Corrosion-Resistant\nSteel Sunset Review, para. 7.293.\n1509 See, below paras. 7.940-7.963.\n1510 We find support for our approach in the findings of the panel in Thailand – Cigarettes (Philippines).\nThat panel was requested to consider whether the usage of a particular methodology for calculating the excise\ntax on imported cigarettes constituted the \"administration\" of a measure. That panel concluded that the\n\n7.904. Moreover, while the Appellate Body has clarified that panels may be required to examine\nmunicipal law \"in assessing its consistency with WTO law\" 1511, this role does not, in our view,\ninclude an assessment of a challenged measure's inconsistency with municipal, rather than WTO ,\nlaw. We understand that, by asking us to compare the OPAL decision to the Commission's internal\nguidance and its other decisions, certain of Russia's arguments in vite us to address the\nconsistency of the cited infrastructure exemption decisions with internal EU law and practice. We\ndo not believe our mandate properly encompasses a review of the consistency of decisions with EU\ninternal law or practice. In this rega rd, we recall that the panel in US – Hot-Rolled Steel opined\nthat it is not properly a panel's task to consider whether a Member has acted consistently with its\nown domestic legislation. 1512 This was reiterated by the panel in US – Stainless Steel (Korea)\nwhich found that:\n[The WTO dispute settlement system] was not … intended to function as a mechanism\nto test the consistency of a Member's particular decisions or rulings with the Member's\nown domestic law and practice; th at is a function reserved for each Member's\ndomestic judicial system, and a function WTO panels would be particularly ill -suited to\nperform.1513\n7.905. Russia acknowledges these views but submits that we may consider this claim without\ntesting the European Union’s ad herence to its own domestic law and practice. 1514 Russia argues\nthat the internal guidance and decisions it cites here differ materially from the practice or policy at\nissue in that case.1515\n7.906. The European Union maintains that it has not departed from its domest ic law and from\nCommission practice as it is explained in the Commission Explanatory Note on New Infrastructure\nExemptions but submits that, if the Panel were to consider Russia's arguments regarding the\nCommission's alleged deviations from th at Note, it w ould be testing the European Union's\nadherence to its own domestic law and practice. The European Union considers that the Panel is\nnot well equipped to fulfil that task, which should be left to the domestic courts of the European\nUnion.1516\n7.907. We concur with th e view of these previous panels and consider that, by asking us to\ncompare the OPAL decision to the Commission's internal policy guidance and its other decisions,\nRussia's submissions improperly invite us to consider whether the European Union has followed its\nown laws and practice.\n7.908. Accordingly, we find that Russia's claim under Article X:3(a) in respect of the alleged\nadministration of the infrastructure exemption provision in Article 36 of the Directive does not\nproperly fall within the scope of Article X:3(a) of the GATT 1994. We therefore do not further\nexamine the consistency of the cited infrastructure exemption decisions with the Article X:3(a)\nrequirements to administer the measure in a uniform, impartial and reasonable manner. We\naddress the substa ntive aspects of Russia's claims pertaining to certain aspects of the mentioned\ninfrastructure exemption decisions in our examination of Russia's claims under Article I:1 of the\nGATT 1994, and we examine Russia's claim concerning the conditions contained i n the OPAL\ndecision under Article XI:1 of the GATT 1994 below.\n\nchallenged aspects of the legislation in question were substantive, rather than administrative, in nature within\nthe meaning of Article X:3(a). (Panel Report, Thailand – Cigarettes (Philippines), paras. 7.986-7.988). That\npanel thus considered it unnecessary to continue its analysis under this provision to consider whether the\nadministration of the measure was uniform, impartial and reasonable.\n1511 Appellate Body Report, US – Hot-Rolled Steel, para. 200. See also Appellate Body Reports, US –\n1512 Panel Report, US – Hot-Rolled Steel, para. 7.267.\n1513 Panel Report, US – Stainless Steel (Korea), para. 6.50. (footnote omitted)\n1514 Russia's response to Panel question No. 227, para. 314.\n1515 Russia's response to Panel question No. 227, para. 317. In particular, Russia asserts that the Panel\nis not precluded from considering the Commission Explanatory Note on New Infrastructure Exemptions,\n(Exhibit RUS-27).\n1516 European Union's comments on Russia's response to Panel question No. 227, para. 150. See also\nEuropean Union's opening statement at the first meeting of the Panel, para. 93, where the European Union\nstresses that \"judicial review of an individual measure should be left for the municipal courts and is not the\ntask of a panel assessing a claim under Article X:3(a).\"\n\n7.8.2.3 Conclusion\n7.909. For the reasons stated above, we find that Russia has not demonstrated that the European\nUnion has administered the infrastructure exemption measure in the Directive inconsistently w ith\nArticle X:3(a) of the GATT 1994.\n7.8.3 Russia's claims under Article II:1 of the GATS and Article I:1 of the GATT 1994\n7.8.3.1 Introduction\n7.910. Russia has raised four claims under Article II:1 of the GATS and Article I:1 of the GATT\n1994 in the context of the broader category referred to by Russia as \"the infrastructure exemption\nmeasure\", one under Article II:1 of the GATS1517 and three under Article I:1 of the GATT 1994.1518\nAt the outset, we note that there has been some ambiguity, throughout these proceedings, about\nthe exact nature and content of the measure challenged by Russia under these claims.\n7.911. Throughout its submissions, Russia has focused its argumentation under Article II:1 of the\nGATS and Article I:1 of the GATT 1994 on the \"manner in which the EU applied or implemented\"\nArticle 36 of the Directive, by comparing and contrasting different specific infrastructure exemption\ndecisions taken by the Commission and the relevant NRAs.\n7.912. More particularly, Russia argues : (a) that the Commission and the relevant NRAs\ninterpreted certain requirements for being eligible to receive an infrastructure exemption\ndifferently in respect of one infrastructure exemption decision involving a Russian pipeline\ntransport service supplier and imported Russian natural gas, on the one hand, and two\ninfrastructure exemption decisions involving pipeline transport service suppliers and imported\nnatural gas from other non -EU countries, on the other hand 1519; (b) that the Commission and the\nrelevant NRAs interpreted certain criteria differently and imposed different conditions as regards\none infrastructure exemption granted in respect of a Russian pipeline transport service supplier\nand imported Russian natu ral gas, on the one hand, and a number of infrastructure exemptions\ngranted in respect of pipeline transport service suppliers and imported natural gas from other non -\nEU countries, on the other hand1520; and (c) that the Commission and the relevant NRAs applied or\nimplemented Article 36 differently in respect of two infrastructure exemption decisions involving\nRussian pipeline transport service suppliers and imported Russian natura l gas, on the one hand,\nand infrastructure exemption decisions concerning LNG facilities, on the other hand.1521\n7.913. In response to questions by the Panel, Russia explained that it is not challenging Article 36\nof the Directive per se, nor the specific instances of application of this provision in the different\n\n1517 Russia's first written submission, paras. 721-731; and second written submission, paras. 426-431.\n1518 Russia's first written submission, paras. 680-701; and second written submission, paras. 412-417\n(Russia's first claim under Article I:1 of the GATT 1994); Russia's first written submission, paras. 702-715; and\nsecond written submission, paras. 418-423 (Russia's second claim under Article I:1 of the GATT 1994); and\nRussia's first written submission, paras. 716-720; and second written submission, paras. 424-425 (Russia's\nthird claim under Article I:1 of the GATT 1994).\n1519 Russia's first written submission, paras. 680-701; and second written submission, paras. 412-417\n(Russia's first claim under Article I:1 of the GATT 1994, comparing the NEL infrastructure exemption decision\nwith the Gazelle and TAP infrastructure exemption decisions); and first written submission, paras. 729-731;\nand second written submission, paras. 426-431 (Russia's claim under Article II:1 of the GATS, comparing the\nNEL and OPAL infrastructure exemption decisions with the Gazelle, TAP, Nabucco, Dragon and South Hook\ninfrastructure exemption decisions).\n1520 Russia's first written submission, paras. 702-715; and second written submission, paras. 418-423\n(Russia's second claim under Article I:1 of the GATT 1994, comparing the OPAL infrastructure exemption\ndecision with the Gazelle, TAP, Nabucco and Poseidon infrastructure exemption decisions); and first written\nsubmission, paras. 729-731; and second written submission, paras. 426-431 (Russia's claim under Article II:1\nof the GATS, comparing the NEL and OPAL infrastructure exemption decisions with the Gazelle, TAP, Nabucco,\nDragon and South Hook infrastructure exemption decisions).\n1521 Russia's first written submission, paras. 716-720; and second written submission, paras. 424-425\n(Russia's third claim under Article I:1 of the GATT 1994, comparing the NEL and OPAL infrastructure exemption\ndecisions with the Dragon and South Hook infrastructure exemptions decisions); and first written submission,\nparas. 729-731; and second written submission, paras. 426-431 (Russia's claim under Article II:1 of the GATS,\ncomparing the NEL and OPAL infrastructure exemption decisions with the Gazelle, TAP, Nabucco, Dragon and\nSouth Hook infrastructure exemption decisions).\n\ninfrastructure exemption decisions referred to by Russia. 1522 Instead, Russia is challenging the\nalleged \"inconsistent\" 1523 or \"discriminatory\" 1524 \"manner in which the EU applied or\nimplemented\"1525 Article 36 of the Directive. 1526 We understand that by using the terms\n\"inconsistent\" or \"discri minatory\", Russia refers to alleged differences or lack of coherence in the\ninterpretation of eligibility requirements and in the interpretation of certain criteria and imposition\nof conditions referred to in letters (a), (b) and (c) in the immediately preceding paragraph. Russia\nalso confirmed that the challenged measure is the same for Russia's claims under Article II:1 of\nthe GATS and Article I:1 of the GATT 1994.1527\n7.914. In this regard, we note that \"[i]n principle, any act or omission attributable to a WTO\nMember can be a measure of that Member for purposes of dispute settlement proceedings.\"1528 We\nfurther note that the European Union does not appear to take issue with Russia challenging this\ntype of measure1529, although it disputes the merits of Russia's contention that the European Union\napplied or implemented Article 36 of the Directive in an \"inconsistent\" or \"discriminatory\" manner.\nWe also see no reason to preclude Russia from challenging the alleged \"inconsistent\" or\n\"discriminatory\" manner in which the European Union applied or implemented Article 36 of the\nDirective. At the same time, we believe that it is for Russia to demonstrate the existence of this\nmeasure.1530 In other words, as Russia's claims under Article II:1 of the GATS and Article I:1 of\nthe GATT 1994 are predicated on the notion that the European Union applied or implemented\nArticle 36 of the Directive in an \"inconsistent\" or \"discriminatory\" manner, we believe that it is for\nRussia to demonstrate that the European Union di d in fact apply or implement Article 36 of the\nDirective in this manner, as a basis for its claims.\n7.915. Accordingly, we begin by addressing the threshold issue of whether Russia has\ndemonstrated the existence of the alleged measure, which is, according to Russ ia, that the\nEuropean Union applied or implemented Article 36 of the Directive in an \"inconsistent\" or\n\"discriminatory\" manner.\n\n1522 Russia's responses to Panel question No. 47(a), paras. 223-225, and No. 217(a), para. 283.\n1523 Russia's responses to Panel question No. 5, para. 47, and No. 47(a), para. 224.\n1524 Russia's first written submission, paras. 730-731.\n1525 Russia's responses to Panel question No. 5, paras. 47-49, and No. 47(a), paras. 224-225.\n1526 Russia's response to Panel question No. 217(a), para. 283.\n1527 Russia's response to Panel question No. 217(b), para. 284.\n1528 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 81.\n1529 We note that the European Union, in response to a question by the Panel following the first meeting,\nstates that:\n[I]t would only be possible to assess the consistency of the individual decisions with the MFN\nobligation by taking into account the universe of relevant individual similar decisions (\"like\"\ndecisions) and examining if pipeline transport services and service s uppliers of any other WTO\nMembers have indeed received more favourable treatment than that accorded to Russian\nservices and services suppliers.\n\nIt is entirely inappropriate and inadequate to \"pick and choose\" two individual decisions from a\nuniverse of re levant similar decisions and base a discrimination claim in WTO law on this\ncomparison. (European Union's response to Panel question No. 47, paras. 125-126).\nWe recognize and echo the concerns raised by the European Union regarding the approach of \"pick[ing]\nand choos[ing]\" individual decisions for purposes of advancing discrimination claims under the MFN or national\ntreatment obligations in the GATS or the GATT 1994. More particularly, we agree with the European Union that\nthis approach may not in all circumstances \"allow an unbiased assessment\". (Ibid. para. 127). At the same\ntime, we note that the European Union does not pursue this issue further in its subsequent submissions. We\nfurther note that the European Union has only pointed to additional infrastructure exemption decisions\nconcerning LNG facilities and LNG storage, and has not pointed to any infrastructure exemption decisions\nregarding pipelines in addition to those referred to, and relied on, by Russia in its argumentation.\n(Ibid. paras. 127-128). Such additional infrastructure exemption decisions concerning LNG facilities and LNG\nstorage appear to concern only the third aspect of the alleged \"inconsistent\" or \"discriminatory\" manner in\nwhich the European Union applied or implemented Article 36 of the Directive, namely that the Commission and\nthe relevant NRAs allegedly applied different requirements and imposed different conditions in respect of two\ninfrastructure exemption decisions involving Russian pipeline transport service suppliers and imported Russian\nnatural gas, on the one hand, and infrastructure exemption decisions concerning LNG facilities, on the other\nhand. In order to address the European Union's concerns and to ensure \"an unbiased assessment\", our\nassessment of this aspect takes into account the existence of additional infrastructure exemption decisions\nconcerning LNG facilities and LNG storage.\n1530 We note that similar approaches have been taken in previous disputes. (See, e.g. Appellate Body\nReports, Argentina – Import Measures, para. 5.108; and Panel Report, Russia – Tariff Treatment, paras. 7.283-\n7.294).\n\n7.916. We wish to emphasize that th e assessment of whether Russia has demonstrated the\nexistence of the challenged measure does not concern the issue of whether the application or\nimplementation of Article 36 of the Directive is WTO inconsistent or discriminatory in a manner\nthat would violate Articles II:1 of the GATS or Article I:1 of the GATT 1994. Rather, we are\nexamining solely whet her Russia has demonstrated the existence of the challenged measure,\nwhich Russia itself characterizes as the alleged \"inconsistent\"1531 or \"discriminatory\"1532 \"manner in\nwhich the EU applied or implemented\"1533 Article 36 of the Directive.1534\n7.917. Since Russia has confirmed that the challenged measure is the same for Russia's claims\nunder Article II:1 of the GATS and Article I:1 of the GATT 1994 1535, we will conduct a single\nassessment of whether Russia has demonstrated the existence of the measure challenged under\nboth of these provisions, the alleged \"inconsistent\" or \"discriminatory\" manner in which the\nEuropean Union implemented or applied Article 36 of the Directive.\n7.918. Should we find that this measure exists, we will examine Russia's claims under Article II:1\nof the GAT S and Article I:1 of the GATT 1994 separately, following the approach set out at the\noutset of our Report. More particularly, should we find that the European Union applied or\nimplemented Article 36 of the Directive in an \"inconsistent\" or \"discriminatory\" manner, our\nassessment of Russia's claim under Article II:1 of the GATS will focus on how the \"inconsistent\" or\n\"discriminatory\" implementation or application of Article 36 of the Directive affects the supply of\npipeline transport services and service suppliers, whereas our assessment of Russia's claims under\nArticle I:1 of the GATT 1994 will focus on how it affects trade in natural gas.\n7.8.3.2 Whether the European Union applied or implemented Article 36 of the Directive\nin an \"inconsistent\" or \"discriminatory\" manner\n7.919. As already indicated above, Russia focuses on three different aspects, when arguing that\nthe European Union applied or implemented Article 36 of the Directive in an \"inconsistent\" or\n\"discriminatory\" manner, namely (a) that the Commission and the re levant NRAs interpreted\ncertain requirements for being eligible to receive an infrastructure exemption differently in respect\nof one infrastructure exemption decision involving a Russian pipeline transport service supplier and\nimported Russian natural gas, on the one hand, and two infrastructure exemption decisions\ninvolving pipeline transport service suppliers and imported natural gas from other non -EU\ncountries, on the other hand 1536; (b) that the Commission and the relevant NRAs interpreted\ncertain criteria differently and imposed different conditions as regards one infrastructure\nexemption granted in respect of a Russian pipeline transport service supplier and imported Russian\nnatural gas, on the one hand, and a number of infrastructure exemptions granted i n respect of\npipeline transport service suppliers and imported natural gas from other non -EU countries, on the\nother hand1537; and (c) that the Commission and the relevant NRAs applied or implemented Article\n36 differently in respect of two infrastructure exe mption decisions involving Russian pipeline\ntransport service suppliers and imported Russian natural gas, on the one hand, and infrastructure\nexemption decisions concerning LNG facilities, on the other hand.1538\n\n1531 Russia's responses to Panel question No. 5, para. 47, and No. 47(a), para. 224.\n1532 Russia's first written submission, paras. 730-731.\n1533 Russia's responses to Panel question No. 5, paras. 47-49, and No. 47(a), paras. 224-225.\n1534 Russia's response to Panel question No. 217(a), para. 283.\n1535 Russia's response to Panel question No. 217(b), para. 284.\n1536 Russia's first written submission, paras. 680-701; and second written submission, paras. 412-417\n(Russia's first claim under Article I:1 of the GATT 1994, comparing the NEL infrastructure exemption decision\nwith the Gazelle and TAP infrastructure exemption decisions); and first written submission, paras. 729-731;\nand second written submission, paras. 426-431 (Russia's claim under Article II:1 of the GATS, comparing the\nNEL and OPAL infrastructure exemption decisions with the Gazelle, TAP, Nabucco, Dragon and South Hook\ninfrastructure exemption decisions).\n1537 Russia's first written submission, paras. 702-715; and second written submission, paras. 418-423\n(Russia's second claim under Article I:1 of the GATT 1994, comparing the OPAL infrastructure exemption\ndecision with the Gazelle, TAP, Nabucco and Poseidon infrastructure exemption decisions); and first written\nsubmission, paras. 729-731; and second written submission, paras. 426-431 (Russia's claim under Article II:1\nof the GATS, comparing the NEL and OPAL infrastructure exemption decisions with the Gazelle, TAP, Nabucco,\nDragon and South Hook infrastructure exemption decisions).\n1538 Russia's first written submission, paras. 716-720; and second written submission, paras. 424-425\n(Russia's third claim under Article I:1 of the GATT 1994, comparing the NEL and OPAL infrastructure exemption\ndecisions with the Dragon and South Hook infrastructure exemptions decisions); and first written submission,\n\n7.920. For its three claims under Article I:1 of the GATT 1994, Russia focuses on each of the three\naspects described in the immediately preceding paragraph , respectively1539, whereas it focuses on\nall three aspects for its single claim under Article II:1 of the GATS.1540\n7.921. As mentioned above, Russia has confirmed t hat it is challenging all three aspects as a\nsingle overarching measure and that the challenged measure is the same for Russia's claims under\nArticle II:1 of the GATS and Article I:1 of the GATT 1994. 1541 For the purposes of examining the\nexistence of the overarching measure, we address each of these three aspects, in turn, below.\n7.922. Before turning to our assessment of these aspects, however, we wish to emphasize that\nthis assessment will be tailored to Russia's challenge and the nature of the challenged measure.\nMore particularly, we will examine and compare the various infrastructure exemption decisions\ncited by Russia with a view to determining whether the Commission and the relevant NRAs\ninterpreted requirements differently or imposed different conditions in a way that supports Russia's\ncontention that Article 36 was applied or implemented in an \"inconsistent\" or \"discriminatory\"\nmanner.\n7.923. We will not consider, outside the confines of this comparative assessment, the issue of how\nto interpret the various eligibility requirements or how to apply the various criteria and conditions\nunder Article 36 of the Directive, nor will we review the consistency of the individual infrastructure\nexemption decisions, pointed to by Russia, with EU law, generally, or Article 36 of the Directive,\nmore specifically. As we have already observed1542, we do not believe that such an approach would\ncomport with the functions of panels under Article 11 of the DSU. More particularly, while the\nAppellate Body has clarified that panels may be required to examine municipal law \"in assessing its\nconsistency with WTO law\" 1543, we agree with prior panels that the task of WTO panels is not to\ndetermine whether a Member has acted consistently with its own domestic legislation. Nor do we\nbelieve that Russia's challenge or the nature of the challenged measure warrants such an\napproach.\n(a) Interpretation of certain requirements for eligible types of infrastructure\n7.924. We begin with the first aspect, the alleged \"inconsistent\" or \"discriminatory\" interpretation\nof certain requirements for being eligible to receive an infrastructure exemption under Article 36 of\nthe Directive. In this regard, we recall that this provision allows infrastructure exemptions to be\ngranted only for certain types of infrastructure. More particularly, to be eligible for an\ninfrastructure exemption, the infrastructure must be considered \"[m]ajor new gas infrastructure,\ni.e. interconnectors, LNG and storage facilities\" within the meaning of Article 36(1) of the Directive\nor \"significant increases of capacity in existing infrastructure and [] modifications of such\ninfrastructure which enable the development of new sources of gas supply\" within the meaning of\nArticle 36(2) of the Directive.\n7.925. In its argumentation on this , Russia contrasts the infrastructure exemption decision\nconcerning the NEL pipeline with those concerning the Gazelle and TAP pipelines.1544 In the former,\n\nparas. 729-731; and second written submission, paras. 426-431 (Russia's claim under Article II:1 of the GATS,\ncomparing the NEL and OPAL infrastructure exemption decisions with the Gazelle, TAP, Nabucco, Dragon and\nSouth Hook infrastructure exemption decisions).\n1539 Russia's first written submission, paras. 680-701; and second written submission, paras. 412-417\n(Russia's first claim under Article I:1 of the GATT 1994); Russia's first written submission, paras. 702-715; and\nsecond written submission, paras. 418-423 (Russia's second claim under Article I:1 of the GATT 1994); and\nRussia's first written submission, paras. 716-720; and second written submission, paras. 424-425 (Russia's\nthird claim under Article I:1 of the GATT 1994).\n1540 Russia's first written submission, paras. 721-731; and second written submission, paras. 426-431.\nWe note that Russia, despite focusing on all three aspects for its single claim under Article II:1 of the GATS,\ndoes not refer to one of the individual infrastructure exemption decisions relied on by Russia for its second\nclaim under Article I:1 of the GATT 1994 concerning the second aspect listed in paragraph 7.919, namely the\nPoseidon infrastructure exemption decision. We do not, however, believe that this alters the nature of the\nunderlying measure challenged by Russia nor our assessment of whether this measure exists.\n1541 Russia's response to Panel question No. 217(b), para. 284.\n1542 See, above para. 7.904.\n1543 Appellate Body Report, US – Hot-Rolled Steel, para. 200. See also Appellate Body Reports, US –\n1544 Russia's first written submission, paras. 680-701 and 729-731; and second written submission,\nparas. 412-417 and 427.\n\nthe NEL pipeline was not considered eligible for, and hence denied, an infrastructure exemption by\nvirtue of not being considered an interconnector within the meaning of Article 36(1) of the\nDirective.1545 In the two latter, the Gazelle and TAP pipelines were considered eligibl e for, and\neventually granted, infrastructure exemptions by virtue of being considered major new\ninterconnectors within the meaning of Article 36(1) of the Directive.1546\n7.926. Russia's main point of criticism pertains to the Commission's and the relevant NRAs'\ninterpretation of the term \"interconnectors\", which is defined in the Directive as \"a transmission\nline which crosses or spans a border between Member States for the sole purpose of connecting\nthe national transmission systems of those Member States\". 1547 Based on this definition, the\nCommission and the relevant NRAs have considered the definition of an interconnector as involving\ntwo cumulative requirements: (i) that the transmission line \"crosses or spans a border between\nMember States\"; and (ii) that the trans mission line has the \"sole purpose of connecting the\nnational transmission systems of those Member States\".1548\n7.927. Russia argues that the Commission implicitly accepted the German NRA 's \"narrow\"\ninterpretation of the definition of an interconnector in relation to the first of these requirements, by\nnot reviewing the conclusion that the NEL pipeline does not \"cross[] or span[] a border between\nMember States\", based on the fact that this pipeline \"begins and ends in Germany\". 1549 In Russia's\nview, the Commission \"expa nded\" this definition when reviewing the Czech NRA's decision to\nexempt the Gazelle pipeline by considering that this pipeline \"cross es or spans a border between\nMember States\" as it connects to the German transmission system, despite the fact that this\npipeline connects to the German transmission system by using 20 km of existing pipeline \"located\nentirely in the Czech Republic\". 1550 Similarly, Russia argues that the Commission \"continued to\nexpand\" the definition of an interconnector by finding that the TAP pipeline \"crosses or spans a\nborder between Member States\" regardless of the fact that a non-EU member State was crossed in\nbetween the two EU member States.1551\n7.928. We note that the German NRA's denial of the NEL infrastructure exemption appears to be\nbased on the fact that this pipeline is located only within Germany and does not directly connect to\nthe transmission system of any other EU member State. More particularly, in its decision, the\nGerman NRA stated that:\n[I]t is necessary for the pipeline itself to cr oss or span a national border in order to\ncreate the connection between transmission systems of the Member States. This is\nalready missing in the case of the NEL, which begins at the Greifswald landfall station\n(NEL east) and ends at the Achim valve statio n (NEL west), i.e. on German territory\nover 100 km from the German-Dutch border.1552\n7.929. As acknowledged by Russia, the NEL pipeline does not itself cross or span a border\nbetween EU member States. Instead, Russia points to the fact that the NEL pipeline \"connects with\nthe existing German transmission system, which then connects to the transmission system s of the\nNetherlands and Belgium.\"1553\n7.930. The Commission's conclusion that the Gazelle pipeline \"crosses or spans a border between\nMember States\", on the other hand, appears to be based on the fact that the Gazelle pipeline itself\n\"crosses a border between Member States, namely the Czech/German border at the Waidhaus\n\n1545 See BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), p. 77.\n1546 See Commission decision on the exemption of the Gazelle pipeline II, (Exhibit RUS-87), pp. 2 and\n12-13; and Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10), pp. 2, 8-9 and 55-62.\n1547 Directive 2009/73/EC, (Exhibit EU-5), Article 2(17).\n1548 See, e.g. BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), p. 20.\n1549 Russia's first written submission, paras. 681-682, 684, 723 and 729 (referring to BNetzA decision on\nthe exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), pp. 20-22).\n1550 Russia's first written submission, paras. 687-688 and 723 (referring to Commission decision on the\nexemption of the Gazelle pipeline I, (Exhibit RUS-81), paras. 19-21; and Commission decision on the\nexemption of the Gazelle pipeline II, (Exhibit RUS-87)).\n1551 Russia's first written submission, paras. 694-697 and 723 (referring to Commission decision on the\nexemption of the TAP pipeline, (Exhibit RUS-10), paras. 55-56).\n1552 BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), p. 21.\n1553 Russia's first written submission, para. 680. See also Russia's first written submission, para. 692.\n\nborder station where it is connected to the German transmission system\" .1554 Russia does not\nappear to suggest otherwise, but instead points to the fact that \"'Gazelle uses 20 km of an existing\npipeline' located entirely in the Czech Republic\" and criticizes the Commission for addressing this\nonly in the context of considering whether the Gazelle pipeline is \"n ew\" and not in the context of\nconsidering whether it is an interconnector. 1555 As pointed to by Russia itself, however, these 20\nkm of an existing pipeline are \"located entirely in the Czech Republic\". For this reason, we do not\nsee the usage of these existin g 20 km of pipeline as altering the fact that the Gazelle pipeline,\nunlike the NEL pipeline, crosses or spans a border between EU member States. In light of this\nfactual difference, we therefore do not agree with Russia's position that the Commission's\nconclusion that the Gazelle pipeline fulfilled the first requirement for being an interconnector,\nwhereas the NEL pipeline did not, can be viewed as demonstrating that the Commission applied or\nimplemented Article 36 in an \"inconsistent\" or \"discriminatory\" manner.\n7.931. Similarly, we note that the Commission's conclusion that the TAP pipeline \"crosses or\nspans a border between Member States\" appears to be based, as pointed out by the European\nUnion1556, on the fact that this pipeline is located within the territories of both Italy and Greece.1557\nRussia argues that the Commission \"continued to expand its interpretation of the definition of\n'interconnector'\" and \"acted contrary to BNetzA's decision regarding NEL\" by concluding that \"the\nconcept of 'interconnectors' must be understood as comprising, inter alia, gas pipelines which span\nthe borders of (at least) two EU Member States, regardless as to whether the territory of an non -\nEU Member State is crossed in between.\"1558\n7.932. We recall that our examination is not directed at det ermining how to interpret the various\nrequirements under Article 36 of the Directive consistently with EU law, including whether the\nrequirement to \"cross[] or span[] a border between Member States\" should be interpreted to cover\npipelines that span the bo rders of two EU member States by crossing a non -EU member State in\nbetween. Instead, we focus on Russia's assertion that the Commission and the relevant NRAs\ninterpreted this requirement in an \"inconsistent\" or \"discriminatory\" manner in the infrastructure\nexemption decisions pointed to by Russia. In light of the factual differences between the NEL and\nTAP pipelines, and in particular the fact that the NEL pipeline is located solely within a single EU\nmember State, Germany, whereas the TAP pipeline is located within and connects two EU member\nStates, Italy and Greece, we do not agree with Russia's position that the Commission's conclusion\nthat the latter fulfilled the first requirement for being an interconnector, whereas the for mer did\nnot, can be viewed as demonstrating that the Commission applied or implemented Article 36 in an\n\"inconsistent\" or \"discriminatory\" manner.\n7.933. Russia also asserts certain arguments pertaining to the second requirement under the\ndefinition of an interconnector, namely that such have the \"sole purpose of connecting the national\ntransmission systems of [] Member States\" and to the requirement under Article 36(1) of the\nDirective that the infrastructure be \"new\". More particularly, Russia faults the Commis sion for\nfinding that the Gazelle pipeline was \"new\" infrastructure despite the fact that it uses 20 km of an\nexisting pipeline1559, and for finding that its sole purpose was to connect the national transmission\nsystems of Germany and the Czech Republic witho ut considering its earlier finding that \"the\n'purpose' of Gazelle is to continue OPAL 'as part of the wider Nord Stream project which aims at\ntransporting Russian gas to Europe via the Baltic Sea.'\" 1560 Similarly, Russia faults the Commission\nfor \"brush[ing] aside\" the requirement regarding the sole purpose of the infrastructure being to\n\n1554 Commission decision on the exemption of the Gazelle pipeline I, (Exhibit RUS-81), p. 6.\n1555 Russia's first written submission, para. 688 (quoting Commission decision on the exemption of the\nGazelle pipeline I, (Exhibit RUS-81), p. 6).\n1556 European Union's first written submission, para. 730. See also European Union's second written\nsubmission, para. 312.\n1557 Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10), para. 14.\n1558 Russia's first written submission, paras. 694-696 (quoting Commission decision on the exemption of\nthe TAP pipeline, (Exhibit RUS-10), para. 55).\n1559 Russia's first written submission, paras. 690-691 and 723 (quoting Commission decision on the\nexemption of the Gazelle pipeline I, (Exhibit RUS-81), paras. 24-25).\n1560 Russia's first written submission, paras. 689 and 723 (quoting Commission decision on the\nexemption of the Gazelle pipeline I, (Exhibit RUS-81), para. 19).\n\nconnect the national transmission systems of EU member States in the TAP infrastructure\nexemption decision.1561\n7.934. As explained above, our examination pertains to the issue of whet her Russia has\ndemonstrated that the European Union applied or implemented Article 36 in an \"inconsistent\" or\n\"discriminatory\" manner. In our view, Russia's arguments concerning the requirement s that a\npipeline have \"the sole purpose of connecting the nati onal transmission systems of [] Member\nStates\" and be \"new\" are inapposite in this regard. More particularly, since the NEL pipeline was\nfound not to comply with the requirement to \"cross[] or span[] a border between Member States\",\nthe requirement that th e NEL pipeline have the \"sole purpose of connecting the national\ntransmission systems of [] Member States\" and the requirement that the NEL pipeline be \"new\"\ninfrastructure were never interpreted or applied in the NEL infrastructure exemption decision. We\ntherefore have no point of comparison for determining whether the Commission and the relevant\nNRAs interpreted or applied th ese requirements differently in the NEL infrastructure exemption\ndecision, on the one hand, and the Gazelle and TAP infrastructure e xemption decisions, on the\nother hand, in a way that would support Russia's contention that the European Union applied or\nimplemented Article 36 of the Directive in an \"inconsistent\" or \"discriminatory\" manner.\n7.935. Russia appears to criticize the German NRA and the Commission for not examining the\npurpose of the NEL pipeline, arguing that \"[h]ad either BNetzA or the Commission conducted this\nanalysis, as was required, they would likely also have reached the same affirmative finding\nregarding NEL as they did for Gazelle.\"1562 More generally, Russia appears to fault the German NRA\nand the Commission for not examining \"any of the additional factors in relation to NEL\", including\nthe requirement that this pipeline have \"the sole purpose of connecting the national tran smission\nsystems of [] Member States\" and the requirement to be \"new\" under Article 36(1) of the\nDirective.1563 It is, however, undisputed that the requirements to \"cross[] or span[] a border\nbetween Member States\", to have \"the sole purpose of connecting the national transmission\nsystems of those Member States\", and to be \"new\", are cumulative. 1564 For this reason, it is\nunclear to us why Russia suggests that the German NRA and the Commission would be required to\nconsider the latter two requirements in respect o f the NEL pipeline, having already found that this\npipeline did not fulfil the first.\n7.936. In other words, the Commission and the relevant NRAs decided to consider the latter two\nrequirements in the Gazelle and TAP infrastructure exemption decisions, having fo und that these\npipelines met the first requirement. The Commission and the German NRA, on the other hand, did\nnot consider those latter two requirements in the NEL inf rastructure exemption decision, having\nfound that this pipeline did not meet the first re quirement to begin with. In our view, this does not\nsupport Russia's contention that the European Union applied or implemented Article 36 in an\n\"inconsistent\" or \"discriminatory\" manner. It simply stems from the fact that the three\nrequirements, as acknowledged by Russia1565, are cumulative.\n7.937. Russia also submits that the German NRA and the Commission failed to consider whether\nthe NEL pipeline was a \"significant increase[] of capacity in existing infrastructure\" or a\n\"modification[] of such infrastructure which enable[s] the development of new sources of gas\nsupply\" under Article 36(2) of the Directive as an \"alternative exemption basis\", having found that\nthe NEL pipeline was not \"[m]ajor new gas infrastructure, i.e. interconnectors, LNG and storage\nfacilities\" within the meaning of Article 36(1).1566\n7.938. When examining the German NRA 's decision concerning the NEL pipeline, it appears that\nthe applicants themselves requested an exemption for the NEL pipeline as being \"[m]ajor new gas\ninfrastructure\" under the provision of the German national implementing law equivalent to\nArticle 36(1) of the Directive, rather than requesting an exemption for the NEL pipeline as being a\n\"significant increase[] of capacity in existing infrastructure\" or a \"modification[] of such\ninfrastructure which enable[s] the development of new sources of gas supply\" und er the provision\n\n1561 Russia's first written submission, paras. 697 and 723 (referring to Commission decision on the\nexemption of the TAP pipeline, (Exhibit RUS-10), para. 56).\n1562 Russia's first written submission, para. 689.\n1563 Russia's first written submission, para. 692.\n1564 Russia's first written submission, para. 692.\n1565 Russia's first written submission, para. 692.\n1566 Russia's first written submission, paras. 683-684.\n\nequivalent to Article 36(2) of the Directive.1567 This was unlike the \"capacity expansions in existing\ntransport systems of Wingas Transport GmbH & Co. Kg\", which were \"not the subject of the\napplication\".1568 For this reason, we have difficulti es understanding Russia's criticism of the\nGerman NRA and the Commission for not examining this \"alternative exemption basis\".\n7.939. In light of the considerations above , we do not believe that Russia has demonstrated that\nthe Commission and the relevant NRAs i nterpreted or applied the eligibility requirements under\nArticle 36 of the Directive for granting an infrastructure exemption in a way that demonstrates its\ncontention that the European Union applied or implemented Article 36 in an \"inconsistent\" or\n\"discriminatory\" manner.\n(b) Interpretation of criteria and imposition of conditions\n7.940. We turn to the second aspect, that is Russia's arguments that the Commission and the\nrelevant NRAs interpreted the criteria set out in Article 36(1) of the Directive differentl y and\nimposed different conditions as regards one infrastructure exemption granted in respect of a\nRussian pipeline transport service supplier and imported Russian natural gas , on the one hand,\nand a number of infrastructure exemptions granted in respect o f pipeline transport service\nsuppliers and imported natural gas from other non -EU countries, on the other hand . Russia offers\na detailed comparison of the interpretation by the relevant NRAs and the Commission of certain\ncriteria in the infrastructure exem ption provision relating to the competition analysis, as well as of\nthe conditions imposed in the OPAL infrastructure exemption decision , with the corresponding\nelements in the Gazelle, TAP, Nabucco and Poseidon infrastructure exemption decisions. We first\nexamine Russia's arguments on the interpretation of criteria, and then turn to Russia's arguments\non the conditions imposed in the various decisions cited by Russia. In examining Russia's\narguments, we will look at whether Russia has demonstrated the existence of the challenged\nmeasure, that is, that the European Union applied or implemented Article 36 in an \"inconsistent\"\nor \"discriminatory\" manner, as a basis for its claims.\nInterpretation of criteria\n7.941. Article 36( 1) of the Directive sets out five cumulative criteria for obtaining an\ninfrastructure exemption.1569 Russia focuses its argumentation on only two of these, namely that\n(a) the investment must enhance competition in gas supply and enhance security of supply; a nd\n(e) the exemption must not be detrimental to competition or the effective functioning of the\ninternal market in natural gas, or the efficient functioning of the regulated system to which the\ninfrastructure is connected.1570\n7.942. We recall and underline that ou r examination is not directed at determining how to\ninterpret the criteria in Article 36 of the Directive consistently with EU law, including the specific\nparameters of any assessment taking place under the competition -related paragraphs thereof with\nrespect to relevant markets and competitive impacts of infrastructure in respect of which an\nexemption has been requested. Rather, we focus on Russia's assertion that the Commission and\nthe relevant NRAs interpreted these criteria in an \"inconsistent\" or \"discriminatory\" manner in the\ninfrastructure exemption decisions pointed to by Russia.\n7.943. We observe that the Commission's OPAL decision includes an assessment of competitive\nimpacts based on nationally defined geographic markets, not only in the Czech Republic 1571, but\n\n1567 BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), p. 5.\n1568 BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), p. 5.\n1569 See, above para. 2.37.\n1570 Directive 2009/73/EC, (Exhibit EU-5), Articles 36(1)(a) and 36(1)(e).\n1571 We note that the Commission disagreed with BNetzA's assessment of competitive impact in the\nCzech market. See Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), paras. 41-\n44, where the Commission observes that the BNetzA concludes that as a whole the OPAL project will contribute\nto an enhancement of competition in gas supply, noting that \"[t]he basis for the evaluation by the BNetzA is an\nanalysis of the anticipated effects of the OPAL project on competition on the gas sales markets in the Czech\nRepublic and in Germany, and on the market (which is demarcated at least Europe-wide) for the supply of\nsupra-regional wholesale companies with gas ('producer market').\" (footnotes and emphasis omitted) The\nCommission also observes that \"[t]he BNetzA comes to the conclusion that the OPAL at least 'as a whole' (i.e.\nin consideration of the imposed ancillary provisions) contributes to the enhancement of competition in gas\nsupply. It bases this assumption on the fact that the OPAL or the ancillary provisions linked to the exemption\n\nalso in Germany (regarding which the Commission accepts the analysis of BNetzA, the German\nNRA).1572 In reaching its decision that OPAL posed risks for competition, the Commission\nconsidered that\n[I]t is probable that no volumes relevant for competition from OPAL will remain in the\nCzech Republic. However, the Commission believes that it is at least possible that a\ncertain amount of the gas transported via the OPAL will remain there. This kind of\nscenario, in which Gazprom would deliver even more gas to t he Czech market than it\ncurrently does, would strengthen Gazprom' s dominant position on the producer\nmarket and therefore lead to a deterioration in competition. If the gas were to be\nsupplied to RWE Transgas, this would also strengthen the market -dominating position\nof RWE Transgas on the downstream wholesale market.1573\n7.944. Turning to the Commission's Gazelle decision, Russia asserts that the Commission\nexamined both the \"upstream producer market\" and the \"wholesale and retail markets\" and\nimplicitly identified the relevant geographic market as being EU -wide and that, having examined\nnot only the Czech market but also the markets of \"Germany and other countries\", the\nCommission found that Gazprom has a dominant position on the Czech upstream producer market.\nRussia further submits that the Commission appeared to base its decision entirely on the\nconclusion that Gazprom supplies the \"majority of the Czech gas consumption.\" 1574 Russia notes\nthat the Commission nevertheless determined that \"the construction of Gazelle w ill not strengthen\nGazprom's market position on this market\" and concluded that \"Gazelle will therefore positively\naffect the competitive situation on the Czech gas markets, without strengthening the position of\ndominant players on these markets.\"1575 We understand that the allegedly inappropriate \"EU-wide\"\n\nwill lead to enhanced competitive conditions on the Czech gas sales market.\" The Commission further observes\nthat \"[i]n relation to the German gas sales markets and the producer market, the BNetzA comes to the\nconclusion that OPAL’s effects on these markets are 'neutral'. Consequently the BNetzA does not assume that\nthe OPAL pipeline will have positive effects on competition in gas supply in Germany.\" (footnotes and emphasis\nomitted). The Commission then states its own opinion that \"the BNetzA statements in relation to the alleged\nenhancement of competition in the Czech gas sales market are not convincing. In actual fact, the Commission\nis concerned that the OPAL may even have negative effects on competition in the Czech Republic.\" The\nCommission then proceeds to analyse effects on competition in the Czech Republic, including lack of positive\neffects on competition and possible negative effects on competition (in paras. 45-74), concluding (in paras. 78-\n79) that:\nIt must be determined that, according to the information available to the Commission, it should\nnot be expected that there will be an enhancement of competition on the gas markets in\nquestion. The Commission also does not have any reliable indications of positive competitive\neffects from the OPAL in other Member States. The BNetzA also did not present any such positive\neffects. In addition, there are risks for competition from the OPAL in the Czech producer market.\nDue to the lack of enhancement and the possible deterioration of competition on the relevant\nmarkets, the requirements for granting an exemption as per Article 22(1) a) and e) of Directive\n2003/54/EC are not present. (emphasis original)\n1572 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), paras. 75-77\n(contained in a section entitled \"3. Effects on competition in Germany\"):\n\nThe Commission shares the assessment of the BNetzA that the OPAL project will not enhance\ncompetition on the German gas markets.\n\nThe Commission also agrees with the BNetzA finding that the OPAL project will not lead to\nnegative effects on competition in the German gas markets.\n\nAs the present exemption relates exclusively to the cross-border transport capacities of the OPAL\nto the Czech Republic, the Commission believes that it is primarily the Czech gas market which is\nrelevant for the analysis of competition.\n\n1573 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 71. The\nCommission further surmised that \"[t]he additional access option created for Gazprom to Nord Stream gas\ncould also weaken potential competitors on the producer market\" (para. 72).\n1574 Russia's first written submission, para. 576 (citing Commission decision on the exemption of the\nGazelle pipeline I, (Exhibit RUS-81), para. 31).\n1575 Russia's first written submission, para. 576 (citing Commission decision on the exemption of the\nGazelle pipeline I, (Exhibit RUS-81), paras. 31-33 and 35). In its Gazelle decision, the Commission observed\nthat Gazelle would start at the Czech/German border point Brandov, cross the northwest of the Czech Republic\nand end at the Czech/German border at Waidhaus, noting that gas quantities taken up by Gazelle would \"be\ndirectly shipped to Waidhaus and can only be exited in Waidhaus\". (para. 9) The Commission emphasized that\n\"[t]he gas volumes on Gazelle will be transported to Germany and other markets … and are not intended to\n\napproach that Russia points to appears to be the Commission's consideration of nationally defined\ngeographic markets other than the Czech Republic (the German market and the national markets\nof other countr ies). The Commission's consideration of such other national markets in its Gazelle\nanalysis appears to be based on the particular situation and route of the Gazelle pipeline, which it\nconsiders has the effect of de-congesting the Czech transmission system.1576\n7.945. We further understand Russia to argue, in essence, that the Commission should have\nconsidered OPAL and Gazelle as a single pipeline and that, hence, any differences in the facts\ntaken into consideration in the two decisions constitute evidence of discrim inatory treatment.1577\nWe observe that the possibility existed that gas transported through OPAL could remain in the\nCzech market, although, as noted above, the Commission opined that it was probable that no\nvolumes relevant for competition from OPAL would re main there. As Russia itself\nacknowledges1578, the Commission recognized the interlinkages between OPAL and Gazelle,\nobserving inter alia that \"[w]hile the three projects Nord Stream, OPAL and Gazelle are sponsored\nby different companies, they depend on one another, as both OPAL and Gazelle transport further\nthe Russian gas delivered through Nord Stream.\"1579 The Commission thus took account of existing\nplans to link OPAL to Gazelle, but the Gazelle pipeline was not yet constructed at the time of the\n2009 OPAL decision (its construction was completed in 2013). The applications for exemptions for\nthe two pipelines were made separately.1580 Since Gazelle's completion, we understand that Russia\nand the European Union have discussed, on several occasions, the modification of the OPAL\nconditions.1581 However, these conditions remain in place.1582\n7.946. We observe that, in its TAP exemption decision, the Commission conducted analyses of the\nrelevant geographic market and of the impact on competition in the Greek market 1583 and on\ncompetition in the Italian market separately. 1584 The Commission had similarly distinguished both\nmarkets as separate geographic markets in other parts of its decision. 1585 For Russia, this\n\"contradicted its approach to OPAL and Gazelle as well as the European Union's stated competition\npolicy\" and \"[t]he Commission's approach to TAP suggests that the Greek and Italian gas markets\n\nserve the Czech market, except for emergency situations. From a competition point of view, the Gazelle\npipeline is thus rather a substitute for the 'Brotherhood' pipeline, which is currently used for transports to the\nGerman border, than an additional source for gas imports to Czech markets\" (para. 32). (footnotes and\nemphasis omitted).\n1576 Commission decision on the exemption of the Gazelle pipeline I, (Exhibit RUS-81), para. 29.\n1577 We note that, in its Gazelle decision, the Commission stated that exemptions \"may notably have a\ndetrimental effect on competition if a similar infrastructure project is planned in parallel to the project for which\nan exemption is requested and the exemption for this project risks jeopardizing the commercial viability of the\nother project\" and concluded that \"[s]ince no alternative projects to Gazelle exist in the present case, the\nexemption for the Gazelle project is unlikely to be detrimental to competition.\" (Commission decision on the\nexemption of the Gazelle pipeline I, (Exhibit RUS-81), para. 63). (footnotes omitted)\n1578 Russia's first written submission, para. 574.\n1579 Commission decision on the exemption of the Gazelle pipeline I, (Exhibit RUS-81), para. 10.\n1580 Russia's first written submission, para. 574, refers to the \"18 months separating the Commission's\ntwo exemption decisions\".\n1581 For example, Russia notes, Gazprom formally requested the German NRA to reconsider its second\nOPAL decision adopting the Commission's decision and the conditions. See Russia's first written submission,\nparas. 583 and 706 (citing [***], (Exhibit RUS-91) (BCI); and [***], (Exhibit RUS-92) (BCI)). Russia submits\nthat a settlement was agreed upon with the German NRA but was not finalized as a binding agreement because\nthe Commission did not give its approval. See Russia's first written submission, para. 706 (citing [***],\n(Exhibit RUS-94) (BCI)).\n1582 See, above fn 1430.\n1583 Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10), paras. 99-123. It\nreads:\nCurrently, competition in the Greek gas markets can only be characterised as n ascent. Greece\nhas no domestic gas production. All gas consumed in Greece is imported. The incumbent gas\nsupplier in Greece's wholesale and retail gas markets is DEPA.\n\nAt least three market levels are currently dominated by the incumbent player (DEPA) in Greece:\n Gas imports (including both pipeline and LNG imports);\n Wholesale supply;\n Retail supply (including supplies to individual households and industries).\n(Ibid. paras. 99-100). (footnote omitted)\n\n1584 Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10), paras. 124-139.\n1585 Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10), see e.g. paras. 66-77\nand 84-93.\n\noperate independentl y, while its other findings suggest the opposite \".1586 The basis for Russia's\nargument about the inappropriateness of the Commission's findings that the Greek and Italian\nmarkets operated independently is unclear to us, given that, before the construction of TAP, there\nwas no direct interconnection between the gas systems of these countries . This differs from the\nfactual situation surrounding the German and Czech markets in the OPAL decision.\n7.947. Russia argues, in addition, that the Commission excluded Albania en tirely from its\ncompetition assessment, even though it is directly crossed by TAP. 1587 In this connection, we\nacknowledge the European Union's arguments1588 that the Commission did not review the Albanian\nNRA's conclusions in detail because, firstly, Albania is not a member of the European Union and\nhence the Commission did not have the requisite competence to do so and, secondly, before\ncompletion and entry into operation of the TAP pipeline, Albania did not have a gas system or\nmarket, and thus the impact of th e infrastructure investment and of its exemption on competition\ncould not be assessed in the same manner as when markets already exist.1589\n7.948. We see that the Commission's approach to Nabucco was based on the effects of the\nexemption in nationally defined relevant geographic markets, similar to its approach to OPAL, with\nthe difference that the Nabucco pipeline crosses four countries while OPAL crosses two (the OPAL\npipeline crosses Germany and ends in the Czech Republic whereas the Nabucco pipeline was\nplanned to stretch from Turkey via Romania, Bulgaria and Hungary to Austria.) The Commission\nanalysed the impact on competition in each affected market and concluded that the requested\nexemption did not enhance competition, and further conditions were therefore con templated\n(summarized below at para graph 7.954).1590 As for the particular markets analy sed, we\nacknowledge the European Union's view that the product markets to be analysed in a decision\ndepend on the concrete market situation for a given project, offering the example that \"[where]\nlocal distributors and industrial consumers are exclusively supplied by one incumbent, but subject\nto different conditions, this can requ ire a separate analysis, as was the case of Nabucco in\nBulgaria\".1591 While the Commission does appear to have conducted a relatively more detailed\n\n1586 Russia's first written submission, para. 608.\n1587 Russia's first written submission, para. 609. Russia submits that Albania joined Greece and Italy in\nthe Joint Opinion but that the Commission noted only that the Secretariat of the Energy Community had found\nthat TAP enhances competition in Albania, on the basis of a relevant geographical market delineated on the\nbasis of national boundaries (citing Final Joint Opinion of the Energy Regulators on TAP AG's Exemption\nApplication, (Exhibit RUS-97), para. 31).\n1588 European Union's response to Panel question No. 226, para. 298.\n1589 We recall that Russia notes that the list of TAP's shareholders has changed significantly since the\nCommission's TAP decision was issued and that two of the current shareholders in TAP - SOCAR and Snam -\nacquired other TSOs in the same markets after the exemption was issued, thus potentially modifying the basis\nfor the Commission's competition analysis. In this connection, Russia states that \"[a]t the time of its decision in\nMay 2013, the Commission identified TAP AG's shareholders as Statoil ASA (Norway) (42.5%), Axpo AG\n(Switzerland) (42.5%) and E.On Ruhrgas AG (Germany) (15%). The shareholders later changed dramatically\nand now consist of: BP (UK) (20%), AzTAP (subsidiary of SOCAR) (20%), Snam S.p.A. (Italy) (20%), Fluxys\n(Belgium) (19%), Enagás (Spain) (16%) and Axpo (5%).\" (Russia's first written submission, para. 595).\n(footnotes omitted) Russia asserts that the Commission should have monitored the exemption decision in order\nto verify whether the assumptions underlying the decision prove to be correct, as required by text of the\ndecision and the Commission's internal guidance. (Russia's first written submission, paras. 610-617 and 703\n(citing Commission Explanatory Note on New Infrastructure Exemptions, (Exhibit RUS-27); and Commission\ndecision on the exemption of the TAP pipeline, (Exhibit RUS-10), p. 61)). See also Russia's comments on\nEuropean Union's response to Panel question No. 226, para. 236. The European Union offers reasons for why\nthe circumstances did not trigger a re-assessment of the decision, including that the alleged ownership\nchanges did not take place to the extent alleged; the situation of TSO Snam being distinct from that of a VIU\nacquiring major shareholdings in transmission systems; the monitoring of exemption decisions falling within\nthe purview of NRAs and the Commission not being aware of a failure by the relevant NRA to assess the effects\nof ownership changes. (European Union's response to Panel question No. 229, paras. 302-303; No. 230, para.\n304; and No. 233, para. 305). We do not consider it necessary to address this issue in order to properly\naddress Russia's claim. In respect of the allegedly material changes in circumstances concerning TAP pointed\nto by Russia, we underline the factual and geographic particularities pertaining to each infrastructure\nexemption and recall that it is not our task here to conduct or re-conduct the Commission's own competition\nanalysis, nor to measure the European Union's (or EU member States') compliance with its/their own internal\nlaw and practice.\n1590 Commission decision on the exemption of the Austrian section of the Nabucco pipeline, (Exhibit\nRUS-83), paras. 31-40; Commission decision on the exemption of the Bulgarian section of the Nabucco\npipeline, (Exhibit RUS-84), paras. 33-43; and Commission decision on the exemption of the Romanian section\nof the Nabucco pipeline, (Exhibit RUS-85), paras. 38-52.\n1591 European Union's response to Panel question No. 226, para. 300.\n\nanalysis of Nabucco's impacts on the upstream wholesale market, the downstream wholesale\nmarket, the market for supply to local distributors and the retail market for industrial consumers,\nwe acknowledge the European Union's explanation that the more detailed analysis could operate\nas a more stringent standard to qualify for an exemption.1592\n7.949. We see that the Commissio n's approach in its Poseidon decision was based on the effects\nof the exemption in nationally defined relevant geographic markets (Italy and Greece). 1593 It\naccepted the assessments of the Italian and Greek NRAs regarding the generally positive effects\non competition, but considered that the positive effects on competition and security of supply were\nnot fully proportional to the extent of the exemption granted (and hence attached additional\nconditions, discussed below at paragraph 7.954).1594\n7.950. We have examined the elements of the infrastructure exemption decisions pointed to by\nRussia on the basis of the parties' argumentation. We are not persuaded that the Commission took\nsuch divergent approaches to its competition analysis in the OPAL and Gazelle, TAP, Nabucco and\nPoseidon infrastructure exemption decisions in a manner that would amount to an \"inconsistent\" or\n\"discriminatory\" application of the infrastructure exemption measure in Article 36 of the Directive\nfor the purposes of our analysis of whether the alleged measure exists as a basis for Russia's\nclaims. We consider that the differences identified by Russia in the competition analysis in the\nOPAL and Gazelle, TAP, Na bucco and Poseidon infrastructure exemption decisions stem from the\nCommission's assessment of the specific circumstances, distinct geographical situations and\ncompetitive impacts of these pipelines and are not evidence of an \"inconsistent\" or\n\"discriminatory\" application of Article 36 for the purposes of our assessment of the existence of the\nmeasure as a basis for Russia's claims here.\nImposition of conditions\n7.951. With respect to the conditions imposed in connection with the granting of infrastructure\nexemptions, Article 36(6) of the Directive states that:\nAn exemption may cover all or part of the capacity of the new infrastructure, or of the\nexisting infrastructure with significantly increased capacity.\nIn deciding to grant an exemption, consideration shall be given, on a case -by-case\nbasis, to the need to impose conditions regarding the duration of the exemption and\nnon-discriminatory access to the infrastructure. When deciding on those conditions,\naccount shall, in particular, be taken of the additional cap acity to be built or the\nmodification of existing capacity, the time horizon of the project and national\ncircumstances.1595\n\n1592 European Union's response to Panel question No. 226, para. 299.\n1593 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), pp. 10-18 (analysing\neffects on the Czech market); and p. 19 (analysing effects on the German market); and Commission decision\non the exemption of the Poseidon pipeline, (Exhibit RUS-86). The Commission refers throughout to separate\ncompetition analyses of the Poseidon pipeline carried out by the Greek and Italian NRAs. See, e.g. p. 5: \"[T]he\nGreek and Italian authorities consider that the project will not have a detrimental effect on the functioning of\nthe internal gas market or the efficient functioning of the regulated system to which the infrastructure is\nconnected.\"\n1594 Commission Decision on the Exemption of the Poseidon pipeline, (Exhibit RUS-86), p. 6.\n1595 Directive 2009/73/EC, (Exhibit EU-5), Article 36(6). Article 36(6) includes two further paragraphs:\n\nBefore granting an exemption, the regulatory authority shall decide upon the rules and mechanisms for\nmanagement and allocation of capacity. The rules shall require that all potential users of the\ninfrastructure are invited to indicate their interest in contracting capacity before capacity allocation in\nthe new infrastructure, including for own use, takes place. The regulatory authority shall require\ncongestion management rules to include the obligation to offer unused capacity on the market, and\nshall require users of the infrastructure to be entitled to trade their contracted capacities on the\nsecondary market. In its assessment of the criteria referred to in points (a), (b) and (e) of paragraph 1,\nthe regulatory authority shall take into account the results of that capacity allocation procedure.\n\nThe exemption decision, including any conditions referred to in the second subparagraph of this\nparagraph, shall be duly reasoned and published.\n\n7.952. Russia's submissions compare the conditions imposed on the OPAL pipeline, on the one\nhand, with conditions imposed on each of the Gazelle, TAP, Nabucco and Poseidon pipelines, on\nthe other hand, alleging that the OPAL conditions are more restrictive than t he conditions imposed\nin the other exemption decisions.\n7.953. Regarding the conditions attached to the respective exemptions, the European Union\nsubmits that the conditions imposed on the OPAL pipeline are not more restrictive than those\nimposed on the other pipelines.1596 The European Union's characterization of conditions attached to\nexemptions generally is that they \"are determined taking account of the size of the relevant\nmarket, the expected evolution of gas demand and of the market shares of competitors\" and that\n\"the level of a capacity cap or gas release requirement is established to ensure that with the\naccess to the relevant infrastructure (in the case of capacity cap), or to a gas supply (in the case\nof gas release program), competing undertakings will b e able to exercise a competitive constraint\non the dominant undertaking.\"1597 The European Union asserts that the imposition of capacity caps\nand gas release requirements generally is in line with previous Commission practice as well as the\nCommission Explanatory Note on New Infrastructure Exemptions . In particular, the European\nUnion argues that capacity caps imposed on undertakings holding a dominant position on the\nrelevant gas markets are standard conditions appended to such exemptions. The European Union\nalso cites the conditions attached to the Nabucco and TAP exemptions to argue that capacity caps\nand gas and capacity release programs are not unusual conditions for infrastructure\nexemptions.1598\n\nWe see that \"partial\" exemptions may include \"[l]imiting the exemption to part of the infrastructure, i.e.\nless than 100% of the capacity. In this case, part of the capacity would fall under regulated TPA and the\nproject promoters would be exempted from the TPA rules only for the other part of the capacity.\" (Commission\nExplanatory Note on New Infrastructure Exemptions, (Exhibit RUS-27), para. 18.1). We note that, among the\npossible conditions that may be imposed in connection with an infrastructure exemption, the same document\nenumerates: \"[a] limitation of the maximum percentage of capacity that can be allocated to an undertaking\nwith significant market power in the relevant market(s). This condition can be combined with the requirement\nto release the capacity share or corresponding gas volumes exceeding the defined maximum percentage.\"\n(para. 39.2).\n1596 European Union's first written submission, paras. 708-712; and second written submission, paras.\n288-293.\n1597 European Union's response to Panel question No. 234, para. 310; and Commission Explanatory Note\non New Infrastructure Exemptions, (Exhibit RUS-27), para. 39.\n1598 European Union's second written submission, paras. 289-292.\n\n7.954. We summarize the main conditions imposed in the exemption decisions referred to by\nRussia in the table below:\nOPAL1599 Gazelle1600 TAP1601 Nabucco1602 Poseidon1603\nMarket dominating\ncompanies (e.g.\nGazprom), are not\nallowed to book more\nthan 50% of the exit\ncapacity of the\npipeline at the Czech\nborder.\n\nThe capacity cap may\nbe exceeded if the\ncompany (or\ncompanies) offers a\ngas volume of 3 billion\ncubic meters per\nannum (m3/a) to the\nmarket on the OPAL\n(i.e. a \"gas release\nprogram\"), along with\na corresponding\ncapacity release\nprogram. The\nprograms must be\napproved by the\nGerman NRA.\nThe TSO is to\nenable sufficient bi-\ndirectional capacity\non Gazelle to\nsafeguard the\nsecurity of supply of\nthe Czech market in\nemergencies.\n\nAt the new border\npoint of Brandov,\nregulated virtual\nreverse flow shall\napply from the exit\npoint of Gazelle into\nOPAL and from the\nexit point of OPAL\ninto Gazelle.\n\nMarket dominating\nundertakings are not\nallowed to reserve\nmore than 50% of the\ncapacity on the TAP\nexit point in the\ncountry.\n\nIn case a lack of\ninterest by other\nparties causes\ncapacity to remain\nidle, a derogation from\nthe capacity cap\n(regulated by the\nNRA) is possible - in\nthe form of a gas and\ncapacity release\nrequirement.\n\nChanges in\nshareholders are to be\nnotified to the NRA.\n\nMarket dominating\nundertakings are not\nallowed to book more\nthan 50% of the total\ncapacity at the exit\npoints in the section of\nthe Nabucco pipeline in\nthe country.\n\nIn case a lack of interest\nby other parties causes\ncapacity to remain idle, a\nderogation from the\ncapacity cap (regulated\nby the NRA) is possible –\nin the form of a gas and\ncapacity release\nrequirement. A formula\nto calculate gas volume\nto be offered to the\nmarket is also\nrecommended.\n\nChanges in shareholders\nare to be notified to the\nNRA.\nNo gas shipper\nthrough the Poseidon\nPipeline will be\nauthorized to contract\nmore than 80% of the\nexempted\ntransportation\ncapacity.\n\nThe applicant TSO is\nto make available to\nthird parties\nincremental\ntransportation capacity\nto meet the effective\ndemand. The\nminimum capacity to\nbe made available in\nthis procedure shall\nnot be less than 0.8\nbcm/year, making full\nuse where possible of\nall the technical\ncapacity reasonably\navailable.\n\n7.955. We focus on Russia's assertion that the Commission and the relevant NRAs imposed\nconditions on exemptions granted in connection with such criteria in an \"inconsistent\" or\n\"discriminatory\" manner in the infrastructure exemption decisions pointed to by Russia.\n7.956. We note that (unlike in the OPAL decision) no capacity cap or gas release programme was\nimposed in the Gazelle decision1604, although part of that pipeline's capacity, i.e. above 30 bcm,\n\n1599 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89. The cap\nalso applies to cumulative bookings by companies belonging to the same market dominating corporate group\n(e.g. Gazprom and Wingas), or market-dominating companies or groups between which there are long-term\nand significant gas supply agreements (e.g. RWE Transgas and Gazprom).\n1600 Commission decision on the exemption of the Gazelle pipeline I, (Exhibit RUS-81), pp. 15-16. The\nexemption must also be conditional upon the treatment of the border point of Brandov as one common\nentry/exit point with the existing exit/entry point of Hora Svate Kateřiny for the purpose of trading gas from\nthe Czech Republic to Germany and from Germany to the Czech Republic, so that access from the Czech virtual\nhub (i.e. its entry/exit system) to the German exit point of OPAL and the German virtual hub, and vice versa\nfrom Germany to the Czech Republic, is possible.\n1601 Commission decision on the exemption of the TAP pipeline, (Exhibit RUS-10), pp. 55-62. The\ndecision also recommends that, in the event that two or more undertakings together hold a market share of at\nleast 80% and each of these undertakings have a market share of more than 20% in any relevant product\nmarket for the supply of gas in that country, or on the upstream market of supplying gas for that country, the\nrelevant NRA will have the right to impose a capacity cap on these undertakings on the TAP exit point in the\ncountry. Undertakings belonging to the same group of companies shall be considered together.\n1602 Commission decisions on the exemption of the Austrian, Bulgarian, and Romanian sections of the\nNabucco pipeline, (Exhibit RUS-83), pp.14-15; (Exhibit RUS-84), pp. 18-20; and (Exhibit RUS-85), pp. 20-21.\nThe decisions also recommend that, for the calculation of the capacity cap, undertakings belonging to the same\ngroup shall be considered together. With respect to dominant market players in Romania, the Commission\nrecommended two additional conditions: a) In the event of collective dominance on the upstream wholesale\nmarket the competent national authority should have the right to limit the capacity share of any of the\ncollectively dominant undertakings. The competent national authority should set a capacity cap in such a way\nthat non-dominant undertakings are enabled to compete effectively with the jointly dominant undertakings,\nand b) Nabucco International shall inform ANRE in good time of the result of the open season procedures.\nANRE should then, within a reasonable and specified period of time express its preliminary or final opposition\nto the submitted capacity allocation if one or more undertakings holding a dominant position exceed(s) the\nsingle dominance or the collective dominance capacity cap.\n1603 Commission decision on the exemption of the Poseidon pipeline, (Exhibit RUS-86), pp. 6-7.\n1604 Russia's first written submission, paras. 544-546 (citing Commission decision on the exemption of\nthe Gazelle pipeline I, (Exhibit RUS-81), p. 15).\n\nwas not exempted and thus fully regulated. 1605 The Commission considered the two pipelines to\nend in different national markets: while the physical end -point of Gazelle is in Germany, OPAL\nends in the Czech Republic. 1606 As Russia itself notes, the Commission re quired that the\nexemption's term be reduced from 23 to 22 years (the same as for OPAL), along with several\nother minor conditions.1607\n7.957. We note that the proportional gas release programs that the Commission imposed in each\nof its Nabucco decisions required tha t undertakings exceeding the capacity cap be required to\nrelease a percentage of their annual gas volume to the market. Russia contrasts this with the\n\"arbitrary\" 3 bcm/year required in the case of OPAL if it books capacity in excess of the 50%\ncap.1608 Furthermore, Russia notes that the Nabucco gas release program mes were each based on\nthe \"share of booked capacity\" of the dominant undertaking involved. 1609 Russia argues that the\nCommission effectively imposed a capacity cap on Gazprom in its Nabucco exemption d ecision\npertaining to Bulgaria, despite Gazprom not being affiliated with Bulgargaz and being considered\ndominant in a different segment of the market. Russia considers that by treating Bulgargaz and\nGazprom jointly for purposes of this capacity cap, the C ommission created a situation in which\nGazprom – a third party – could be completely precluded from acquiring any Nabucco capacity in\nBulgaria.1610 We note that the Commission established that the requested exemption would have a\ndetrimental impact on competition in the relevant market unless a capacity cap would apply.\n7.958. We note that TAP received an exemption from third -party access for 50% of its capacity.\nThe usage of TAP capacities by gas undertakings with a market share above 40% is limited to 50%\nof exit capacities both in Greece and in Italy. Russia asserts\"[t]he authorities may thus choose to\nimpose a capacity cap, make it lower than 50%, impose it on the \"two or more undertakings\ntogether,\" impose it on each individually, or impose no cap at all. There are no rules.\" We\nnevertheless acknowledge the European Union's argument that, because not all undertakings with\na 40% market share are dominant, but undertakings with less than 40% are very unlikely to be\ndominant, the capacity cap imposed on the TAP pipeline could be regarded as stricter than the one\nimposed on OPAL and that the additional possibility of applying a capacity cap to two undertakings\nreaching a combined share of 80% would tend to reinforce the operation of the capacity cap. 1611\nWe take note tha t in case a lack of interest by other parties caused capacity to remain idle, a\nderogation from the capacity cap (regulated by the NRA) is possible - in the form of a gas and\ncapacity release requirement.\n7.959. We take note of the European Union's argument that such programmes were not used in\nthe case of TAP 1612 because the pipeline is still under construction and Nabucco 1613 because that\npipeline project was abandoned while, in the case of OPAL, the decision not to use the gas and\ncapacity release programs rests entirely with Gazprom.\n7.960. We note that in its Poseidon decision, the Commission imposed an 80% exit capacity cap\nand no gas release requirement 1614, and added conditions to those that had been imposed by the\nItalian and Greek regulatory authorities, namely to make available to third parties incremental\ntransportation capacity.1615 We do not disagree with Russia's assertion that, notwithstanding that\nthe exemption granted in 2007 to Poseidon has expired 1616, the decision could nonetheless have\nhad a \"detrimental impact to the equality of competitive opportunities between Russian and other\n\n1605 European Union's first written submission, para. 708 (citing Commission decision on the exemption\nof the Gazelle pipeline I, (Exhibit RUS-81), para. 16).\n1606 European Union's first written submission, para. 708 (citing Commission decision on the exemption\nof the Gazelle pipeline I, (Exhibit RUS-81), para. 40; and Commission decision on the exemption of the OPAL\npipeline, (Exhibit RUS-82), paras. 45-48).\n1607 Russia's first written submission, para. 546 (citing Commission decision on the exemption of the\nGazelle pipeline I, (Exhibit RUS-81), p. 15).\n1608 Russia's first written submission, paras. 659, 712; and second written submission, para. 421.\n1609 Russia's first written submission, paras. 656, 712; and second written submission, para. 421.\n1610 Russia's first written submission, para. 661; and second written submission, para. 421.\n1611 European Union's first written submission, para. 711.\n1612 European Union's response to Panel question No. 130, para. 333; and No. 136, para. 358.\n1613 European Union's response to Panel question No. 130, para. 333; and No. 136, para. 358.\n1614 Russia's first written submission, paras. 664-672, 713 (citing Commission decision on the exemption\nof the Poseidon pipeline, (Exhibit RUS-86), pp. 2-3).\n1615 European Union's first written submission, para. 732; and Commission decision on the exemption of\nthe Poseidon pipeline, (Exhibit RUS-86), p. 6.\n1616 European Union's first written submission, para. 732.\n\nthird-country gas in the EU market result[ing] from the differential treatment.\" 1617 It would,\nhowever, remain for Russia to demonstrate that this was the case.\n7.961. We focus on Russia's assertion that the Commission and the relevant NRAs imposed\nconditions on exemptions granted in connection with such criteria in an \"inconsistent\" or\n\"discriminatory\" manner in the infrastructure exemption decisions pointed to by Russia. We are not\npersuaded that t he Commission took such divergent approaches to its imposition of conditions in\nthe OPAL and Gazelle, TAP, Nabucco and Poseidon infrastructure exemption decisions in a manner\nthat would amount to an \"inconsistent\" or \"discriminatory\" application of the inf rastructure\nexemption measure in Article 36 of the Directive for the purposes of our analysis of whether the\nalleged measure exists as a basis for Russia's claims here.\n7.962. To our mind, the mere fact that there are differences in the conditions attached to th e\nvarious infrastructure exemption decisions, including in terms of numerical thresholds for capacity\ncaps and gas release programmes does not necessarily lead to the existence of inconsistency or\ndiscrimination where factual differences exist between the relevant situations. We consider that\nthe differences identified by Russia in the conditions imposed in each of the individual situations\nconcerned do stem from the Commission's assessment of the specific circumstances, distinct\ngeographical situations and competitive impacts of the different pipelines concerned.\n7.963. For these reasons, we do not believe that Russia has demonstrated that the Commission\nand the relevant NRAs interpreted or applied the criteria under Article 36 of the Directive for\ngranting an in frastructure exemption in a way that demonstrates the existence of the challenged\nmeasure, that is, its contention that the European Union applied or implemented Article 36 in an\n\"inconsistent\" or \"discriminatory\" manner.\n(c) Application or implementation of Article 36 in respect of LNG facilities\n7.964. With respect to the third aspect, the alleged \"inconsistent\" or \"discriminatory\" application\nor implementation of Article 36 in respect of LNG facilities, we begin by recalling that the types of\ninfrastructure that are eligible for an infrastructure exemption include \"[m]ajor new gas\ninfrastructure, i.e. interconnectors, LNG and stora ge facilities\" within the meaning of Article 36(1)\nof the Directive. Eligible types of infrastructure therefore include not only major new\n\"interconnectors\", addressed in paragraphs 7.924 through 7.939 above, but also major new \"LNG\nand storage facilities\".1618\n7.965. In its argumentation regarding the third aspect, Russia contrasts t he infrastructure\nexemption decisions concerning the NEL and OPAL pipelines with those concerning the Dragon and\nSouth Hook LNG facilities. 1619 In the NEL infrastructure exemption decision , the NEL pipeline was\nnot considered eligible for, and hence denied, a n infrastructure exemption by virtue of not being\nconsidered an interconnector within the meaning of Article 36(1) of the Directive. 1620 In the OPAL\ninfrastructure exemption decision, the OPAL pipeline was granted an infrastructure exemption from\nthe third-party access and tariff regulation requirements by virtue of being considered a major new\ninterconnector within the meaning of Article 36(1) of the Directive but a 50% capacity cap and a\n3 billion m 3/year gas release programme were imposed as conditions on this infrastructure\nexemption.1621 In the Dragon and South Hook infrastructure exemption decisions , both were\ngranted infrastructure exemptions from the third -party access and tariff regulation requirements\nby virtue of being considered major new LNG faciliti es within the meaning of Article 36(1) of the\nDirective and no conditions were imposed on these exemptions.1622\n\n1617 Russia's second written submission, para. 420.\n1618 Directive 2009/73/EC, (Exhibit EU-5), Article 36(1).\n1619 Russia's first written submission, paras. 716-720 and 729-731; and second written submission,\nparas. 424-425 and 429.\n1620 See BNetzA decision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), p. 77.\n1621 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), paras. 88-90.\n1622 Final views of the UK NRA on the exemption of the Dragon LNG facility, (Exhibit RUS-66), pp. 1-2\nand 13; Letter from the UK NRA regarding the Commission decision on the exemption of the Dragon LNG\nfacility, (Exhibit RUS-101), pp. 1-2; Final views of the UK NRA on the exemption of the South Hook LNG\nfacility, (Exhibit RUS-68), pp. 1-2 and 21; and Letter from the UK NRA regarding the Commission decision on\nthe exemption of the South Hook LNG facility, (Exhibit RUS-102), pp. 1-2.\n\n7.966. Generally, Russia's arguments concerning the third aspect are brief. More particularly,\nRussia faults the United Kingdom's NRA for imposing \"no re quirement similar to that for\n'interconnectors'\", for \"assum[ing] that the infrastructure that both Dragon and South Hook\nproposed to construct qualified as LNG facilities, without even examining the Article 2(11)\ndefinition\", and for not imposing \"any con ditions restricting the TPA exemption for either LNG\nfacility\".1623\n7.967. Regarding the lack of \"requirement similar to that for 'interconnectors'\", Russia suggests\nthat this criticism is directed more generally at Article 36 of the Directive rather than the speci fic\ninfrastructure exemptions for the Dragon and South Hook LNG facilities. Russia thus submits that\n\"[i]ndeed, the infrastructure exemption measure is designed to treat LNG facilities differently than\nnew pipelines, which must satisfy the interconnector d efinition.\"1624 In this regard, we recall that\nan LNG facility is defined in Article 2(11) of the Directive as:\n[A] terminal which is used for the liquefaction of natural gas or the importation,\noffloading, and re -gasification of LNG, and includes ancillary s ervices and temporary\nstorage necessary for the re -gasification process and subsequent delivery to the\ntransmission system, but does not include any part of LNG terminals used for\nstorage[.]\n7.968. Bearing in mind this definition, it is not clear to us why the Co mmission and the relevant\nNRAs, in Russia's view, should consider the requirements for being an \"interconnector\" when\nassessing whether a particular infrastructure qualifies as an \"LNG facility\". Indeed, if one were to\nfollow the approach Russia appears to be suggesting, the Commission and the relevant NRAs\nwould presumably also be required to consider the requirements for being an \"LNG facility\" when\nassessing whether a particular infrastructure qualifies as an \"interconnector\".\n7.969. Generally, we do not believ e it is sufficient for Russia to simply point to the fact that the\ndefinitions of an \"interconnector\" and an \"LNG facility\" involve different requirements , in order to\ndemonstrate that the European Union applied or implemented Article 36 of the Directive i n an\n\"inconsistent\" or \"discriminatory\" manner. Similarly, we note that Russia does not elaborate any\nfurther on its arguments that the United Kingdom's NRA \"assumed that the infrastructure that both\nDragon and South Hook proposed to construct qualified as LNG facilities, without even examining\nthe Article 2(11) definition\" and did not impose \"any conditions restricting the TPA exemption for\neither LNG facility\"1625, nor does Russia provide any explanation of how these arguments relates to\nits contention that the European Union applied or implemented Article 36 in an \"inconsistent\" or\n\"discriminatory\" manner.\n7.970. For this reason, we do not believe that Russia has demonstrated that European Union\napplied or implemented Article 36 in an \"inconsistent\" or \"discriminatory\" manner in respect of\ninfrastructure exemption decisions for LNG facilities. This conclusion is not altered by the fact that,\nas pointed out by the European Union 1626, more infrastructure exemptions have been issued\nconcerning LNG facilities and storage, than those explicitly relied on by Russia.\n7.8.3.3 Conclusion\n7.971. On the basis of our findings above, we conclude that Russia has not demonstrated that the\nEuropean Union applied or implemented Article 36 in an \"inconsistent\" or \"discriminatory\" manner.\nAs we explain ed in paragraphs 7.913 through 7.917 above, the alleged \"inconsistent\" or\n\"discriminatory\" application or implementation of Article 36 constitutes the measure challenged by\nRussia for both its claim under Article II:1 of the GAT S and its claim s under Article I:1 of the\nGATT 1994 and it is therefore necessary for Russia to demonstrate the existence of this alleged\n\"inconsistent\" or \"discriminatory\" application or implementation of Article 36 as a basis for its\nclaims. Having found that Russia has not made such a demonstration, we do not believe it is\nnecessary for us to consider whether the \"non -existent\" measure, namely the alleged\n\"inconsistent\" or \"discriminatory\" manner in which the European Union applied or implemented\n\n1623 Russia's first written submission, para. 719.\n1624 Russia's first written submission, para. 720.\n1625 Russia's first written submission, para. 719.\n1626 European Union's response to Panel question No. 47, para. 128.\n\nArticle 36 of the Directive, has resulted in violations of Article II:1 of the GATS or Article I:1 of the\nGATT 1994, or both.\n7.8.4 Russia's claim under Article XI:1 of the GATT 1994\n7.8.4.1 Introduction\n7.972. The legal standard under Article XI:1 of the GATT 1994, as set out in par agraphs 7.242\nand 7.243 above, requires us to conduct a two-step analysis of whether a challenged measure (a)\nfalls within the scope of the phrase \"quotas, import or export licences or other measures \"\n(emphasis added) and ( b) constitutes a prohibition or restriction on the importation or on the\nexportation or sale for export of any product.\n7.973. In determining whether a measure falls within the scope of Article XI:1 of the GATT 1994,\nthe panel in Brazil – Retreaded Tyres considered that a panel must examine the \"nature\" of the\nmeasure.1627 In Argentina – Import Measures, the panel considered that what is relevant when\nexamining a measure under Article XI:1 of the GATT 1994 is whether a measure prohibits or\nrestricts trade, rather than the means by which such prohibition or restriction is made effective.1628\nThe Appellate Bod y in Argentina – Import Measures explained that the words \"made effective\nthrough\" suggest that the scope of Article XI:1 covers measures through which a prohibition or\nrestriction is produced or becomes operative. 1629 Some panels have focused on whether a gi ven\nmeasure prohibits or restricts trade, rather than examining the means by which such prohibition or\nrestriction would be made effective. 1630 It is well established that the residual terms \"or other\nmeasures\" in Article XI suggest a broad coverage.1631\n7.974. The App ellate Body has noted that the use of the word \"quantitative\" in the title of\nArticle XI of the GATT 1994 informs the interpretation of the words \"restriction\" and \"prohibition\"\nin Article XI:1, suggesting that the coverage of Article XI includes those pro hibitions and\nrestrictions that limit the quantity or amount of a product being imported. 1632 According to the\nAppellate Body, this provision\n[D]oes not cover simply any restriction or prohibition. Rather, Article XI:1 refers to\nprohibitions or restrictions \"on the importation … or on the exportation or sale for\nexport\". Thus, in our view, not every condition or burden placed on importation or\nexportation will be inconsistent with Article XI, but only those that are limiting, that is,\nthose that limit the importation or exportation of products.1633\n7.975. When examining whether a measure constitutes a restriction, the focus has thus been on\nwhether a measure is a limitation (i.e. something that has a limiting effect) 1634 on importation and\nlimits the competitive opportuni ties available to import s.1635 Panels have thus noted factors such\nas the existence of uncertainties affecting importation1636, whether the measures affect investment\n\n1627 Panel Report, Brazil – Retreaded Tyres, para. 7.372.\n1628 Panel Reports, Argentina – Import Measures, para. 6.363.\n1629 Appellate Body Reports, Argentina – Import Measures, para. 5.218.\n1630 See e.g. Panel Reports, Argentina – Import Measures, para. 6.363.\n1631 Appellate Body Reports, Argentina – Import Measures, para. 5.219. Nevertheless, as observed by\nthe Appellate Body, the scope of application of Article XI:1 of the GATT 1994 is not unfettered. Article XI:1\nitself explicitly excludes \"duties, taxes and other charges\" from its scope of application. Article XI:2 of the\nGATT 1994 further restricts the scope of application of Article XI:1 by providing that the provisions of\nArticle XI:1 shall not extend to the areas listed in Article XI:2.\n1632 Appellate Body Reports, Argentina – Import Measures, para. 5.217 (citing Appellate Body Reports,\nChina – Raw Materials, para. 320).\n1633 Appellate Body Reports, Argentina – Import Measures, para. 5.217.\n1634 Appellate Body Reports, Argentina – Import Measures, para. 5.217 (citing Appellate Body Reports,\nChina – Raw Materials, para. 319 (in turn quoting Shorter Oxford English Dictionary, 6th ed., W.R. Trumble, A.\nStevenson (eds.) (Oxford University Press, 2007), Vol. II, p. 2553).\n1635 Panel Reports, Argentina – Import Measures, paras. 6.254 and 6.264 (citing Panel Report, Argentina\n– Hides and Leather, para. 11.20, which stated that \"Article XI:1, like Articles I, II and III of the GATT 1994,\nprotects competitive opportunities of imported products, not trade flows\"; and Panel Report, Colombia – Ports\nof Entry, para. 7.252).\n1636 Panel Report, Colombia – Ports of Entry, para. 7.240. In that case, the uncertainties in question\nincluded access to one seaport for extended periods of time and the likely increased costs that would arise for\nimporters operating under the constraints of the port restrictions. That panel observed that:\n\nplans, restrict market access for imports or make importation prohibitively costly or unpredict able\nor whether they constitute disincentives affecting importation. 1637 The fact that a measure is not\nadministered at the border does not necessarily alter its nature as a restriction on importation\nwithin the meaning of Article X1:1 of the GATT 1994.1638\n7.976. Under Article XI:1 of the GATT 1994, Russia challenges a specific instance of application of\nthe infrastructure exemption measure in the Directive. In particular, as summarized at\nparagraph 7.954 above, Russia challenges the capacity cap and gas release programme contained\nin the 2009 OPAL infrastructure exemption decision, asserting that these two \"additional restrictive\nconditions\" imposed by the Commission (over and above those imposed by the German NRA\nBNetzA) result in a de facto quantitative restriction on the volume of imported Russian gas, in\nviolation of Article XI:1 of the GATT 1994.1639\n7.977. According to Russia, the two challenged OPAL conditions do not limit the volume of gas\nthat Gazprom may import through a direct ban, which would permit quantifying the effects of the\nmeasure. Rather, Russia asserts that the restrictions limit the volume of gas on a de facto basis,\nas shown by their design, architecture, and rev ealing structure. In Russia's view, this limits\nGazprom’s ability and incentive to import Nord Stream gas for OPAL transport, which has the same\neffect as banning a certain volume of imports directly.1640\n7.978. The European Union asserts that the two challenged con ditions in the Commission's OPAL\ndecision do not impose any restrictions on the importation of natural gas from Russia. According to\nthe European Union, there is no direct or indirect limiting effect on imports arriving from\n\n[A] number of GATT and WTO panels have recognized the applicability of Article XI:1 to\nmeasures which create uncertainties and affect investment plans, restrict market access for\nimports or make importation prohibitively costly, all of which have implications on the\ncompetitive situation of an importer. Moreover, it appears that findings in each of these cases\nwere based on the design of the measure and its potential to adversely affect importation, as\nopposed to a standalone analysis of the actual impact of the measure on trade flows.\n\n1637 For example, the panel in Brazil – Retreaded Tyres found a violation of Article XI:1 where fines did\nnot impose a per se restriction on importation, but acted as an absolute disincentive to importation by\npenalizing it and making it \"prohibitively costly\" (Panel Report, Brazil – Retreaded Tyres, para. 7.370).\n1638 Panel Report, Brazil – Retreaded Tyres, para. 7.372. See also Panel Report, India – Autos, paras.\n7.254-7.263.The panel stated that \"it is the nature of the measure as a restriction in relation to importation\nwhich is the key factor to consider in determining whether a measure may properly fall within the scope of\nArticle XI:1\" and considered that the phrase \"restrictions … on … importation\" does not necessarily limit the\nscope of Article XI:1 to border measures. (Ibid., paras. 7.261-7.262) (emphasis original) The panel in EC –\nSeal Products noted: \"The guidance provided in previous disputes regarding its scope suggests that Article XI:1\ndoes not apply to internal regulations affecting imported products that also apply to the like domestic products;\ninstead, according to the Ad Note to Article III of the GATT 1994, these are dealt with under Article III.\" (Panel\nReports, EC – Seal Products, fn 1007). The Ad Note to Article III of the GATT 1994 reads as follows:\nAny internal tax or other internal charge, or any law, regulation or requirement of the kind\nreferred to in paragraph 1 which applies to an imported product and to the like domestic product\nand is collected or enforced in the case of the imported product at the time or point of\nimportation, is nevertheless to be regarded as an internal tax or other internal charge, or a law,\nregulation or requirement of the kind referred to in paragraph 1, and is accordingly subject to the\nprovisions of Article III.\n\nSee, e.g. Panel Report, India – Autos, para. 7.220 (quoting GATT Panel Report, Canada – FIRA,\npara. 5.14, which stated that \"the General Agreement distinguishes between measures affecting the\n'importation' of products, which are regulated in Article XI:1, and those affecting 'imported products', which\nare dealt with in Article III. If Article XI:1 were interpreted broadly to cover also internal requirements,\nArticle III would be partly superfluous.\").\n1639 Russia requests the Panel to find a violation of Article XI:1 of the GATT 1994, because the OPAL\nexemption decision, pursuant to the infrastructure exemption measure in Article 36 of the Directive (and its\npredecessor, Article 22 of the Second Energy Package Directive), institutes two quantitative restrictions on the\nimportation of natural gas from Russia. (\"Requests for Findings\", Russia's first written submission, para. 810;\nand second written submission, para. 487). In Russia's response to Panel question No. 5, para. 51, Russia\nasserts that the OPAL exemption decision, pursuant to the infrastructure exemption measure, restricts the\nimport of natural gas from Russia, \"as applied\", in violation of Article XI:1 of the GATT 1994. In Russia's\nresponse to Panel question No. 133, paras. 555-556, Russia underlines that it challenges the European Union's\ndecision to impose the capacity cap and gas release programme on OPAL as quantitative restrictions, arguing\nthat both conditions have the effect of limiting the quantity or volume of gas that Gazprom may import via\nNord Stream for transport on OPAL.\n1640 Russia's response to Panel question No. 134(a), para. 560.\n\nRussia.1641 The European Union submits that the \"contested condition imposing a capacity cap only\nrestricts the supply of pipeline transmission services by those undertakings found to be dominant\non the Czech gas markets. It does not restrict the quantities or volume of gas that may be\nimported from Russia.\"1642\n7.979. According to the European Union, the \"confusing attempts of Russia\"1643 to explain how the\nconditions imposed on Gazprom and related companies translate into restrictions of imports of\nRussian gas again assume, incorrectly, that Russian gas can only be imported into the EU market\nby Gazprom. 1644 The European Union asserts that the capacity cap does not affect all Russian\nundertakings, only those which are dominant on the relevant Czech markets. There are Russian\nundertakings other than Gazpr om active in the market for natural gas in Russia. The transport of\nnatural gas of Russian origin by Russian undertakings that do not hold a dominant position on the\nCzech market, such as Rosneft or Novatek, is not limited in any way by the conditions atta ched to\nthe OPAL exemption or any other provision of EU law. It is rather Russian law that limits their\nactivities in the European Union, since Russian law grants Gazprom an export monopoly for gas via\npipelines, thus limiting competitive opportunities for both Russian and foreign companies. 1645\nAccording to the European Union, the origin of the gas is irrelevant for the purpose of applying the\n50% cap on the booking of OPAL capacities by undertakings dominant in the Czech gas\nmarkets.1646\n7.8.4.2 Analysis by the Panel\n7.980. Russia's claim under Article XI:1 of the GATT 1994 requires us to consider whether the\ncapacity cap and gas release programme contained in the Commission's 2009 OPAL infrastructure\nexemption decision 1647 constitute \"prohibitions or restrictions\" other than du ties, taxes or other\ncharges made effective through quotas, import or export licences or \"other measures\" that are\n\"instituted or maintained\" by the European Union on the importation of Russian gas within the\nmeaning of Article XI:1 of the GATT 1994.\n7.981. It is well established that the scope of Article XI:1 (and, in particular, the scope of the\nresidual basket of \"other measures\") is broad, and that it encompasses measures of a de facto\nnature. There is no disagreement between the parties that Article XI:1 may apply to the contents\nof a single decision.1648 Accordingly, based on this and the broad scope of the residual category of\n\"other measures\" falling within the ambit of Article XI:1, we consider that we are permitted to\nexamine the challenged OPAL conditions under Article XI:1 of the GATT 1994. Therefore, in\naccordance with the legal standard under Article XI:1 of the GATT 1994 articulated above1649, we\nwill assess whether Russia has demonstrated that the challenged conditions in the OPAL\ninfrastructure exemption decision constitute restrictions (i.e. limitations, something that has a\nlimiting effect) on the importation of Russian natural gas into the European Union.\n7.982. We understand that this analysis must be carried out on a case -by-case basis, taking into\naccount the import formality or requirement at issue and the relevant facts of the case. 1650\nMoreover, for the purposes of Article XI:1 of the GATT 1994, the limitation on importation need\nnot be demonstrated by quantifying the effects of the measure at issue; rather , such limiting\neffects can be demonstrated through the design, architecture, and revealing structure of the\nmeasure at issue considered in its relevant context. 1651 Mindful of these considerations, we\nproceed with our analysis.\n\n1641 European Union's response to Panel question No. 133, paras. 342-347.\n1642 European Union's second written submission, para. 345.\n1643 European Union's first written submission, para. 766.\n1644 European Union's first written submission, para. 766.\n1645 European Union's first written submission, para. 767.\n1646 European Union's second written submission, para. 346.\n1647 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89.\n1648 European Union's response to Panel question No. 131, paras. 335-336; and Russia's response to\nPanel question No. 131, paras. 541-544.\n1649 See, above paras. 7.242-7.243.\n1650 Appellate Body Reports, Argentina – Import Measures, para. 5.245.\n1651 Appellate Body Reports, Argentina – Import Measures, para. 5.217. See also Panel Report, Colombia\n– Ports of Entry, para. 7.252.\n\n7.983. Turning first to the two OPAL conditions challenged by Russia 1652, we recall that the first\nchallenged condition in the OPAL infrastructure exemption decision is the 50% capacity cap. It is\nimposed as a condition for exempting the OPAL pipeline from otherwise generally applicable\nobligations (third -party access and regulated tariffs). Thus, we understand that, due to the\ninfrastructure exemption granted in respect of the OPAL pipeline, allocation by OPAL's system\noperator (Opal Gastransport GmbH (\"OGT\")) of capacities on the route from Gr eifswald to Brandov\nis not subject to the generally applicable requirements. OGT would thus, in principle, be able to\nchoose which entities obtain acce ss to the exempted capacities. However, the capacity cap limits\nOGT in allocating, in any given year, mor e than 50% of capacities in the pipeline to \"dominant\nundertakings on one of the Czech gas markets\"1653, which include Gazprom and RWE Transgas1654,\nunless the second challenged condition in the OPAL infrastructure ex emption decision is fulfilled.\nThis second co ndition permits Gazprom (and related companies) to exceed the capacity cap\nprovided that it fulfils the gas release programme requirements of freeing 3 bcm in an open,\ntransparent and non -discriminatory process and the capacity release programme requiremen t is\nsatisfied (i.e. OGT (or the undertakings concerned) provide the corresponding transport capacity\non the OPAL pipeline ). BNetzA must approve both the gas release program me and the capacity\nrelease programme.1655 It is an undisputed fact that the second OPAL condition (release of 3 bcm)\nhas never been used, and the capacity cap threshold in the first condition has never been\nsurpassed.1656\n7.984. We first recall that the challenged conditions in the OPAL decision are conditions placed on\nan exemption (i.e. the infrastructure exemption from certain otherwise generally applicable\nrequirements (e.g. third party access and regulated tariffs)). 1657 We note the European Union's\ncontention that an infrastructure exemption must be regarded as an \"advantage\" for VIUs owning\nor operating a pipeline, since the exemption allows them to freely allocate capacities on the\npipeline.1658 The European Union asserts:\nPursuant to an exemption, vertically integrated undertakings may charge\ndiscriminatory transmission tariffs to competitors on the gas markets seeking to use\nor access the infrastructure. They may also exclude altogether the use of the\ninfrastructure by other gas undertakings. The competent regulatory authorities do not\ngrant such an advantage unless its beneficiary has specifically requested it and the\ncriteria necessary for an exemption are met.1659\n7.985. The European Union posits that the capacity cap challenged by Russia \"has a very limited\nscope\".1660 The European Union asserts that since the exemption granted to the OPAL p ipeline is\nan \"adv antage\" that benefits its joint -owner, Gazprom, this implies that, contrary to Russia’s\ncontention, the conditions restricting the scope of that advantage do not constitute, in themselves,\na restriction on imports within the meaning of Ar ticle XI:1 of the GATT 1994. 1661 For the European\nUnion, Article XI:1 forbids measures that restrict imports of foreign products, not measures that\n\n1652 See also, above para. 7.954 for a summary of conditions imposed on infrastructure exemptions.\n1653 European Union's response to Panel question No. 129(a), para. 313; and Commission decision on\nthe exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89.\n1654 As noted above, the bookings of the undertakings concerned are counted together for this purpose.\n(Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89(a)).\n1655 European Union's response to Panel question No. 129(a), para. 315; and Commission decision on\nthe exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89.\n1656 Russia's response to Panel question No. 130, paras. 535-540; and European Union's response to\nPanel question No. 130, paras. 331-334.\n1657 See, above para. 7.954 for a summary of conditions imposed on infrastructure exemptions. In this\ncase, the OPAL exemption is partial (including by being subject to the two challenged conditions).\n1658 European Union's response to Panel question No. 135, para. 350.\n1659 European Union's response to Panel question No. 135, para. 350.\n1660 European Union's second written submission, para. 343. The European Union states that \"the 50%\ncapacity cap only concerns a very small part of the activities of the vertically integrated undertaking Gazprom\"\nand underlines \"the very limited scope of the capacity cap\". (European Union's response to Panel question\nNo. 129(b), paras. 316-317).\n1661 See e.g. Russia's response to Panel question No. 220, paras. 299-304. In the context of its\nchallenge to the infrastructure exemption measure, we note that Russia has alleged that the infrastructure\nexemption constitutes a benefit or \"advantage\", as it may exempt an undertaking partially or fully from the\nunbundling, third-party access and regulated tariff requirements in the Directive. (Russia's responses to Panel\n\nallow imports from other sources, in addition to those of a particular Member, and foster\ncompetition on the market of the importing Member.1662\n7.986. We recall that the OPAL conditions were imposed in connection with the infrastructure\nexemption granted in respect of the OPAL pipeline, pursuant to a process initiated by an\napplication submitted in respect of the OPAL pipe line under the Directive's infrastructure\nexemption provision. The conditions imposed are binding as long as the decision remains\noperational.1663 However, nothing legally prevents a request for modification and/or termination of\nthe infrastructure exemption decision (or any of the conditions co ntained therein), or seeking an\nalternative legal/regulatory arrangement under the Directive. 1664 As we have already\nmentioned1665, we understand that the infrastructure exemption and any related conditions are\nrules that eff ectively \"replace\" otherwise applic able rules (such as unbundling): they become the\nbinding legal regime pertaining to the infrastructure concerned as long as the relevant\ninfrastructure exemption decision remains operational. It is precisely the legal reg ime in respect of\nthe OPAL pipeline imposed pursuant to the OPAL infrastructure exemption decision which we\nexamine here. We underline that we are basing our assessment on the design, architecture and\nrevealing structure of the measure, and do not find it necessary or constructive to characterize the\nmeasure as constituting (or not constituting) a condition on an \"advantage\" for the purposes of\nconducting our examination under Article XI:1 of the GATT 1994.1666\n7.987. We next observe that there is no question that th e challenged OPAL conditions are\n\"quantitative\" in nature: they consist of percentages (50%) and numerical conditions (3 bcm /yr).\nWe note, however, the European Union's assertion that the OPAL exemption decision does not\nrestrict the importation of a produ ct – natural gas – from Russia and thus has no \"limiting\neffect\"1667 for the purposes of Article XI:1 of the GATT 1994. According to the European Union, the\nOPAL decision:\n[O]nly restricts the exit capacity that Gazprom may book on OPAL as a supplier of\npipeline transmission services, thereby allowing other undertakings to access that\npipeline. The restriction is imposed on the capacities that Gazprom and RWE Transgas\nmay together book on OPAL as transport service providers, not on the importation of\nRussian gas.1668\n7.988. Thus, while the challenged OPAL conditions may unquestionably be \"quantitative\" in\nnature, we nonetheless still need to consider whether quantitative conditions addressing the\ncapacity allocation available to certain companies in respect of cert ain infrastructure for the\ntransport of natural gas may constitute a quantitative restriction having a limiting effect on\nimports of a product – here, natural gas - within the meaning of Article XI:1 of the GATT 1994.\n7.989. We understand that the conditions plac e quantitative restrictions on pipeline transport\ncapacities that Gazprom and RWE Transgas may together book on the OPAL pipeline a s transport\nservice providers. To our minds, transport capacity allocated to a given company is the \"flip -side\"\nof the volume (i.e. quantity) of natural gas that may be transported u sing this allocated\ncapacity.1669 We therefore consider that conditions on the allocation of pipeline transport capacity\nmay, in principle, have an effect on the volume (i.e. quantity) of natural gas th at may be\n\n1662 European Union's second written submission, paras. 350-351.\n1663 We recall that the OPAL exemption remains valid for a period of 22 years from the commissioning of\nthe pipeline, which took place in 2011. (See BNetzA decision on the exemption of the OPAL and NEL pipelines,\n(Exhibit RUS-61), p. 76; and Russia's first written submission, para. 540).\n1664 See, e.g. European Union's first written submission, para. 688. Indeed, we understand that Russia\nand the European Union have, on various occasions, discussed options for modifying the OPAL conditions.\n(See, e.g. above fns 1430 and 1581).\n1665 See, above paras. 7.881-7.892. .\n1666 We disagree with the proposition that conditions attached to a measure that can arguably be\ncharacterized as an \"advantage\" would thereby, for that reason alone, be excluded from the scope of Article\nXI:1 of the GATT 1994. As we have already mentioned, we see Article XI:1 as focusing on the issue of whether\na particular measure restricts imports rather than the means by which such restriction is brought about.\n1667 European Union's response to Panel question No. 131, para. 336; and No. 133, paras. 341-349.\n1668 European Union's response to Panel question No. 131, para. 336.\n1669 Indeed, the challenged OPAL conditions themselves reinforce our view: the second condition\nrequires the release of 3 bcm of natural gas. This must be accompanied by the availability of the transport\ncapacity corresponding to this volume (quantity) of natural gas. (Commission decision on the exemption of the\nOPAL pipeline, (Exhibit RUS-82), para. 89(b)).\n\ntransported by a given company transporting gas from a particular origin through a given\ninfrastructure.\n7.990. We thus proceed with our examination to discern whether the challenged OPAL conditions\nhave a limiting effect on the importation of natural gas of Russian origin into the European Union.\n7.991. As we have already observed, Russia has acknowledged that the two challenged conditions\ndo not constitute a \"direct ban\", but rather limit Gazprom’s ability and incentive to import Nord\nStream gas for OPAL tr ansport, which Russia alleges has the same effect as banning a certain\nvolume of imports directly. 1670 The European Union counters that the measure affects pipeline\ntransmission services and does not limit directly or indirectly 1671 the quantities or volume of g as\nthat may be imported from Russia.1672 The European Union also asserts that the conditions pertain\nonly to the conditions surrounding a company's (Gazprom's) natural gas transported through a\nparticular pipeline and do not limit the total amount of EU natural gas imports from Russia.1673\n7.992. It is well established that the disciplines of Article XI:1 extend to restrictions of a de facto\nnature.1674 Thus, even where a measure does not provide for an outright ban on importation, it\nmay have the effect of prohibiting or limiting the importation of the product concerned, in violation\nof Article XI:1. 1675 We are nevertheless cognizant that not every measure affecting the\nopportunities for entering the market would be covered by Article XI of the GATT 1994, but only\nthose measu res that constitute a prohibition or restriction on the importation of products, i.e.\nthose measures which affect the opportunities for importation itself.1676\n7.993. We see that the Nord Stream pipeline connects to both OPAL1677 and NEL1678 at Greifswald,\nin Germany, for delivery of Russian gas. 1679,1680 Both of these pipelines transport gas imported\n\n1670 Russia's response to Panel question No. 134, para. 560.\n1671 European Union's responses to Panel question No. 129(a), para. 313, No. 132, paras. 337-338, and\nNo. 133, paras. 342-343.\n1672 European Union's response to Panel question No. 129(c), paras. 324-330.\n1673 European Union's response to Panel question No. 129(c), paras. 324-330.\n1674 Panel Report, Argentina – Hides and Leather, para. 11.17 (referring to GATT Panel Report, Japan –\nSemi-Conductors, paras. 105–109; and Appellate Body Report, EC – Bananas III, paras. 232–234 (in turn\nciting GATT Panel Reports, EEC – Imports of Beef; Spain – Unroasted Coffee; and Japan – SPF Dimension\nLumber)).\n1675 Panel Report, Brazil – Retreaded Tyres, para. 7.15.\n1676 Panel Reports, Argentina – Import Measures, para. 6.458 (referring to Panel Report, Dominican\nRepublic – Import and Sale of Cigarettes, para. 7.261).\n1677 The Commission Decision on the exemption of the OPAL pipeline indicates the following:\nAccording to the findings of the BNetzA, the OPAL is planned as follows: \"The OPAL is intended to\nbe 470 km long and have a diameter of 1,420 mm and a maximum operating press ure of 100\nbar. In terms of capacity, it is divided into two sections; OPAL north and OPAL south. The OPAL\nnorth starts on the premises of the Greifswald/Lubmin compressor station and ends at the\nplanned [Gross Koeris] compressor station to the south of Be rlin. The OPAL south is intended to\nstart in [Gross Koeris] and run to the border between the Federal Republic of Germany and the\nCzech Republic. The capacity of the OPAL north is intended to be 36.5 billion m3/a. In [Gross\nKoeris] it is planned that there will be an exit point with a bookable output capacity of 4.5 billion\nm3/a. There, the pipeline will be continued via the OPAL south with a capacity of 32 billion m3/a\nin the direction of the Czech Republic. Beyond the German/Czech border it is intended th at a\nbookable output point for transport customers will be constructed near to the Czech municipality\nof Brandov. There, it is planned that there will be a network coupling with the transmission\nsystem operated by RWE Transgas Net s.r.o. (hereinafter 'RWE Transgas Net') or its new pipeline\nproject called Gazelle.\" (Commission decision on the exemption of the OPAL pipeline, (Exhibit\nRUS-82), para. 13). (emphasis and footnotes omitted)\n1678 The Commission Decision on the exemption of the OPAL pipeline indicates the following:\nAccording to the findings of the BNetzA, the NEL is planned as follows: \"As a second onshore\nconnection line, the NEL is intended to allow for the transport of another part of the gas volumes\nwhich arrive in the Federal Republic of Germany via the Nord Stream. The NEL is intended to run\nfrom the exit point of the Nord Stream in Greifswald/Lubmin with a length of approximately 440\nkm along the Baltic Sea coast in the direction of Hamburg and via Heidenau and Achim onwards\ntowards Rehden in Lower Saxony. The re, it is intended that there will be a connection to the\ntransmission system of Wingas Transport GmbH & Co. KG and E.ON Gastransport GmbH\n(formerly E.ON Gastransport AG & Co. KG). The NEL is intended to be ready for operation in\n2012. In Greifswald/Lubmin, a total of 21.8 billion m3/a can be fed from the Nord Stream into\nthe NEL.\" (Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS -82), para.\n14). (emphasis and footnotes omitted)).\n\nfrom Russia via Nord Stream to separate parts of the European Union. The OPAL pipeline continues\nsouthward through Germany and crosses the Czech border at Brandov and then con nects to the\nGazelle pipeline. The remainder and majority of the OPAL pipeline gas is transited via Gazelle\nacross the northern portion of the Czech Republic and exits back into Germany at Waidhaus.1681\n7.994. Once imported at the point of entry, the onward transporta tion of natural gas throughout\nthe European Union could be considered as no longer constituting \"importation\". Hence, a\ncondition focusing on the exit capacity of the OPAL pipeline at Brandov on flows from the\nGreifswald entry point might be considered as an internal EU regulatory measure, rather than one\nrelating to importation from Russia via Nord Stream to the Greifswald entry point. However, we\nnote the nature of pipelines and natural gas transmission and the essential function of\ntransmission pipeline infrastructure in the transport of natural gas. We recall Russia's observation\nthat, \"[o]nce gas enters a pipeline, its movement, direction and potential for release either into the\nmarket or another pipeline are all strictly controlled\". 1682 We further note that, in order to be\n\"imported\" into the European Union, natural gas transported by pipeline from various origins\nenters the European Union through a limited number of fixed entry points. We consider that due to\nthe fixed nature of pipeline infrastructure and the necessity for natural gas transported by pipeline\nto flow along predetermined paths and to be imported through a limited number of fixed entry\npoints, an arrangement conditioning access to the transport c apacity of such fixed infrastructure\nwith a demonstrable and sufficiently direct link to an entry point for that product into the market\nof the importing Member may have an effect on the importation of the product in question.\n7.995. We see that the two challenge d OPAL conditions limit the transport capacities that\nGazprom (and related companies) may together book on the OP AL pipeline in any given year. We\nrecall that the OPAL decision described the capacity cap as an annual 50% cap on the \"exit\ncapacity\" of OPAL at the Czech border. 1683 However, \"[t]he exemption applies exclusively to\nconnection capacities \" on OPAL, which BNetzA, the German NRA, defined as \"entry and exit\ncapacities subject to allocation restrictions, which are only offered in bundled form. \"1684 We\nunderstand that the exit conditions imposed at Brandov may have an effect on the entry conditions\nat Greifswald (and, consequently, on the interconnection with the Nord S tream pipeline at\n\n1679 A predetermined volume of gas is released in Germany at Gross Koeris. This gas is not subject to\nthe infrastructure exemption. Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82),\npara. 13 states: \"In [Gross Koeris], it is planned that there will be an exit point with a bookable output capacity\nof 4.5 [bcm/year].\"\n1680 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82) states: \"It is intended\nthat the OPAL will start in Greifswald, northern Germany. It is planned that it will be an onshore continuation of\nthe Nord Stream gas pipeline, which is also planned and will directly connect Russia and the European Union\nvia the Baltic Sea. In the south, it is intended that the OPAL will connect to the planned 'Gazelle' gas pipeline\nnear Brandov in the Czech Republic. From there, it is intended that the Gazelle will run onwards towards\nGermany (Waidhaus).\" (Ibid. para. 10). (emphasis added) It adds that the OPAL, Gazelle and Nord Stream\n\"projects depend on each other in that the OPAL and Gazelle projects will accept the gas volumes supplied by\nthe Nord Stream and are intended to then transport southwards through Germany and through the Czech\nRepublic.\" (Ibid. para. 12); that \"[t]he OPAL connects directly to the Nord Stream Baltic Sea pipeline, which\nwill bring natural gas from Russia to the EU.\" (Ibid., para. 27); that \"[t]he gas volumes from the Nord Stream\nrequire the construction of new pipelines onshore for transmission in Germany, but also to other Member\nStates. The existing pipelines are not sufficient to accept the gas volumes from the Nord Stream.\" (Ibid., para.\n28); and that \"[a]s the OPAL will be fed exclusively from the Nord Stream, technical, political or economic risks\nof Nord Stream have a direct effect on OPAL.\" (Ibid. para. 33).\n1681 See, e.g. Russia's responses to Panel question No. 221, para. 305, and No. 222, para. 309.\n1682 Russia's response to Panel question No. 222, para. 308. Russia explains: \"That is, once the gas\nenters a pipeline, it flows unimpeded, as directed, and may not be released for transit through another pipeline\nor for consumption unless and until an affirmative decision is reached to permit that release.\"\n1683 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89(a).\n1684 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 5 (quoting\nBNetzA Decision on the Exemption of OPAL and NEL, para. 1(a)). The exemption granted to OPAL by BNetzA in\nits initial decision from the third-party access and tariff regulation requirements \"applies exclusively for\nconnection capacities on the OPAL with entry in German state territory and exit in Brandov.\" BNetzA defined\nthe term \"connection capacities\" for purposes of the exemption \"to mean entry and exit capacities subject to\nallocation restrictions, which are only offered in bundled form.\" According to BNetzA: \"If the level of the\noffered/booked entry capacity differs from the level of the offered/booked exit capacity, then in this respect the\nexemption as a whole shall only extend to the lower of the two values (hereinafter: 'exempt capacities')\".\n(Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 5 (quoting BNetzA\ndecision on the exemption of the OPAL and NEL pipelines, (Exhibit RUS-61), para. 1(a))). The Commission’s\ndecision and the additional conditions it imposed did not alter this aspect of BNetzA’s decision or the OPAL\ninfrastructure exemption. (See Russia's response to Panel question No. 129(a), para. 533.)\n\nGreifswald). Thus, the OPAL capacity cap condition effectively limits Ga zprom from booking more\nthan 50% of the \"connection\" or \"bundled\" or \"exempt capacities\", both to transport gas on OPAL\nfrom Greifswald, the entry point in Germany for Nord Stream gas imported from Russia, to\nBrandov at the Czech border, and to release tha t gas at Brandov for further transport on Gazelle\n(unless the second challenged OPAL condition is fulfilled).\n7.996. Given the particular facts and circumstances before us in the context of transporting\nnatural gas from Russia onward within the European Union, w e consider that the conditions\nimposed at the Brandov exit point have a demonstrable and sufficiently direct link to the entry\npoint linking Nord Stream/OPAL at Greifswald to be considered as having an effect on the\nimportation of natural gas from R ussia i nto the European Union. Therefore, the fact that the\nchallenged OPAL conditions are not administered directly at the border does not, in our view, alter\ntheir nature as relating to importation, nor their potential to have a limiting effect on importation\nof Russian natural gas into the European Union within the meaning of Article XI:1 of the GATT\n1994.1685\n7.997. We recall that, in response to Panel questioning, Russia clarified that \"100% of the natural\ngas transported through Nord Stream is of Russian origin. Likewise, 100% of the natural gas\ntransported (a) through OPAL from Greifswald to Brandov and (b) released at Brandov for further\ntransport on Gazelle is of Russian origin.\" 1686 We observe that Gazprom (and RWE Transgas) are\nthe only entities subject to the 50% ca pacity cap; that Gazprom is currently the only importer of\nnatural gas from Russia via the Nord Stream pipeline to the European Union; that Gazprom was\nand has remained the exclusive user of the OPAL pipeline capacity; that others have not, in fact,\nsought to use the remaining vacant capacity in the OPAL pipeline 1687; and that the natural gas\nflown through the Nord Stream and OPAL pipelines is exclusively of Russian origin. Thus, in the\nparticular circumstances before us, Gazprom's gas flown through OPAL is Ru ssian gas. We take\nnote that only half of the capacity of the OPAL pipeline is utilized. This means that the OPAL\npipeline is currently transporting half of the amount of (Russian) gas that it has the capacity to\ntransport.\n7.998. We recall the European Union's a ssertion that Russian law grants Gazprom an export\nmonopoly for natural gas via pipelines. The European Union asserts that this limits competitive\nopportunities for both Russian and foreign companies. 1688 Russia calls this a \"red herring\". 1689\nAccording to Russi a, Russian law and its treatment of Gazprom in Russia has nothing to do with\nthis claim or the standard under which the Panel should interpret Article XI. 1690 The Panel notes\nthat Russia also does not contest the existence of Gazprom's export monopoly on natu ral gas.1691\nThe record thus supports a finding in the context of this dispute that Gazprom enjoys an exclusive\nexport monopoly of natural gas from Russia. 1692 In this connection, the Panel recalls that\nArticle XI:1 deals with the elimination of quantitative restrictions on imports and concurs with\nRussia that, in general, and in the particular facts and circumstances of this dispute, an exporting\nWTO Member's domestic law is not the focus of an analysis of a claim of violation of Article XI:1 by\nan importing Member. The Panel underlines that it is assessing Russia's challenge against this EU\nmeasure in light of the European Union's obligati ons contained in Article XI:1. As our analysis\ntargets the particular OPAL conditions imposed by the European Union in thi s case, we do not find\nit necessary or fruitful to examine any alleged aspect of Russia's domestic law in order to resolve\nthis claim.\n\n1685 See, e.g. Panel Report, Brazil – Retreaded Tyres, paras. 7.372-7.373. See also, above fn 1638.\n1686 Russia's response to Panel question No. 221, para. 305.\n1687 In its response to Panel question No. 223 concerning whether anyone had sought to use the\nremaining 50% capacity in the OPAL pipeline, Russia stated: \"Russia is aware of a single third-party, European\ngas trading company having used a portion of the remaining 50% capacity on OPAL. This company purchased\ngas via auction for delivery at the Greifswald entry point for transit of the gas through the OPAL pipeline to the\nCzech Republic. This company purchased only a very small amount of gas, 60 MWh/h, which amounts to only\n0.4% of the remaining 50% OPAL transit capacity.\" (Russia's response to Panel question No. 223, para. 312).\nWe consider that this supports the view that, in the prevailing circumstances, there were no other companies\ncompeting for this capacity or seeking to transport their natural gas through this pipeline.\n1688 European Union's first written submission, para. 767.\n1689 Russia's response to Panel question No. 132(a), para. 546.\n1690 Russia's response to Panel question No. 132(a), paras. 546-549.\n1691 Russia's response to Panel question No. 29, para. 145.\n1692 Russia's response to Panel question No. 29, para. 145; and European Union's responses to Panel\nquestion No. 29, para. 62, and No. 132, para. 340. Both parties refer to Article 3 of Federal Law No. 117-FZ of\nJuly 18, 2006.\n\n7.999. We see that the challenged conditions affect the ability of Gazprom (and related\ncompanies) to access transport capacity on the OPAL pipeline. We recognize that other\nopportunities exist for the onward transportation of natural gas of Russian origin from Greifswald\n(e.g. via NEL). We further recognize that neither party disputes that other opportunities exist for\nnatural gas of Russian origin to enter the European Union.1693 Moreover, other possibilities exist for\nnatural gas from Russia to be imported into the European Union using the remaining 50%\ncapacities of OPAL. 1694 Thus, additional capacity on the OPAL pipeline could become available,\nthereby allowing additional quantities of natural gas to flow through the pipeline in a given period,\nand these additional quantities could include imports of Russian natural gas. In this connection, we\nobserve that the challenged OPAL conditio ns permit the remaining OPAL capacities to be booked\nby other (non-Gazprom-related) Russian undertakings or by satisfaction of the gas (and capacity)\nrelease programme requirements.1695 These options could result in the increase of the volumes of\nRussian natural gas imported into the European Union via the Nord Stream and OPAL pipelines.\nNevertheless, we concur with Russia that Article XI: 1 does not require a demonstration that all of\na certain type of goods imported by one Member from another are restricted o r limited to support\na finding of violation. 1696 Rather, as we have already stated, Article XI:1 prohibits a Member from\nlimiting competitive opportunities for importation from another Member.\n7.1000. We consider that the challenged OPAL conditions effectively impos e a limitation on the\ncompetitive opportunities for natural gas of Russian origin that may be imported (by Gazprom)\ninto the European Union on the Nord Stream pipeline at the pipeline’s termination point at\nGreifswald, Germany, to be transpor ted through th e OPAL pipeline. The restrictive effects of the\nnumerical limitation in the 50% capacity cap are reinforced by the requirements of the gas (a nd\ncapacity) release programme. These requirements – which would require Gazprom, as an importer\nof natural gas of Russian origin, to release the transport of 3 bcm/yr of natural gas over the OPAL\npipeline -- have never been triggered. We consider that the existence of, and requirements\nimposed by, this condition effectively operate so as to discourage certain importer s of Russian\nnatural gas, i.e. Gazprom and related companies, from exceeding the 50% capacity cap. We\ntherefore see the consequence of the operation of the two challenged OPAL conditions as\ndisincentivizing importation of Russian natural gas flown through the Nord Stream pipeline and,\nthereafter, the OPAL pipeline. In light of our analysis above and the particular facts and\ncircumstances before us, we thus concur with Russia 1697 that the challenged OPAL conditions have\na limiting effect on the competitive oppo rtunities for importation of Russian gas into the European\nUnion.1698\n\n1693 The European Union imports gas from Russia through several pipelines. Part of the gas imported via\nNord Stream is transported over OPAL. The remainder is transported over the NEL interconnector across the\nnorth of Germany to other EU Member States. Other pipelines include Brotherhood, which travels from Russia\nacross Ukraine and Slovakia into the Czech Republic, from which gas is also directed via connecting pipelines to\nother Member States. Likewise, Gazprom imports gas through the Yamal pipeline through Belarus into the\nBaltic States and across Poland into Germany and onward. (See, e.g. Russia's response to Panel question No.\n134(c), para. 563.) The Panel observes that Russian natural gas imported via other pipelines goes to other EU\ndestinations and cannot be substituted for natural gas that could have been transported through the additional\ncapacity on the OPAL pipeline.\n1694 For example, the possibility exists that Russian gas may be imported via Nord Stream for transport\nover OPAL by undertakings unrelated to Gazprom (i.e. that do not hold a \"dominant position on the Czech\nmarket\" (such as Rosneft or Novatek)). See, e.g. European Union's second written submission, paras. 344-\n345. See also European Union's second written submission, para. 344, stating that\n[t]hese possibilities include the sale by Gazprom of Russian gas already at Greifswald or on the\nGaspool virtual trading point, allowing the gas to be transported onwards by the client. If\nGazprom supplies the pipeline transmission services on OPAL itself, volumes of gas exceeding\nthe 50% allowed capacities must be intended for the exit point near Berlin, at [Gross Koeris], or\nthey must be sold on the Czech market in a regulated and non -discriminatory manner,\nimplementing the 3bcm gas release program provided for in the second condition imposed by the\nCommission.\n1695 Commission decision on the exemption of the OPAL pipeline, (Exhibit RUS-82), para. 89(b); Russia's\nfirst written submission, paras. 744-745; and response to Panel question No. 134(a), para. 559.\n1696 Russia's responses to Panel question No. 134(c), paras. 564-566, and No. 132(a), para. 549.\n1697 Russia's response to Panel question No. 134(a), para. 560.\n1698 We find guidance for our approach in Panel Report, Colombia – Ports of Entry, para. 7.240. We do\nnot mean to suggest that each and every capacity cap or gas (and capacity) release programme would\nnecessarily violate Article XI:1 of the GATT 1994. We once again underline that our finding is limited to the\nparticular facts and circumstances of this case in light of the parties' argumentation and evidence.\n\n7.1001. We are not persuaded by the European Union's contention that Russia's \"insistence\" on\nthe link between the use of the OPAL pipeline by Gazprom and the importation of Russian gas\nproceeding from Nord Stream is \"fundamentally flawed\". 1699 We note the European Union's\nstatement that the capacity cap \"does not restrict , and is not intended to restrict, the importation\nof Russian gas exceeding the allowed 50% of OPAL's capacities, provided that the gas is not\ntransported by Gazprom or to the Brandov exit point giving access to the Czech market\". 1700 We\nunderstand this as an acknowledgement, by the European Union itself, that the challenged OPAL\nconditions restrict, that is, have a limiting effect on, n atural gas transported by Gazprom or to the\nBrandov exit point (or both). 1701 We see this as further support for our view that the challenged\nOPAL conditions restrict market access for importers of Russian natural gas, thereby limiting\ncompetitive opportunities for importation of Russian natural gas in contravention of Article XI:1 of\nthe GATT 1994.\n7.1002. Given the particular facts and circumstances of this case, and the particularities of natural\ngas pipeline transport, we consider that the design, architecture and revealing structure of the two\nchallenged OPAL conditions restrict market access for EU imports of natural gas from Russia and\nlimit competitive opportunities for the importation of Russian natural gas into the European Union.\nWe therefore find that they have a limiting effect on the importation of natural gas from Russia\nwithin the meaning of Article XI:1 of the GATT 1994.\n7.8.4.3 Conclusion\n7.1003. For the reasons stated above, we find that Russia has demonstrated that the two\nchallenged OPAL conditions (that is, the 50% capacity cap and 3 bcm/yr gas release programme)\nare inconsistent with Article XI:1 of the GATT 1994.\n7.9 The upstream pipeline networks measure\n7.9.1 Introduction\n7.1004. As determined above in section 2.2.6, the upstream pipeline networks measure stems\nfrom the provisions of the Directive defining upstream pipeline networks and setting out their legal\nregime. In contrast to TSOs, the operators o f upstream pipeline networks are not subject to the\nrules of the Directive on unbundling and tariff regulation. The operators of upstream pipeline\nnetworks are also not subject to the rules on third -party access under Article 32 of the Directive,\nbut are instead subject to the provisions of Article 34 of the Directive, entitled \"Access to upstream\npipeline networks\".1702\n7.1005. Russia challenges the upstream pipeline networks measure under Articles I:1 and III:4 of\nthe GATT 1994, advancing one claim under Article II I:4 and two claims under Article I:1. First,\nRussia advances its claims under Article s I:1 and III:4 based on the comparison of the general\nlegal regime s applicable to the operators of upstream pipeline networks and TSOs under the\nDirective. Then, Russia submits a separate claim under Article I:1 focused on the comparison of\nthe general legal regime of the operators of upstream pipeline networks under the Directive w ith\nthe specific legal regime applicable to the operators of the NEL and OPAL pipelines pursuant to the\nexemption decisions under Article 36 of the Directive.\n\n1699 European Union's second written submission, para. 342.\n1700 European Union's second written submission, para. 343. See also European Union's response to\nPanel question No. 129(b), paras. 316-330.\n1701 In this context, we also note the European Union's statement that:\nIt cannot, therefore, be excluded that, in the absence of the conditions attached by the\nCommission to the OPAL exemption, Gazprom and related companies would have decided to\nrelease additional quantities of gas into the Czech market, where they already held a dominant\nposition, instead of transporting the gas further on Gazelle back into Germany. (European\nUnion's comments on Russia's response to Panel question No. 222, para. 148.)\n\nWe see this statement, and in particular, the reference to \"additional quantities of gas\" that might have\nflown through OPAL from Russia as a further implicit acknowledgement by the European Union that the OPAL\nconditions restrict market access and have a limiting effect on the competitive opportunities of imports of\nnatural gas from Russia.\n1702 See, above paras. 2.43 and 2.44.\n\n7.1006. In our assessment of Russia's claims, we follow the same order. F irst, we address\nRussia's claim s under Article s I:1 and III:4 of the GATT 1994 based on the comparison of the\ngeneral lega l regimes of the operators of upstream pipeline networks and TSOs under the\nDirective. Then we turn to examine Russia's additional claim under Article I:1 of the GATT 1994\nfocused on the comparison of the general legal regime of the operators of upstream p ipeline\nnetworks under the Directive with the specific legal regime applicable to the operators of the NEL\nand OPAL pipelines pursuant to the exemption decisions under Article 36 of the Directive.\n7.9.2 Russia's claim under Article I:1 of the GATT 1994\n7.9.2.1 Introduction\n7.1007. Russia argues that, due to the non -application of the unbundling obligation, tariff\nregulation rules and Article 32 of the Directive to the operators of upstream pipeline networks,\nimported natural gas originating in third countries and transported vi a upstream pipelines is\ngranted an advantage within the meaning of Article I:1 of the GATT that is not accorded to natural\ngas originating in Russia and transported via transmission pipelines. 1703 In Russia's view, this\n\"differential treatment\" of the operators of upstream pipelines and TSOs modifies the conditions of\ncompetition to the detriment of Russian natural gas , in viola tion of Article I:1 of the\nGATT 1994.1704\n7.1008. The European Union submits that Russia has not explained how a competitive advantage\nis grante d to natural gas transported through upstream pipelines, and of what this advantage\nconstitutes.1705 In the European Union's view, upstream pipeline networks are different in nature\nfrom transmission pipelines and therefore a different legal regime of the ope rators of upstream\npipeline networks does not modify the conditions of competition to the detriment of Russian\nnatural gas transported through transmission pipelines within the meaning of Article I:1 of the\nGATT 1994.1706\n7.9.2.2 Analysis by the Panel\n7.1009. In light of th e legal standard under Article I:1 of the GATT 1994, as set out in\nparagraphs 7.236 and 7.237 above, our analysis below will focus on whether Russia has\nestablished the following elements: (a) that the upstream pipeline networks measure falls with in\nthe scope of Article I:1; (b ) that the relevant imported products are like products; (c) that the\nupstream pipeline networks measure confers an \"advantage, favour, privilege, or immunity\" on a\nproduct originating in the territory of any country; and (d ) that the advantage so accorded is not\nextended \"immediately\" and \"unconditionally\" to like Russian products.\n7.9.2.2.1 Scope of Article I:1 of the GATT 1994\n7.1010. According to Russia, the upstream pipeline networks measure affects the internal sale of\nthe imported natural gas in the European Union within the meaning of Article III:4 of the GATT\n1994 and therefore falls within the scope of Article I:1 of the GATT 1994. 1707 The European Union\ndoes not contest Russia's arguments.\n7.1011. As observed by the Appellate Body, Article I:1 of the GATT 1994 \"incorporates all mat ters\nreferred to in paragraphs 2 and 4 of Article III\". 1708 Thus, in light of Russia's arguments, we need\nto determine whether the upstream pipeline networks measure falls within the scope of the\n\"matters\" referred to in Article III:4 of the GATT 1994 in order to determine whether it falls within\nthe scope of Article I:1 of the GATT 1994. For a measure to fall within the scope of Article III:4 of\nthe GATT 1994, such a measure must constitute a law, regulation or requirement \"affecting\" the\n\n1703 Russia's first written submission, paras. 402 and 411; and second written submission, paras. 294-\n296.\n1704 Russia's first written submission, para. 411.\n1705 European Union's first written submission, para. 457.\n1706 European Union's first written submission, paras. 450–454; and second written submission,\npara. 182.\n1707 Russia's first written submission, para. 382; and response to Panel question No. 113, para. 468.\n1708 Appellate Body Reports, EC – Seal Products, para. 5.80.\n\n\"internal sale, offering for sale, purchase, transportation, distribut ion or use\" of imported natural\ngas.1709\n7.1012. We note that the parties do not disagree that the Directive constitutes a law, regulation\nor requirement within the meaning of Article III:4 of the GATT 1994. In our view, the Directive is\nundeniably a law, regulation or req uirement within the meaning of this provision. However, a s\nclarified by the Appellate Body, it is \"not any 'laws, regulations and requirements' which are\ncovered by Article III:4, but only those which \"' affect' the specific transactions, activities and use s\nmentioned in that provision\".1710 According to the Appellate Body, \"the word 'affecting' operates as\na link between identified types of government action ('laws, regulations and requirements') and\nspecific transactions, activities and uses relating to the p roducts in the marketplace ('internal sale,\noffering for sale, purchase, transportation, distribution or use')\".1711\n7.1013. Russia argues that the non -application of the unbundling obligation, tariff regulation\nrequirements and Article 32 of the Directive to the op erators of upstream pipeline networks\n\"lowers the costs and increases the profit margin on natural gas supplied through these\npipelines\".1712 Therefore, in Russia's view, \"the measure must be viewed as affecting the sale of\nnatural gas\".1713\n7.1014. We recall that, as set out above, the upstream pipeline networks measure lays out a legal\nregime for the operators of upstream pipeline networks, which regulates the relationship that\nproducers and suppliers of natural gas may have with those operators. We understand that\nupstream pipeline networks are used to transport natural gas from a gas production project to a\nprocessing plant, terminal or final coastal landing terminal. 1714 Thus, we believe that this measure\naffects the internal transportation of natural gas.\n7.1015. Therefore, we consider that the upstream pipeline networks measure affects the internal\ntransportation of imported natural gas in the European Union and consequently falls within the\nscope of the \"matters\" referred to in Article III:4 of the GATT 1994. On this basis, we find that the\nupstream pipeline networks measure falls within the scope of Article I:1 of the GATT 1994.\n7.9.2.2.2 Like products\n7.1016. In Russia's view, natural gas transported via upstream pipelines is identical to natural gas\ntransported via transmission pipelines. Therefore, Russia considers that natural gas originating in\nthird countries and transported via upstream pipelines is like natural gas originating in Russia and\ntransported via transmission pipelines within the meaning of Article I:1 of the GATT 1994. We\nnote, however, that Ukraine, in its third -party submission, argues that natural gas transported via\nupstream pipelines is \"raw\" gas, which is not like natural gas transported through transmission\npipelines.1715 The European Union agrees with Ukraine's position.1716\n7.1017. We observe that \"raw\" or \"unprocessed\" gas is natural gas that has not undergone any\nprocessing upon its extraction. 1717 \"Processed\" gas, on the other hand, is natural gas that has\nundergone necessary processing after its extraction in order to produce ga s suitable for\n\n1709 Panel Report, Argentina – Financial Services, para. 7.1015.\n1710 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 208. (emphasis original)\n1711 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 208.\n1712 Russia's response to Panel question No. 113, para. 468.\n1713 Russia's response to Panel question No. 113, para. 468.\n1714 Directive 2009/73/EC, (Exhibit EU-5), Article 2(2).\n1715 Ukraine's third-party submission, paras. 39–43.\n1716 In response to a question by the Panel, the European Union stated that it agrees with Ukraine that\n\"Russia has not demonstrated that 'raw gas' is 'like' natural gas transported through regular pipeline\nnetworks\". (European Union's response to Panel question No. 107, para. 278). The European Union further\nindicated that it considers that upstream pipelines do not carry processed gas. (European Union's response to\n1717 US Department of Transportation, Pipeline & Hazardous Materials Safety Administration,\n\"Stakeholder Communications: Natural Gas Processing Plants\"\nhttps://primis.phmsa.dot.gov/comm/FactSheets/FSNaturalGasProcessingPlants.htm\n(accessed 23 March 2017), (Exhibit EU-166); and NaturalGas.org, Processing Natural Gas\nhttp://naturalgas.org/naturalgas/processingng/ (accessed 11 May 2017), (Exhibit RUS-260), p. 1.\n\ntransmission and subsequent delivery to the final consumer. 1718 Neither Ukraine nor the European\nUnion provides any evidence that pipelines that meet the definition of \"upstream pipeline network\"\nin the Directive transport only unprocessed gas. The European Union asserts that upstream\npipelines are used to convey natural gas from an oil or gas production project to a processing plant\nor terminal or final coastal landing terminal, and if the pipeline conveys gas from the production\nproject to a f inal coastal landing terminal, processing would take place once this terminal is\nreached.1719 Russia, on the other hand, contends that pipelines that meet the definition of\n\"upstream pipeline network\" in the Directive include those that convey processed gas from a\nprocessing plant to a \"terminal or final coastal landing terminal\". 1720 The parties do not disagree\nthat transmission pipelines transport processed natural gas.\n7.1018. The Directive defines \"upstream pipeline network\" as follows:\n'[U]pstream pipeline network' means any pipeline or network of pipelines operated\nand/or constructed as part of an oil o r gas production project, or used to convey\nnatural gas from one or more such projects to a processing plant or terminal or final\ncoastal landing terminal[.]1721\n7.1019. Based on this definition, we understand that an \"upstream pipeline network\" covers any\nof the fol lowing pipelines or networks of pipelines: (a ) operated and/or constructed as part of an\noil or gas production project; (b ) used to convey natural gas from one or more oil or natural gas\nproduction projects to a processing plant; (c ) used to convey natural gas from one or more oil or\nnatural gas production projects to a terminal; (d) used to convey natural gas from one or more oil\nor natural gas production projects to a final coastal landing terminal.1722 We consider that pipelines\noperated and/or constructed as part of an oil or gas production project, as well as those used to\nconvey natural gas from one or more such projects to a processing plant will transport\nunprocessed gas. The processing of such gas will take place at a processing plant. We are,\nhowever, unconvinced by the European Union's explanation that pipelines used to convey natural\ngas from one or more oil or gas production projects to a terminal or final coastal landing terminal\nwill transport unprocessed gas.\n7.1020. As noted above, the European Union a rgues that the processing of gas transported by\npipelines running from one or more oil or gas production projects to a terminal or final coastal\nlanding terminal will take place once the terminal or final coastal landing terminal is reached. We\ndisagree. The processing of gas can take place only at a specialized processing facility referred to\nin the Directive as a \"processing plant\". Aside from referring to a \"processing plant\", the Directive\nalso refers to \"terminal\" and \"final coastal landing terminal\". We consider that if a \"terminal\", \"final\ncoastal landing terminal\" and \"processing plant\" had the same meaning , the Directive would have\nreferred only to pipelines used to convey gas to a \"processing plant\", and not to pipelines \"used to\nconvey natural gas … to a processing plant or terminal or final coastal landing terminal\". 1723 We\n\n1718 US Department of Transportation, Pipeline & Hazardous Materials Safety Administration,\n\"Stakeholder Communications: Natural Gas Processing Plants\"\nhttps://primis.phmsa.dot.gov/comm/FactSheets/FSNaturalGasProcessingPlants.htm (accessed\n23 March 2017), (Exhibit EU-166); and NaturalGas.org, Processing Natural Gas\nhttp://naturalgas.org/naturalgas/processingng/ (accessed 11 May 2017), (Exhibit RUS-260), pp. 1-2.\n1719 European Union's response to Panel question No. 108(c), para. 279.\n1720 Russia's responses to Panel question No. 107, para. 426, and No. 108, paras. 429-431.\n1721 Directive 2009/73/EC, (Exhibit EU-5), Article 2(2).\n1722 Directive 2009/73/EC, (Exhibit EU-5), Article 2(2).\n1723 One of the documents cited by Russia in response to Panel question No. 10 reflects the following\nunderstanding of a \"processing plant\", \"terminal\" and \"final coastal landing terminal\" in Article 2(2) of the\nDirective:\nThe definition in Article 2.2 was designed to meet a number of circumstances. The reference to\n\"processing plant\" was intended to allow Article 23 to apply to pipelines or pipeline networks\nwhich carry largely unprocessed gas from a production project (field) to a facil ity at which the\ngas is processed to sales quality (broadly speaking, the main practice offshore in United\nKingdom). \"Terminal\" in Article 2.2 was intended to allow Article 23 to apply to pipelines, or\npipeline networks, which carry gas which has been proc essed to sales quality but which has not\npreviously entered a transmission or distribution system (largely the Norwegian approach).\n\"Final coastal landing terminal\" was intended to allow Article 23 to apply to pipelines, or pipelines\nnetworks, which carry processed gas, which has not previously entered a transmission or\ndistribution system but may have passed through a \"terminal\", to a facility in another country\nfrom which the gas enters that country’s transmission or distribution system (also largely the\n\nalso note that the evidence on the record indicates that, in respect of natural gas transported from\nan oil or gas production project to a terminal or final coastal landing termin al, processing can take\nplace at a processing plant located between an oil or gas production project and a terminal. 1724\nThis means that parts of upstream pipeline networks running from an oil or gas production project\nto a terminal or final coastal landing terminal will transport processed natural gas.\n7.1021. Therefore, we conclude that the definition of \"upstream pipeline network\" in the Directive\ncovers pipelines that transport processed natural gas . In light of this conclusion, we do not\nconsider it necessary to determine whether processed and unprocessed gas are like products\nwithin the meaning of Article I:1 of the GATT 1994. Instead, we turn to consider whether\nprocessed natural gas transported via upstream pipeline networks is like processed natural gas\ntransported via transmission pipelines.\n7.1022. The parties agree that processed natural gas transported via upstream pipelines and\nnatural gas transported via transmission pipelines are like product s within the meaning of\nArticle I:1 of the GATT 1994.1725 We also recall that, in the context of the unbundling measure, we\nhave found that imported Russian natural gas and imported natural gas from other countries are\nlike products within the meaning of Article I:1 of the GATT 1994. 1726 We consider that processed\nnatural gas transported via upstream pipelines is identical in all respects to natural gas transported\nvia transmission pipelines. Therefore, we find that imported natural gas of Russian origin\ntransported via transmission pipelines and imported natural ga s originating in any other third\ncountry transported via upstream pipelines are like products within the meaning of Article I:1 of\nthe GATT 1994.\n7.9.2.2.3 An advantage, favour, privilege or immunity\n7.1023. Russia argues that, as a consequence of the definition of \"upstream pipeline network\" in\nthe Directive, a number of operators of upstream pipelines transporting imported natural gas\noriginating in third countries are \"exempted\" from the unbundling obligation, tariff regulation rules\nand Article 32 of the Directiv e.1727 In Russia's view, due to this \"exemption\", imported natural gas\n\nNorwegian approach but potentially relevant to the United Kingdom/Belgium interconnector). In\nthe United Kingdom we tend to use the term \"terminal\" to encompass all of the above – this is\nreflected in the proposals at Section 3.8 below. (Russia's respons e to Panel question No. 10,\npara. 91 (referring to the UK Department for Trade and Industry, Consultation Document,\nImplementation of those provisions of Directive 98/30/EC of the European Parliament and of the\nCouncil of 22 June 1998 concerning the common rules for the internal market in natural gas\nwhich relate to access to upstream pipeline networks (March 2000), (Exhibit RUS -184), para.\n3.6))\nThe European Union observes that none of the \"Reports\" that Russia cites in its response to Panel\nquestion No. 10 is an EU document, but rather a UK source. (European Union's second written submission,\npara. 170 and fn 195). The document quoted above appears to be indeed a UK source. Nevertheless, we find\nthe explanations provided in this document instructive. We also note that the European Union has not\nchallenged the accuracy or credibility of information contained in this document.\n1724 We note the \"Europipe II\" pipeline carries natural gas from an onshore processing plant in Norway\n(Kårstø) to an interconnection point in Germany (Dornum) across the North Sea. The processing plant in\nNorway (Kårstø) is connected to gas production sites in the North Sea. The \"Norpipe\" and \"Europipe I\"\npipelines are also connected to the onshore processing plants in Norway (Kårstø and Kollsnes) before\ntransporting gas from the production sites in the North Sea to the interconnection points in Germany (Emden\nand Dornum, respectively). We therefore understand that the \"Europipe II\" pipeline transports processed gas,\nand that similarly, the \"Norpipe\" and \"Europipe I\" pipelines may also transport processed gas. (Norway\nPipelines Map, (Exhibit RUS-196); Gassco AS, the Norwegian Ministry of Petroleum and Energy, List of gas\npipelines on the Norwegian continental shelf, (Exhibit RUS-197); Gassco, Europipe II,\nhttps://www.gassco.no/en/our-activities/pipelines-and-platforms/europipe-II/ (accessed 25 February 2017),\n(Exhibit RUS-204); and Gassco, Kollsnes Gas Processing Plant, (Exhibit RUS-266)).\n1725 Russia's first written submission, paras. 345-349; and responses to Panel question No. 107, paras.\n426-427, and No. 108, paras. 430 – 431. See also European Union's first written submission, para. 359; and\nresponse to Panel question No. 110(a), para. 285. Regarding the likeness of gas in the context of the upstream\npipeline networks measure, the European Union considers that consumers will not differentiate between\n\"gaseous\" natural gas based on the infrastructure by which it has been processed or transported. In the\nEuropean Union's view, the competitive relationship is not affected by the infrastructure. (European Union's\nresponse to Panel question No. 120, para. 301)\n1726 See, above para. 7.577.\n1727 Russia's first written submission, paras. 403–410; responses to Panel question No. 114(c),\nparas. 483–484, and No. 191, paras. 214-215; and second written submission, paras. 288–296. In particular,\nRussia indicates that such pipelines transport gas of Norwegian origin. Russia also notes other pipelines, that,\n\noriginating in third countries and transported through upstream pipelines is granted an advantage\nwithin the meaning of Article I:1 of the GATT 1994.1728\n7.1024. The European Union argues that the no n-application of the unbundling obligation, tariff\nregulation rules and Article 32 of the Directive to the operators of upstream pipelines does not\namount to an \"exemption\". 1729 According to the European Union, the definition of \"upstream\npipeline network\" is based on objective characteristics. 1730 The European Union further submits\nthat the different legal regime of upstream pipeline networks as compared to transmission systems\nreflects the economic, technical and operational characteristics of such networks.1731 The European\nUnion also argues that Russia assumes that the non -application of the unbundling requirement to\nupstream pipeline networks automatically implies that gas from owners of such upstream networks\nhas a competitive advantage that is not extended to Russian gas.1732 The European Union submits,\nhowever, that Russia does not explain how such competitive advantage is granted, and of what\nthis advantage actually constitutes.1733\n7.1025. We recall that previous panels considered that a measure grants an advantage within the\nmeaning of Article I:1 of the GATT 1994 when such a measure creates \"more favourable\ncompetitive opportunities\" to products of a particular origin.1734\n7.1026. We understand Russia to derive its claim against the upstream pipeline networks measure\nunder Article I:1 of the GATT 1994 from the legal regime of the operators of upstream pipelines in\ncomparison to TSOs. Accordingly, we consider that, in order to establish that the upstream\npipeline networks measure grants an advantage to natural gas of a particular or igin within the\nmeaning of Article I:1 of the GATT 1994, Russia needs to demonstrate that this legal regime\ncreates \"more favourable competitive opportunities\" to natural gas of a particular origin.\n7.1027. We further understand that, in Russia's view, the legal regime of the operators of\nupstream pipeline networks based on the non -application of the unbundling obligation, tariff\nregulation rules and Article 32 of the Directive allows a VIU to exercise control over the operators\nof such pipelines, refuse third -party access and minimize its costs when transporting natural gas\nvia these pipelines. 1735 Thus, Russia's arguments imply that a VIU transporting natural gas via\nupstream pipelines whose operators it controls would be in a better position than a VIU\ntransporting natural gas via transmission pipelines whose operators it does not control. In Russia's\nview, this means that natural gas produced and transported by the former VIU would thus receive\nan advantage within the meaning of Article I:1 of the GATT 1994 in comp arison to natural gas\nproduced and transported by the latter VIU. 1736 We thus understand Russia to argue that the\n\nin its view, are similarly \"exempted\" and transporting gas of Algerian and Libyan origin (Russia's response to\nPanel question No. 191, paras. 213-215).\n1728 Russia's first written submission, para. 411; response to Panel question No. 114(c), paras. 483-484\nand No. 191, paras. 213-215; and second written submission, para. 296.\n1729 European Union's response to Panel question No. 1, paras. 2, 6 and 9; and second written\nsubmission, para. 142.\n1730 European Union's first written submission, para. 448. See also European Union's second written\nsubmission, paras. 170 – 173.\n1731 European Union's first written submission, paras. 450-453; and second written submission,\nparas. 157-167 and 173.\n1732 European Union's first written submission, para. 456.\n1733 European Union's first written submission, para. 457.\n1734 Panel Reports, EC – Bananas III (Guatemala and Honduras), para. 7.239; and Colombia – Ports of\nEntry, para. 7.346. The panel in EC – Seal Products considered that the advantage granted by the EU Seal\nRegime was in the form of market access (Panel Reports, EC – Seal Products, para. 7.596).\n1735 Russia's response to Panel question No. 114(c), paras. 483 – 484; and second written submission,\nparas. 291 and 294.\n1736 Russia's second written submission, para. 296. Russia initially argued that an \"advantage\" is\ngranted to gas of Norwegian origin. Thus, in its response to a question by the Panel regarding the \"advantage\"\nthat gas transported via upstream pipeline networks receives, Russia states as follows:\nAs a result of these exemptions, the entire Norwegian export pipeline network is operated by a\nsingle state-owned company, Gassco. Additionally, because its upstream pipeline network, by\ndefinition, is exempt from the unbundling, TPA and tariff regulation requirements under the\nDirective, the Norwegian-origin gas supplied and placed on the EU market by Gassco is accorded\nan advantage. Gassco is not required to divest ownership of its transmission pipelines running\nfrom the processing facilities in the North Sea or TSO under the OU model, or even to engage an\nISO or establish a separate subsidiary in the form of an ITO. Gassco is also not required to grant\nthird-party access to its pipelines. (Russia's response to Panel question No. 114(c), para. 484).\n\ndifferences in the legal regime of the operators of upstream pi peline networks and TSOs create\nmore favourable conditions for the transportation of natural gas via upstream pipeline networks\nthan via transmission pipelines.\n7.1028. In our view, more favourable conditions for the transportation of products can be\nconsidered a competitive advantage. We recall, however, that the \"advantage\" referred to in\nArticle I:1 of the GATT 1994 is an advantage granted to \"any product originating in or destined for\nany other country\". 1737 Therefore, in order to establish that the upstream pipeline networks\nmeasure grants an advantage within the meaning of Article I:1 of the GATT 1994, Russia needs to\ndemonstrate that allegedly more favourable conditions for the transportation of natural gas via\nupstream pipelines than via transmission pipelines result in more favourable competitive\nopportunities to natural gas of a particular origin.\n7.1029. In light of Russia's arguments, we will conduct a two -pronged assessment of whether the\nupstream pipeline networks measure grants an advantage to natural gas of a particular origin\nwithin the meaning of Article I:1 of the GATT 1994. Under the first prong, we will examine whether\nRussia has demonstrated that the legal regime of upstream pipeline networks creates more\nfavourable conditions for the transportation of natural gas via upstream pipelines than via\ntransmission pipelines. Should we conclu de that this is the case, under the second prong, we will\nassess whether Russia has demonstrated that more favourable conditions for the transportation of\nnatural gas via upstream pipelines than via transmission pipelines results in more favourable\ncompetitive opportunities to natural gas of any particular origin.\n7.9.2.2.3.1 More favourable conditions for the transportation of natural gas\n7.1030. We begin our assessment by noting that there is no disagreement between the parties\nthat the unbundling obligation of the Directi ve does not apply to the operators of upstream\npipeline networks. 1738 Furthermore, the European Union does not contest that tariff regulation\nrules and Article 32 of the Directive do not apply to the operators of upstream pipeline networks.\nSimilarly, the parties do not disagree that Article 34 of the Directive, entitled \"Access to upstream\npipeline networks\" is applicable to the operators of upstream pipeline networks. 1739 However, the\nparties draw different conclusions as to the content of the obligation contai ned in Article 34 of the\nDirective, as further discussed below.\n7.1031. Russia argues that, being \"exempted\" from \"the unbundling, TPA and tariff regulation\nrequirements\" allows a VIU controlling the operator of a n upstream pipeline network to \"develop\nits export pipeline network and control the supply and placement of its gas on the EU market as it\ndeems appropriate\". 1740 In Russia's view, this reduces the costs of such a VIU in transporting\nnatural gas via upstream pipeline networks. 1741 Russia also argues that the \"UPN exemption\"\nprovides greater certainty to investor s in pipelines and allows them to plan and implement the\ninvestment based on the possibility to equally invest and have long -term planning in natural gas\n\nLikewise, in its second written submission, Russia makes the following allegations:\nToday, the entire Norwegian export pipeline network is operated by a single state -owned\ncompany, Gassco, which is free to develop its export pipeline network and control the supply and\nplacement of its gas on the EU market as it deems appropriate. Gassco and its Norwegian gas\nexport pipelines are exempt from the unbundling, TPA and tariff regulation requirements.\nRussian gas export pipelines are identical in terms of their purpose to the Norwegian gas export\npipelines. They transport identical gas and are both operated by VIUs. (Russia's second written\nsubmission, para. 294)\nIn its response to Panel question No. 191, however, Russia indicated that pipelines transporting gas of\nAlgerian and Libyan origin are, in its view, similarly \"exempted\" from the unbundling, third-party access and\ntariff regulation requirements. (Russia's response to Panel question No. 191, para. 213). We thus understand\nRussia to imply that, as a consequence, gas of Algerian and Libyan origin would also be granted an advantage.\n(Russia's response to Panel question No. 191, para. 215)\n1737 Article I:1 of the GATT 1994.\n1738 Russia's first written submission, para. 406; and second written submission, para. 282. See also\nEuropean Union's first written submission, para. 452.\n1739 Russia's first written submission, para. 408; and second written submission, para. 284. See also\nEuropean Union's first written submission, para. 451; and second written submission, para. 159.\n1740 Russia's second written submission, para. 294\n1741 Russia's second written submission, para. 291; and opening statement at the second meeting of the\nPanel, para. 134.\n\nproduction, while \"the status of a transmission pipeline, with its unbundling and TPA requirements,\ndoes not provide such a certainty\". 1742 On this basis, Russia concludes that natural gas carried\nthrough an upstream pipeline network has a \"clear -cut\" competitive advantage over natural gas\ncarried through a transmission pipeline.1743\n7.1032. We understand that, for Russia, the possibility that a VIU may control the operator of an\nupstream pipeline network creates more favourable conditions for the transportation of natural gas\nvia upstream pipelines than via transmission pipelines. Russia asserts that, being \"exempted\" from\n\"the unbundling, TPA and tariff regulation requirements\" allows a VIU controlling the operator of\nan upstream pipeline network to \"develop its export pipeline network and contr ol the supply and\nplacement of its gas on the EU market as it deems appropriate\". 1744 However, Russia does not\nexplain how this transforms into more favourable conditions for the transportation of natural gas\nvia upstream pipelines than via transmission pipelines.\n7.1033. Russia further contends that the \"UPN exemption\" provides greater certainty to the\ninvestor in pipelines and allows them to plan and implement the investment based on the\npossibility to equally invest and have long -term planning in terms of producti on of natural gas.1745\nIt is unclear to us, and Russia has not explained, how issues related to investment decisions in\nconnection with natural gas pipelines are relevant for our assessment of Russia's claim under the\nGATT 1994.\n7.1034. Thus, we consider that Russia has not demonstrated that a control by a VIU of the\noperator of an upstream pipeline network results in more favourable conditions for the\ntransportation of natural gas via upstream pipelines than via transmission pipelines.1746\n7.1035. Russia also argues that, not being subject to the third -party access rules of Article 32 of\nthe Directive, the operators of upstream pipeline networks are not obliged to grant access to these\npipelines to all interested parties. 1747 We thus understand that, in Russia's view, the non -\napplication of the third -party access rules of Article 32 of the Directive to the operators of\nupstream pipeline networks creates more favourable conditions for the transportation of natural\ngas via upstream pipelines than via transmission pipelines, whose op erators (TSOs) are subject to\nArticle 32 of the Directive.\n7.1036. We observe that the European Union contests Russia's arguments that the operators of\nupstream pipeline networks are not obliged to grant third -party access, pointing to the fact that\nArticle 34 of the Directive, entitled \"Access to upstream pipeline networks\", requires such\naccess.1748 As already noted, the parties disagree on the content of the obligation contained in\nArticle 34 of the Directive.\n7.1037. Russia argues that Article 34 of the Directive \"sets out a vague, non -mandatory regime;\nit grants Member States discretion to oversee implementation; and is clearly designed to favor\nupstream pipeline network operators and developers\". 1749 Russia considers that, in particular, the\n\"matters\" listed in Article 34(2) of the Directive that may be taken into account in providing access\nto upstream pipeline networks make the obligation contained in Article 34 of the Directive \"vague\"\nand \"meaningless\".1750 Russia also states that the European Union confirmed that Article 34 of the\nDirective has never been utilized.1751 The European Union, however, contends that all EU member\nStates have implemented Article 34 of the Directive in their national law. 1752 The European Union\n\n1742 Russia's opening statement at the second meeting of the Panel, para. 146.\n1743 Russia's opening statement at the second meeting of the Panel, para. 146.\n1744 Russia's second written submission, para. 294\n1745 Russia's opening statement at the second meeting of the Panel, para. 146.\n1746 We note that Russia has not provided any specific argumentation on the non-application of the rules\non tariff regulation to the operators of upstream pipeline networks. We therefore do not address this issue\nfurther.\n1747 Russia's response to Panel question No. 114(c), para. 484.\n1748 European Union's first written submission, para. 451; and second written submission, para. 159.\n1749 Russia's first written submission, para. 408;\n1750 Russia's second written submission, para. 286; and response to Panel question No. 201(c),\npara. 236.\n1751 Russia's opening statement at the second meeting of the Panel, para. 133.\n1752 European Union's response to Panel question No. 201, para. 157.\n\nhas also indicated that five disputes were notified in th e United Kingdom for access to upstream\npipelines and one decision on effective access was adopted in Denmark.1753\n7.1038. Article 34 of the Directive , entitled \"Access to upstream pipeline networks\", provides, in\nrelevant part, as follows:\n1. Member States shall tak e the necessary measures to ensure that natural gas\nundertakings and eligible customers, wherever they are located, are able to obtain\naccess to upstream pipeline networks, including facilities supplying technical services\nincidental to such access, in acc ordance with this Article, except for the parts of such\nnetworks and facilities which are used for local production operations at the site of a\nfield where the gas is produced. The measures shall be notified to the Commission in\naccordance with the provisions of Article 54.\n2. The access referred to in paragraph 1 shall be provided in a manner determined by\nthe Member State in accordance with the relevant legal instruments. Member States\nshall apply the objectives of fair and open access, achieving a compet itive market in\nnatural gas and avoiding any abuse of a dominant position, taking into account\nsecurity and regularity of supplies, capacity which is or can reasonably be made\navailable, and environmental protection. The following matters may be taken into\naccount:\n(a) the need to refuse access where there is an incompatibility of technical\nspecifications which cannot reasonably be overcome;\n\n(b) the need to avoid difficulties which cannot reasonably be overcome and could\nprejudice the efficient, current and planned future production of hydrocarbons,\nincluding that from fields of marginal economic viability;\n\n(c) the need to respect the duly substantiated reasonable needs of the owner or\noperator of the upstream pipeline network for the transport and processing of gas\nand the interests of all other users of the upstream pipeline network or relevant\nprocessing or handling facilities who may be affected; and\n\n(d) the need to apply their laws and administrative procedures, in conformity with\nCommunity law, for the grant o f authorisation for production or upstream\ndevelopment.\n3. Member States shall ensure that they have in place dispute -settlement\narrangements, including an authority independent of the parties with access to all\nrelevant information, to enable disputes rel ating to access to upstream pipeline\nnetworks to be settled expeditiously, taking into account the criteria in paragraph 2\nand the number of parties which may be involved in negotiating access to such\nnetworks.1754\n7.1039. We observe that the content of Article 34 of the Directive is different from the content of\nArticle 32 of the Directive. 1755 However, in our view, this does not mean that Article 34 of the\nDirective contains absolutely no obligation of third-party access to upstream pipeline networks. We\nnote, in parti cular, that Article 34(1) of the Directive requires member States to \"take the\nnecessary measures to ensure that natural gas undertakings and eligible customers, wherever\nthey are located, are able to obtain access to upstream pipeline networks\". 1756 Russia argues that\nthe obligation in Article 34 of the Directive is \"vague\" and \"meaningless\". 1757 However, aside from\n\n1753 European Union's response to Panel question No. 201, para. 158.\n1754 Directive 2009/73/EC, (Exhibit EU-5), Article 34.\n1755 Article 32 of the Directive, entitled \"Third-party access\", requires EU member States to \"ensure the\nimplementation of a system of third party access to the transmission and distribution system, and LNG facilities\nbased on published tariffs, applicable to all eligible customers, including supply undertakings, and applied\nobjectively and without discrimination between system users\". (Directive 2009/73/EC, (Exhibit EU-5), Article\n32(1)).\n1756 Directive 2009/73/EC, (Exhibit EU-5), Article 34(1).\n1757 Russia's second written submission, para. 286; and response to Panel question No. 201(c),\npara. 236.\n\nreferring to the text of Article 34 of the Directive, Russia has not submitted any evidence that this\nobligation is ineffective.\n7.1040. Based on the scrut iny of the text of Article 34 of the Directive, in light of the arguments\nof the parties and evidence on the record, we consider that Article 34 of the Directive provides an\nobligation of third -party access to upstream pipeline networks. Therefore, we reje ct Russia's\narguments that the operators of upstream pipeline networks are not obliged to grant access to\nother parties interested in using these pipelines. Thus, contrary to Russia's arguments, the\noperators of upstream pipelines are not \"exempted\" from t hird-party access rules and,\nconsequently, cannot use the non-application of Article 32 of the Directive to transport natural gas\non more favourable conditions than TSOs.\n7.1041. Russia also alleges, \"based on legislative history and other EU documentation, that the\nNorwegian government and natural gas industry lobbied for and obtained this EU exemption\nexpressly to reduce the costs of transporting Norwegian -origin gas, thus granting that gas a\ncompetitive advantage within the meaning of GATT Article I:1\". 1758 Russia further alleges that the\n\"EU included the UPN measure to avoid '[t]he resulting increases in costs and loss of efficiency\n[which] would put Norway at an unfair disadvantage compared with other non-EEA producers'\".1759\nIn support of these allegations, Russia quotes from the Seventh Report of the Select Committee on\nEuropean Communities of the UK House of Lords on the Amended Proposal for a European\nParliament and Council Directive concerning common rules for the internal market in natural gas\n(UK House of Lords Report).1760\n\n1758 Russia's second written submission, para. 291. See also Russia's response to Panel question No. 10,\nparas. 93-94.\n1759 Russia's second written submission, para. 294. See also Russia's response to Panel question No. 10,\nparas. 93-94.\n1760 UK House of Lords, Select Committee on European Communities, Seventh Report on the Amended\nProposal for a European Parliament and Council Directive concerning common rules for the internal market in\nnatural gas (18 November 1997)\nhttps://publications.parliament.uk/pa/ld199798/ldselect/ldeucom/035vii/ec0701.htm (accessed\n15 September 2017), (UK House of Lords Report), (Exhibit RUS-116). Russia quotes the following parts of the\nUK House of Lords Report:\n\n45. Norway, although not an EU Member State, was obliged by its membership of the EEA\nAgreement to implement any Community legislation involving the single market which was\nadopted by the EEA Joint Committee. As a result, Norway was likely to be significantly affected\nby the Directive, despite having no direct influence in the negotiations. The Norwegian Ministry of\nPetroleum and Energy said that gas had been a success story in Europe and had the potential to\nprovide a larger share of future energy needs, with benefits for the environment and security of\nsupply, but the investments that were necessary to secure the future development of gas would\nbe jeopardised by the uncertainty that the draft Directive would introduce. Some amendments\nwere needed to secure a long -term regulatory regime and to guarantee the contracts that were\nneeded (pp 97-8).\n\nAPPLICATION TO UPSTREAM PRODUCTION AND COMPETITION IN GAS SUPPLY\n\n46. One of Norway's key concerns as a major European gas producer was with the scope of\napplication of the Directive, which it proposed should be limited to \"the outlet flange of the\nultimate landing terminal\", thus excluding offshore production-related pipelines[13]. Without\nsuch a change, which was supported by the oil industry and was consistent with existing EC\nand Norwegian legislation, Norway believed its existing integrated production system would\nhave to be split up under different regulatory regimes. The resulting increases in costs and\nloss of efficiency would put Norway at an unfair disadvantage compared with other non-EEA\nproducers (p 97, QQ 277, 292-5).\n\n…\n\nASPECTS OF THE DIRECTIVE STILL UNDER NEGOTIATION\n\n…\n\nApplication of the Directive to upstream transmission pipelines\n\n106. We sympathise with the arguments of the Norwegian Government and gas producers\nabout the possible impact of the Directive on upstream activities, principally access to\n\n7.1042. After a careful review of the UK House of Lords Report referred to by Russia, we do not\nconsider that it supports Russia's position that the upstream pipeline networks measure grants an\nadvantage to Norwegian natural gas within the meaning of A rticle I:1 of the GATT 1994. The\nparagraphs of the UK House of Lords Report referred to by Russia, reflecting the discussions held\nin the UK House of Lords, do not in any way connect the definition of upstream pipeline networks\nin the Directive with the al leged efforts of the Norwegian government and natural gas industry to\nobtain an \"exemption\" in order to \"reduce the costs of transporting Norwegian -origin gas\".1761 The\nfact that the House of Lords \"sympathise[d] with the arguments of the Norwegian Government and\ngas producers about the possible impact of the Directive on upstream activities\" 1762 does not in\nand of itself establish such a connection. Even assuming that the discussions reflected in the parts\nof the UK House of Lords Report referred to by Russia so mehow pointed to the intent of the\nEuropean Union to favour natural gas of Norwegian origin, it would not release Russia from its\nburden to demonstrate how the alleged advantage is granted to natural gas of Norwegian origin\nwithin the meaning of Article I:1 of the GATT 1994. Merely showing the discriminatory intent of the\nregulator would be insufficient to establish a violation of Article I:1 of the GATT 1994.\n7.1043. In view of the analysis conducted above, we consider that Russia has not demonstrated\nthat the leg al regime of the operators of upstream pipeline networks creates more favourable\nconditions for the transportation of natural gas via upstream pipelines than via transmission\npipelines. This means that Russia cannot demonstrate that the upstream pipeline n etworks\nmeasure grants an advantage to natural gas of any particular origin transported via upstream\npipelines within the meaning of Article I:1 of the GATT 1994. It is thus unnecessary for us to\nproceed to the second prong of our analysis identified above in paragraph 7.1029.\n7.9.2.3 Conclusion\n7.1044. In view of the foregoing, we find that Russia has not established that the upstream\npipeline networks measure grants an advantage to natural gas of any particular origin, and\nconsequently, failed to demonstrate that this measure is inconsiste nt with Article I:1 of the\nGATT 1994.\n7.9.3 Russia's claim under Article III:4 of the GATT 1994\n7.1045. In the context of its claim under Article III:4 of the GATT 1994, Russia argues that the\nupstream pip eline network measure modifies the conditions of competition to the detriment of\nRussian natural gas in comparison to domestic natural gas because the legal regime of the\noperators of upstream pipeline networks creates more favourable conditions for the tr ansportation\nof domestic natural gas via these networks than for the transportation of Russian natural gas via\ntransmission pipelines. 1763 Therefore, the issue of whether the legal regime of the operators of\nupstream pipeline networks creates more favourable conditions for the transportation of natural\ngas via upstream pipelines than via transmission pipelines is a central premise for Russia's claim\nunder Article III:4 of the GATT 1994. In advancing its claim under Article III:4, Russia does not\nprovide any arguments in addition to those submitted in the context of its claim under Article I:1\nin order to demonstrate that the legal regime of the operators of upstream pipeline networks\ncreates more favourable conditions for the transportation of natural gas via u pstream pipelines\nthan via transmission pipelines.1764\n\ntransmission pipelines in the North Sea. In most cases, however, pipelines are natural\nmonopolies and the cost of transporting gas onshore represents a significant part of the final\nprice paid by the consumer. As a result of the refinement of the definition of transmission in\nthe 6 October text (see paragraph 21 above) it is now clear that, in the North Sea, only\ntransmission pipelines will be subject to the terms of the Directive. The Committee welcomes\nthis clarification. (UK House of Lords Report, (Exhibit RUS-116), paras. 45, 46 and 106).\n\n1761 Russia's second written submission, para. 291.\n1762 UK House of Lords Report, (Exhibit RUS-116), para. 106.\n1763 Russia's first written submission, paras. 412–414; and second written submission, paras. 297–298.\n1764 We note that Russia explicitly relies on the arguments developed in the context of its claim under\nArticle I:1 of the GATT 1994. Russia states that \"[t]he same explanation as set forth in the preceding section\nwith regard to upstream pipeline networks and third-country gas applies equally to domestic-origin gas\nproduced in the European Union that is transported and sold on the EU market through what the Directive\n\n7.1046. In the course of our assessment of Russia's claim under Article I:1, we have found that\nRussia has not demonstrated that the legal regime of the operators of upstream pipeline networks\ncreates more favou rable conditions for the transportation of natural gas via upstream pipelines\nthan via transmission pipelines. 1765 We are aware of distinctions between Article I:1 and Article\nIII:4 of the GATT 1994, which are two separate legal provisions. However, given tha t both of\nRussia's claims are premised on Russia's contention that the legal regime of the operators of\nupstream pipeline networks creates more favourable conditions for the transportation of natural\ngas via upstream pipelines than via transmission pipelin es, our conclusion that Russia has not\nproved this contention in the context of its claim under Article I:1 also leads us to consider that\nRussia has not proved this contention for the purposes of its claim under Article III:4. Without\nproving this content ion, Russia cannot establish that the upstream pipeline networks measure\naccords to Russian natural gas transported via transmission pipelines treatment less favourable\nthan that accorded to domestic natural gas transported via upstream pipelines, in breac h of Article\nIII:4 of the GATT 1994.1766\n7.1047. Therefore, in light of how Russia has developed its discr imination claims under the\nGATT 1994 against the upstream pipeline networks measure, we conclude that Russia has not\ndemonstrated that this measure is inconsistent with Article III:4 of the GATT 1994.\n7.9.4 Russia's additional claim against the upstream pipeline networks measure\n7.1048. In addition to its claims against the upstream pipeline networks measure focused on the\ndifferences in the general legal regime of the operato rs of upstream pipeline networks and TSOs\nunder the Directive, 1767 Russia submits a claim focused on the comparison of the general legal\nregime of the operators of upstream pipeline networks under the Directive with the specific legal\nregime of the operators of the NEL and OPAL pipelines pursuant to the exemption decisions under\nArticle 36 of the Directive.\n7.1049. In advancing this claim, Russia argues that, while the operators of upstream pipeline\nnetworks are \"automatically exempted\" from the rules on unbundling, third-party access and tariff\nregulation rules under the Directive, the Commission denied the exemptions from the third -party\naccess and tariff regulation rules to the operator of the NEL pipeline and attached conditions to the\ngranting of such exemptions to the operator of the OPAL pipeline. 1768 According to Russia, as a\nresult, imported natural gas originating in third countries and transported through upstream\npipelines is granted an advantage within the meaning of Article I:1 of the GATT 1994 that is not\naccorded to natural gas originating in Russia and transported through the OPAL and NEL\npipelines.1769 Russia thus submits that \"this separate claim demonstrates yet another violation by\nthe EU of its obligations under Article I:1 of the GATT 1994\".1770\n7.1050. We recall that we have already found that Russia's failure to demonstrate that the\ndifferences in the general legal regime of upstream pipeline networks and TSOs under the\nDirective create more favourable conditions for the transportation of natural gas via upstream\npipelines than via transmission pipelines. 1771 On this basis, we ha ve concluded above in\nparagraph 7.1044 that Russia has not established that the upstream pipeline networks measure\ngrants an advantage to imported natural gas of any particular origi n within the meaning of\nArticle I:1 of the GATT 1994. These findings also inform our assessment below.\n7.1051. We understand that, in the context of the present claim, R ussia argues that the\nadvantage allegedly granted to natural gas transported through upstream pipelines stems from the\nfact that the operators of upstream pipeline networks are not subject to the unbundling obligation,\ntariff regulation rules and the third -party access rules of Article 32 of the Directive, while the\n\ndefines as upstream pipeline networks\" (Russia's first written submission, para. 412; and second written\nsubmission, para. 297).\n1765 See above para. 7.1044.\n1766 Taking into account our findings above in paragraphs 7.536 and 7.1015, the upstream pipeline\nmeasure falls within the scope of Article III:4 of the GATT 1994, and domestic natural gas and Russian natural\ngas are like products within the meaning of Article III:4 of the GATT 1994.\n1767 See above paras. 7.1007 and 7.1045.\n1768 Russia's first written submission, para. 734; and second written submission, para. 432.\n1769 Russia's first written submission, para. 736; and second written submission, para. 432.\n1770 Russia's second written submission, para. 433.\n1771 See above para. 7.1043.\n\noperator of the NEL pipeline was denied an exemption from the tariff regulation rules and Article\n32 of the Directive. We note that the NEL pipeline is a transmission pipeline. Therefore, not be ing\ngranted an exemption under Article 36 of the Directive, the operator of this pipeline is subject to\nthe general rules of the Directive applicable to TSOs. We have already found that the differences in\nthe general legal regime of the Directive applicable to the operators of upstream pipeline networks\nand TSOs do not result in granting an advantage within the mea ning of Article I:1 of the\nGATT 1994 to imported natural gas of any origin transported through upstream pipelines. 1772 In\nlight of this finding, the denial of the mentioned exemption to the operator of the NEL pipeline,\nwhich results in the application of the general rules of the Directive to the operator of this\ntransmission pipeline, cannot lead to granting an advantage to imported natural gas of any origin\nwithin the meaning of Article I:1 of the GATT 1994.\n7.1052. As for the OPAL pipeline operator, we recall that the exemption from the tariff regulation\nrules and third-party access rules of Article 32 of the Directive was granted to the operator of this\npipeline subject to a 50% capacity cap and 3 bcm/year gas release programme.1773 We understand\nRussia to argue that, because the operators of upstream pipelines are \"automatically exempted\"\nfrom the rules on unbundling, third -party access and tariff regulation rules under the Directive,\nwhile the exemption granted to the operator of the OPAL pipeline is subject to these conditions,\nimported natural gas transported through the former pipelines is granted an advantage within the\nmeaning of Article I:1 of the GATT 1994.1774\n7.1053. There are certain similarities and differences in the legal regime of the operators of\nupstream pipelines under the general rules of the Directive, on the one hand, and the legal regime\nof the operator of the OPAL pipeline under the exemption decis ion under Article 36 of the\nDirective, on the other. First, the operators of both types of infrastructure are not subject to the\ntariff regulation rules and third -party access rules of Article 32 of the Directive. However, under\nthe general rules of the Di rective, the operators of upstream pipeline networks are required to\nprovide third -party access in accordance with Article 34 of the Directive, 1775 while no such\nobligation applies to the operator of the OPAL pipeline. Second, the operators of upstream pipeli ne\nnetworks are not subject to the unbundling obligation of the Directive, while this obligation applies\nto the operator of the OPAL pipeline. 1776 Third, the operator of the OPAL pipeline is subject to a\n50% capacity cap and 3 bcm/year gas release programme, while no such requirements apply to\nthe operators of upstream pipeline networks.\n7.1054. We note, however, that Russia offers no explanation as to how the application of the\nseparate, and somewhat different, legal regimes to the operators of upstream pipeline net works\nand the operator of the OPAL pipeline grants an advantage within the meaning of Article I:1 of the\nGATT 1994 to imported natural gas of any origin. It is well established that Article I:1 of the GATT\n1994 protects the equality of competitive opportunities of products 1777, rather than the operators\nof the infrastructure used to transport such products. Thus, in order to establish a prima facie case\nof a violation of this provision, a complainant needs to demonstrate that the challenged measure\nmodifies the conditions of competition to the detriment of imported products of any origin. The\ndifferences in the regulatory treatment of the operators of the infrastructure used to transport\nthese products, in and of themselves, would not be sufficient to establish a violation of Article I:1\nof the GATT 1994. While Russia has pointed to the differences in the legal regimes applicable to\nthe operators of upstream pipeline networks and the operator of the OPAL pipeline, it has not\ndemonstrated how these differences affect the conditions of competition of imported natural gas of\nRussian or any other origin. Therefore, we consider that Russia has failed to make a prima facie\ncase of a violation of Article I:1 of the GATT 1994.\n7.1055. In view of the foregoing, we conclu de that Russia's separate claim against the upstream\npipeline networks measure based on the comparison of the general legal regime of the operators\nof upstream pipeline networks under the Directive with the specific legal regime of the operators of\nthe NEL and OPAL pipelines pursuant to the infrastructure exemption decisions under Article 36 of\n\n1772 See above para. 7.1043.\n1773 See above para. 7.983.\n1774 Russia's first written submission, paras. 734 and 736.\n1775 See above para. 7.1040.\n1776 See above para. 7.983.\n1777 Appellate Body Reports, EC – Seal Products, paras. 5.82 and 5.87.\n\nthe Directive does not demonstrate a violation by the European U nion of Article I:1 of the\nGATT 1994.\n7.10 The third-country certification measure\n7.10.1 The third-country certification measure in the Directive\n7.10.1.1 Introduction\n7.1056. Russia challenges the third -country certification measure in the Directive, described in\nparagraph 2.46 above, under Article II:1 of the GATS. In its written submissions, Russia has\ndeveloped both a claim of de jure violation1778 and a claim of de facto violation1779 against the\nthird-country certification measure in the Directive. The European Union rejects both claims and\nhas, alternatively, raised defences under Articles V 1780 and XIV(a)1781 of the GATS in respect of\nRussia's claim of de jure violation, but not in respect of Russia's claim of de facto violation.\n7.1057. In our Preliminary Ruling of 10 November 2016, we found that Russia's claim of de jure\nviolation under Article II:1 of the GATS, as developed in its first written submission, falls outside\nour terms of reference, but that the claim of de jure violation presented in Russia's panel request\nfalls within our terms of reference.1782\n7.1058. In its second written submission, Russia has developed a claim of de jure violation based\non that presented in its panel request, claiming th at the alleged less favourable treatment of\nRussian pipeline transport services and service suppliers in comparison with like pipeline transport\nservices and service suppliers of EU member States violates the MFN obligation in Article II:1 of\nthe GATS as \"each such Member State is also a Member of the WTO\".1783\n7.1059. Following the second meeting of the Panel, however, Russia has explained that it asserts\nthis claim of de jure violation on an alternative basis and that it would not be necessary for the\nPanel to addr ess this claim if it were to agree with Russia that the unbundling measure in the\nDirective should be assessed on an EU-wide basis.1784\n7.1060. In this regard, we recall that we have found, in section 7.5.1.2 above, that the WTO\nconsistency of the unbundling measure in the Directive should be assessed throughout the EU\nterritory rather than within each individual EU member State. We further recall that a complaining\nparty has \"the prerogative to narrow or abandon its claims, and thereby reduce the scope of its\ndisagreement and dispute, at any stage of a proceeding\". 1785 In light of this, we do not consider it\nnecessary or appropriate to address Russia's claim of de jure violation under Article II:1 of the\nGATS against the third -country certification measure in the Directive. It is therefore also not\nnecessary for us to address the defences raised by the European Union under Articles V and XIV(a)\nof the GATS in respect of this claim.\n7.1061. We therefore proceed to consider solely Russia's claim of de facto violation under\nArticle II:1 of the GATS against the third -country certification measure in the Directive. In this\nregard, we recall that, in section 7.2.2.3.3 above, we have found certain aspects of Russia's claim,\nas developed in its written submissions, to fall outside our terms of reference. Accordingly, we do\nnot address these below but instead focus our assessment on the claim that falls within our terms\nof reference, namely the alleged de facto less favourable treatment of Russian pipeline transport\nservices and service suppliers stemming from the Commission, when reviewing and providing\nopinions on draft certification decisions by NRAs, requiring a security of energy supply assessment\n\n1778 Russia's first written submission, paras. 446-454; and second written submission, paras. 326-330.\n1779 Russia's first written submission, paras. 455-500; and second written submission, paras. 331-356.\n1780 European Union's responses to Panel question No. 153, para. 27, and No. 205(a), paras. 172-188.\n1781 European Union's response to Panel question No. 153, para. 28.\n1782 Preliminary Ruling (conclusions) of 10 November 2016, para. 2.2. See also section 7.2.2.2.4 above\nwherein reasons in support of this conclusion are provided.\n1783 Russia's second written submission, paras. 326-330.\n1784 Russia's response to Panel question No. 202(b), paras. 237 and 247.\n1785 Appellate Body Report, US – Countervailing Measures (China), para. 4.19 (referring to Appellate\n\nfor certifications concerning Russian pipeline transport service suppliers but not for certifications\nconcerning pipeline transport service suppliers of any other non-EU country.\n7.1062. We also wish to clarify that although Russia seeks to demonstrate its claim of de facto\nviolation under Article II: 1 of the GATS by \"contrasting\" different individual Commission opinions\nconcerning third-country certification1786, Russia has repeatedly explained that it is challenging the\nthird-country certification measure in Article 11 of the Directive per se or \"as such\".1787\n7.10.1.2 Analysis by the Panel of Russia's claim under Article II:1 of the GATS\n7.1063. In accordance with the legal standard for Article II:1 of the GATS, set out in\nparagraphs 7.226 and 7.227 above, our assessment below will focus on whether Russia has made\na prima facie case that: (a) the third-country certification measure in the D irective falls within the\nscope of the GATS; (b) the relevant services and service suppliers are like; and (c) the third -\ncountry certification measure in the Directive accords less favourable treatment to Russian\nservices and service suppliers than that ac corded to the like services and service suppliers of any\nother country.\n7.1064. We address these requirements, in turn, below.\n7.10.1.2.1 Scope of the GATS\n7.1065. As explained above, Article I:1 of the GATS sets out the scope of this Agreement as\napplying to \"measures by Members af fecting trade in services\", which requires Russia to\ndemonstrate: (a) that \"there is 'trade in services' in the sense of Article I:2\"; and (b) that the\nthird-country certification measure in the Directive \"'affects' such trade in services within the\nmeaning of Article I:1\".1788\n7.1066. Russia has identified pipeline transport services as the relevant services 1789 and mode 3\nor commercial presence, within the meaning of Article I:2(c) of the GATS, as the relevant mode of\nsupply.1790 In this regard, we recall that we have already found, in paragraph 7.407 above, that\nsuch pipeline transport services can be and are supplied through commercial presence in the EU\nterritory and hence that there can be and is trade in pipeline transport services.\n7.1067. Turning to whether the third-country certification measure in the Directive affects trade in\npipeline transport services, we note that this measure imposes requirements for the certification of\nTSOs where \"certification is requested by a transmission syste m owner or a transmission system\noperator which is controlled by a person or persons from a third country or third countries\". 1791 As\nexplained in paragraphs 7.433 and 7.441 through 7.446 above, persons from non -EU countries\nsupply pipeline transport services through the commercial presence of TSOs in the EU territory. As\nthe third -country certification measure sets out the requirements for TSOs to be certified and\nhence permitted to supply pipeline transport services in the EU territory, i t therefore affects trade\nin such pipeline transport services.\n7.1068. In light of this, we conclude that the third -country certification measure in the Directive\nfalls within the scope of the GATS.\n\n1786 Russia's first written submission, para. 459.\n1787 Russia's comments on the European Union's comments on Russia's response to Panel question\nNos. 5 and 17, para. 51; and second written submission, para. 331. We further note that, although Russia's\napproach of \"contrasting\" individual opinions by the Commission resembles the approach taken by Russia in\nrespect of its claims under Article II:1 of the GATS and Article I:1 of the GATT 1994 against the so-called\ninfrastructure exemption measure, the nature of the challenged measure differs for these claims as Russia has\nspecified that it is not challenging the infrastructure exemption measure in Article 36 per se but rather the\nalleged \"inconsistent\" or \"discriminatory\" \"manner in which the EU applied or implemented\" Article 36 of the\nDirective. (Russia's first written submission, paras. 730-731; and responses to Panel question No. 5, para.\n1788 Appellate Body Report, Canada – Autos, para. 155.\n1789 Russia's first written submission, para. 443.\n1790 Russia's response to Panel question No. 56, para. 285.\n1791 Directive 2009/73/EC, (Exhibit EU-5), Article 11(1).\n\n7.10.1.2.2 Like services and service suppliers\n7.1069. As explained in paragraphs 7.226 and 7.227 above, the MFN obligation in Article II:1 of\nthe GATS applies only with respect to services and service suppliers that are like and we therefore\nturn to the issue of whether Russia has made a prima facie case that the relevant services and\nservice suppliers are like within the meaning of Article II:1 of the GATS.\n7.1070. Russia sta tes that \"for purposes of analyz ing the de facto third-country certification\nmeasure claim set out below in Section XV.C.2 under Article II:1 of the GATS, domestic and third -\ncountry pipeline transport services and service suppliers, including LNG services and service\nsuppliers, are in a competitive rela tionship with each other and thus satisfy the 'likeness'\nrequirements on this basis\". 1792 As with certain other claims by Russia, it is therefore not clear\nwhether the relevant services and service suppliers, for purposes of Russia's claim under Article\nII:1 of the GATS against the third -country certification measure in the Directive, include both\npipeline transport services and service suppliers as well as LNG services and service suppliers. We\ntherefore consider it helpful to determine the scope of the liken ess enquiry to be conducted for\nRussia's claim against the third -country certification measure in the Directive under Article II:1 of\nthe GATS, before turning to the actual assessment of likeness.\n7.1071. We recall that Russia's claim pertains to the alleged less favourable treatment of Russian\npipeline transport services and service suppliers stemming from the Commission requiring a\nsecurity of energy supply assessment for certifications concerning Russian pipeline transport\nservice suppliers but not for certifica tions concerning pipeline transport service suppliers of any\nother non-EU country. It is undisputed that the rules on certification apply with respect to TSOs\nonly, be that those in Article 10 of the Directive or those in Article 11 in relation to third co untries.\nNeither of the parties suggests that these rules apply with respect to operators of LNG facilities.\nFurthermore, we note that Russia, with the exception of the above -mentioned brief reference to\nLNG services and service suppliers in the context of its arguments concerning likeness 1793, does\nnot rely on any example or argumentation with respect to LNG services or service suppliers in\narguing that the third -country certification measure in the Directive accords less favourable\ntreatment in violation of Article II:1 of the GATS.\n7.1072. For these reasons, we find that pipeline transport services and service suppliers are the\nonly relevant ones for Russia's claim against the third -country certification measure in the\nDirective under Article II:1 of the GATS. It is therefore not necessary or relevant for us to\nconsider, in the context of this claim, whether pipeline transport services and service suppliers are\nlike LNG services and service suppliers.\n7.1073. Having determined that the scope of our likeness enquiry should be limited to pipeline\ntransport services and service suppliers, we proceed to consider the actual assessment of likeness.\nAs mentioned above, Russia's claim under Article II:1 of the GATS against the third -country\ncertification measure in the Directive pert ains to the alleged less favourable treatment of Russian\npipeline transport services and service suppliers stemming from the Commission requiring a\nsecurity of energy supply assessment for certifications concerning Russian pipeline transport\nservice suppli ers but not for certifications concerning pipeline transport service suppliers of any\nother non -EU country. We have already concluded that pipeline transport services and service\nsuppliers are like regardless of their origin in the context of Russia's clai m under Article II:1 of the\nGATS against the unbundling measure in the Directive. 1794 We see nothing on the record of these\nproceedings that would suggest that this analysis would differ in the context of Russia's claim\nunder Article II:1 of the GATS against the third-country certification measure and the parties do\nnot argue otherwise.1795\n\n1792 Russia's first written submission, para. 445.\n1793 Russia's first written submission, para. 445.\n1794 See above paras. 7.421-7.422.\n1795 Russia's first written submission, para. 445. The European Union does not explicitly address likeness\nin the context of Russia's claim against the third-country certification measure in the Directive under\nArticle II:1 of the GATS, but states more generally that it \"does not dispute that Russian and other third\ncountry suppliers of pipeline transport services are 'like' suppliers\" in the context of Russia's claim against the\nunbundling measure in the Directive under this provision. (European Union's first written submission,\npara. 282).\n\n7.1074. In light of the above, we hence conclude that the relevant services and service suppliers\nare like within the meaning of Article II:1 of the GATS. Having made this finding of likeness, we\nproceed to assess whether Russia has demonstrated that the third-country certification measure in\nthe Directive accords less favourable treatment to Russian pipeline transport services and service\nsuppliers than that accorded to pipeline trans port services and service suppliers of any other non -\nEU country.\n7.10.1.2.3 Less favourable treatment\n7.1075. Russia argues that the third -country certification measure in the Directive accords de\nfacto less favourable treatment to Russian pipeline transport services and ser vice suppliers than\nthat accorded to the like pipeline transport services and service suppliers of any other non -EU\ncountry due to the \"double standard\" 1796 or \"differential treatment accorded by the Commission\nand the Member States in implementing the third -country certification measure \".1797 More\nspecifically, and as explained above, this claim concerns the alleged less favourable treatment of\nRussian pipeline transport services and service suppliers stemming from the Commission requiring\na security of energy supply assessment for certifications concerning Russian pipeline transport\nservice suppliers, but not for certifications concerning pipeline transport service suppliers of any\nother non -EU country. Russia seeks to demonstrate thi s alleged \"double standard\" or de facto\ndiscrimination:\n[B]y contrasting each of the five instances in which other third -country certification\nrequests have been granted, while the Commission repeatedly directed the Polish NRA\nto reassess the security of supply issue regarding the IS O request of Gaz-System and\nYamal.1798\n7.1076. More particularly, Russia \"contrast[s]\" the certification of Gaz -System as the ISO of the\nYamal pipeline in Poland with those of jordgas as the ITO of the Norddeutsche Erdgas Transversale\nPipeline System (NETRA pipeline) in Germany, TAP AG as the \" ad hoc ITO\" of the TAP pipeline in\nGreece and Italy , NABUCCO Gas Pipeline International GmbH ( NIC) as the TSO of the Nabucco\npipeline in Austria, TIGF as the TSO of the TIGF network in France, and DESFA as the ITO of the\nGreek transmission system in Greece.1799\n7.1077. The European Union rejects Russia's claim of de facto violation by criticizing each of the\nexamples relied on by Russia. More particularly, the European Union argues that the example of\nGaz-System being subject to a security of energy supply assessment under the third -country\ncertification measure in Article 11 of the Directive does not involve a Russian pipeline transport\nservice supplier1800, that Russia's argumentation concerning jordgas and NIC not being subject to a\nsecurity of energy supply assessment is \"misguided because it overlooks\" the fact that the third -\ncountry certification measure in Article 11 of the Directive was not \"applicable\" when these\nrequested certification1801, and that Russia's argumentation concerning TAP A G not being subject\nto a security of energy supply assessment is \"manifestly unfounded\" as \"[t]he situation at issue in\nTAP was very different from that considered in Gaz-System\".1802\n7.1078. As explained above in section 7.2.2.3.3, the European Union has raised a terms of\nreference objection concerning the examples of TIGF and DESFA as these concern the content or\nstrictness of the Commission's security of energy supply assessments1803, and submits that the\n\n1796 Russia's second written submission, para. 342.\n1797 Russia's first written submission, para. 459.\n1798 Russia's first written submission, para. 459.\n1799 Russia's first written submission, paras. 457 and 460-500.\n1800 European Union's first written submission, paras. 582-584; and second written submission,\nparas. 232-234.\n1801 European Union's first written submission, paras. 597-598 (concerning jordgas) and 605-606\n(concerning NIC).\n1802 European Union's first written submission, paras. 602-603.\n1803 European Union's first written submission, paras. 578-581; and second written submission,\nparas. 229-231.\n\ndifference in the content or strictness of the security of energy supply assessments is, in any\nevent, explained by the \"fundamentally different factual situations\".1804\n7.1079. We begin our assessment of the alleged less favourab le treatment challenged by Russia\nby recalling that the third-country certification measure in the Directive requires the relevant NRAs\nto adopt a draft decision concerning certification of TSOs when such certification is requested by a\ntransmission system owner or a TSO, which is \"controlled by a person or persons from a third\ncountry or third countries\", and to notify the Commission of this draft decision. 1805 The relevant\nNRA can request an opinion from the Commission concerning, among others, whether certi fication\n\"will not put at risk the security of energy supply\". 1806 If the Commission does not provide an\nopinion, it is \"deemed not to raise objections to the decision of the regulatory authority\" but if the\nCommission does provide an opinion, the relevant NR A is required to \"take utmost account of the\nCommission's opinion\" in adopting its final decision.1807\n7.1080. As explained above, Russia's claim of de facto violation under Article II:1 of the GATS is\nbased on \"contrasting\" the Commission opinion regarding certification of Gaz-System with \"each of\nthe five instances in which other third-country certification requests have been granted\".1808\n7.1081. In this regard, we reiterate our concerns regarding Russia's approach of seeking to\ndemonstrate the WTO consistency of an underlyin g measure by only pointing to examples of its\napplication.1809 As explained above, Russia is required to demonstrate, on the basis of \"the totality\nof facts and circumstances\" 1810, that \"the design, structure, and expected operation\" 1811 of the\nthird-country certification measure in Article 11 of in the Directive are such that the conditions of\ncompetition are modified to the detriment of the group of Russian pipeline transport services and\n\n1804 European Union's first written submission, paras. 608-612 (concerning TIGF) and 613-616\n(concerning DESFA).\n1805 Directive 2009/73/EC, (Exhibit EU-5), Articles 11(3) and 11(4).\n1806 Directive 2009/73/EC, (Exhibit EU-5), Article 11(5).\n1807 Directive 2009/73/EC, (Exhibit EU-5), Articles 11(6) and 11(8). We note that Russia is of the view\nthat \"the Commission retains authority under the Directive and more generally to restrict\" EU member States\nfrom granting certification when the Commission has \"reach[ed] a contrary decision\", whereas the European\nUnion argues that the relevant NRAs are not legally bound by opinions by the Commission but only required to\n\"take utmost account\" of such. (Russia's first written submission, para. 458; and European Union's first written\nsubmission, para. 587). In support of its position, Russia refers to the European Commission's Fact Sheet on\nIntergovernmental Agreements on Energy, which provides that:\nThe whole idea of an obligatory ex -ante assessment of by the Commission is to avoid the\nsituation where Member States sign agreements which are not compatible with EU law. Firstly,\nthe revised IGA Decision would ensure cooperation between the Commission and the Member\nState by initiating a dialogue on potential non -compliance with EU law. Secondly, under the new\nDecision Member States will not be able to sign an IGA before the Commission has issued its\nopinion. When signing, ratifying or agreeing an IGA, the Member States will have to take utmost\naccount of the Commission's opinion. Should a Member State decide to sign an IGA that would\nbe incompatible with EU law, the Commission would have the possibility to laun ch infringement\nprocedures. (Russia's response to Panel question No. 20, para. 118 (quoting European\nCommission Fact Sheet, Intergovernmental agreements in energy (16 February 2016), (Exhibit\nRUS-122), p. 2). (emphasis added by Russia)\nWe agree with the European Union that there is no basis in the Directive for us to conclude that the\nopinions of the Commission are legally binding on NRAs and that this conclusion is not altered by Russia's\nreference to the Commission's Fact Sheet on Intergovernmental Agreement and the possibility, mentioned\nherein, of the Commission launching infringement procedures in case an EU member State signs an\nintergovernmental agreement incompatible with EU law. (European Union's second written submission,\nparas. 236-238). At the same time, we do not agree with the European Union that \"only [the final certification\ndecisions issued by the NRAs] are capable of affecting the legal status of the applicant TSOs under the\nDirective and hence their competitive opportunities\". (European Union's first written submission, para. 588). As\nacknowledged by the European Union, the relevant NRAs are required to \"take utmost account\" of the\nCommission opinions and such opinions could therefore potentially impact the final decisions of the relevant\nNRAs and hence the competitive opportunities of pipeline transport service suppliers. It is this impact of the\nCommission opinions that we take into account when assessing Russia's claim under Article II:1 of the GATS\nagainst the third-country certification measure in the Directive.\n1808 Russia's first written submission, para. 459.\n1809 See, above paras. 7.486-7.492.\n1810 Appellate Body Reports, US – COOL, para. 269 (quoting Appellate Body Report, US – Clove\nCigarettes, para. 206).\n1811 Appellate Body Reports, US – COOL, para. 269 (quoting Appellate Body Report, Thailand –\nCigarettes (Philippines), para. 130).\n\nservice suppliers in comparison with the group of pipeline transport service s and service suppliers\nfrom any other non -EU country.1812 Although examples o f specific instances of application could\nserve as relevant evidence in this regard, it would be for Russia, as the complaining party, to\nexpound that these serve to demonstrate tha t the third-country certification measure in Article 11\nof the Directive is, as such, of a discriminatory nature. Below we assess whether Russia has done\nso.\n7.1082. We begin by examining the one example provided by Russia to demonstrate alleged less\nfavourable tr eatment of a Russian pipeline transport service s upplier, namely the Commission\nopinions concerning certification of Gaz-System as the ISO of the Yamal pipeline.1813 Russia argues\nthat the Polish NRA, in its first draft decision, did not consider that the own er of Yamal,\nEuropolgaz, was controlled by persons from a non -EU country within the meaning of the Directive\nand therefore did not conduct a security of energy supply assessment under the third -country\ncertification measure, following which the Commission opined that a security of energy supply\nassessment was required as a person from a non -EU country, Gazprom, had joint control over\nEuropolgaz.1814 Following a second draft decision by the Polish NRA , in which it determined that\nthe effects of Gazprom's joint control over Europolgaz did not \"translate into control over the\nnetwork\", the Commission opined that a \"true risk assessment\" under Artic le 11 had not been\ncarried out and that this assessment needed to be extended.1815, 1816\n\n1812 See, above paras. 7.486-7.492.\n1813 We note that Russia, after the first meeting of the Panel, has pointed to a \"second situation\" or\nexample to demonstrate less favourable treatment of Russian pipeline transport services and service suppliers\nunder the third-country certification measure in the Directive, namely that of Lietuvos dujos in Lithuania. We\nrecall that this is also one of the examples relied upon by Russia when challenging the unbundling measure in\nthe Directive under Article II:1 of the GATS. (See, above fn 884). As explained in this regard, Lietuvos dujos\noperated the transmission system in Lithuania prior to the implementation of the unbundling measure, after\nwhich its transmission assets were incorporated in the TSO Amber Grid. Gazprom then sold its shares in Amber\nGrid. In the context of its claim against the third-country certification measure under Article II:1 of the GATS,\nRussia argues that Lietuvos dujos was \"denied an opportunity to apply for certification\" by virtue of having\nbeen found not to comply with the rules on ownership unbundling in Lithuania. (Russia's second written\nsubmission, para. 339. See also Russia's response to Panel question No. 73, para. 324). We begin by recalling\nthat we expressed doubts, in paragraphs 7.497 through 7.501 above, as to whether this example involves a\nRussian pipeline transport service supplier. We further note the European Union's position that it \"is at a loss to\nunderstand the new issue raised by Russia\" and that the third-country certification measure in Article 11 of the\nDirective \"is different from the unbundling requirements and applies to all entities within the scope of the\nprovision, irrespective of the unbundling model.\" (European Union's second written submission, paras. 248-\n249). We too have difficulties understanding the relevance of this situation or example for Russia's claim\nagainst the third-country certification measure in the Directive. As Russia itself acknowledges, Lietuvos dujos\ndid not apply for certification under the third-country certification measure in Article 11 or the rules on\ndomestic certification in Article 10 since its transmission assets were incorporated in the TSO Amber Grid and\nGazprom hereafter sold its shares in Amber Grid pursuant to the OU model. The fact that Lietuvos dujos was\n\"prevent[ed] … from applying for certification under one of the unbundling models\" appears entirely irrelevant\nfor the assessment of whether the third-country certification measure led to de facto less favourable treatment\nof Russian pipeline transport services and service suppliers. More particularly, assuming that Lietuvos dujos\nhad complied with the rules under the OU model in Lithuania, there does not appear to be any reason to\nbelieve that this entity would have received different treatment than TSOs owned or controlled by persons from\nother non-EU countries when seeking certification.\n1814 Russia's first written submission, paras. 461-462.\n1815 Commission Opinion of 19 March 2015 pursuant to Article 3(1) of Regulation (EC) No. 715/2009 and\nArticle 10(6) and 11(6) of Directive 2009/73/EC – Poland – Certification of Gaz-System as the operator of the\nPolish section of Yamal-Europe Pipeline, (Commission opinion on the certification of Gaz-System II), (Exhibit\nRUS-73), p. 5.\n1816 We note that the European Union submits that \"Russia's argument is based, to a large extent, on\nthe assumption that the Commission 'has still not issued a final opinion' on the certification of Gaz-System\", an\nassumption that the European Union points out to be mistaken since the Polish NRA has issued a final decision\ngranting certification following the two opinions provided by the Commission. (European Union's first written\nsubmission, paras. 589-594 (quoting Russia's first written submission, para. 479)). Russia does not dispute\nthat Gaz-System has been certified as the ISO of the Yamal pipeline under the third-country certification\nmeasure in Article 11 of the Directive, but argues that this \"is not the issue\" and that \"[t]he issue concerns the\ndifferential treatment provided by the Commission in considering the Gaz-System application\". (Russia's\nsecond written submission, para. 339). Seeing as Russia's claim under Article II:1 of the GATS against the\nthird-country certification measure pertains to the alleged less favourable treatment of Russian pipeline\ntransport services and service suppliers stemming from the Commission requiring a security of energy supply\nassessment for certifications concerning Russian pipeline transport service suppliers but not for certifications\nconcerning pipeline transport service suppliers of any other non-EU country, we do not consider the fact that\n\n7.1083. The European Union argues that this one example relied on by Russia does not involve a\nRussian pipeline transport service supplier at all. 1817 We recall that this example involves the\ncertification request for Gaz-System as the operator, also known as the ISO, of the Yamal pipeline\nunder the I SO model.1818 We further recall that under the ISO model, a VIU continues to own,\ndirectly or indirectly, the transmission system but the ISO is required to be separate from the VIU\nby complying with the rules on ownership unbundling. 1819 In the case of the Yama l pipeline, Gaz-\nSystem serves as the ISO and Europolgaz as the owner of this transmission system. Both parties\nagree that the ISO Gaz -System is wholly -owned by the Polish Government and cannot be\nconsidered a Russian pipeline transport service supplier nor a commercial presence through which\nRussian pipeline transport services are supplied within the meaning of the GATS.1820 Russia instead\nsubmits that the Russian VIU Gazprom \"supplies pipeline transport services through Europolgaz, a\ncommercial presence in th e EU, based on Gazprom's joint ownership and control of\nEuropolgaz\".1821\n7.1084. We have already addressed the issue of whether the owner of a transmission system can\nbe considered to supply pipeline transport services under the ISO model in general, when the\nowner d oes not operate the transmission system under this particular unbundling model. In\nparagraphs 7.460 through 7.466 above, we found that Article XXVIII(b) of the GATS defines the\n\"supply of a service\" as including \"the production, distribution, marketing, sale and delivery of a\nservice\" and that Russia has not demonstrated, gen erally, that the owner of the transmission\nsystem produces, distributes, markets, sells or delivers pipeline transport services under the ISO\nmodel. We consider this finding to be relevant also for the specific issue of whether the Russian\nVIU Gazprom can be considered to supply pipeline transport services through the transmission\nsystem owner Europolgaz. At the same time, we note that Russia has submitted certain additional\narguments concerning the specific issue of whether the Russian VIU Gazprom can be considered to\nsupply pipeline transport services through the transmission system owner Europolgaz, and we\nproceed to address these.\n7.1085. First, Russia points out that \"the EU as a whole is the relevant market for assessing\nRussia's MFN claims \" and that the Euro pean Union has acknowledged that the Russian VIU\nGazprom supplies pipeline transport services through certain other TSOs in the EU territory,\nnamely NEL GT, OPAL GT and GASCADE.1822 On the basis of this, Russia appears to conclude that\n\"Gazprom thus supplies pipeline transport services through Europolgaz, a commercial presence in\nthe EU\". 1823 While Russia is correct in stating that it is undisputed among the parties that the\nRussian VIU Gazprom supplies pipeline transport services through the commercial presence of\nthese three TSOs1824, we cannot agree that this, in and of itself , would suffice to demonstrate that\nGazprom also does so through the transmission system owner Europolgaz.\n7.1086. Second, Russia points to the fact that the Commission required Gaz -System to undergo\nthird-country certification pursuant to Article 11 of the Directive due to Gazprom's \"joint ownership\nand control\" over Europolgaz .1825 We understand Russia to suggest that this indicates that the\nCommission considered that Gazprom supplies pipeline transport services through the commercial\npresence of Europolgaz. However, Article 11 of the Directive explicitly calls for third -country\ncertification \"[w]here certification is requested by a transmission system owner or a transmission\nsystem operator whi ch is controlled by a person or persons from a third country or third\ncountries\".1826 We therefore do not consider the application of Article 11 decisive or relevant for\n\nGaz-System was ultimately certified, after having undergone a security of energy supply assessment,\ndetrimental to Russia's claim.\n1817 European Union's first written submission, paras. 582-584; and second written submission,\nparas. 232-234.\n1818 Russia's first written submission, paras. 460-463; and second written submission, paras. 333-339.\n1819 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(a).\n1820 Russia's response to Panel question No. 52, para. 268; and second written submission, para. 333;\nand European Union's first written submission, paras. 582-583.\n1821 Russia's response to Panel question No. 52, para. 268.\n1822 Russia's second written submission, para. 336.\n1823 Russia's second written submission, para. 338.\n1824 Russia's response to Panel question No. 52, para. 265; and second written submission, para. 336;\nand European Union's first written submission, paras. 338-341; and response to Panel question No. 52,\npara. 143.\n1825 Russia's second written submission, paras. 334 and 338; and response to Panel question\nNo. 204(a), para. 249.\n1826 Directive 2009/73/EC, (Exhibit EU-5), Article 11(1). (emphasis added)\n\nthe assessment of whether Gazprom can be considered to supply pipeline transport services\nthrough Europolgaz.\n7.1087. Third, Russia argues that:\nEuropolgaz supplies services under historical long -term gas transmission contracts\npursuant to relevant provisions of the intergovernmental agreement between Russia\nand Poland of 1993 (as amended in 2010) and the respective operatorship agreement\nbetween Europolgaz and Gaz-System.1827\n7.1088. While Russia [***].1828 Russia points to several statements by the Polish NRA that do\nindeed suggest that Europolgaz supplies pipeline transport services, in particular that:\n[***].1829\n7.1089. We find it curious for the Polish NRA to make such statements while, at the same time,\nhaving certified Gaz -System as the ISO under the ISO model: a model which, as explained in\nparagraphs 2.13 through 2.19 above, requires the ISO, rather than the owner of the transmission\nsystem, to operate the transmission system 1830 and to provide access for third parties to the\ntransmission system.1831 Indeed, this model requires the ISO to be separate from the owner by\ncomplying with the rules under the OU model 1832 and Article 14(4) of the Directive explicitly states\nthat \"[t]he transmi ssion system owner shall not be responsible for granting and managing third -\nparty access\".\n7.1090. At the same time, we note the European Union's explanation that the \"unrelated matter\",\nwhich the Polish NRA addressed in the correspondence referred to by Russia, concerned \"certain\nhistorical transmission contracts\" 1833, which we understand to be those between Europolgaz, on\nthe one hand, and JSC \"PGNiG\" and OOO \"Gazprom export\", on the other hand. Russia does not\nelaborate on what the \"unrelated matter\" relates to, a nd we consider the European Union's\nexplanation reasonable in light of the conclusion reached by the Polish NRA that \"Europolgaz shall\nsubmit to ACER a request for [the] contracts [concluded with JSC 'PGNiG' and OOO 'Gazprom\nexport']\".\n7.1091. We agree with the European Union that the Polish NRA's statements \"must be understood\nwithin [the] limited context\" of these historical contracts 1834 and in this regard note the European\nUnion's arguments that \"Europolgaz remains formally responsible for the execution of certai n\nhistorical transmission contracts, but only until their expiration\"1835 and that:\nEuropolgaz's responsibility for the execution of those historical contracts does not\ninvolve any activities with regard to the operation of the pipeline. Europolgaz remains\nformally a party to those historical contracts from a legal point of view and is\ntherefore legally responsible for their execution. But Europolgaz does not \"execute\"\nthem in the sense of undertaking by itself any action with a view to transmitting the\ngas since, as stated above, Gaz -System is the entity solely responsible for operation\nof flows on the pipeline. Europolgaz's responsibility only means that if one of the\nhistorical contracts was not properly executed as a result of the TSO's (i.e. Gaz -\nSystem's) actions, the gas supplier could lodge a claim against Europolgaz.1836\n\n1827 Russia's response to Panel question No. 204(a), para. 249.\n1828 Russia's response to Panel question No. 204(a), para. 250.\n1829 Russia's response to Panel question No. 204(a), para. 250. We note that Russia has provided [***]\nin Exhibit RUS-206 (BCI), which is in Polish with no translation. Russia has provided translations only of the\nsections quoted in its response to Panel question No. 204(a). The European Union does not appear to take\nissue with the translation provided by Russia.\n1830 Directive 2009/73/EC, (Exhibit EU-5), Articles 13(1)(a) and 14(2)(b).\n1831 Directive 2009/73/EC, (Exhibit EU-5), Article 14(4).\n1832 Directive 2009/73/EC, (Exhibit EU-5), Article 14(2)(a).\n1833 European Union's comments on Russia's response to Panel question No. 204(a), para. 124.\n1834 European Union's comments on Russia's response to Panel question No. 204(a), para. 125.\n1835 European Union's comments on Russia's response to Panel question No. 204(a), para. 124.\n1836 European Union's comments on Russia's response to Panel question No. 204(a), para. 124.\n\n7.1092. Indeed, at times, Russia appears to echo the European Union's position that \"Gaz-System\nis the entity solely responsible\" for the operation of the Yamal pipeline, stating that Gaz -System\n\"pursuant to the Directive's ISO provisions, is required to operate Yamal in a manner completely\nseparate from the influence of Europolgaz\".1837\n7.1093. We further note that the European Union, in support of this position, provides a section of\nthe 2010 amendment to th e 1993 Intergovernmental Agreement between Poland and Russia,\nreferred to by Russia, which states that:\n[T]he functions of the operator on the Polish section of the Gas Transit Pipeline\nSystem Yamal – Europe are realised by Gas Transmission Operator Gaz -System S.A.\nin accordance with the Agreement of entrusting operator responsibilities.1838\n7.1094. Insofar as Gaz -System is the entity \"solely responsible for the operation of all flows on\nYamal\" and that Europolgaz' responsibilities pursuant to the historical transmiss ion contracts with\nJSC \"PGNiG\" and OOO \"Gazprom export\" consist solely of a legal responsibility in case Gaz -System\ndoes not supply the required pipeline transport services, we would agree with the European Union\nthat Europolgaz' role in these historical c ontracts do not entail that it supplies pipeline transport\nservices within the meaning of the GATS.\n7.1095. Bearing in mind the fact that Russia, as the complaining party, bears the burden of\nmaking a prima facie case and that Russia has only provided excerpts fr om correspondence by the\nPolish NRA on the \"unrelated matter\" of certain historical contracts, which appear to contradict this\nNRA's own certification decision as well as the excerpt from the 1993 Intergovernmental\nAgreement between Poland and Russia provi ded by the European Union and indeed statements\nmade by Russia itself in the current proceedings, we do not believe that Russia has carried its\nburden of demonstrating the Europolgaz supplies pipeline transport services, nor that the Russian\nVIU Gazprom su pplies pipeline transport services through the commercial presence of\nEuropolgaz.1839\n7.1096. Given that the one example provided by Russia to demonstrate the alleged less\nfavourable treatment of Russian pipeline transport services and service suppliers does not appe ar\nto involve a Russian pipeline transport service supplier at all, we have difficulties seeing how\nRussia could be considered to have made a prima facie case of violation under Article II:1 of the\nGATS. More specific ally, the assessment under Article II:1 is an inherently comparative one,\nrequiring the complaining party to demonstrate that its services and service suppliers are accorded\nless favourable treatment in comparison with that accorded to the like services and service\nsuppliers of any other countr y. In our view, the absence of any evidence relating to Russian\n\n1837 Russia's first written submission, para. 465.\n1838 European Union's comments on Russia's response to Panel question No. 204(a), para. 121.\n1839 Even assuming that Russia had demonstrated that Europolgaz supplies pipeline transport services,\nwe recall that it would also be required to demonstrate that the Russian VIU Gazprom owns or controls\nEuropolgaz within the meaning of Articles XXVIII(n)(i) or (ii) of the GATS in order to prove that Gazprom\nsupplies pipeline transport services through the commercial presence of Europolgaz and hence the existence of\na Russian pipeline transport service supplier. In this regard, we note Russia's statement that:\n[A]s the European Commission found in its decision concerning the application for certification of\nGaz-System as ISO, Europolgaz … is a joint venture between Gazprom and PGNiG, the state -\nowned Polish gas incumbent, each of which owns 48% of Europolgaz, with Polish Gas -Trading\nS.A. holding a 4% interest. … Gazprom thus supplies pipeline transport services through\nEuropolgaz, a commercial presence in the EU, based on Gazprom's joint ownership and control of\nEuropolgaz. (Russia's response to Panel question No. 52, para. 268 (referring to Commission\nOpinion of 9 September 2014 pursuant to Article 3(1) of Regulation (EC) No 715/2009 and\nArticle 10(6) and 11(6) of Directive 2009/73/EC – Poland - Certification of Gaz -System as the\noperator of the Polish section of the Yamal -Europe Pipeline, C(2014) 6463, (Commission opinion\non the certification of Gaz -System I), (Exhibit RUS -59)). See also Ru ssia's first written\nsubmission, para. 460).\nAs Gazprom does not own \"more than 50 per cent of the equity interest\" in Europolgaz, it does not own\nEuropolgaz within the meaning of Article XXVIII(n)(i) of the GATS and we do not believe it is sufficient for\nRussia to point to the Commission's finding of \"joint control\" within the meaning of the Directive in order to\ndemonstrate control within the meaning of Articles XXVIII(n)(ii) of the GATS. In particular, and as explained\nabove in paragraphs 7.455 and 7.456, the concepts of control in the Directive and in the GATS, respectively,\ndo not necessarily coincide as the latter refers to the \"power to name a majority of [] directors or otherwise to\nlegally direct [] actions\" whereas the former covers the possibility to \"block certain major decisions\".\n\npipeline transport services and service suppliers, in and of itself, means that Russia has not made\na prima facie case of violation under Article II:1 of the GATS. Nevertheless, we consider it useful to\nprovide certain considerations below regarding the m ain arguments of the parties on the\nCommission opinions, which Russia \"contrasts\" with the Commission opinion on the certification of\nGaz-System.\n7.1097. Even assuming that the Russian VIU Gazprom can be considered to supply pipeline\ntransport services through the commercial presence of Europolgaz, and hence that the certification\nunder Article 11 of Gaz -System involves a Russian pipeline transport service supplier, we do not\nbelieve that Russia has de monstrated de facto discrimination against Russian pipeline transport\nservices and service suppliers b y \"contrasting\" the Commission opinion concerning certification of\nGaz-System with \"each of the five instances in which other third -country certification requests\nhave been granted\".1840 In this regard, we recall that Russia \"contrast[s]\" the certification of Gaz -\nSystem as the ISO of the Yamal pipeline in Poland with those of jordgas as the ITO of the NETRA\npipeline in Germany, TAP AG as the \" ad hoc ITO\" of the TAP pipeline in Greece and Italy, NIC as\nthe TSO of the Nabucco pipeline in Austria, TIGF as the TSO of the TIGF network in France, and\nDESFA as the ITO of the Greek transmission system in Greece.1841, 1842\n7.1098. With respect to the certifications of jordgas and NIC, Russia faults the Commission for not\nrequiring the relevant NRAs to conduct a security of energy supply assessment under Article 11 of\nthe Directive in relation to thes e – contrary to the Commission opinion concerning the certification\nof Gaz-System as the ISO for the Yamal pipeline. 1843 However, as acknowledged by Russia, the\nthird-country certification measure in the Directive did not enter into force until 3 March 2013 and\ntherefore had not entered into force when jordgas or NIC applied for certification.1844\n7.1099. Russia argues that \"[a]s with jordgas, it is also irrelevant that NIC's certification was\ngranted before 3 March 2013, the stated effective date of the [third -country certification measure\nin the Directive]\". 1845 We cannot agree with this position. Most legal instruments have a date of\nentry into force and the mere existence of a regulatory distinction or difference in treatment prior\nto and following the entry into force of a measure does not, in our view, suffice to demonstrate a\nviolation of non-discrimination provisions such as Article II:1 of the GATS.\n\n1840 Russia's first written submission, para. 459.\n1841 Russia's first written submission, paras. 457 and 460-500.\n1842 We note that, in order to demonstrate that these five examples involve pipeline transport service\nsuppliers from other non-EU countries, Russia would be required to demonstrate that persons from non-EU\ncountries own or control these five TSOs within the meaning of Articles XXVIII(n)(i) or (ii) of the GATS. Both\nparties agree that the Norwegian VIU Statoil owns and controls jordgas within the meaning of the GATS and\nthat the Singaporean juridical person GIC Private Limited controls TIGF within the meaning of the GATS.\n(Russia's response to Panel question No. 52, para. 267; and European Union's response to Panel question\nNo. 52, para. 143). Furthermore, provided that the Azerbaijani VIU SOCAR's pending acquisition of 66% of the\nshareholdings in DESFA is completed, both parties agree that SOCAR owns and controls DESFA within the\nmeaning of the GATS. (Russia's response to Panel question No. 52, para. 266; and European Union's response\nto Panel question No. 52, para. 144). No such agreement exists with respect to TAP AG or NIC. Instead, Russia\npoints to the minority shareholdings of non-EU juridical persons in these TSOs and on this basis suggests that\neach of these supplies pipeline transport services by owning and controlling the commercial presence of TAP\nAG or NIC. (Russia's response to Panel question No. 52, paras. 266-267). In our view, these references to\nminority shareholdings do not suffice to demonstrate ownership or control within the meaning of the GATS.\n1843 Russia's first written submission, paras. 464-468 (concerning jordgas) and 480-481 (concerning\nNIC). For the ITO jordgas, Russia argues that \"the more favourable treatment accorded jordgas went beyond\njust exempting it from Article 11\", pointing to \"the current 'Beneficial Use Agreement' between jordgas and the\nother TSOs for NETRA\" under which \"'jordgas is entitled to operate and commercially exploit' some undisclosed\npercentage of the capacities of NETRA.\" Russia submits that \"jordgas receives additional commercial benefits\nand competitive advantages by being able to jointly operate NETRA in this manner\" and that \"jordgas may\ndevelop and invest in the NETRA transmission system, manage capacity, and otherwise exploit NETRA's\ncommercial potential as it sees fit, without any possibility of jordgas's rights or those of Statoil being restricted\nor suspended as a result\". (Russia's first written submission, para. 467). Russia, however, provides no\nexplanation of how these alleged \"additional commercial benefits and competitive advantages\" relate to the\nthird-country certification measure in the Directive or Russia's claim under Article II:1 of the GATS against this\nmeasure, and we therefore do not consider these arguments further in our assessment of this measure and\nclaim.\n1844 Russia's second written submission, para. 342. See also Directive 2009/73/EC, (Exhibit EU-5),\nArticle 54(1).\n1845 Russia's first written submission, para. 481.\n\n7.1100. Russia also argues that the date of entry into force of the third -country certification\nmeasure in the Directive const itutes a \"double standard at work\"1846 and that the European Union\n\"selected this date knowing that companies such as jordgas and NIC … would submit applications\nbefore 3 March 2013 and thereby automatically be exempted from the EU's discriminatory security\nof supply analysis\".1847 Russia appears to suggest that it is for the European Union t o explain \"why\n3 March [2013] was chosen for application of Article 11, rather than 3 March [2011], the date of\napplication for the remainder of the Directive\". 1848 We again recall that it is for R ussia, as the\ncomplaining party, to make a prima facie case that the third -country certification measure in the\nDirective violates Article II:1 of the GATS. We further note the European Union's argument that:\n[A]s of the date of adoption of the Directive on 13 July 2009, the EU authorities could\nnot have possibly an ticipated which TSOs would file applications before and after\n3 March 2013. Nor could they possibly have anticipated the origin of the persons that\nwould control each TSO at the time where it chooses to file for certification.1849\n7.1101. Russia has provided no evid ence that would suggest otherwise. Indeed, and as pointed\nout by the European Union, both parties agree that the Russian VIU Gazprom supplies pipeline\ntransport services through the commercial prese nce of the TSOs GASCADE and NEL GT1850, which\nboth applied for certification prior to 3 March 2013 and were therefore not subject to a security of\nenergy supply assessment under Article 11 of the Directive but rather subject to the rules in\nArticle 10, similarly to jordgas and NIC.1851 We find this evidence difficult to reconcile with Russia's\ncontention that the timing of the entry into force of Article 11 should somehow be viewed as\nresulting in de facto discrimination against Russian pipeline transport services and service\nsuppliers.\n7.1102. Turning to the certification of TAP AG, it is undisputed that, unlike the certification of Gaz-\nSystem, this entity did not undergo third -country certification pursuant to Article 11 and thus was\nnot subject to a security of energy supply assessment regardless of this provision having ente red\ninto force when certification was requested.\n7.1103. Generally, Russia faults the Commission for having provided \"no analysis\" nor \"cite [d]\nany evidence\" in support of its agreement with the Greek and Italian NRAs' conclusion that \"none\nof TAP AG's shareholde rs enjoy either sole or joint control over TAP AG\" and hence that third -\ncountry certification was not required. 1852 In this regard, the European Union argues that Russia\n\"disregards the Commission's proper role in the certification process\", which is not \"to re-do ex\nnovo the NRA's analysis\" and that the Commission must \"substantiate properly\" any objections to\nthe NRA's analysis but is not required \"to motivate in detail\" where it agrees with an element of\nthe NRA's analysis.1853 We agree with the European Union that the mere fact that the Commission\ndid not provide its own analysis, but rather agreed with that of the relevant NRAs, in and of itself,\ndoes not suffice to demonstrate a violation under Article II:1 of the GATS.\n7.1104. Russia also points, more specifically, to the Commission having \"overlooked\" the fact that\nTAP AG was registered in a non -EU country, Switzerland 1854, in response to which the European\nUnion points out that the \"relevant criterion for determining the applicability of Article 11 of\nDirective 2009/73/EC is whether the TSO or the transmission system is controlled by a person or\npersons of a third country or third countries, rather than the country of incorporation of the\n\n1846 Russia's second written submission, para. 342.\n1847 Russia's response to Panel question No. 73, para. 323.\n1848 Russia's second written submission, para. 346.\n1849 European Union's second written submission, para. 243.\n1850 Russia's response to Panel question No. 52, para. 265; and second written submission, para. 336;\nand European Union's first written submission, paras. 338-341; and response to Panel question No. 52,\npara. 143.\n1851 European Union's first written submission, para. 599; and second written submission, para. 245.\n1852 Russia's first written submission, para. 472 (quoting Commission Opinion of 28 January 2016\npursuant to Article 3(1) of Regulation (EC) No. 715/2009 and Article 10(6) of Directive 2009/73/EC – Italy -\nGreece - Certification of TAP AG, C(2016) 538 final, (Exhibit RUS-57), p. 7).\n1853 European Union's first written submission, para. 601.\n1854 Russia's first written submission, para. 473.\n\nTSO.\"1855 We see nothing in the text of Article 11, nor in the remainder of the rec ords of this\nproceeding, to suggest otherwise.\nLastly, Russia points to the Commission having stated, in its opinion concerning the\ncertification of Gaz-System, that \"[f]or the question of joint control it suffices that the\nparties can jointly exercise decisive influence over the joint venture, which is the case\nfor Europolgaz\" and faults the Commission for not reaching the same conclusion for\nTAP AG where the Azerbaijani entity AzTAP and the two EU entities BP and Snam each\nheld 20%.1856 Russia appears to interpret the Commission's statement as defining the\nconcept of joint control in the Directive to cover all situations where a foreign\nshareholder and a domestic shareholder or shareholders, together, can exercise\ndecisive influence. We note, however, that a more complete reading of the\nCommission's reasoning in its opinion concerning certification of Gaz -System provides\nthat:\n\"Joint control exists where two or more undertakings or persons have the possibility of\nexercising decisive influence over another undertaking. Decisive influence in this sense\nnormally means the power to block actions which determine the strategic commercial\nbehaviour of an undertaking. Joint control is characterized by the possibility of a\ndeadlock situation resulting from the power of two or more parent companies to reject\nproposed strategic decisions. Parties are required to cooperate to reach a common\nunderstanding in determining the commercial policy of their joint venture.\n…\nFor the question of joint control it suffices that the parties can jointly exercise decisive\ninfluence over the joint venture, which is the case for Europolgaz. Moreover, there are\nclear indications that Gazprom's veto possibilities go beyond the protection of its\nfinancial interests. For instance, in case Gazprom is absent in the General Meeting, in\nthe Supervisory Board or in the Management Board, no decision at all can be taken by\nthese bodies. ERO itself concludes that \" it should be noted that all significant\ndecisions related to the company's operations as well as its current activity rules shall\nbe, in fact, agreed upon with the company's partners, including Gazprom\".1857\n7.1105. A more complete reading of the Commission's reasoning concerning the certification of\nGaz-System therefore suggests that the finding of joint control over Europolgaz by a foreign\nperson, Gazprom, was based on cooperation by Gazprom being a prerequisite for the operation of\nEuropolgaz, and on the ability of Gazprom to block strategic decisions.\n7.1106. In contrast, the European Union points out that the \"situation at issue in TAP was very\ndifferent from that co nsidered in Gaz-System\", since a foreign person, AzTAP, held \"only\" 20% of\nthe shares in the TAP AG and there was \"no indication\" that AzTAP had the power to \"block the\nadoption of any strategic decisions by TAP [AG]\".1858\n7.1107. Russia does not dispute the existence of these differing circumstances. 1859 We recall that\nit does not fall within the tasks of panels to consider whether a responding party has acted\nconsistently with its own domestic legislation. 1860 Hence, we do not consider it appropriate for us\nto determine how the concept of sole or joint control should properl y be interpreted or applied\nunder EU law, nor to assess whether or not the Commission and the relevant NRAs interpreted and\napplied the concept of sole or joint control consistently with EU law. Rather, we assess whether\nRussia has demonstrated that the de sign, structure and expected operation of the third -country\ncertification measure is de facto discriminatory b y \"contrasting\" the Commission opinion\n\n1855 European Union's first written submission, para. 603.\n1856 Russia's first written submission, paras. 473-474; and second written submission, para. 350\n(quoting the Commission opinion on the certification of Gaz-System I, (Exhibit RUS-59), p. 9).\n1857 Commission opinion on the certification of Gaz-System I, (Exhibit RUS-59), p. 9. (emphasis added\nby the Commission)\n1858 European Union's first written submission, para. 602.\n1859 Russia's second written submission, para. 350, stating \"[o]f course, the Europolgaz circumstances\nwere not present in the case of TAP AG. Plenty of other circumstances were present, however\".\n1860 See Panel Reports, US – Hot-Rolled Steel, para. 7.267; and US – Stainless Steel (Korea),\npara. 6.50.\n\nconcerning certification of Gaz -System with that concerning certification of TAP AG. 1861 Given the\ndifferences pointed to by the European Union, and acknowledged by Russia, we do not consider\nthis to be the case.\n7.1108. With respect to the last two examples, TIGF and DESFA, Russia does not dispute that\nthese underwent third-country certification under Article 11 of the Directive and were subject to a\nsecurity of energy supply assessment in this regard. 1862 Instead Russia focuses its argumentation\non the content of and process for conducting the security of energy supply assessments in respect\nof DESFA and TIGF, and compares this to the content of and process for conducting the security of\nenergy supply assessment in respect of Gaz-System.1863\n7.1109. As we have found above in section 7.2.2.3.3, our terms of reference concerning Russia's\nclaim under Article II:1 of the GATS against the third-country certification measure in the Directive\ninclude only the claim presented in Russia's panel request, namely t he alleged violation of\nArticle II:1 stemming from the Commission requiring a security of energy supply assessment for\ncertifications concerning Russian pipeline transport service suppliers but not for certifications\nconcerning pipel ine transport service suppliers of any other non -EU country, rather than the\nsubstance of such security of energy supply assessments.\n7.1110. The examples of TIGF and DESFA, in our view, provide no support for the contention that\nthe third-country certification measure results in a de facto violation of Article II:1 of the GATS by\nvirtue of the Commission requiring a security of supply assessment for certifications concerning\nRussian pipeline transport service suppliers but not for certifications concerning pipeli ne transport\nservice suppliers of any other non -EU country. On the contrary, these examples appear to\ndemonstrate that pipeline transport service suppliers from other origins than Russian are subject\nto third-country certification under Article 11 of the Directive, including a security of energy supply\nassessment, where certification is requested by a transmission system owner or a TSO that is\n\"controlled by a person or persons from a third country or third countries\" within the meaning of\nthe Directive, fo llowing entry into force of the third -country certification measure in the Directive\non 3 March 2013.\n7.1111. Having considered the various examples relied on by Russia, we do not believe that these\ndemonstrate that the third-country certification measure in the Directive results in Russian pipeline\ntransport services and service suppliers being accorded de facto less favourable treatment than\nthat accorded to the like pipeline transport services and service suppliers of any other non -EU\ncountry.1864\n\n1861 We note that Russia has also raised certain arguments in which it appears to \"contrast\" the\nCommission opinion concerning certification of TAP AG with its opinion concerning certification of DESFA, rather\nthan its opinion concerning certification of Gaz-System. (See, e.g. Russia's first written submission,\nparas. 476-478; and second written submission, paras. 352-354). We note that Russia does not suggest that\nthe example of DESFA involves a Russian pipeline transport service supplier. Indeed in other parts of its\nsubmission, Russia \"contrasts\" the Commission opinion concerning DESFA with its opinion concerning\ncertification of Gaz-System, suggesting that the former, like the certification of TAP AG, is an example of the\nalleged more favourable treatment of pipeline transport services and service suppliers from any other non-EU\ncountry. (Russia's first written submission, paras. 490-500). In light of this, it is unclear to us how the\n\"contrasting\" of the Commission opinion concerning certification of TAP AG with its opinion concerning\ncertification of DESFA would serve to demonstrate de facto discrimination against Russian pipeline transport\nservices and service suppliers, and we do not address these arguments further.\n1862 Russia's first written submission, paras. 482 (concerning TIGF) and 491 (concerning DESFA).\n1863 Russia's first written submission, paras. 482-489 (concerning the ITO TIGF) and 490-500\n(concerning the TSO DESFA).\n1864 We note that Russia has also submitted certain arguments concerning the objective of the third-\ncountry certification measure in the Directive. More particularly, Russia argues that \"[i]t is no accident that\nthroughout the adoption and implementation of the [Third Energy Package], Article 11 of the Directive has\ncommonly been referred to as the 'Gazprom Clause'\" and that \"the EU's sole objective was to enact what it\nnow concedes is a discriminatory certification measure that could be selectively applied to prevent Gazprom\nfrom acquiring too many EU transmission assets\". (Russia's second written submission, para. 343; and opening\nstatement at the second meeting of the Panel, para. 164). In this regard, we recall that \"the Appellate Body\nand prior panels have, on several occasions, cautioned against undue reliance on the intent of a government\nbehind a measure to determine the WTO-consistency of that measure\" and have found that \"the intent, stated\nor otherwise, of the legislators is not conclusive\" although \"objectively reviewable expressions of a\ngovernment's policy objectives\" may constitute relevant evidence. (Appellate Body Report, EC and certain\nmember States – Large Civil Aircraft, para. 1050 (citing Appellate Body Reports, Japan – Alcoholic Beverages\n\n7.10.1.3 Conclusion\n7.1112. Having considered the various arguments and evidence provided by Russia, and for the\nreasons explained in paragraphs 7.1075 through 7.1111 above, we conclude that Russia has not\ndemonstrated that the third -country certification measure in the Directive accords less favourable\ntreatment to Russian pipeline transport services and se rvice suppliers in comparison with that\naccorded to pipeline transport services and servic e suppliers of any other non -EU country. Hence,\nwe find that Russia has failed to make a prima facie case of violation under Article II:1 of the GATS\nwith respect to the third-country certification measure in the Directive.\n7.10.2 The third -country certification measure in the national implementing laws of\nCroatia, Hungary and Lithuania\n7.10.2.1 Introduction\n7.1113. The third -country certification measure implemented in the national laws of C roatia,\nHungary and Lithuania is described above in section 2.2.7.2. Russia contends that this measure is\ninconsistent with Article XVII of the GATS. Aside from raising terms of reference objections with\nrespect to certain of the provisions in the national laws of Hungary and Lithuania challenged by\nRussia, the European Union submits that the third -country certification measure implemented in\nthe national laws of Croatia, Hungary and Lithuania is justified under Article XIV(a) of the\nGATS.1865 In our analysis below, we first determine whether this measure is inconsistent with\nArticle XVII of the GATS and then proceed, as appropriate, to an examination of the European\nUnion's defense.\n7.1114. As discussed above in section 7.2.2.3.2, the European Union has raised terms of\nreference objections with respect to Sections 123(5) and 123(6) o f Hungary's Gas Act and\nArticles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas. We have concluded that\nArticles 20(5) and 29(4)(3) of Lithuania's Law on Natural Gas fall outside, while Sections 123(5)\nand 123(6) of Hungary's Gas Act within, our term s of reference.1866 Therefore, below we examine\nthe consistency with Article XVII of the GATS of the following provisions of the national laws\nimplementing the third -country certification measure: (i) Article 24 of Croatia's Gas Market Act;\n(ii) Section 128/A of Hungary's Gas Act; (iii) Sections 123(5) and 123(6) of Hungary's Gas Act;\n(iv) and Article 29 of Lithuania's Law on Natural Gas.1867\n7.1115. The third -country certification measure challenged by Russia under Article XVII of the\nGATS consists of the national laws of Croatia, Hungary and Lithuania implementing Article 11 of\n\nII, p. 27, DSR 1996:1, 97, at p. 119; US – Offset Act (Byrd Amendment), para. 259; and Panel Report, Japan\n– DRAMs (Korea), para. 7.104)). (emphasis original) In support of its arguments concerning the \"objective\" of\nthe third-country certification measure in the Directive, Russia has referred to a press release, namely \"EU\nParliament, 3rd Energy Package gets final approval from MEPs\" at\nhttp://www.europarl.europa.eu/sides/getDoc.do?language=en&type=IM-\nPRESS&reference=20080616FCS31737. (Russia's opening statement at the first meeting of the Panel, para.\n68). The European Union argues that this press release describes \"the personal views expressed by one MEP\n(Mr. La Russa), who acted as a rapporteur for the Industry Committee\" and that the reference to Gazprom\nwas:\n[P]robably because at the time Gazprom had more shareholdings in EU gas underta kings than\nother third country entities and because, as mentioned in the press release, Russia/Gazprom was\nthe most vocal opponent to the envisaged provision while the proposal was still being debated by\nthe European Parliament. (European Union's second written submission, paras. 259-260).\nRussia does not dispute the European Union's characterization of this press release but instead submits\nthat it is for the European Union to offer evidence or argue that \"the press release was inaccurate\" or that \"it\nhad a different objective in enacting the third-country certification measure[]\". In this regard, we again recall\nthat Russia bears the burden of making a prima facie case of violation under Article II:1 of the GATS. We do\nnot believe that Russia, by referring to a press release quoting a Member of the European Parliament, has\nprovided \"objectively reviewable expressions\" of the European Union's policy objectives behind the third-\ncountry certification measure in the Directive being to discriminate against Russian pipeline transport services\nor service suppliers. Hence, this evidence does not suffice to make a prima facie case of violation under Article\nII:1 of the GATS.\n1865 As discussed further below, the European Union argues that Sections 123(5) and 123(6) of\nHungary's Gas Act are not inconsistent with Article XVII of the GATS.\n1866 See above section 7.2.2.3.2.4.\n1867 Our references to Article 29 of Lithuania's Law on Natural Gas are to be understood as excluding\nArticle 29(4)(3), which we found to fall outside our terms of reference. See above section 7.2.2.3.2.4.\n\nthe Directive. The national implementing laws are legally separate and distinct from each other, as\nwell as from the Directive. However, the parties have developed a significant part of their\narguments mainly on the basis of Article 11 of the Directive, without clearly distinguishing between\nthe national implementing laws at issue. Therefore, we provide a single, joint analysis of Russia's\nclaim and the European Union's defen ce for all three nati onal implementing laws at issue, except\nSections 123(5) and 123(6) of Hungary's Gas Act, which will be addressed separately, as\nexplained further below in paragraphs XX. We emphasize, however, that Article 11 of the Directive\nis not a measure at issue under this claim.\n7.10.2.2 Russia's claim under Article XVII of the GATS\n7.10.2.2.1 Introduction\n7.1116. Russia claims that Article 24 of Croatia's Gas Market Act, Sections 123(5), 123(6) and\n128/A of Hungary's Gas Act, and Article 29 of Lithuania's Law on Natural Gas apply only to\ntransmission system owners or TSOs controlled by persons from third countries, and,\nconsequently, provide to third -country pipeline transport services and service suppliers treatment\nless favourable than that accorded to like domestic pipeline transport services and service\nsuppliers, contrary to Article XVII of the GATS .1868 The European Union does not contest that\nArticle 24 of Croatia's Gas Market Act, Section 128/A of Hungary's Gas Act and Article 29 of\nLithuania's Law on Natural Gas provide less favourable tre atment to like services and service\nsuppliers of third countries within the meaning of Article XVII of the GATS but argues that any\ninconsistency with Article XVII is justified under Article XIV(a) of the GATS. 1869 The European\nUnion, however, submits that Se ctions 123(5) and 123(6) of Hungary's Gas Act are not\ninconsistent with Article XVII of the GATS but, as explained below, does not raise a defence under\nArticle XIV(a) of the GATS in respect of these provisions.1870\n7.10.2.2.2 Analysis by the Panel\n7.1117. We note that the Eu ropean Union concedes that Article 24 of Croatia's Gas Market Act,\nSection 128/A of Hungary's Gas Act and Article 29 of Lithuania's Law on Natural Gas are\ninconsistent with Article XVII of the GATS but argues that they are justified under Article XIV(a) of\nthe GATS.1871 However, the European Union argues that Sections 123(5) and 123(6) of Hungary's\nGas Act are not inconsistent with Article XVII of the GATS, while not raising any defense in the\nevent we find otherwise.1872\n7.1118. In light of this particular way the European Union structured its arguments, we separately\nexamine the consistency of Article 24 of Croatia's Gas Market Act, Section 128/A of Hungary's Gas\nAct and Article 29 of Lithuania's Law on Natural Gas with Article XVII of the GATS and the\nconsistency of Sections 123(5) and 123(6) of Hungary's Gas Act with Article XVII of the GATS.\n7.1119. In accordance with the legal standard for Article XVII of the GATS, set out in\nparagraphs 7.234 and 7.235 above, our analysis will focus on whether Russia has d emonstrated\nthe following elements : (a) Croatia, Hunga ry, and Lithuania have assumed national treatment\ncommitments in the relevant secto r(s) and mode(s) of supply in their GATS Schedules; (b) the\nthird-country certification measure affects the supply of services in the relevant sector(s) and\nmode(s); (c) the relevant services and service suppliers are like; and ( d) the third -country\ncertification measure fails to accord to services and service suppliers of any other Member\ntreatment no less favourable than that accorded by the Member concerned to its own like services\nand service suppliers.\n\n1868 Russia's first written submission, paras. 426–438.\n1869 European Union's response to Panel question No. 95, para. 233. See also European Union's first\nwritten submission, paras. 476 and 550.\n1870 European Union's first written submission, para. 552.\n1871 European Union's first written submission, paras. 476 and 550. See also European Union's response\n1872 European Union's response to Panel question No. 151, para. 18.\n\n7.10.2.2.2.1 Article 24 of Croatia's Gas Market Act, Section 1 28/A of Hungary's Gas Act\nand Article 29 of Lithuania's Law on Natural Gas\n7.1120. Russia submits that Croatia, Hungary and Lithuania made national treatment\ncommitments in their GATS Schedules with respect to pipeline transport services for mode 3, and\nthat the third-country certification measure affects the supply of these services by foreign\nsuppliers by directly regulating the terms on which those services may be supplied in the European\nUnion, including in Croatia, Hungary and Lithuania. 1873 According to Russia, the relevant services\nand service suppliers are presumed to be like and the third -country certification measure\nimplemented in Article 24 of Croatia's Gas Market Act, Section 128/A of Hungary's Gas Act and\nArticle 29 of Lithuania's Law on Natural Gas fail s to accord to services and service suppliers of\nother Members treatment no less favourable than that accorded to like domestic services and\nservice suppliers.1874\n7.1121. In response to a question by the Panel asking the European Union to clarify whether it\nagrees with Russia that the third -country certification measure is inconsistent with Article XVII of\nthe GATS, the European Union replied as follows:\nThe SoS certification requirement provided for in Article 11 of the Directive does not\napply to the certification of TSOs if neither the TSO nor the owner of the transmission\nsystem are controlled by a person or persons of a third country or countries.\nTherefore, the European Union does not contest that the SoS certification requirement\nprovides different and \"less f avourable treatment\" (within the specific meaning of\nArticle XVII GATS) to like service suppliers and services of other Members.1875\n7.1122. As we have determined above, Croatia, Hungary and Lithuania undertook national\ntreatment commitments in their respective GATS Schedules with respect to sector 11.G, \"Pipeline\nTransport [Services]\", for mode 3. 1876 Russia has also indicated that the relevant mode of supply\nfor its GATS claims is mode 3 (commercial presence).1877 The third-country certification measure in\nthe national im plementing laws of Croatia, Hungary and Lithuania concerns the certification of\nTSOs.1878\n7.1123. As explained above, we consider that TSOs supply pipeline transport services in the\nEuropean Union and that natural or juridical persons from non -EU countries can and d o supply\npipeline transport services through the commercial presence of such TSOs. 1879 Hence, in our view,\nthe measure at issue has \"an effect on\" 1880 the supply of pipeline transport services within the\nmeaning of Article XVII of the GATS. Thus, we consider tha t Russia has established the first two\nelements of the legal standard under Article XVII of the GATS.\n7.1124. In determining whether the measure in question does not accord to services and service\nsuppliers of other Members treatment no less favourable than that accorded to like domestic\nservices and service suppliers, we note that only TSOs may supply pipeline transport services in\nthe European Union. Accordingly, any person seeking to supply pipeline transport services in the\nEuropean Union via mode 3 will need to establish, or acquire ownership or control over, a TSO.\n7.1125. The third-country certification measure implemented in Article 24 of Croatia's Gas Market\nAct, Section 128/A of Hungary's Gas Act and Article 29 of Lithuania's Law on Natural Gas provides\nrules and procedure s for the certification of TSOs, where the TSO or the transmi ssion system\nowner is controlled, or is in the process of being controlled, by a person or persons from a third\ncountry or third countries. 1881 Under this measure, the NRA responsible for the certification of a\n\n1873 Russia's first written submission, para. 418-419.\n1874 Russia's first written submission, paras. 415, 420–421 and 423–441; and response to Panel\nquestion No. 56, para. 285.\n1875 European Union's response to Panel question No. 95, para. 233.\n1876 See above para. 7.371.\n1877 Russia's response to Panel question No. 56, para. 285.\n1878 See above section 2.2.7.2.\n1879 See above paras. 7.263 and 7.407.\n1880 Appellate Body Report, EC – Bananas III, para. 220.\n1881 Third-country certification must be conducted in two situations: (i) when certification is requested\nby a transmission system owner or a TSO which is controlled by a person or persons from a third country or\nthird countries; and (ii) when the regulatory authority has acquired knowledge of any circumstances that would\n\nTSO is required to assess whether granting certi fication will not put at risk the security of energy\nsupply.1882 The NRA shall refuse certification if it has not been demonstrated to the NRA that\ngranting certification will not put at risk the security of energy supply.1883 Thus, when third-country\ncertification is requested, a third-country person that controls – or is in the process of acquiring\ncontrol over – a TSO or a transmission system owner, will be subject to a security of energy supply\nassessment.\n7.1126. The third-country certification measure implemented in Article 24 of Croatia's Gas Market\nAct, Section 128/A of Hungary's Gas Act and Article 29 of Lithuania's Law on Natural Gas applies\nwith respect to the certification of all TSOs controlled by third -country persons, and hence with\nrespect to all third-country pipeline transport service suppliers supplying their services through the\ncommercial presence of TSOs. In contrast, certification of TSOs controlled by domestic EU persons\nis generally governed by the rules implementing Article 10 of the Directive, w hich does not require\na security of energy supply assessment to be conducted.1884\n7.1127. We recall that, in the context of the public body measure in the national implementing\nlaws of Croatia, Hungary and Lithuania, we have concluded that domestic suppliers of pipe line\ntransport services and pipeline transport service suppliers of other Members established as TSOs in\nCroatia, Hungary and Lithuania are like service suppliers within the meaning of Article XVII of the\nGATS.1885 Guided by this finding, we consider that dom estic and third -country pipeline transport\nservice suppliers are like service suppliers within the meaning of Article XVII of the GATS also in\nthe context of the third-country certification measure in the national implementing laws of Croatia,\nHungary and Lithuania.\n7.1128. As follows from o ur analysis conducted above, the requirement of security of energy\nsupply assessment is an additional condition imposed on all third-country pipeline transport service\nsuppliers before they are allowed to supply pipeline transp ort services through the commercial\npresence of TSOs. Domestic service suppliers are generally not subject to the same requirement.\nTherefore, we consider that the measure in question places an additional burden on third -country\nservice suppliers and thus modifies the conditions of competition in favour of domestic service\nsuppliers compared to like service suppliers of other Members.\n7.1129. Furthermore, as we have already observed, the European Union does not contest that the\nrequirement of a security of energy supply assessment provides different and less favourable\ntreatment to like services and service suppliers of other Members within the specific meaning of\nArticle XVII GATS. 1886 Therefore, taking into account the European Union's position, we find that\nthe thi rd-country certification measure implemented in Article 24 of Croatia's Gas Market Act,\n\nresult in a person or persons from a third country or third countries acquiring control of the transmission\nsystem owner or the TSO. (Croatia's Gas Market Act, (Exhibit RUS-45), Article 24(2); Hungary's Gas Act,\n(Exhibits EU-155/RUS-47), Section 128/A(1); and Lithuania's Law on Natural Gas, (Exhibit RUS-136rev),\nArticle 29(1) (implementing Directive 2009/73/EC, (Exhibit EU-5), Articles 11(1) and 11(2)).\n1882 Croatia's Gas Market Act, (Exhibit RUS-45), Article 24(4); Hungary's Gas Act, (Exhibits EU-\n155/RUS-47), Section 128/A(4)(b); and Lithuania's Law on Natural Gas, (Exhibit RUS-136rev), Article 29(4)(2)\n(implementing Directive 2009/73/EC, (Exhibit EU-5), Article 11(3)).\n1883 Croatia's Gas Market Act, (Exhibit RUS-45), Article 24(4); Hungary's Gas Act, (Exhibits EU-\n155/RUS-47), Section 128/A(4)(b); and Lithuania's Law on Natural Gas, (Exhibit RUS-136rev),\nArticle 29(4)(2).\n1884 We note that third-country certification is required not only where the TSO is controlled by a third-\ncountry person or persons, but also where the transmission system owner is controlled by a third-country\nperson or persons. As explained above in paragraph 2.13, the owner and operator of the transmission system\nare two separate entities under the so-called ISO model, which is applicable only in EU member States that\nhave chosen to implement this model in addition to the OU model and only in respect of transmission systems\nthat belonged to a VIU on 3 September 2009. Under this particular model, it is therefore possible that a TSO\ncontrolled by a domestic person or persons would be subject to third-country certification insofar as the owner\nof the transmission system is controlled by a third-country person or persons. Indeed, we addressed this\nsituation with respect to the domestic controlled TSO Gaz-System and the third-country controlled\ntransmission system owner Europolgaz above in section 7.10.1.2.3. The fact that domestic controlled TSOs are\nsubject to third-country certification in these limited circumstances does, however, not alter our finding above\nthat all TSOs controlled by third-country persons are subject to third-country certification, whereas TSOs\ncontrolled by domestic persons, generally, are not.\n1885 See above para. 7.743.\n1886 See above para. 7.1121.\n\nSection 128/A of Hungary's Gas Act and Article 29 of Lithuania's Law on Natural Gas 1887 is\ninconsistent with Article XVII of the GATS.\n7.10.2.2.2.2 Sections 123(5) and 123(6) of Hungary's Gas Act\n7.1130. Russia argues that Sections 123(5) and 123(6) of Hungary's Gas Act are inconsistent with\nArticle XVII of the GATS for the same reasons as Section 128/A of Hungary's Gas Act. 1888 The\nEuropean Union, on the other hand, submits that Sections 123(5) and 123(6) are not inconsistent\nwith Article XVII of the GATS. 1889 According to the European Union, Section 123(6) does not apply\nonly to the foreign investments described in Section 123(5) of Hungary's Gas Act, but also applies\nto the transactions described in Section 123(2), which covers both domestic and foreign\ninvestments.1890\n7.1131. In paragraph 7.179, we have found that Sections 123(5) and 123(6) of Hungary's Gas\nAct constitute a \"version\" of the third -country certification measure implemented in Hungary. We\nhave concluded that the third -country certification measure implemented in Section 128/A of\nHungary's Gas Act, as well as in Article 24 of Croatia's Gas Market Act an d Article 29 of Lithuania's\nLaw on Natural Gas, is inconsistent with Article XVII of the GATS. 1891 In our view, being an\nimplemented \"version\" of the same measure, the third-country certification measure contained in\nSections 123(5) and 123(6) of Hungary's Ga s Act is necessarily inconsistent with Article XVII of\nthe GATS on the basis of the same grounds.\n7.1132. We are also of the opinion that it is irrelevant that Section 123(6) of Hungary's Gas Act\nalso applies to transactions described in Section 123(2) of Hungary's Gas Act.1892 Section 123(6) of\nHungary's Gas Act establishes a range of grounds allowing the Office to refuse, or make\nconditional, its approval for various types of transactions described in Sections 122(1), 123(2) and\n123(5) of Hungary's Gas Act. 1893 While it is true that neither Section 122(1) nor Section 123(2) of\nHungary's Gas Act distinguishes, on its face, between domestic and third-country persons involved\nin such transactions, Section 123(5), in contrast, explicitly describes only transactions involving\nthird-country persons. The European Union has not contested that the approval of the transactions\ndescribed in Section 123(5) may be refused or made conditional on the basis that such\ntransactions pose a potential threat to the security of natural gas supply.1894\n7.1133. As we have determined in paragraphs 7.170 and 7.173 above, Sections 123(5) and\n123(6) result in the application of the requirement of security of energy supply assessment to\nthird-country persons in the process of acquiring control over a TSO. In the same manner as the\nrequirement provided for in Section 128/A of Hungary's Gas Act, this requirement places an\nadditional burden on third -country suppliers, and is thus incompatible with Hungary's national\ntreatment obligation under Article XVII of the GATS. Therefore, and for the reasons laid out above,\nthe third-country certification measure implemented in Sections 123(5) and 123(6) of Hungary's\nGas Act is inconsistent with Article XVII of the GATS.\n\n1887 Our finding of inconsistency does not concern Article 29(4)(3) of Lithuania's Law on Natural Gas,\nwhich we found to be outside our terms of reference. See above section 7.2.2.3.2.4.\n1888 Russia's first written submission, para. 432.\n1889 European Union's first written submission, para. 552.\n1890 European Union's first written submission, para. 552.\n1891 See above paras. 7.1128. -7.1129. .\n1892 European Union's first written submission, para. 552.\n1893 Section 122(1) of Hungary's Gas Act sets out the following transactions: \"[t]he demerger (division,\nseparation) of any authorized operator under the Civil Code, their merger with another company (merger by\nthe formation of a new company or merger by acquisition), winding up without succession, or reduction of the\ninitial capital or equity capital by at least one-quarter\". Section 123(2) of Hungary's Gas Act concerns the\nacquisition of control of more than 25, 50 or 75 per cent of the voting rights in a natural gas company, and the\nexercise of the rights associated therewith. Aside from these transactions posing a potential threat to the\nsecurity of natural gas supply, the grounds that allow the Office to refuse, or make conditional, its approval\ninclude the existence of a potential threat to inter alia the following interests: public safety; the enforcement of\ncompliance with energy policy objectives; discharge of activities subject to authorization under Hungary's Gas\nAct or the regulations for determining the price of transmission, storage and distribution services, and\nuniversal services, and the regulations for determining the quality of such services. (Hungary's Gas Act,\n(Exhibits EU-155/RUS-47), Sections 122(1), 123(2), and 123(6)).\n1894 European Union's response to Panel question No. 150, paras. 12–17.\n\n7.10.2.2.3 Conclusion\n7.1134. In view of the foregoing, we find that the third -country certification measure\nimplemented in Article 24 of Croatia's Gas Market Act, Sections 123(5) and 123(6) and 128/A of\nHungary's Gas Act and Article 29 of Lithuania's Law on Natural Gas is inconsistent with Article XVII\nof the GATS. 1895 We recall that, in response to a question by the Panel, the European Uni on\nconfirmed that it is not invoking Article XIV(a) of the GATS in the event we find Sections 123(5)\nand 123(6) to be inconsistent with Article XVII of the GATS. 1896 Thus, we will examine the\nEuropean Union's defence under Article XIV(a) of the GATS with resp ect to the third -country\ncertification measure implemented only in Article 24 of Croatia's Gas Market Act, Section 128/A of\nHungary's Gas Act and Article 29 of Lithuania's Law on Natural Gas.\n7.10.2.3 The European Union's defence under Article XIV(a) of the GATS\n7.10.2.3.1 Introduction\n7.1135. As explained above, the European Union raises a defence under Article XIV(a) of the\nGATS in response to Russia's claim under Article XVII of the GATS against the third -country\ncertification measure implemented in the national laws of Croatia, Hungary, and Lithuania, arguing\nthat this measure is necessary to ensure the European Union's security of energy supply and\nhence to maintain public order.\n7.1136. At the outset, we recall that the European Union has r aised its defence under\nArticle XIV(a) solely i n respect of Russia's claims against the third -country certification measure\nimplemented in Article 24 of Croatia's Gas Market Act, Section 128/A of Hungary's Gas Act, and\nArticle 29 of Lithuania's Law on Natural Gas, and not in respect of Sections 123(5) and 123(6) of\nHungary's Gas Act, which Russia has also challenged under Article XVII of the GATS. While we\nhave made findings of inconsistency with Article XVII of the GATS for the third-country certification\nmeasure implemented in Sections 123(5) and 123(6) of Hungary's Gas Act in addition to the third-\ncountry certification measure implemented in Article 24 of Croatia's Gas Market Act, Section 128/A\nof Hungary's Gas Act, and Article 29 of Lithuania's Law on Natural Gas, our findings on the defense\nraised by the European Union under Article XIV(a) of the GATS therefore concern only the latter.\n7.1137. We further note that, although the national implem enting laws of Croatia, Hungary and\nLithuania are legally separate and distinct from each other as well as from the Directive, both\nparties have developed a single line of argumentation for the European Union's defense under\nArticle XIV(a) of the GATS, mainly on the basis of Article 11 of the Directive without clearly\ndistinguishing between the different national implem enting laws at issue. As explained in\nparagraph 7.1115 above, the parties followed a similar approach when addressing the underlying\nclaim by Russia under Article XVII of the GATS and both agree that Article 24 of Croatia's Gas\nMarket Act, Section 128/A of Hungary's Gas Act, and Article 29 of Lithuania's Law on Natural Gas\nall implement the substance of the third-country certification measure in the Directive. In light of\nthis, we too provide a single, joint analysis of the European Union's defen ce for all three national\nimplementing laws.\n7.10.2.3.2 Analysis by the Panel\n7.1138. In accordance with the legal standard for Article XIV(a) of the GATS, set out in\nparagraphs 7.228 through 7.231 above, our analysis will focus on whether the European Union has\nmade a prima facie case that: (i) the third -country certification measure implemented in the\nnational laws of Croatia, Hungary and Lithuania is prov isionally justified under paragraph (a) of\nArticle XIV of the GATS; and (ii) the third -country certification measure implemented in the\nnational laws of Croatia, Hungary and Lithuania satisfies the requirements of the chapeau of\nArticle XIV of the GATS.\n7.1139. Below, we address these elements in turn.\n\n1895 Except Article 29(4)(3) of Lithuania's Law on Natural Gas, which we found to fall outside our terms\nof reference. See above section 7.2.2.3.2.4.\n1896 European Union's response to Panel question No. 151, para. 18.\n\n7.10.2.3.2.1 Provisional justification under Article XIV(a) of the GATS\n7.1140. An assessment of whether a challenged measure is provis ionally justified under\nArticle XIV(a) of the GATS involves examining whether it is: (1) \"designed\" to protect public\nmorals or to maintain public order; and (2) \"necessary\" to protect public morals or to maintain\npublic order.1897\n7.1141. As explained above, the European Union focuses its defence of the third -country\ncertification measure implemented in the na tional laws of Croatia, Hungary and Lithuania on the\nground that it is necessary to maintain public order. Below, we therefore consider whether the\nEuropean Union has demonstrated that third -country certification measure is (1) designed to\nmaintain public order and (2) necessary to maintain public orde r within the meaning of\nArticle XIV(a) of the GATS.\n7.10.2.3.2.1.1 Designed to maintain public order\n7.1142. When considering whether the third -country certification measure implemented in the\nnational laws of Croatia, Hungary and Lithuania is designed to maintain public order, we begin by\nassessing, first, whether the stated policy objective of ensuring the European Union's security of\nenergy supply falls within the scope of those meant to \"maintain public order\" within the meaning\nof Article XIV(a) of the GATS and, second, whether the third -country certification measure is\ndesigned to ensure the European Union's security of energy supply.1898\n7.1143. With respect to the first of these issues, the European Union follows the standar d in\nfootnote 5 to Article XIV(a) of the GATS, arguing that security of energy supply is a \"fundamental\ninterest[] of society\" 1899 and that foreign control of TSOs 1900 may in some circumstances pose a\n\"genuine and sufficiently serious threat\" to this interest.1901\n7.1144. The Appellate Body has found that the definition of public order \"include[s] the standard\nin footnote 5\" and has clarified that panels are not required \"to make a separate, explicit\ndetermination that the standard of footnote 5 ha[s] been met\". 1902 In the dispute before us, both\nparties have structured their arguments based on the standard in footnote 5. Therefore, while we\nagree that an explicit examination under this standard may not be necessary in all circumstances,\nwe find it appropriate to follow this st ructure in our assessment below. Hence, we begin by\nconsidering whether the European Union has demonstrated that security of energy supply is a\nfundamental interest of society and turn, as appropriate, to consider whether it has demonstrated\nthat foreign control of TSOs poses a genuine and sufficiently serious threat to this interest.\n\n1897 Appellate Body Report, US – Gambling, para. 292. See also Appellate Body Report, Colombia –\nTextiles, para. 5.67 concerning the corresponding provision in Article XX(a) of the GATT 1994.\n1898 For a similar approach, see Panel Report, Colombia – Textiles, para. 7.331.\n1899 European Union's first written submission, paras. 480-506.\n1900 The European Union generally argues that foreign control of both TSOs and transmission system\nowners poses a genuine and sufficiently serious threat to its security of energy supply. (See, e.g. European\nUnion's first written submission, paras. 480 and 507-509; and second written submission, paras. 189 and 197-\n198). In this regard, we recall that our finding of violation under Article XVII of the GATS in respect of the\nthird-country certification measure is based on the less favourable treatment accorded to third-country pipeline\ntransport services and service suppliers, in accordance with the scope and subject matter of the GATS. As\nexplained in paragraphs 7.440 through 7.446 and 7.460 through 7.466 above, TSOs supply pipeline transport\nservices in the European Union and natural or juridical persons from third countries can and do supply pipeline\ntransport services through the commercial presence of such TSOs, whereas the owners of transmission\nsystems do not supply pipeline transport services. As was the case for our underlying finding of violation under\nArticle XVII of the GATS, we believe that our assessment of the European Union's defence under Article XIV(a)\nof the GATS should focus on pipeline transport services and service suppliers, and we therefore do not address\nforeign control of transmission system owners further. This approach is also confirmed by the fact that certain\narguments by the European Union under its defence appear to relate solely to foreign controlled TSOs and not\nforeign controlled transmission system owners. (See, e.g. European Union's first written submission,\nparas. 512-513; and response to Panel question No. 209, paras. 205-206).\n1901 European Union's first written submission, paras. 507-526.\n1902 Appellate Body Report, US – Gambling, para. 298.\n\nSecurity of energy supply as a fundamental interest of society\n7.1145. The European Union argues that security of energy supply is a fundamental interest of\nsociety, pointing to energ y being \"one of the most basic necessities of modern societies\" 1903 and\ndisruptions in supply potentially having \"severe social, economic and, ultimately, political\nconsequences\".1904 The European Union points out that the fundamental nature of security of\nenergy supply is reflected in its laws and policies, referring to Article 194 of the Treaty on the\nFunctioning of the European Union (TFEU), to various strategies covered by the Commission's\nCommunication on a European Energy Security Strategy, and to other pie ces of EU legislation,\nincluding the Directive which forms the underlying basis of the third -country certification\nmeasure.1905\n7.1146. Russia does not dispute that security of energy supply is a fundamental interest of\nsociety, but submits that \"neither the Directi ve nor any other EU authority on the record identifies\na clear and consistent definition of security of supply\". 1906 In Russia's view, this was \"deliberate\"\nand meant to \"maximize [the European Union's] discretion to define security of supply in the\nmanner mo st advantageous to its overall objectives, to include reducing reliance on Russian\npipeline transport services and natural gas imports\".1907\n7.1147. We note that Russia, at times, appears to direct its criticism at the Directive or other EU\nlegal sources for not containing a definition of the term security of energy supply 1908 and, at other\ntimes, appears to be criticizing the European Union more generally for failing to provide a clear\ndefinition of security of energy supply when advancing its defence under Article XIV( a) of the\nGATS.1909 With respect to the lack of a definition of security of energy supply in the Directive or\nother EU legal sources, we see no basis for considering that footnote 5 covers only fundamental\ninterests which are defined in the challenged measure or elsewhere in the legislation of the\nresponding party.\n7.1148. Turning to the definition of security of energy supply employed by the European Union\nwhen advancing its defence, we note that Russia agrees that \"the scope of a 'fundamental interest'\nmay vary, at least to some degree, from Member to Member given the difference in values\nbetween societies\", but submits that this variation in scope is not limitless and that the \"term must\nhave some continuity in meaning from Member to Member\". 1910 More particularly, Russia submits\nthat:\n[A] \"fundamental interest\" must be considered an interest which lies at the core of a\nsociety and which that society constantly strives to achieve and maintain. As such, it\nwill be \"specific\" and easily identified by other parties.1911\n7.1149. We a gree with Russia that a certain minimum level of clarity is required in order to\nassess, in a meaningful manner, whether a stated interest can be considered a fundamental\ninterest of society within the meaning of footnote 5. Furthermore, as the responding party bears\nthe burden of making a prima facie case when advancing a defence, we also agree that it is for the\nEuropean Union to provide sufficient clarity concerning the meaning of the concept of security of\nenergy supply.\n7.1150. Having said this, we do not believe that the European Union has defined or employed the\nconcept of security of energy supply in a manner that is problematically unclear or inconsistent\n\n1903 European Union's first written submission, para. 481.\n1904 European Union's first written submission, para. 485.\n1905 European Union's first written submission, paras. 490-501 (referring to Article 194 of the TFEU;\nCommunication from the Commission to the European Parliament and the Council, European Energy Security\nStrategy, COM(2014) 330 final, (28 May 2014), (Exhibit RUS-5); Regulation (EU) No. 994/2010, (Exhibit EU-\n73), Articles 1, 3(1), 5(1), 6, 8, 9(3), and 10; Directive 2009/73/EC, (Exhibit EU-5), Articles 2(4) and 13 and\nRecitals (1), (6), (8), and (22); and TEN-E Regulation, (Exhibit EU-4), Recital (1)).\n1906 Russia's opening statement at the second meeting of the Panel, para. 153. See also Russia's\nopening statement at the first meeting of the Panel, para. 59; and second written submission, para. 305.\n1907 Russia's opening statement at the second meeting of the Panel, para. 153.\n1908 Russia's opening statement at the first meeting of the Panel, para. 59.\n1909 Russia's second written submission, para. 305.\n1910 Russia's second written submission, para. 304.\n1911 Russia's second written submission, para. 304.\n\nduring these proceedings. More particularly, when explaining this concept, the European Union has\npointed to the International Energy Agency defining energy security as \"the uninterrupted\navailability of energy sources at an affordable price\"1912 and the UNECE defining it as:\n[T]he availability of usable energy supplies, at the point of final consumption, at\neconomic price levels and in sufficient quantities and timeliness, so that, given due\nregard to encouraging energy efficiency, the economic and social development of a\ncountry is not materially constrained.1913\n7.1151. The European Union also explains that security of energy supply has a short -term and a\nlong-term dimension: The former focuses on \"the ability to respond promptly to sudden changes\nwithin the supply -demand balance\" 1914 caused by, e.g. \"infrastructure breakdown, natural\ndisasters, social unrest, political action or terrorism\". 1915 The latter focuses on the need for\n\"adequate investments in the production and distribution of energy and efficient energy\nmarkets\"1916 and the need to overcome obstac les related to the \"traditional fragmentation of the\nEU market\" for natural gas and the \"relatively limited number of foreign sources of supply\".1917\n7.1152. Even if the concept of security of energy supply and the European Union's definition or\nexplanation of it involve some ambiguities, we do not consid er this detrimental to the European\nUnion's defence under Article XIV(a) of the GATS. While we do not disagree with Russia that a\nfundamental interest is one that \"lies at the core of a society and which that society constantly\nstrives to achieve and maintain\", we are not convinced that such a fundamental interest of society\nwill hereby necessarily be \"'specific' and easily identified\".1918\n7.1153. In this regard, we agree with the panel in US – Gambling, that \"the term 'public morals'\ndenotes standards of right and wrong conduct maintained by or on behalf of a community or\nnation\"1919 and \"the content of these concepts for Members can vary in time and space, depending\nupon a range of factors, including prevailing social, cultural, ethical and religious values.\" 1920 It\nwas on the basis of this standard that the Appellate Body rejected the argument \"that, for the\npurposes of an analysis under Article XX(a), a panel is required to identify the exact content of the\npublic morals standard at issue.\" 1921 We believe a similar approac h is warranted for the purposes\nof our analysis of the public order standard under Article XIV(a) of the GATS and footnote 5\nhereto. Therefore, while we reiterate our view that a certain minimum level of clarity is required in\norder to meaningfully assess whether a stated interest can be considered fundamental, we do not\nbelieve that the required level of clarity should be overly demanding. In our view, the explanations\nand definitions of security of energy supply provided by the European Union in these pro ceedings\nprovide the level of clarity required to assess its defence in a meaningful manner.\n7.1154. Having found that the European Union has defined or explained the concept of security of\nenergy supply with sufficient clarity, we recall that the European Union e xplains the fundamental\nnature of security of energy supply by pointing to disruptions of energy supply potentially having\n\"severe social, economic and, ultimately, political consequences\". 1922 Russia does not appear to\n\n1912 European Union's first written submission, para. 482 (quoting International Energy Agency, Energy\nsupply security: Emergency Response of IEA Countries 2014 (OECD/IEA 2014), (Exhibit EU-70), p. 13).\n1913 European Union's first written submission, para. 482 (quoting United Nations Economic Commission\nfor Europe, Emerging Global Energy Security Risks, No. 36 (2007), pp. 8-9, (Exhibit EU-71), p. 8).\n1914 European Union's first written submission, para. 483.\n1915 European Union's first written submission, para. 487.\n1916 European Union's first written submission, para. 483.\n1917 European Union's first written submission, paras. 488-489.\n1918 Russia's second written submission, para. 304.\n1921 Appellate Body Reports, EC – Seal Products, para. 5.199.\n1922 European Union's first written submission, para. 485. As examples of social consequences, the\nEuropean Union argues that disruptions may \"prevent the heating of households and public spaces\" and as a\nresult \"disrupt the provision of essential social services, such as healthcare, childcare, education and other\nwelfare activities, as well as many other basic public services, such as transportation, police or the\nadministration of justice\" which, in turn, \"may endanger the health, life, security and, more generally, the well-\nbeing of the European citizens, in particular in the event of prolonged disruptions during the winter months\".\n(Ibid.) As examples of economic consequences, the European Union argues that disruptions \"may require the\ninterruption of important industrial processes, cause irreparable damage to certain industrial installations, in\nparticular in case of sudden interruptions, and, more generally, have a serious impact on the overall economy\".\n\ndispute these potential effects of disr uptions of energy supply, nor their gravity. We further recall\nthat the European Union seeks to demonstrate the importance placed on security of energy supply\nin the EU society by pointing to it being reflected in its laws and policies.1923 Again, Russia does not\ndispute the existence of these laws or policies, nor the fact that the EU society places a great\nimportance on its security of energy supply. In light of this, we consider that the European Union\nhas demonstrated that security of energy supply is a fu ndamental interest of society within the\nmeaning of footnote 5.\n7.1155. Furthermore, we are of the view that Russia's argument that the European Union is\ndeliberately seeking to \"maximize its discretion to define security of supply in the manner most\nadvantageous to its overall objectives, to include reducing reliance on Russian pipeline transport\nservices and natural gas imports\" does not so much pertain to the issue of whether security of\nenergy supply is a fundamental interest of society but rather to the relati onship between the third-\ncountry certification measure and this stated objective. We believe that these arguments are more\nappropriately addressed in other parts of the analysis under Article XIV(a), namely when assessing\nwhether the third -country certification measure is designed and necessary to ensure security of\nenergy supply, as well as in the analysis under the chapeau of Article XIV.1924\n7.1156. Hence, we conclude that security of energy supply is a fundamental interest of society\nwithin the meaning of footnote 5 to Article XIV(a) of the GATS, and we proceed to assess whether\nthe European Union has demonstrated that foreign control of TSOs poses a genuine and\nsufficiently serious threat to this interest.\nForeign control of TSOs as a genuine and sufficiently seri ous threat to the\nEuropean Union's security of energy supply\n7.1157. At the outset, we wish to point out that the standard for determining whether a threat is\n\"genuine and sufficiently serious\" has not been explicitly addressed in previous disputes. In light of\nthis, we consider it useful to begin with some general considerations regarding the interpretation\nof these terms, following the principles of treaty interpretation in Article 31 of the Vienna\nConvention.\n7.1158. Both parties appear to agree that the term \"genuine\" and the term \"sufficiently serious\"\nshould be given distinct meanings. More particularly, both parties agree that the term \"genuine\"\nspeaks to the \"degree of likelihood\" of a threat materializing 1925 and that the term \"sufficiently\n\n(Ibid.) The European Union then goes on to argue that \"[t]hese social and economic effects may in turn lead to\nunrest and disturbances affecting the maintenance of law and order. (Ibid.) We note that Japan considers\nsecurity of energy supply a \"means or tool to achieve various higher policy objectives … but not the\nfundamental interest of society in and of itself\". (Japan's third-party statement, para. 8). Russia echoed\nJapan's position in its second written submission but subsequently abandoned this distinction, indicating that it\ndoes not consider it relevant in the context of the European Union's defence of the third-country certification\nmeasure under Article XIV(a) of the GATS. (Russia's second written submission, para. 305; and response to\nPanel question No. 206, para. 256). In our view, the relevant inquiry under Article XIV(a) of the GATS and\nfootnote 5 hereto is whether a stated interest can be considered a fundamental interest in society, regardless\nof whether it has reached this standing due to its role or relationship with other fundamental interests. We\ntherefore do not believe that a separate inquiry into the relationship between the stated interest and other\nfundamental interests is called for. Indeed, and as pointed out by the European Union, most interests of\nsociety could be characterized as a means to achieve basic social and economic interests and panels in\nprevious disputes have accepted this. (European Union's second written submission, para. 196 (referring to\nPanel Report, US – Gambling, para. 6.469, in which the panel accepted the prevention of criminal activity as a\nfundamental interest even though this could also be regarded as a means to protect the life, health, security\nand well-being of citizens)).\n1923 European Union's first written submission, paras. 490-501. More specifically, and in addition to its\nreference to Article 194 of the TFEU and to the Commission's Communication on a European Energy Security\nStrategy, the European Union refers to Regulation (EU) No. 994/2010, (Exhibit EU-73), Articles 1, 3(1), 5(1),\n6, 8, 9(3), and 10; Directive 2009/73/EC, (Exhibit EU-5), Articles 2(4) and 13 and Recitals (1), (6), (8), and\n(22); and TEN-E Regulation, (Exhibit EU-4), Recital (1).\n1924 See paras. 7.1203-7.1208, 7.1213-7.1224 and 7.1241-7.1253 below.\n1925 European Union's response to Panel question No. 207, para. 192; and Russia's response to Panel\nquestion No. 207(a), para. 261.\n\nserious\" speaks to the \"potential consequences\"1926 or the \"potential gravity of the effects\" 1927 of a\nthreat materializing.\n7.1159. We too believe it is important to give meaning to the fact that the drafters of the GATS\nincluded two separate terms to qualify the type of threat cove red by the s tandard in footnote 5.\nHence, we consider that only threats that are both genuine and sufficiently serious are covered by\nfootnote 5, and we consider that the inclusion of both of these terms suggests that they must each\nbe given their own, distinct meaning.\n7.1160. We begin by noting that the term \"threat\" is defined in the Shorter Oxford English\nDictionary as \"an indication of the approach of something unwelcome or undesirable; a person or\nthing regarded as a likely cause of harm\".1928\n7.1161. With respect to the meaning of a \"sufficiently serious\" threat, we note that the term\n\"sufficiently\" is defined in the Shorter Oxford English Dictionary as \"in a sufficient manner;\nadequately, satisfactory, enough\" 1929, whereas the term \"serious\" is defined a s \"[i]mportant,\ngrave; having (potentially) important, esp. undesired, consequences; giving cause for concern; of\nsignificant degree or amount; worthy of consideration\".1930\n7.1162. We further note that the latter term has been used in other covered agreements as\nreferring to the effects or the impact of a measure or an event occurring. For instance, Article 6.3\nof the SCM Agreement lists a number of effects of subsidies that would constitute \"serious\nprejudice to the interests of another Member\" and Article 4.1(a) of the Agreement on Safeguards\ndefines \"serious injury\" as \"a significant overall impairment in the position of a domestic industry\".\n7.1163. When the term \"sufficiently serious\" is used to qualify a threat, which is , as mentioned\nabove, defined as \"an indication of the approach of something unwelcome or undesirable; a person\nor thing regarded as a likely cause of harm\" 1931, we therefore agree with the parties that it should\nbe understood as referring to the potential consequences or the potential gravity of the effects of a\nthreat materializing. In other words, for a threat to be considered sufficiently serious within the\nmeaning of footnote 5, the potential consequences or effects on the fundamental interest of\nsociety must be of a certain magnitude or gravity.\n7.1164. As for the meaning of a \"genuine\" threat, we note that th e term \"genuine\" is not used\nelsewhere in the covered agreements, but is defined in the Shorter Oxford English Dictionary as\n\"[h]aving the character claimed for it; real, true, not counterfeit\". 1932 When this term is used to\nqualify a threat, which is , as mentioned above, defined as \"an indication of the approach o f\nsomething unwelcome or undesirable; a person or thing regarded as a likely cause of harm\" 1933,\nwe therefore agree with the parties that it relates t o the degree of likelihood of the threat\nmaterializing. This conclusion is furthermore supported by the abovementioned consideration that\nthe term \"genuine\" should be given a distinct meaning from that of the term \"sufficiently serious\".\n7.1165. Having determined that the examination of whether a threat is genuine relates to the\nlikelihood of it materializing, we note that, while the term \"genuine\" is not used elsewhere in the\ncovered agreements, other terms have been used to qualify the likelihood of a threat or an event\noccurring. More particularly, Article XII:2(a) of the GATT 1994 refers to \"the imminent threat of …\na serious decline in [] monetary reserves\", Article 3.7 of the Agreement on Implementation of\nArticle VI of the General Agreement on Tariffs and Tr ade 1994 specifies that for a \"threat of\n\n1926 Russia's response to Panel question No. 207(b), para. 264.\n1927 European Union's response to Panel question No. 207, para. 191.\n1928 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 3248.\n1929 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 3097.\n1930 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 2762.\n1931 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 3248.\n1932 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 1, p. 1094.\n1933 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),\nVol. 2, p. 3248.\n\nmaterial injury\" to exist, \"[t]he change in circumstances which would create a situation in which\nthe dumping would cause injury must be clearly foreseen and imminent\" and \"the totality of the\nfactors considered mus t lead to the conclusion that further dumped exports are imminent and\nthat, unless protective action is taken, material injury would occur\", and Article 4.1(b) of the\nAgreement on Safeguards defines a \"threat of serious injury\" as a \"serious injury that is clearly\nimminent\".\n7.1166. In our view, the fact that footnote 5 uses the term \"genuine\" rather than terms such as\n\"imminent\" or \"clearly imminent\", and does not provide a definition or specification similar to those\nlisted above, suggests that a lesser degree of likelihood is required under footnote 5.\n7.1167. While we agree with Russia that it is not sufficient for a responding party to rely on \"mere\nconjecture\" or \"speculation\" 1934, we therefore cannot agree with Russia that the standard for\ndetermining whether a threat is ge nuine requires \"at a minimum, circumstantial evidence that,\nunless the measure is adopted or enforced, there is a significant degree of likelihood that the\nthreat in question will materialize\".1935\n7.1168. If the drafters of the GATS had intended to cover only threats where \"there is a\nsignificant degree of likelihood that the threat in question will materialize\" \"unless the measure is\nadopted or enforced\", language to this effect should have been included. Indeed, and as\nmentioned above, such language is inclu ded elsewhere in the covered agreements. Its absence in\nfootnote 5, in our view, suggests that the standard under this provision is closer to that suggested\nby the European Union, namely , whether the occurrence of the threatened event is \"a real, true\nand authentic possibility\" rather than \"an imaginary or very remote risk invoked in order to escape\nthe obligations imposed by the GATS \".1936 This is confirmed by the abovementioned ordinary\nmeaning of the term \"genuine\" being \"[h]aving the character claimed for it; real, true, not\ncounterfeit\". We do not believe that a threat can be considered not to have the character claimed\nfor it, or not to be real or true, simply because it does not have a significant degree of likelihood of\nmaterializing.\n7.1169. Having set out the se considerations regarding the distinct meaning of the terms\n\"genuine\" and \"sufficiently serious\", respectively, we note the European Union's argument that\nthese terms \"provide context for the interpretation of each other\" and that \"the degree of\nlikelihood necessary to regard a threat as 'genuine' must take into account the seriousness of the\nthreat.\"1937 We agree that it may not always be appropriate to conduct the analyses of whether a\nthreat is genuine and sufficiently serious, respectively, in complete i solation from one another.\nDepending on the particularities of the situation, a more holistic approach may be warranted and\nin these circumstances the seriousness of a threat may impact the assessment of whether it is\ngenuine, and vice versa.\n7.1170. Turning to whether the European Union has demonstrated the existence of a genuine and\nsufficiently serious threat to its security of energy supply, we note that the European Union argues\nthat foreign control of TSOs poses a genuine and sufficiently serious threat to th e European\nUnion's security of energy supply due to \"the interaction of a number of circumstances\".1938\n7.1171. More particularly, the European Union has pointed to the following \"circumstances\": (a)\nthat foreign governments, in some circumstances, have \"important ec onomic and/or political\ninterests which conflict with the EU's own interest in ensuring SoS within the European Union\" and,\nthus, incentives to undermine the European Union's security of energy supply 1939; (b) that foreign\ncontrolled TSOs can effectively undermine the European Union's security of energy supply either\nby failing to comply with legal obligations imposed under EU law or by acting in a manner that is\nnot in their own commercial interest 1940; and (c) that foreign governments have the means to\nrequire or induce foreign controlled TSOs to undermine the European Union's security of energy\n\n1934 Russia's response to Panel question No. 207(a), para. 261.\n1935 Russia's response to Panel question No. 207(a), para. 261.\n1936 European Union's response to Panel question No. 207, para. 190.\n1937 European Union's response to Panel question No. 207, para. 192.\n1938 European Union's response to Panel question No. 209, para. 203.\n1939 European Union's first written submission, para. 511. See also European Union's second written\nsubmission, para. 197; and response to Panel question No. 209, paras. 213-219.\n1940 European Union's first written submission, paras. 512-513. See also European Union's second\nwritten submission, para. 197; and response to Panel question No. 209, paras. 205-206.\n\nsupply.1941 The European Union also argues that the threat of foreign control over TSOs is\n\"compounded\"1942 or \"may be further aggravated\" 1943 by two other circumstances: (d) that it may\nbe more difficult for the EU authorities to \"detect and investigate\" violations of obligations under\nEU law in relation to foreign controlled TSOs 1944; and (e) that it may be more difficult for EU\nauthorities to effectively enforce sanctions in r esponse to violations of obligations under EU law in\nrelation to foreign controlled TSOs.1945\n7.1172. We understand from the European Union's responses to questi ons by the Panel that the\nabove-mentioned circumstances primarily relate to the issue of whether foreign c ontrol of TSOs\nposes a genuine risk to the European Union' s security of energy supply. 1946 We also understand\nthe European Union to argue that the threat to its security of energy supply will materialize when\ncircumstances (a), (b), and (c) are all present si multaneously.1947 In other words, the European\nUnion's rationale appears to be that if a foreign government has an incentive to undermine the\nEuropean Union's security of energy supply as well as the means to require or induce foreign\ncontrolled TSOs to do so, there is a genuine threat within the meaning of footnote 5. The European\nUnion, on the other hand, explains that circumstances (d) and (e) are \"aggravating factors, rather\nthan indispensable elements for the existence of the threat\".1948\n7.1173. In light of this, we find it useful to begin by considering the validity of each of the three\n\"indispensable\" circumstances, before turning to address the degree of likelihood of these\ncircumstances – compounded by the \"aggravating factors\" – simultaneously occurring, and i n\nparticular whether this degree of likelihood renders the threat of foreign control over TSOs a\ngenuine one, within the meaning of footnote 5.\n7.1174. With respect to the first \"circumstance\", that foreign governments may have incentives to\nundermine the European Union's security of energy supply, the European Union has pointed to a\nnumber of more specific situations where this would, in the European Union's view, be the case: (i)\nwhere a foreign government \"may be interested in maximizing its exports of gas to th e European\nUnion at the expense of any other domestic or foreign sources of supply, contrary to the EU's\ninterest in diversifying its sources of supply and promoting competition\"; (ii) where a foreign\ngovernment may be interested in ensuring its own securi ty of energy supply at the expense of the\nEuropean Union's, in particular in case of \"parallel shortage\"; (iii) where a foreign government is\nseeking to \"gain leverage vis-à-vis the European Union or the EU Member States in commercial or\npolitical negotiat ions\"; or (iv) where a foreign government seeks to \"punish behaviour by the\nEuropean Union, by a certain EU Member State or by a certain operator which that third -country\ngovernment regards as a threat to its political interests\". 1949 The European Union has f urthermore\npointed to historical examples, namely the 1973 oil embargo by the Organization of Arab\nPetroleum Exporting Countries and the interruption of Russian natural gas supplies to Ukraine in\n2006 and 2009, as illustrations of \"how a country's economic or political interests may enter into\nconflict with another country's interest in ensuring its SoS and lead the former country to take\nmeasures that have the effect of undermining the latter's SoS.\" 1950 Russia does not appear to\ndispute that foreign governme nts may have conflicting interests that would give them cause to\nseek to undermine the European Union's security of energy supply. In fact, Russia states that:\n\n1941 European Union's first written submission, paras. 514-519. See also European Union's second\nwritten submission, para. 197; and response to Panel question No. 209, paras. 207-210.\n1942 European Union's first written submission, para. 520; and second written submission, para. 198.\n1943 European Union's response to Panel question No. 209, para. 211.\n1944 European Union's first written submission, paras. 521-524. See also European Union's second\nwritten submission, para. 198; and response to Panel question No. 210, paras. 223-225.\n1945 European Union's first written submission, paras. 525-526. See also European Union's second\nwritten submission, para. 198; and response to Panel question No. 210, paras. 226-230.\n1946 European Union's response to Panel question No. 207, para. 193.\n1947 European Union's response to Panel question No. 207, para. 193.\n1948 European Union's response to Panel question No. 210, para. 222.\n1949 European Union's first written submission, para. 511.\n1950 European Union's response to Panel question No. 212, para. 240. See also European Union's second\nwritten submission, paras. 204-206.\n\nThe concept of foreign governments acting in the best interest of their citizens is a\nbedrock pr inciple of how governments function; it cannot and should not be\nconsidered a threat to the EU's security of supply.1951\n7.1175. We agree with both parties that any government will act in accordance with its national\ninterests and that this is indeed \"a bedrock princ iple of how governments function\". While we wish\nto emphasize that we are not suggesting that the right of foreign governments to \"act[] in the best\ninterest of their citizens\", in and of itself, should be considered a threat to the European Union's\nsecurity of energy supply, we agree with the European Union that it is not mere conjecture or\nspeculation for it to suggest that a foreign government may have incentives to undermine the\nEuropean Union's security of energy supply when their interests conflict, i ncluding in the specific\nsituations listed by the European Union.\n7.1176. With respect to the second \"circumstance\", that foreign controlled TSOs can effectively\nundermine the European Union's security of energy supply, the European Union argues that TSOs\n\"play a critical role\" in ensuring the European Union's security of energy supply and that foreign\ncontrolled TSOs can undermine it either by failing to comply with the obligations imposed under EU\nlaw or by failing to act in accordance with \"their own commercial interests, contrary to the\nreasonable expectation on which the market -based mechanisms provided for in the Third Energy\nPackage are premised.\"1952\n7.1177. The European Union points to the following more specific ways in which foreign controlled\nTSOs can undermine it s security of energy supply by failing to comply with obligations imposed\nunder EU law: (i) discontinuing the transmission of natural gas in extreme periods of cold or\nneglecting network maintenance for extended periods contrary to Articles 2(4) and 13(a) of the\nDirective; (ii) failing to provide third -party access on a non -discriminatory basis and favouring\naffiliated producers or suppliers contrary to Article 32 of the Directive; (iii) failing to plan\ninvestments or not implementing mandatory network inve stments and thereby preventing\ncompeting sources of natural gas from reaching the EU market contrary to Articles 14(5)(b) and\n14(5)(d), 17(1)(d) and 17(2)(f), and 22(2) and 22(7) of the Directive; (iv) disclosing confidential\ninformation to foreign governments contrary to Article 16 of the Directive, thereby providing them\nwith \"undue advantages in contractual negotiations\"; and (v) refusing non-discriminatory access to\nnecessary information for network users, preventing the optimal use of available infrastructure and\nthereby \"reducing the quantity of available gas in regions with scarcity or ensuring economic\nadvantages for certain producers or suppliers\" contrary to Article 16(3) of the Directive and \"a\nnumber of detailed obligations on transparency in Regulation (EC) No 715/2009\".1953\n7.1178. Furthermore, the European Union points to the following more specific ways in which\nforeign controlled TSOs can undermine its security of energy supply by failing to act in accordance\nwith their own commercial interests: (i) no t implementing \"economically rational\" network\ninvestments that would allow competing sources of natural gas to reach the EU market; (ii)\nscheduling maintenance works in periods of high demand; and (iii) underinvesting in the networks,\nincreasing the risks of technical failure, accidents and interruptions.1954\n7.1179. We note that Russia does not dispute the role of TSOs for the European Union's security\nof energy supply, nor the existence of obligations imposed on TSOs under EU law. Rather, Russia\nappears to argue that there is no threat to the European Union's security of energy supply\nstemming from foreign controlled TSOs engaging in the actions listed by the European Union\nexactly because these are \"already prohibited\" under EU law.1955\n7.1180. We have difficulties underst anding the relevance of this argument. As pointed out by the\nEuropean Union, its position is that foreign controlled TSOs can effectively undermine the\nEuropean Union's security of energy supply by not complying with the obligations imposed on\nthem under E U law – or by failing to act in accordance with their own commercial interests. The\nexistence of obligations under EU law that prohibit the types of actions referred to by the European\nUnion therefore does not appear to invalidate the European Union's posi tion. Russia also argues\n\n1951 Russia's second written submission, para. 307.\n1952 European Union's response to Panel question No. 209, paras. 205-206.\n1953 European Union's first written submission, para. 512.\n1954 European Union's first written submission, para. 512.\n1955 Russia's second written submission, para. 308.\n\nthat the actions by TSOs referred to by the European Union are \"entirely hypothetical\". 1956 In this\nregard, we recall that we are, at this point, only addressing the validity of the European Union's\nsecond \"circumstance\", that foreign controlled TSOs can effectively undermine the European\nUnion's security of energy supply by not complying with the obligations imposed under EU law or\nby failing to act in accordance with their own commercial interests. We address Russia's\narguments concerning whether it is \"entirely hypothetical\" that foreign controlled TSOs will actually\ndo so, when considering the degree of likelihood of all three \"circumstances\" occurring\nsimultaneously.\n7.1181. Given that TSOs are responsible for operating the transmission s ystems through which\nnatural gas is supplied, granting access to such systems, and investing in them, we agree with the\nEuropean Union that it is a reasonable inference, rather than mere conjecture or speculation, to\nsuggest that foreign controlled TSOs ca n effectively undermine the European Union's security of\nenergy supply.\n7.1182. With respect to the third \"circumstance\", that foreign governments have the means to\nrequire or induce foreign controlled TSOs to undermine the European Union's security of energy\nsupply, the European Union points to two scenarios:\n7.1183. First, the European Union argues that where the foreign government itself controls a TSO,\nthe foreign government can require or induce it to undermine the European Union's security of\nenergy supply \"by exercising its ownership rights and/or other rights which give it control over the\nmanagement of the TSO\".1957\n7.1184. Second, the European Union argues that a foreign government can require or induce\nTSOs controlled by foreign private persons to undermine the European Union's security of energy\nsupply by imposing legal obligations \"that make it impossible or more difficult for them to comply\nwith the obligations imposed under EU law with a view to ensuring SoS\" 1958 or by \"offering to\ngrant, or threatening to withdraw, cert ain benefits in respect of their activities in their home third\ncountry\" where the foreign private persons \"conduct similar or related economic activities in their\ncountry of origin\".1959 As an example, the European Union has pointed to Decree of the Presiden t\nof the Russian Federation No. 1285 of 11 September 2012 on Measures to protect the interests of\nthe Russian Federation when Russian legal entities engage in foreign economic activity.1960\n7.1185. Russia disputes that foreign governments have the means to require o r induce foreign\ncontrolled TSOs to undermine the European Union's security of energy supply, but does not\nelaborate on this position.1961\n7.1186. In our view, it would indeed appear that a foreign government can require or induce TSOs\nto undermine the European Unio n's security of energy supply when that foreign government itself\ncontrols the TSOs.\n7.1187. With respect to TSOs that are controlled by foreign private persons, we agree with the\nEuropean Union that such foreign private persons are subject to legal obligations i mposed under\ntheir originating jurisdiction and could be subject to inducement in the form of offers to grant or\nthreats to withdraw benefits. Where foreign private persons are subject to legal obligations or\ninducements by foreign governments, which conflict with obligations imposed under EU law or with\nits commercial interests in the European Union, the result will ultimately depend on that foreign\nprivate person and the weight or importance of its interests in its country of origin and in the\nEuropean Union, respectively. While we see no reason to assume that foreign controlled TSOs will\nalways comply with the legal obligations or inducements imposed by foreign governments, rather\nthan the legal obligations under EU law or their own commercial interests in the European Union, it\n\n1956 Russia's second written submission, para. 308.\n1957 European Union's first written submission, para. 515.\n1958 European Union's first written submission, para. 517.\n1959 European Union's first written submission, para. 518.\n1960 European Union's second written submission, fn 255; and response to Panel question No. 209,\npara. 209 (referring to Resolution of the Government of the Russian Federation No. 1017 of 5 October 2012 on\nmeasures implementing Decree of the President of the Russian Federation No. 1285 of 11 September 2012,\n(Exhibit EU-131)).\n1961 Russia's opening statement at the second meeting of the Panel, para. 158.\n\ndoes not appear to be mere conjecture or speculation to suggest that foreign controlled TSOs may\ncomply with the legal obligations or inducements imposed by foreign governments , at least in\nsome situations.\n7.1188. Having found that the three \"indispensable\" circumstances referred to by the European\nUnion are not, in and of themselves, mere conjecture or speculation but rather reasonable\ninferences, we turn to consider whether the degree of likelihood of these three circumstances –\ncompounded by the two additional, \"aggravating\" circumstances pointed to by the European Union\n– simultaneously occurring, and in particular whether this degree of likelihood renders the threat\nof foreign control over TSOs a genuine one, within the meaning of footnote 5.\n7.1189. In this regard, we note Russia's argument that the threat of foreign governments\nundermining the European Union's security of energy supply through foreign controlled TSOs is\n\"entirely hypothetical\". More specially, Russia submits that this has \" not occurred to date, and will\nnot occur in the future\".1962 The European Union does not dispute that the alleged threat posed by\nforeign control over TSOs has not yet materialized, but instead faults Russia for suggesting that\n\"only evidence of actual disruptions of supply could be relevant\".1963\n7.1190. We agree with the European Union that evidence of a threat already having materialized\nis not a prerequisite for demonstrating that this threat is genuine, i.e. has the character of a threat\nand is real and true. As ac knowledged by Russia itself, \"a threat, by its very nature, is something\nthat has not yet occurred or materialized\".1964\n7.1191. At the same time, we recall that the alleged threat cannot be entirely hypothetical in\nnature and that mere conjecture or speculation does not suffice. In our view, however, the\nEuropean Union does not merely engage in conjecture or speculation. Rather, we recall that it has\npointed to a number of actual situations where a foreign government will have incentives to\nundermine the European Union's security of energy supply and will have the means to do so either\nby controlling a TSO itself or by being in a po sition to require or induce foreign private persons\nthat, in turn, control a TSO to do so.\n7.1192. While we consider the \"aggravating\" circumstances pointed to by the European Union,\nnamely the fact that it may be more difficult to investigate, detect and enforce legal obligations\nunder EU law in respect of foreign controlled TSOs, of less importance, we agree with the\nEuropean that these are reasonably inferred from the fact that the EU authorities' investigative\npowers are limited to the EU territory 1965 and the fa ct that sanctions typically take the form of\nfines, which may be less effective where a person has limited assets within the EU territory.1966\n7.1193. We also agree that these obstacles to the investigation, detection, and enforcement of EU\nlegal obligations in resp ect of foreign controlled TSOs may serve to aggravate the likelihood of\nforeign governments seeking to induce or require foreign controlled TSOs to undermine the\nEuropean Union's security of energy supply.\n7.1194. Bearing this in mind, we believe that the Europea n Union has made a prima facie case\nthat there is a real and true possibility, rather than a merely hypothetical one, of foreign\ngovernments requiring or inducing foreign controlled TSOs to undermine the European Union's\nsecurity of energy supply. Hence, the European Union has, in our view, demonstrated that foreign\ncontrol over TSOs poses a genuine risk to its security of energy supply.\n7.1195. As we have found that foreign control of TSOs poses a genuine threat to the European\nUnion's security of energy supply, we turn to the issue of whether this threat can also be\nconsidered a sufficiently serious one. In this regard, we recall our finding that this issue relates to\nthe potential consequences or the potential gravity of the effects of a threat materializing. In other\nwords, for the threat of foreign control of TSOs to be considered sufficiently serious within the\n\n1962 Russia's second written submission, para. 308.\n1963 European Union's second written submission, para. 201.\n1964 Russia's response to Panel question No. 207(a), para. 260.\n1965 European Union's first written submission, paras. 521-524; and response to Panel question No. 210,\nparas. 223-225.\n1966 European Union's first written submission, paras. 525-526; and response to Panel question No. 210,\nparas. 226-230.\n\nmeaning of footnote 5, the potential consequences or effects on the European Union's security of\nenergy supply must be of a certain magnitude or gravity.\n7.1196. The European Union argues that foreign control of TSOs poses a sufficiently serious threat\nto the European Union's security of energy supply, pointing to the arguments made in the context\nof claiming that security of energy supply is a fundamental interest of society.1967\n7.1197. We recall that the European Union has explained that disruptions of supply may have\n\"severe social, economic and, ultimately, political consequences\". 1968 As examples of social\nconsequences, the European Union has explained that disruptions may \"prevent the heating of\nhouseholds and public spaces\" and as a result \"disrupt the provision of essential social services,\nsuch as healthcare, childcare, education and other welfare activities as well as many other basic\npublic services, such as transportation, police or the administration of justice\" which, in turn, \"may\nendanger the health, life, security and, more generally, the well -being of the European citizens, in\nparticular in the event of prolonged disruptions during the winter months\". 1969 As exa mples of\neconomic consequences, the European Union argues that disruptions \"may require the interruption\nof important industrial processes, cause irreparable damage to certain industrial installations, in\nparticular in case of sudden interruptions, and, mo re generally, have a serious impact on the\noverall economy\".1970 The European Union then goes on to argue that \"[t]hese social and economic\neffects may in turn lead to unrest and disturbances affecting the maintenance of law and order.1971\n7.1198. Russia does not dispu te the severity of the effects disruptions of supply may have on\nsociety and we too consider this relevant. In this regard, we also take into account the fact that\nnatural gas, according t o the European Union, \"plays an essential an d ever-growing role in t he\nenergy balance of many countries, including the European Union, making gas security a key\nelement in energy security\".1972 Presumably, disruptions in the supply of natural gas will therefore\nlead to similar disruptions in the overall energy balance.\n7.1199. We further note the European Union's explanation of the \"specific characteristics of the\ngas sector\", namely that \"[n]atural gas is far less fungible than oil, particularly with regard to\ntransporting the fuel to end users\" and that \"downstream gas transport is always performed by\nfixed infrastructure\". 1973 This, in turn, means that \"[i]f any part of a major gas transmission\npipeline is destroyed, supply downstream is typically stopped until the damage can be repaired or\nthe pipeline replaced; alternative arrangements by road are not an option.\"1974 Since natural gas is\ntransported by TSOs through infrastructure, which is fixed and, at any given time, of finite\nquantity, it can reasonably be inferred that there will be a significant impact on the supply of\nnatural gas, and hence energy, if a foreign government requires or induces even a single or a few\nTSOs to violate their obligations under EU law or to act contrary to their commercial interests.\n7.1200. Although Russia, as explained, does not dispute the severity of the effe cts disruptions of\nenergy supply may have on society, it argues that \"the potential consequences of foreign control\nof TSOs are mitigated by the existing regulatory framework in the European Union.\" 1975 This\nappears to be a reiteration of the position that the legal obligations imposed on TSOs under EU law\nentail that foreign control of TSOs does not constitute a threat against the European Union's\nsecurity of energy supply.\n\n1967 European Union's response to Panel question No. 207, para. 194 (referring to European Union's first\nwritten submission, para. 485).\n1968 European Union's first written submission, para. 485.\n1969 European Union's first written submission, para. 485.\n1970 European Union's first written submission, para. 485.\n1971 European Union's first written submission, para. 485.\n1972 European Union's first written submission, para. 484. More particularly, the European Union submits\nthat \"[t]he share of gas in the total primary energy supply (TPES) of the European Union has increased from\n18 % in 1990 to 23 % in 2013\" and that \"the share of gas in the power generation mix rose from 8.6 % in\n1990 to 16.6 % in 2013, with around 48 % of incremental power generation coming from natural gas\". (Ibid.)\n1973 European Union's first written submission, para. 486 (quoting International Energy Agency, Energy\nsupply security: Emergency Response of IEA Countries 2014 (OECD/IEA 2014), (Exhibit EU-70), pp. 53-54).\n1974 European Union's first written submission, para. 486 (quoting International Energy Agency, Energy\nsupply security: Emergency Response of IEA Countries 2014 (OECD/IEA 2014), (Exhibit EU-70), pp. 53-54).\n1975 Russia's response to Panel question No. 207(c), para. 270.\n\n7.1201. We have addressed this argument already in the context of considering whether foreign\ncontrol of TSOs constitutes a genuine threat to the European Union's security of energy supply. We\nreiterate the position that the existence of obligations on TSOs under EU law does not mitigate the\ngravity of the effects on the European Union's security of energy supply caused by foreign\ngovernments requiring or inducing foreign controlled TSOs to violate the obligations imposed on\nthem under EU law – or to fail to act in accordance with their own commercial interests.\n7.1202. We therefore conclude that foreign control of TSOs poses a genuine and sufficiently\nserious threat to a fundamental interest of the EU society, namely its security of energy supply,\nand proceed to assess whether the European Union has demonstrated that the third -country\ncertification measure is designed to maintain public order by being designed to address this threat\nagainst the European Union's security of energy supply.\nWhether t he third -country certification measure is designed to ensure the\nEuropean Union's security of energy supply\n7.1203. When considering whether the European Union has demonstrated that the third -country\ncertification measure implemented in the na tional laws of Croatia, Hungary and Lithuania is\ndesigned to address the threat against the European Union's security of energy supp ly posed by\nforeign control over TSOs, we recall that the Appellate Body has found, in the context of\nArticle XX(a) of the GATT 1994, that the analysis of a challenged measure's design is only a\nthreshold examination, which is not \"a particularly demanding step\".1976 We consider these\nfindings relevant for our assessment under Article XIV(a) of the GATS as well.1977\n7.1204. We therefore follow the approach set out by the Appellate Body and focus our assessment\non whether the European Union has demonstrated that the thir d-country certification measure is\nnot \"incapable\" of addressing the threats posed by foreign control over TSOs to the European\nUnion's security of energy supply, and hence maintaining public orde r within the meaning of\nArticle XIV(a) of the GATS.1978\n7.1205. In this regard, we note the European Union's argument that:\n[B]y its own express terms, the SoS requirement included in Article 11 of the Gas\nDirective is specifically aimed at ensuring the security of gas supply in the European\nUnion by addressing the threats to SoS posed by foreign controlled TSOs.1979\n7.1206. The European Union furthermore refers to its arguments on the contribution of the third -\ncountry certification measure to the objective of ensuring security of energy supply, made in the\ncontext of arguing that this measure is necessary to maintain public order.1980\n7.1207. While the assessment of a measure's contribution in this context is a more demanding\none than the assessment of whether the measure is designed to maintain public order, we see no\nproblem in assessing the latter on the basis of argumentation and evidence provided in the context\nof the former. 1981 We recall the European Union's explanation of the design, structure and\n\n1976 Appellate Body Report, Colombia – Textiles, paras. 5.68 and 5.70.\n1977 In the context of Article XIV(c) of the GATS, the Appellate Body has similarly considered the\nassessment of the design of a challenged measure an \"initial examination\" and the assessment of a challenged\nmeasure's necessity a \"more in-depth, holistic analysis\". (Appellate Body Report, Argentina – Financial\nServices, paras. 6.203-6.204).\n1978 Appellate Body Reports, Argentina – Financial Services, para. 6.203; and Colombia – Textiles,\npara. 5.68.\n1979 European Union's response to Panel question No. 213, para. 243.\n1980 European Union's response to Panel question No. 213, para. 246 (referring to European Union's first\nwritten submission, paras. 507-529; and second written submission, paras. 197-204).\n1981 See Appellate Body Report, Argentina – Financial Services, para. 6.205, in which the Appellate Body\nreferred to these two elements as \"conceptually distinct, yet related, aspects of the overall inquiry to be\nundertaken\" in the context of Article XIV(c) of the GATS and stated that:\nWe do not see the content of these two el ements of the analysis as entirely separate. Nor do we\nsee the structure of each analysis as one that must follow a rigid path. Rather, the analyses of\nthese two elements may overlap in the sense that some considerations may be relevant to both\nelements of the Article XIV(c) defence. The way in which a panel organizes its examination of\nthese elements in scrutinizing a defence in any given dispute will be influenced by the measures\n\nexpected operation of the third -country certification measure, namely that it involves a \"scre ening\nmechanism which allows the competent authorities to detect and assess in advance the potential\nrisks to SoS \" and, where warranted, allows the authorities to \"deny access to the transmission\nmarket\" to TSOs that would pose a risk, \"thereby preventing the risks to SoS from\nmaterialising\".1982 We further note that Russia does not dispute that the third -country certification\nmeasure \"may, in the abstract, not be incapable of contributing to ensuring SoS\" 1983 and we too\nbelieve that the above mentioned explanation of t his measure's design, structure and expected\noperation demonstrates that it is not incapable of ensuring the European Union's security of\nenergy supply by addressing the threat posed by foreign control over TSOs.\n7.1208. As we have found that the third-country certification measure is not incapable of ensuring\nthe European Union's security of energy supply by addressing the threat posed by foreign control\nover TSOs, we conclude that it is designed to maintain public orde r within the meaning of\nArticle XIV(a) of the GATS. We therefore proceed to assess whether the European Union has\ndemonstrated that this measure is necessary to maintain public orde r within the meaning of\nArticle XIV(a) of the GATS by being necessary to address the threat to the European Union 's\nsecurity of energy supply posed by foreign control over TSOs.\n7.10.2.3.2.1.2 Necessary to maintain public order\n7.1209. The Appellate Body has clarified that the assessment of whether a challenged measure is\nnecessary to maintain public order within the meaning of Article XIV(a) of the GATS involves a\nprocess of weighing and balancing a series of factors including : (i) \"the 'relative importance' of the\ninterests or values furthered by the challenged measure\" 1984; (ii) \"the contribution of the measure\nto the realization of the ends pursued by it\" 1985; and (iii) \"the restrictive impact of the measure on\ninternational commerce\".1986 Furthermore, panels must then compare the challenged measure with\nreasonably available alternative measures, which achieve the same level of pro tection while being\nless trade restrictive.1987\n7.1210. Below, we consider each of the three factors listed above as well as the alternative\nmeasures proposed by Russia, and then turn to provide an overall assessment, weighing and\nbalancing all of these elements.\nRelative importance of the objective of security of energy supply\n7.1211. With respect to the relative importance of the objective of security of energy supply, we\nnote that the Appellate Body has clarified, in the context of Article XX(d) of the GATT 1994, that:\n[A]ssessing a measure claimed to be necessary to secure compliance of a WTO -\nconsistent law or regulation may, in appropriate cases, take into account the relative\nimportance of the common interests or values that the law or regulation to be\nenforced is int ended to protect. The more vital or important those common interests\nor values are, the easier it would be to accept as \"necessary\" a measure designed as\nan enforcement instrument.1988\n7.1212. The European Union refers to its arguments concerning security of energy supply being a\nfundamental interest of society within the m eaning of footnote 5 to Article XIV(a) of the GATS1989,\nwhereas Russia does not address this factor. We recall our finding in paragraphs 7.1145 through\n7.1156 above that security of energy supply is a fundamental interest of society. In our view, this\n\nand laws or regulations at issue, as well as by the way in which the parties present their\nrespective arguments. (Ibid.)\n1982 European Union's first written submission, para. 529.\n1983 Russia's comments on the European Union's response to Panel question No. 213, para. 211.\n1984 Appellate Body Report, US – Gambling, para. 306 (quoting Appellate Body Report, Korea – Various\nMeasures on Beef, para. 162).\n1985 Appellate Body Report, US – Gambling, para. 306.\n1986 Appellate Body Report, US – Gambling, para. 306.\n1987 Appellate Body Report, US – Gambling, paras. 307-308.\n1988 Appellate Body Report, Korea – Various Measures on Beef, para. 162. See also Panel Reports, EC –\nSeal Products, para. 7.632; and Appellate Body Reports, EC – Seal Products, para. 5.203.\n1989 European Union's first written submission, para. 527.\n\nfinding suggests that this objective is of fundamental importance to the European Union also for\nthe purposes of our necessity analysis.\nContribution to the objective of security of energy supply\n7.1213. Turning to the third -country certification measure's contri bution to the objective of\nsecurity of energy supply, we note the European Union's argument that this measure forms \" part\nof a comprehensive policy consisting of a multiplicity of interacting measures\" and that it is\ntherefore difficult to \"isolate and qua ntify its effects\". 1990 For this reason the European Union\nsuggests that a \"qualitative analysis\" would be best suited to assess the contribution of the third -\ncountry certification measure.1991\n7.1214. The European Union argues that the \"design and expected operation\" of the measure is\n\"manifestly apt to make a material contribution\" to the objective of ensuring security of energy\nsupply.1992 More particularly, the European Union points out that the third -country certification\nmeasure sets out a \"screening mechanism which allows the competent authorities to detect and\nassess in advance the potential risks\" and, where warranted, allows the authorities to \"deny access\nto the transmission market\" to TSOs that would pose a risk, \"thereby preventing the risks to SoS\nfrom materialising\".1993\n7.1215. Russia does not appear to question the underlying design of the third-country certification\nmeasure, and we agree with the European Union that a measure which explicitly requires the\nrelevant authorities to assess potential threats to the Europe an Union's security of energy supply\nand to deny access to the market unless it has been determined that no such threat exists,\nappears to be \"manifestly apt to make a material contribution\" to the objective of security of\nenergy supply.\n7.1216. At the same time, we note that Russia argues that the third -country certification \"do[es]\nnot actually ensure that TSOs take action to ensure the security of supply of energy beyond those\nthey are already required to take.\"1994 This appears to be a reiteration of its position that the third-\ncountry certification measure is redundant since other EU laws and regulations already impose\nobligations on TSOs that prohibit actions, which could threaten the European Union's security of\nenergy supply.1995\n7.1217. We are not convinced that the mer e existence of other measures addressing the same or\nsimilar threats to the European Union's security of energy supply entails that the third -country\ncertification measure is redundant or does not contribute to this objective. As explained by the\nAppellate Body, concerns or challenges may arise that require Members to implement \"a\ncomprehensive policy comprising a multiplicity of interacting measures\".1996\n7.1218. The European Union explicitly refers to the third -country certification measure forming\npart of such a c omprehensive policy.1997 As pointed out by the European Union, the third -country\ncertification measure has an ex ante effect, namely, to detect and address in advance the risk that\nTSOs controlled by foreign persons may not comply with the various substantive requirements\nimposed on TSOs under EU law.1998\n7.1219. We therefore agree with the European Union that the third-country certification measure\ninteracts with other provisions, such as those banning the types of behaviour referred to by the\nEuropean Union, by allowing the relevant authorities to detect TSOs which may not to comply with\nsuch provisions due to foreign control, and prevent such TSOs from gaining access to the market.\n\n1990 European Union's first written submission, para. 528 (referring to Appellate Body Reports, Brazil –\nRetreaded Tyres, paras. 151; and EC – Seal Products, para. 5.212.\n1991 European Union's first written submission, para. 528.\n1992 European Union's first written submission, para. 529 (referring to Appellate Body Reports, Brazil –\n1993 European Union's first written submission, para. 529.\n1994 Russia's second written submission, para. 315.\n1995 Russia's second written submission, paras. 315-316.\n1996 Appellate Body Reports, Brazil – Retreaded Tyres, para. 151; China – Publications and Audiovisual\nProducts, fn 480; and EC – Seal Products, para. 5.212.\n1997 European Union's first written submission, para. 528.\n1998 European Union's second written submission, para. 209.\n\n7.1220. Russia also criticizes the third -country certification measure for not being designed to\naddress all threats posed to the European Union's security of energy supply. As examples, Russia\nsubmits that the third-country certification measure would not have prevented \"the interruptions in\nthe flow of Russian gas through Ukraine in 2006 and 2009\", which the European Union itself has\nrelied on \"as 'a compelling illustration of how foreign governments may find in their own interest to\ndisrupt gas supplies to another country in order to advance their foreign policy objectives\".1999\n7.1221. In this regard, we note that the European Union does not dispute that the interruptions in\ngas supplies in 2006 and 2009 would not have been prevented by the third -country certification\nmeasure. Generally, the European Union does not suggest that the third -country certification\nmeasure is necessary to address all potential threats that may be posed to its security of energy\nsupply, but rather that it is necessary to address the specific thre at pointed to, namely that posed\nby foreign control over TSOs. We agree that a measure need not be necessary to prevent all\npotential threats to a fundamental interest of society in order to be justified under Article XIV(a) of\nthe GATS. In particular , we recall the Appellate Body's finding in EC – Seal Products that a\nresponding Member is not required to address the same or similar public moral concerns in the\nsame way. 2000 We also recall the European Union's position that the third -country certification\nmeasure forms \" part of a comprehensive policy consisting of a multiplicity of interacting\nmeasures\". This further supports the conclusion that the third -country certification measure is not\nrequired to address all threats to the European Union's security of en ergy supply in order to be\njustified under Article XIV(a) of the GATS.\n7.1222. Lastly, Russia criticizes the third-country certification measure for having only an ex ante\neffect, arguing that \"the threat that the measure addresses by means of an 'ex -ante' assessment\nautomatically pre-empts the 'certain circumstances' as referred to by the EU from being present \"\nand that \" [c]onsequently, the EU attempts to obtain justification for a measure that does not, in\nany way, shape or form, address the threat that arises wh enever these 'certain circumstances' are\nin fact present.\"2001\n7.1223. We see no issue with a responding party attempting to justify a measure that is of an ex\nante nature under Article XIV(a) of the GATS and such measures have been accepted in a number\nof previous disputes.2002 We also reiterate the point made by the European Union that the third -\ncountry certification measure forms \" part of a comprehensive policy consisting of a multiplicity of\ninteracting measures\". Indeed, the European Union has pointed to other prov isions, which provide\nEU authorities with the possibility of imposing sanctions should TSOs engage in actions that\nthreaten the European Union's security of energy supply. 2003 This does, however, not entail that a\nmeasure, which ex ante seeks to prevent such threats from materializing in the first place, should\nnot be considered as contributing towards the objective of ensuring the European Union's security\nof energy supply.\n7.1224. In light of the above, we therefore agree with the European Union that the design,\nstructure and expected operation of the third -country certification measure renders it manifestly\napt to address ex ante the threat to the European Union's security of energy supply posed by\nforeign control over TSOs, and that this conclusion is not altered b y the fact that the third-country\ncertification measure may not address certain other potential threats to the European Union's\nsecurity of energy supply.\nTrade-restrictiveness of the third-country certification measure\n7.1225. The European Union compares the thi rd-country certification measure to a \"complete\nban\", pointing to the third -country certification measure being \"much less restrictive\". 2004 More\nparticularly, the European Union submits that this measure \"restricts trade in services to the\nextent that it req uires that the competent authorities refuse the certification of any third country\n\n1999 Russia's response to Panel question No. 214(a), para. 275 (quoting the European Union's second\nwritten submission, para. 206).\n2000 Appellate Body Reports, EC – Seal Products, para. 5.200.\n2001 Russia's comments on the European Union's response to Panel question No. 212, para. 110.\n2002 See, e.g. Appellate Body Reports, Korea – Various Measures on Beef, para. 178; and Argentina –\nFinancial Services, para. 6.231; and Panel Report, Argentina – Financial Services, paras. 7.694, 7.697, 7.709\nand 7.716.\n2003 European Union's response to Panel question No. 210, paras. 229-230.\n2004 European Union's first written submission, para. 531.\n\ncontrolled TSO which puts at risk the security of supply\". 2005 We therefore understand from the\nEuropean Union that the degree of trade -restrictiveness depends on the relevant authorities'\napplication of the rules on third -country certification, which – as acknowledged by both parties –\ntakes place on a case-by-case basis.2006\n7.1226. In the European Union's view, this limits the trade -restrictiveness of the third -country\ncertification me asure as the authorities will only impose restrictions on foreign controlled TSOs\nwhen they are found to pose a threat to the European Union's security of energy supply. 2007\nContrary to the European Union, Russia submits that this increases the trade -restrictiveness of the\nthird-country certification measure, arguing that the lack of a \"clear standard\" for applying\nArticle 11 of the Directive means that \"there are virtually no limitations on the restrictions on\ncommerce that may be imposed.\"2008\n7.1227. We cannot agree with Russia that the third -country certification measure should be\nconsidered highly trade -restrictive solely because it requires a case -by-case analysis by the\nrelevant authorities and permit these flexibility or discretion in determining whether a foreig n\ncontrolled TSO poses a threat to the European Union's security of energy supply. At the same\ntime, we can only agree with what appears to be the underlying sentiment of both parties'\nposition, namely that the trade -restrictiveness of the third -country ce rtification measure will\nultimately depend on how it is applied by the relevant authorities.\n7.1228. In this regard, we find it relevant that, as pointed out by the European Union, all\napplications for third-country certification have so far been granted. 2009 In our view, this suggests\nthat the European Union is correct in stating that the third -country certification measure will only\nrestrict trade in pipeline transport services when there is found to be a threat against the\nEuropean Union's security of energy suppl y, and hence that the trade -restrictiveness of this\nmeasure is limited.\nReasonably available alternative measures\n7.1229. The Appellate Body has clarified that a responding party is not require d to \"identify the\nuniverse of less trade-restrictive alternative measures and then show that none of those measures\nachieves the desired objective\". 2010 Instead, as the responding party, the European Union is\nrequired to address alternative measures raised by Russia and demonstrate \"why its challenged\nmeasure nevertheless rema ins 'necessary' in light of that alternative or, in other words, why the\nproposed alternative is not, in fact, 'reasonably available'\", taking into account \"the interests or\nvalues being pursued and the party's desired level of protection\".2011\n7.1230. Russia has po inted to two measures, which, in its view, are reasonably available\nalternatives to the third -country certification measure and would achieve the same level of\nprotection while being less trade restrictive: (a) applying the same certification rules for all TSOs,\ni.e. either applying the third -country certification measure under Article 11 of the Directive or the\n\n2005 European Union's first written submission, para. 530.\n2006 European Union's first written submission, para. 531; and Russia's second written submission,\npara. 319.\n2007 European Union's first written submission, para. 530.\n2008 Russia's second written submission, para. 319.\n2009 European Union's first written submission, para. 532 (referring to Decision of the French\nCommission for the Regulation of Energy (CRE) of 4 June 2014 on the certification of Transport et\nInfrastructures Gaz France (TIGF), (Decision of the French NRA on the certification of TIGF), (Exhibit EU-67);\nDecision of the Greek Regulatory Authority for Energy (RAE) of 25 September 2014 on the certification of the\nHellenic TSO (DESFA), (Decision of the Greek NRA on the certification of DESFA), (Exhibit EU-68); and Decision\nof 19 May 2015 of the Polish Energy Regulatory Office (ERO) on the certification of Gazociągów Przesyłowych\nGaz-System Spółka Akcyjna (Gaz-System) in connection with its function as the TSO on the Polish section of\nthe Yamal-Western Europe pipeline, (Decision of the Polish NRA on the certification of Gaz-System), (Exhibit\nEU-69).\n2010 Appellate Body Report, US – Gambling, para. 309.\n2011 Appellate Body Report, US – Gambling, para. 311.\n\nrules for domestic TSOs under Article 10 to all TSOs regardless of their origin 2012; and (b) a\n\"blocking statute\".2013\n7.1231. With respect to the first alternative measure proposed by Russia, applying the same\ncertification rules for all TSOs, we note that Russia suggests that the European Union should apply\nArticle 10 of the Directive in respect of all TSOs or, alternatively, that it should apply the thi rd-\ncountry certification measure in Article 11 of the Directive in respect of all TSOs. 2014 As to the\nformer proposal, we recall that Article 10 calls for certification without any assessment of threats\nposed to the European Union's security of energy supply. Applying these rules to domestic as well\nas foreign controlled TSOs would therefore, plainly, not achieve the same level of protection in\nrespect of threats posed by foreign control over TSOs.\n7.1232. Turning to the proposed use of the rules on third -country certification with respect to all\nTSOs, the European Union argues that this alternative is not reasonably available to the European\nUnion.2015 In this regard, the European Union points out that this alternative would \"make no\ncontribution whatsoever to the SoS o bjective\" and that it would therefore be \"manifestly\nunreasonable and place an 'undue burden' on both the domestically controlled T [S]Os and the EU\nauthorities responsible for the administration of the third -country certification measure.\" 2016 The\nEuropean Un ion does not expand on the \"undue burden\" allegedly placed on domestically\ncontrolled TSOs and EU authorities, but argues that the potential risk that a foreign government\nmay induce or require domestically controlled TSOs to undermine the European Union's security of\nenergy supply is \"by no means comparable to th e threat addressed by the third country\ncertification measure and does not require the adoption of similar measures\".2017\n7.1233. We further note the European Union's argument that the basis for Russia's claim under\nArticle XVII of the GATS against the third -country certification measure, and hence for our finding\nof violation, is the lack of application of this measure to domestically controlled TSOs.2018\n7.1234. We agree with the European Union that the justificat ion for not applying the same\ntreatment to domestically controlled TSOs is more appropriately addressed under the chapeau of\nArticle XIV of the GATS, an approach that, as pointed out by the European Union, has been\nfollowed in previous disputes. 2019 We therefore do not consider this proposed alternative measure\nfurther but rather address the underlying issues, as appropriate, in the context of our assessment\nof whether the third -country certification measure fulfils the requirements of the chapeau of\nArticle XIV.2020\n7.1235. With respect to the second alternative measure proposed by Russia, the \"blocking\nstatute\", both parties appear to agree that such a measure would require TSOs not to comply with\ncertain extra-territorial laws adopted by foreign governments which affect trade with the European\nUnion.2021 On this basis, Russia argues that a blocking statute would \"explicitly prevent these TSOs\nfrom receiving or acting upon instructions from foreign persons or foreign governments in violation\nof EU law\". 2022 The European Union, on the other hand, does not believe that such a blocking\nstatute would ensure compliance with existing EU obligations, arguing:\n\n2012 Russia's second written submission, para. 320.\n2013 Russia's second written submission, paras. 321-322.\n2014 Russia's second written submission, para. 320.\n2015 European Union's response to Panel question No. 215(a), para. 259. The European Union also states\nthat this proposed measure \"would maintain the existing burden on foreign controlled TSOs while imposing a\nnew burden upon the domestically controlled TSOs\" and that \"Russia has not explained how, in view of this,\nthe proposed alternative would be less 'restrictive'\". (Ibid. para. 258). In this regard, we note that Russia\nsuggests that the proposed alternative would be less trade restrictive as it would \"level the playing field for all\nTSOs\". (Russia's comments on the European Union's response to Panel question No. 215, para. 217).\n2016 European Union's response to Panel question No. 215(a), para. 259.\n2017 European Union's response to Panel question No. 214, para. 252.\n2018 European Union's response to Panel question No. 215(a), para. 261.\n2019 European Union's response to Panel question No. 215(a), para. 261 (referring to Appellate Body\nReport, US – Gasoline, pp. 28-29, DSR 1996:I, 3, at pp. 30-31).\n2020 See paras. 7.1241-7.1253 below.\n2021 European Union's second written submission, paras. 215-216; and Russia's second written\nsubmission, paras. 321-322.\n2022 Russia's second written submission, para. 322.\n\nJust like a foreign government can require or induce a third country TSO not to\ncomply with the obligations of the Third Energy Package aimed at ensuring SoS, it\ncould do the same with regard to the \"blocking statute\" proposed by Russia. Indeed,\nnothing would prevent the third country concerned from enacting its own \"blocking\nstatute\" in order to block compliance with the \"blockin g statute\" proposed by\nRussia.2023\n7.1236. When addressing this proposed alternative measure, we recall that we have already\nfound that there are situations where a foreign government can require or induce foreign\ncontrolled TSOs not to comply with obligations under EU law. As previously explained, it is this\nthreat that the third-country certification measure addresses.\n7.1237. We have difficulties understanding how a blocking statute could achieve the same level of\nprotection in relation to this threat. More particularly, if a foreign government , in cert ain\ncircumstances, has the means to require or induce foreign controlled TSOs not to comply with\nobligations imposed under EU law, it would presumably also have the means to require or induce\nsuch TSOs not to comply with the proposed blocking statute.\n7.1238. In light of this, we do not consider the proposed blocking statute a reasonably available\nalternative measure, which would achie ve the same level of protection as the third -country\ncertification measure.\n Overall assessment\n7.1239. We have found that the objective o f ensuring security of energy supply is of fundamental\nimportance and that the third -country certification measure, although it may not address all\npotential threats posed to the European Union's security of energy supply, is manifestly apt to\naddress the specific threat pointed to by the European Union, namely that posed by foreign control\nover TSOs. While the trade-restrictiveness of the third-country certification measure will ultimately\ndepend on the manner in which it is applied by the relevant authori ties, the evidence submitted by\nthe European Union on past assessments suggests that the trade-restrictiveness of this measure is\nlimited. Lastly, we recall that the alternative measures proposed by Russia have either been found\nnot to achieve the same lev el of protection of the European Union's security of energy supply or\nnot to be reasonably available alternatives. All of these factors suggest that the third -country\ncertification measure is necessary within the meaning of Article XIV(a) of the GATS.\n7.1240. We therefore conclude that the European Union has made a prima facie case that the\nthird-country certification measure implemented in the national la ws of Croatia, Hungary and\nLithuania is necessary to address the threat to the European Union's security of en ergy supply\nposed by foreign control over TSOs, and therefore necessary to maintain public order. Hence, we\nconclude that this measure is provisionally justified under Article XIV(a) of the GATS and therefore\nturn to consider whether the European Union has demonstrated that it fulfils the requirements\nunder the chapeau of Article XIV of the GATS.\n7.10.2.3.2.2 Requirements under the chapeau of Article XIV of the GATS\n7.1241. We begin our assessment under the chapeau of Article XIV of the GATS by recalling that\nthis involves an e xamination of whether the challenged measure is \"applied in a manner which\nwould constitute a means of arbitrary or unjustifiable discrimination between countries whe re like\nconditions prevail, or a disguised restriction on trade in services\".2024\n7.1242. The European Union has acknowledged the existence of differential and less favourable\ntreatment between domestic pipeline transport services and service suppliers and third -country\npipeline transport services and service suppliers. Indeed it is this less favourable treatment that\nforms the basis of our finding of violation under Article XVII of the GATS to begin with.2025\n\n2023 European Union's second written submission, para. 217 (referring to Resolution of the Government\nof the Russian Federation No. 1017 of 5 October 2012 on measures implementing Decree of the President of\nthe Russian Federation No. 1285 of 11 September 2012, (Exhibit EU-131)).\n2024 See paragraph 7.231 above.\n2025 See section 7.10.2.2 above.\n\n7.1243. The European Union, however, argues that the third -country certification measure does\nnot give rise to arbitrary or unjustifiable discrimination.2026\n7.1244. In this regard, we recall that the Appellate Body has clarified, in the context of Article XX\nof the GATT 1994, that the nature and quality of the discrimination to be examined under the\nchapeau of this provision is different from that found to be inconsist ent with the substantive\nobligations.2027 More particularly, the Appellate Body has explained that \"[a]nalyzing whether\ndiscrimination is arbitrary or unjustifiable usually involves an analysis that relates primarily to the\ncause or the rationale of the discr imination.\"2028 In our view, these findings are relevant also for\nthe assessment of arbitrary or unjustifiable discrimination under the chapeau of Article XIV of the\nGATS.\n7.1245. The European Union contends that the discrimination between domestic and third-country\npipeline transport services and service suppliers is not arbitrary or unjustifiable, arguing that the\nthreat of foreign governments inducing or requiring domestically controlled TSOs to undermine the\nEuropean Union's security of energy supply is \"by no mea ns comparable to the threat addressed\nby the third-country certification measure\".2029\n7.1246. More particularly, the European Union points out that a foreign government would \"find it\nextremely difficult to require or induce a TSO owned or controlled by an EU Member State … to act\nin ways that would undermine the interests of that EU Member State or of the European\nUnion.\"2030 The European Union also argues that foreign private persons \"are much more likely to\nhave their principal place of business and/or personal and family links in that foreign country than\nthe nationals of an EU Member State\", rendering foreign persons \"much more vulnerable to the\nrequirements and inducements emanating from the government of that foreign country \".2031\nSimilarly, the European Union argues that \"requirements or inducements emanating from a foreign\ncountry could be effectively countered by the requirements or inducements from the EU Member\nState of which the persons in question are nationals and where they usually have their main\npersonal links and business activity.\"2032\n7.1247. We recall that the European Union, when arguing that foreign control over TSOs poses a\ngenuine and sufficiently serious threat to its security of energy supply, has pointed to foreign\ngovernments having the means to requ ire or induce a foreign controlled TSO to undermine the\nEuropean Union's security of energy supply where that foreign government itself controls the TSO\nor where the TSO is controlled by foreign private persons.2033 In respect of the latter, the European\nUnion submits that foreign governments can require or induce TSOs controlled by foreign private\npersons to undermine the European Union's security of energy supply by imposing legal obligations\n\"that make it impossible or more difficult for them to comply with the obligations imposed under\nEU law with a view to ensuring SoS\" 2034 or by \"offering to grant, or threatening to withdraw,\ncertain benefits in respect of their activities in their home third country\" where the foreign private\npersons \"conduct similar or related economic activities in their country of origin\".2035\n7.1248. As we explained when addressing this argument above, where a foreign private person is\nsubject to legal obligations or inducements by foreign governments, which conflict with obligations\nimposed under EU law or with its commercial interests in the European Union, the result will\nultimately depend on that foreign private person and the weight or importance of its interests in its\ncountry of origin and in the European Union, respectively.2036\n7.1249. In our view, this reasoning applies to domestic persons as well. More particularly, where\na domestic person, who controls a TSO within the European Union and also \"conduct[s] similar or\nrelated economic activities\" in a foreign country, is subject to legal obligations or inducements by\n\n2026 European Union's first written submission, paras. 535-540.\n2027 Appellate Body Report, US – Shrimp, para. 150.\n2028 Appellate Body Report, Brazil – Retreaded Tyres, para. 225.\n2029 European Union's response to Panel question No. 214, para. 252.\n2030 European Union's response to Panel question No. 214, para. 254.\n2031 European Union's response to Panel question No. 214, para. 255.\n2032 European Union's response to Panel question No. 214, para. 255.\n2033 European Union's first written submission, paras. 515-518.\n2034 European Union's first written submission, para. 517.\n2035 European Union's first written submission, para. 518.\n2036 See para. 7.1187 above.\n\nforeign governments, which conflict with obligations imposed under EU law or with its commercial\ninterests in the European Union, the result will ultimately depend on that domestic private person\nand the weight or importance of its intere sts in the European Union and the foreign country in\nquestion.\n7.1250. While we do not disagree with the European Union that foreign private persons may be\nmore likely to have their \"principal place of business and/or personal and family links\" in its foreign\ncountry of origin and hence be more \"vulnerable to the requirements and inducements emanating\nfrom the government of that foreign country \"2037, we see no reason to conclude that there is no\nrisk of domestic persons having commercial interests and/or personal and family links in foreign\ncountries, which would render them vulnerable to requirements and inducements emanating from\nforeign governments. Similarly, while we do not disagree with the European Union that the\nEuropean Union may be more likely to \"effectivel y counter\" requirements or inducements\nemanating from a foreign country with requirements or inducements emanating from EU member\nStates or the European Union itself in respect of domestic private persons 2038, we see no reason to\nconclude that the European Un ion would not also be able to do so, in some circumstances, in\nrespect of foreign private persons controlling a TSO within the EU territory.\n7.1251. In other words, while the risk or threat to the European Union's security of energy supply\nposed by domestically c ontrolled TSOs may be different or less than that posed by foreign\ncontrolled TSOs, the European Union has not demonstrated that this risk or threat does not exist,\nnor that it is entirely speculative or hypothetical. It is undisputed that the third -country\ncertification measure does nothing to address this risk or threat. More particularly, and as\nexplained above, Article 10, which generally regulates certification of domestically controlled TSOs,\ninvolves no assessment of threats to the European Union's security of energy supply at all.2039\n7.1252. The European Union has itself explained that the design of the third -country certification\nmeasure is such that it operates in an ex ante manner by requiring the relevant authorities to\ndetect and address, in advance, the risk of foreign controlled TSOs undermining the European\nUnion's security of energy supply, and to certify the TSO only if it is found not to pose such a\nrisk.2040 The European Union has further explained that the third -country certification measure will\nrestrict the supply of pipeline transport services only insofar as the TSO is found to pose a risk to\nthe European Union's security of energy supply. 2041 Bearing this in mind, we have difficulties\nreconciling the lack of any prior assessment of the risk of domestically controlled TSOs\nundermining the European Union's security of energy supply with the cause or rationale of\nensuring the European Union's security of energy supply. More particularly, and as explained\nabove, the E uropean Union has not demonstrated that a foreign government would not, in some\ncircumstances, be able to require or induce a domestically controlled TSO to undermine the\nEuropean Union's security where that domestic person also \"conduct[s] similar or related economic\nactivities\" in a foreign country.\n7.1253. While we do not mean to imply that the same regulatory scheme should necessarily be\napplied with respect to foreign and domestically controlled TSOs, we believe that the European\nUnion is required to adapt or \"calibrate\" its measure in a way so it addresses the threats posed by\nforeign governments requiring or inducing domestically controlled TSOs to undermine the\nEuropean Union's security of energy supply as well. 2042 The lack of any assessment of threats\nposed by foreign governments requiring or inducing domestically controlled TSOs to undermine the\nEuropean Union's security of energy supply, in our view, is not compatible with the cause or\nrationale of the third-country certification measure. Hence , this constit utes arbitrary and\nunjustifiable discrimination in violation of the chapeau of Article XIV of the GATS.2043\n\n2037 European Union's response to Panel question No. 214, para. 255.\n2038 European Union's response to Panel question No. 214, para. 255.\n2039 See para. 7.1231 above.\n2040 European Union's second written submission, para. 209.\n2041 European Union's first written submission, para. 530.\n2042 For a similar approach, see Appellate Body Reports, US – Tuna II (Mexico), para. 286, where the\nAppellate Body found that the chapeau of Article XX of the GATT 1994 required the challenged measure to be\n\"calibrated\" to the different risks of adverse effects on dolphins arising under different fishing methods.\n2043 Both parties have also submitted arguments concerning alleged arbitrary and unjustifiable\ndiscrimination between pipeline transport services and service suppliers from different third countries, which\ndoes not relate to the discrimination forming the basis of our underlying finding of violation under the national\n\n7.10.2.3.3 Conclusion\n7.1254. Having considered the various arguments and evidence provided by the European Union,\nand for the reasons explained in paragraphs 7.1241 through 7.1253 above, we conclude that the\nEuropean Union has not demonstrated that the third-country certification measure implemented in\nthe national laws of Croatia, H ungary and Lithuania fulfils the requirements in the chapeau of\nArticle XIV of the GATS. Hence, we find that the European Union has failed to make a prima facie\ncase that this measure is justified under this provision.\n7.10.2.4 Russia's claims under Articles VI:1 and VI:5(a) of the GATS\n7.1255. Russia claims that the third -country certification measure in the national implementing\nlaws of Croatia, Hungary and Lithuania is also inconsistent with Articles VI:1 and VI:5(a) of the\nGATS.2044\n7.1256. We have found above that the third -country country certification measure in the national\nimplementing laws of Croatia, Hungary and Lithuania is inconsistent with the national treatment\nobligation in Article XVII of the GATS and is not justified under Article XIV(a) of the GATS.\n7.1257. We recall that the principle of judicial economy is recognized in WTO law. Pursuant to that\nprinciple, a panel may decide to address only those claims \"which must be addresse d in order to\nresolve the matter in issue in the dispute.\" 2045 Hence, a panel may \"refrain from making multiple\nfindings that the same measure is inconsistent with various provisions when a single, or a certain\nnumber of findings of inconsistency, would suffice to resolve the dispute.\" 2046 The Appellate Body\nalso warned against \"false judicial economy\" whereby a panel would provide only a partial\nresolution of the matter at issue. Thus, a panel must address those claims \"on which a finding is\nnecessary in order to enable the DSB to make sufficiently precise recommendations and rulings so\nas to allow for prompt compliance by a Member with those recommendations and r ulings 'in order\nto ensure effective resolution of disputes to the benefit of all Members.'\" 2047 The Appellate Body\nhas further clarified that \"the fact that two provisions have a different 'scope and content' does\nnot, in and of itself, imply that a panel must address each and every claim under those provisions\"\nas a panel should rather be guided by \"the need to address all of those claims whose resolution is\nnecessary to resolve the dispute so as to avoid a partial resolution of the dispute.\"2048\n\ntreatment obligation in Article XVII of the GATS. (European Union's first written submission, paras. 541-544;\nand second written submission, para. 223; and Russia's second written submission, para. 325). More\nparticularly, Russia appears to briefly refer to the argumentation advanced for its claims under Articles VI:1\nand VI:5(a) of the GATS against the third-country certification measure. (Russia's second written submission,\npara. 325). Russia has also submitted certain additional arguments in the context of the chapeau of Article XIV\nof the GATS. More particularly, Russia points to Recital (22) of the Directive stating that an assessment of\nsecurity of energy supply should take into account \"the treatment of both domestic and foreign trade and\ninvestment in energy in a particular third country\". (Russia's closing statement at the second meeting of the\nPanel, para. 3 (quoting Directive 2009/73/EC, (Exhibit EU-5), Recital (22)). Furthermore, Russia has provided\nevidence that the treatment of foreign investment in energy in third countries has in fact been taken into\naccount when considering whether to grant certification to foreign controlled TSOs. (Russia's closing statement\nat the second meeting of the Panel, para. 3 (referring to Commission opinion of 17.10.2014 correcting Opinion\nC(2014) 5483 final of 28 July 2014 pursuant to Article 3(1) of Regulation (EC) No. 715/2009 and Article 10(6)\nand 11(6) of Directive 2009/73/EC – Greece – Certification of DESFA, (Exhibit RUS-60)). In our view, panels\nare not necessarily precluded from addressing, in the context of the chapeau of Article XIV of the GATS,\nalleged arbitrary and unjustifiable discrimination that does not relate to the underlying finding of violation.\nHaving said this, we would tend to agree with Russia that the reference to the treatment of foreign\ninvestments in third countries in Recital (22) of the Directive appears to have little to do with addressing the\nrisk of foreign governments seeking to induce or require TSOs to undermine the European Union's security of\nenergy supply, but rather suggests a notion of reciprocity under which the treatment of \"investment in energy\"\nby domestic EU persons in foreign countries could impact the decision on whether or not to grant certification\nto foreign controlled TSOs. However, as we have already found that the third-country certification measure in\nthe Directive does not fulfil the requirements of the chapeau of Article XIV, and in light of the brevity of these\nadditional arguments by Russia, we do not consider it necessary to address these arguments in further detail.\n2044 Russia's first written submission, paras. 519-520; and second written submission, para. 358.\n2045 Appellate Body Reports, US – Wool Shirts and Blouses, p. 19, DSR 1997:I, 323, at p. 340; and US –\nTuna II (Mexico), para. 403.\n2046 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 133. (emphasis original)\n2047 Appellate Body Report, Australia – Salmon, para. 223. (footnotes omitted)\n2048 Appellate Body Reports, Argentina – Import Measures, para. 5.194.\n\n7.1258. Article VI:1 o f the GATS 2049 concerns the administration of the measure at issue rather\nthan its substantive content. 2050 Having found that the measure at issue is inconsistent with the\nsubstantive obligation prescribed in Article XVII of the GATS, the question of whether tha t\nmeasure is administered in a manner inconsistent with Article VI:1 of the GATS becomes\nirrelevant.2051\n7.1259. Article VI:5(a) of the GATS imposes disciplines with respect to licensing and qualification\nrequirements and technical standards. 2052 As we have found that the third -country country\ncertification measure in the national implementing laws of Croatia, Hungary and Lithuania is\ninconsistent with the national treatment obligation in Article XVII of the GATS and is not justified\nunder Article XIV(a) of the GATS, th e European Union will need to take steps to make that\nmeasure WTO-compliant. We therefore consider that our findings above are sufficient to resolve\nthe matter at issue in this dispute.\n7.1260. In light of the above, we decide to exercise judicial economy in respe ct of Russia's claims\nunder Articles VI:1 and VI:5 of the GATS.\n7.11 The TEN-E measure\n7.11.1 Introduction\n7.1261. In this section we address Russia's claims against the TEN -E measure 2053, described\nabove in paragraphs 2.52 through 2.60, and the European Union's defence. Russia challenges the\nTEN-E measure under both the GATT 1994 and the GATS. The European Union advances a defence\nunder Article XX(j) of the GATT 1994 in respect of Russia's claims under the GATT 1994, while not\nasserting any defence with respect of Russia's claim under the GATS. We first address Rus sia's\nclaims under the GATT 1994, followed by the examination of the European Union's defence under\nArticle XX(j) of the GATT 1994. We then proceed to the analysis of Russia's claim under the GATS.\n7.11.2 Russia's claims under the GATT 1994\n7.11.2.1 Introduction\n7.1262. Russia advances two claims against the TEN-E measure under the GATT 1994: one under\nArticle I:1 and the other under Article III:4. In its submissions to the Panel, Russia does not\nalways cross-refer to its arguments developed in the context of its claim under Art icle III:4 when\n\n2049 Article VI:1 of the GATS states as follows: \"In sectors where specific commitments are undertaken,\neach Member shall ensure that all measures of general application affecting trade in services are administered\nin a reasonable, objective and impartial manner.\"\n2051 In the same sense, see Panel Reports, Argentina – Import Measures, para. 6.498.\n2052 Article VI:5(a) of the GATS states as follows:\nIn sectors in which a Member has undertaken specific commitments, pending the entry into force\nof disciplines developed in these sectors pursuant to paragraph 4, the Member shall not apply\nlicensing and qualification requirements and technical standards that nullify or impair such\nspecific commitments in a manner which: (i) does not comply with the criteria outlined in\nsubparagraphs 4(a), (b) or (c); and (ii) could not reasonably have been expected of that Member\nat the time the specific commitments in those sectors were made.\nArticle VI:4 of the GATS, which is referenced in Article VI:5(a)(i), states as follows:\nWith a view to ensuring that measures relating to qualification requirements and procedures,\ntechnical standards and licensing requirements do not constitute unnecessary barriers to trade in\nservices, the Council for Trade in Services shall, through appropriate bodies it may establish,\ndevelop any necessary disciplines. Such disciplines shall aim to ensure that such requirements\nare, inter alia: (a) based on objective and transparent criteria, such as competence and the\nability to supply the service; (b) not more burdensome than necessary to ensure the quality of\nthe service; (c) in the case of licensing procedures, not in themselves a restriction on the supply\nof the service.\n2053 We recall that we have found Russia's \"as applied\" claims against the TEN-E measure to fall outside\nour terms of reference. See, above paras. 7.147. -7.148. . In this section, we address Russia's remaining\nclaims against this measure.\n\nadvancing its claim under Article I:1. Nevertheless, we understand that the main thrust of its\narguments under both claims is largely the same.2054\n7.1263. Russia argues that the TEN -E measure is inconsistent with Articles I:1 and III:4 of the\nGATT 1994 because, in its view, the criteria used to select PCIs, which are eligible for certain\nbenefits under the TEN-E Regulation2055, are discriminatory towards Russian natural gas. According\nto Russia, based on the objective s of \"diversification of gas supply \" and \"end[ing] the isolation of\nthe three Baltic States and Finland and their dependency on a single supplier\", these criteria are\ndesigned to reduce the supply and transmission of imported Russian natural gas into and within\nthe European Union. 2056 In Russia's view, the criteria for PCI designation reduce the competitive\nopportunities of Russian natural gas vis-à-vis domestic natural gas , as well as natural gas\nimported from any other country.\n7.1264. The European Union argues that the criteria for PCI designation under the TEN-E measure\ndo not discriminate against Russian natural gas within the meaning of either Article I:1 or III:4 of\nthe GATT 1994. According to the European Union, the TEN-E measure defines the priority corridors\nso as to cover in a balanced manne r all the main potential sources of supply of gas within and\naround the European Union, as well as the supply needs of all EU member States. 2057 The\nEuropean Union also submits that, in order to satisfy one of the specific criteria for PCI\ndesignation, a proj ect does not necessarily have to contribute to the \"diversification of supply\nsources\".2058 In the European Union's view, the sub -criterion \"diversification of supply sources\"\napplies regardless of the origin of the gas in those EU member States that source t heir gas\nprimarily from Russia, as well as in those EU member States that source their gas from other\ncountries.2059\n7.1265. We understand that the main point of contention between the parties concerns the\nreferences to the objective s of diversification of natural gas supply and \"end [ing] the isolation of\nthe three Baltic States and Finland and their dependency on a single supplier\" in the criteria for\nPCI designation. Whereas for Russia, these references demonstrate discrimination against Russian\nnatural gas within the meaning of Article III:4 and I:1 of the GATT 1994, the European Union\nmaintains that the criteria for PCI designation, including the sub -criterion \"diversification of supply\nsources\", operate regardless of the source of natural gas supply.\n7.1266. We recall t he manner in which the parties have developed their arguments concerning\nthe role of the objective s of diversification of natural gas supply and \"end[ing] the isolation of the\nthree Baltic States and Finland and their dependency on a single supplier\" (here inafter collectively\nreferred to as the objective of diversification of natural gas supply), described above. This\napproach does not allow us to clearly distinguish the arguments relevant only for Russia's claim\nunder Article I:1 from those relevant only f or Russia's claim under Article III:4 of the GATT 1994 .\nThus, in the particular circumstances of this case, w e structure our analysis as follows. First, on\nthe basis of the design, structure and expected operation of the TEN -E measure, we determine the\nmeaning and expected operation of the objective of diversification of natural gas supply in the\ncontext of the criteria for PCI designation. Second, we conduct separate analyses of the impact of\nthe criteria for PCI designation, including the objective of div ersification of natural gas supply\nreferred to therein, on the competitive opportunities of Russian natural gas under Article I:1 and\nArticle III:4 of the GATT 1994.\n\n2054 In its response to Panel question No. 5, Russia summarizes its GATT claims against the TEN-E\nmeasure as follows:\nClaim 30 concerns GATT Article III:4 and is described in Section XXV of Russia's FWS. Claim 31\nconcerns GATT Article I:1 and is described in Section XXVI of Russia’s FWS. Both claims also\nconcern the TEN-E Measure. Like Claim 29, these two claims challenge the TEN-E Regulation, de\nfacto, by demonstrating that Russian natural gas is provided differential and less favourable\ntreatment based exclusively on origin than than [ sic] like domestic and other third -country gas;\nand alternatively that the TEN -E Measure, \" as applied ,\" treats Russian natural gas less\nfavourably based on the absence of Russian projects designated as PCIs. (Russia's response to\nPanel question No. 5, para. 53). (emphasis original)\nSee also Russia's response to Panel question No. 112, para. 460.\n2055 The benefits available to PCIs are discussed above in paras. 2.58-2.60.\n2056 Russia's first written submission, paras. 763–770 and 791-793.\n2057 European Union's second written submission, para. 383.\n2058 European Union's first written submission, para. 819.\n2059 European Union's first written submission, para. 820.\n\n7.11.2.2 Analysis by the Panel\n7.11.2.2.1 The objective of diversification of natural gas supply\n7.1267. As explained above in section 2.2.8, the TEN -E measure sets forth the criteria for the\nselection of PCIs and facilitates the implementation of PCIs by providing a set of administrative,\nregulatory and financial incentives. 2060 Infrastructure developed as part of PCIs includes inter alia\ntransmission pipelines for the transportation of natural gas.2061 In order to be designated as a PCI,\nan infrastructure project must satisfy the general criteria and \"significantly contribute\" to at least\none of the specific criteria. 2062 To satisfy the general criteria, an infrastructure project must be\nnecessary for at least one of the priority gas corridors defined in Annex I.2 of the TEN -E\nRegulation. The relevant specific criteria for PCI designation are set out in Article 4(2)(b). The\ndefinitions of the priority corridors and the text of the specific criteria are provided above in\nparagraphs 2.55 through 2.56.\n7.1268. Diversification of natural gas supply is one of the European Union's energy policy\nobjectives pursued by the TEN-E Regulation.2063 References to this objective occur several times in\nthe definition of the priority corridors, as well as in the specific criteria for PCI designation. In\nparticular, the definitions of NSI East Gas and SGC corridors refer to infra structure to enhance\n\"diversification of gas supply\", while the definition of the BEMIP Gas corridor mentions\ninfrastructure to \"end the isolation of the three Baltic States and Finland and their dependency on\na single supplier\" and to increase \"diversific ation and security of supplies in the Baltic Sea\nregion\".2064 Among the specific criteria, \"diversification of supply sources\" is mentioned, and serves\nas a sub-criterion, in the \"security of supply\" and \"competition\" criteria.2065\n7.1269. The TEN-E Regulation does not define the concept of \"diversification of gas supply\" and\ndoes not further elaborate on what the objective of diversification of natural gas supply entails.\nThe ordinary meaning of \"diversification\" is \"the action of diversifying; the process of becoming\ndiversified; the fact of being diversified; the production of diversity or variety of form or\nqualities\".2066 \"To diversify\" means \"to render diverse, different, or varied, in form, features, or\nqualities; to give variety or diversity to; to variegate, vary, modify\".2067\n7.1270. We consider that one way of introducing variety or diversity in the supply of natural gas\nis to introduce variety or diversity in the sources of natural gas supply. For instance, Recital (5) of\nthe TEN -E Regulation refers to the diversification of \"the Union’s energy supplies, sources and\nroutes\".2068 As already noted, two specific criteria for PCI designation explicitly refer to\n\"diversification of supply sources\".2069 The definition of the BEMIP Gas corridor refers to\ninfrastructure \"to end the isola tion of the three Baltic States and Finland and their dependency on\na single supplier\".2070 In our view, the \"source\" of natural gas supply in this context is synonymous\nwith the \"supplier\" of natural gas.\n\n2060 TEN-E Regulation, (Exhibit EU-4), Article 1(2).\n2062 See above section 2.2.8.\n2063 TEN-E Regulation, (Exhibit EU-4), Recital (5).\n2064 TEN-E Regulation, (Exhibit EU-4), Annexes I.2(6), I.2(7) and I.2(8).\n2065 TEN-E Regulation, (Exhibit EU-4), Articles 4(2)(b)(ii) and 4(2)(b)(iii). We note that in the course of\nthe proceedings, Russia provided a document that purports to show the application of the \"security of supply\"\ncriterion by one of the Regional Groups in the process of drawing up a list of suitable projects for the\ndesignation as PCIs by the Commission. According to this document, within the \"security of supply\" criterion,\nthe sub-criterion \"diversification\" was accorded the weight of 0.44, with \"physical availability\" receiving 0.25\nand \"promotion of IEM\" 0.31 (European Commission, PowerPoint Presentation on North-South Interconnections\nin Central-Eastern Europe – The South-Eastern European subgroup in electricity and gas (15 February 2012),\n(Exhibit RUS-147), p. 12). While the European Union contests the accuracy of this document, according to the\nevidence provided by the European Union, [***].\n2066 Oxford English Dictionary Online, definition of \"diversification, n.a\"\nhttp://www.oed.com/view/Entry/56053?redirectedFrom=diversification (accessed 3 August 2017).\n2067 Oxford English Dictionary Online, definition of \"diversify, v.1.a\"\nhttp://www.oed.com/view/Entry/56058?redirectedFrom=diversify (accessed 3 August 2017).\n2068 TEN-E Regulation, (Exhibit EU-4), Recital (5). (emphasis added)\n2069 See above para. 7.1268.\n2070 TEN-E Regulation, (Exhibit EU-4), Annex I.2(8).\n\n7.1271. The Communication of the Commission \"Energy infrastr ucture priorities for 2020 and\nbeyond – A Blueprint for an integrated European energy network\" (hereinafter Energy\nInfrastructure Blueprint),2071 explicitly mentioned in Recital (3) of the TEN -E Regulation, provides\nfurther context for our understanding of th e concept of \"diversification of gas supply\". Under\nsubheading 4.1.2, entitled \"Diversified gas supplies to a fully interconnected and flexible EU gas\nnetwork\", the Energy Infrastructure Blueprint states as follows:\nThe aim of this priority area is to build the infrastructure needed to allow gas from any\nsource to be bought and sold anywhere in the EU, regardless of national boundaries.\nThis would also ensure security of demand by providing for more choice and a bigge r\nmarket for gas producers to sell their products. A number of positive examples in\nMember States demonstrate that diversification is key to increased competition and\nenhanced security of supply. Whilst on an EU level supplies are diversified along three\ncorridors — Northern Corridor from Norway, Eastern corridor from Russia,\nMediterranean Corridor from Africa — and through LNG, single source dependency still\nprevails in some regions. Every European region should implement infrastructure\nallowing physical access to at least two different sources.2072 (emphasis original)\n7.1272. We note the concern about \"single source dependency\" expressed in the above -quoted\nexcerpt from the Energy Infrastructure Blueprint and the language calling for the implementation\nin \"[e]very European region\" of \"infrastructure allowing physical access to at least two different\nsources\".2073 Moreover, the above -quoted text of the Energy Infrastructure Blueprint explicitly\nrefers to countries supplying natural gas to the European Union, such as Norw ay and Russia. We\nthus understand that the Energy Infrastructure Blueprint treats a \"source\" of natural gas supply as\nsynonymous with a country supplying natural gas, which we also understand to be synonymous to\nthe \"supplier\" of natural gas.\n7.1273. On the basis of our analysis, we thus consider that the concept of \"diversification of\nnatural gas supply\" in the context of the TEN-E measure means introducing or increasing variety in\nthe countries supplying natural gas. Based on the ordinary meaning of the word \"diversification\",\ntaking into account pertinent context, we further believe that, in situations where there is only one\ngas supplier, or where there is more than one gas supplier but only one of them supplies th e\npredominant share of gas, the objective of \"diversification of natural gas supply\" implies\nintroducing at least one additional source of natural gas supply.\n7.1274. With these considerations in mind, we proceed to the examination of how the objective of\ndiversification of natural gas supply operates in the context of the criteria for PCI designation. We\nfirst examine the definitions of the BEMIP Gas, NSI East Gas and SGC priority corridors and then\nthe specific criteria for PCI designation.\n7.1275. According to the def inition of the BEMIP Gas corridor, projects falling within the scope of\nthis corridor include gas infrastructure \"to end the isolation of the three Baltic States and Finland\nand their dependency on a single supplier\". 2074 The relevant part of the Energy Infra structure\nBlueprint states that \"[t]he Eastern Baltic Sea region (Lithuania, Latvia, Estonia and Finland)\nrequires urgent action to ensure security of supply through connection to the rest of the EU\". 2075 It\ncontinues further to note that \"[e]ven though the a nnual gas consumption of the three Baltic\nStates and Finland together is only about 10 bcm, all the gas they consume comes from\nRussia\".2076\n7.1276. In our view, the reference to a \"single supplier\" in the definition of the BEMIP Gas\ncorridor, read in conjunction wi th the Energy Infrastructure Blueprint, sufficiently clearly identifies\nRussia as a single source of natural gas supply.2077 We thus understand that projects contributing\n\n2071 Communication from the Commission to the European Parliament, the Council, the European\nEconomic and Social Committee and the Committee of the Regions, \"Energy infrastructure priorities for 2020\nand beyond – A Blueprint for an integrated European energy network\" COM(2010) 677 (17 November 2010),\n(Energy Infrastructure Blueprint), (Exhibit RUS-109).\n2072 Energy Infrastructure Blueprint, (Exhibit RUS-109), pp. 13-14.\n2073 Energy Infrastructure Blueprint, (Exhibit RUS-109), p. 14. (emphasis original)\n2074 TEN-E Regulation, (Exhibit EU-4), Annex I.2(8).\n2075 Energy Infrastructure Blueprint, (Exhibit RUS-109), p. 34.\n2076 Energy Infrastructure Blueprint, (Exhibit RUS-109), p. 34.\n2077 TEN-E Regulation, (Exhibit EU-4), Annex I.2(8).\n\nto the diversification of natural gas supply in the BEMIP corridor will develop infrastr ucture to end\nthe dependency of Estonia, Finland, Latvia and Lithuania on the supply of Russian natural gas. In\nline with our understanding of the concept of \"diversification of natural gas supply\", articulated\nabove in paragraph 7.1273, such projects will develop infrastructure aimed at connecting Estonia,\nFinland, Latvia and Lithuania with sources of natural gas supply other than Russia.\n7.1277. Turning to the definition of the NSI East Gas priority corridor, we observe a reference to\n\"gas infrastructure for regional connections between and in the Baltic Sea region, the Adriatic and\nAegean Seas, the Eastern Mediterranean Sea and the Black Sea, and for enhancing diversifica tion\nand security of gas supply\". 2078 The Energy Infrastructure Blueprint states that this would provide\nthe overall flexibility for the entire Central East European (CEE) region to create a robust, well -\nfunctioning internal market and promote competition. 2079 The relevant part of the Energy\nInfrastructure Blueprint also provides as follows:\nThere is one main supplier in the CEE region; the current linear (from East to West)\nand isolated networks are the heritage of the past. While the proportion of gas\nimported from Russia constitutes 18% of the EU -15 consumption, in the new Member\nStates this indicator is 60% (2008). Gazprom deliveries are the overwhelming bulk of\ngas imports in the region (Poland: 70%, Slovakia: 100%, Hungary: 80%, certain\nWestern Balkan countries: 100%).2080\n7.1278. We thus understand that the concern cited by the Energy Infrastructure Blueprint is about\n\"one main supplier in the CEE region\", identifying this supplier as Gazprom - the exclusive\nexporter of Russian natural gas via pipelines.2081 In our view, similar to the BEMIP Gas corridor,\nthis evidence is sufficiently clear in identifying Russia as the main source of supply in several EU\nmember States falling within the geographical reach of this corridor. The Energy Infrastructure\nBlueprint mentions Russia as the only natural gas supplier in Slovakia and certain Western Balkan\ncountries. In 2013 (the year the TEN -E Regulation entered into force), Russia was also the only\nnatural gas supplier in Bulgaria and Czech Republic. 2082 Furthermore, Russia supplied 95% and\n92% of all natural gas consumed in Hungary and Romania, respectively. 2083 In light of our\nunderstanding of the meaning of the concept of \"diversification of natural gas supply \" articulated\nabove in paragraph 7.1273, and given the predominance of the supply of Russian natural gas in\nthese EU member States, projects contributing to \"diversification of natural gas supply\" in this\npriority corridor will develop infrastructure aimed at connecting the mentioned EU member States\nwith sources of natural gas supply other than Russia.\n7.1279. We further note that the definition of the SGC priority corridor contains a reference to\ninfrastructure for the transmission of natural gas from the Caspian Basin, Central Asia, the Middle\nEast and the Eastern Mediterranean Basin to the European Union \"to enhance diversification of gas\nsupply\".2084 According to the Energy Infrastructure Blueprint , \"[t]he aim of the Southern Cor ridor\nis to directly link the EU gas market to the largest deposit of gas in the world\". 2085 Thus, the\ndefinition of the SGC corridor and the Energy Infrastructure Blueprint explicitly refer to the\ngeographical regions of natural gas supply – the Caspian Basin, Central Asia, the Middle East and\nthe Eastern Mediterranean basin.\n7.1280. The EU member States falling within the geographical reach of the SGC corridor include\nAustria, Bulgaria, Croatia, Cyprus, Czech Republic, France, Germany, Greece, Hungary, Italy,\nPoland, Romania, Slovakia and Slovenia. 2086 We note that, in 2013, Russia was the only natural\ngas supplier in Bulgaria, Czech Republic and Slovakia, and the predominant natural gas supplier in\n\n2078 TEN-E Regulation, (Exhibit EU-4), Annex I.2(6).\n2079 Energy Infrastructure Blueprint, (Exhibit RUS-109), p. 34.\n2080 Energy Infrastructure Blueprint, (Exhibit RUS-109), p. 34.\n2081 Russia's response to Panel question No. 29, para. 145; and European Union's response to Panel\nquestion No. 29, para. 62.\n2082 Eurostat statistics on natural gas supplies to the European Union and member States by partner,\nvolume and share between 2006 and 2015, and gross inland consumption of natural gas in the EU member\nStates between 2006 and 2015, (Eurostat statistics on natural gas supplies and consumption), (Exhibit EU-\n190), p. 9.\n2083 Eurostat statistics on natural gas supplies and consumption, (Exhibit EU-190), p.9.\n2084 TEN-E Regulation, (Exhibit EU-4), Annex I.2(7).\n2085 Energy Infrastructure Blueprint, (Exhibit RUS-109), p. 32. (footnotes omitted)\n2086 TEN-E Regulation, (Exhibit EU-4), Annex I.2(7).\n\nHungary (95% of all natural gas supply), and Romania (92% of all natural gas supply).2087 In light\nof our understanding of the concept of \"diversification of natural gas supply\" articulated above in\nparagraph 7.1273, and given the predominance of the supply of Russian natural gas in these EU\nmember States, projects contributing to \"diversification of natural gas supply\" in this priority\ncorridor will develop infrastructure aimed at connecting the mentioned EU member States with\nsources of natural gas supply other than Russia.\n7.1281. On the basis of our review of the definitions of the BEMIP Gas, NSI East Gas and SGC\ncorridors for gas infrastructure conducted above, we consider that the objective of diversification\nof natural gas supply will operate to bring within the scope of those corridors projects developing\ninfrastructure aimed at connecting a number of EU member States with sources of natural gas\nsupply other than Russia. Such EU member States include those where Russia is the only or\npredominant supplier of natural gas.\n7.1282. We are of the view that the \"diversification of supply sources\" sub -criterion within the\nspecific criteria of \"security of supply\" and \"competition\" will operate in a manner similar to the\nobjective of diversification of natural gas supply in the definitions of priority corridors. As we have\ndetermined above in paragraph 7.1273, the objective of diversification of natural gas supply is\ndesigned to reduce reliance on the predominant natural gas supplier, and as underscored by the\nEnergy Infrastructure Blueprint, eliminate situations where there is dependency on a single source.\n7.1283. Given that Russia is the main natural gas supplier to the European Union, and the only or\npredominant supplier in a number of individual EU member States, 2088 meeting the \"diversification\nof supply\" sub -criterion will, in many instances, imply developing infrastructure aimed at\nconnecting certain EU member States with sources of natural gas supply other than Russia.\n7.1284. While we acknowledge that other natural gas suppliers in the European Union, including\ndomestic, will also be affected by the sub -criterion \"diversification of gas suppl y\", none of them\nwould likely be affected to the same extent as Russia. In our view, this is explained by the fact\nthat, in comparison to external and domestic sources of natural gas supply to the European Union,\nRussia is the only or predominant supplier of natural gas i n the highest number of individual EU\nmember States.2089\n7.1285. Our analysis above leads us to conclude that, by virtue of the objective of diversification\nof natural gas supply, the criteria for PCI designation include those that in practice condition PCI\ndesignation on projects developing infrastructure aimed at connecting certain EU member States\nwith sources of natural gas supply other than Russia. This means that some projects will be\n\n2087 Eurostat statistics on natural gas supplies and consumption, (Exhibit EU-190), p. 9.\n2088 See, below fn 2089.\n2089 According to the evidence provided by Russia, in 2014, the top four external sources of gas supply\nto the European Union were as follows: Russia at 37.5%, Norway at 31.6%, Algeria at 12.3% and Qatar at\n6.9% (European Commission, EU Energy in Figures: Statistical Pocketbook 2016, pp. 26 and 65, (Exhibit RUS-\n214), p. 26). According to the evidence provided by the European Union, in 2013, in terms of the distribution\nof shares in the total natural gas supply to individual EU member States, , Russia was the main source of\nsupply in the following EU member States: Austria (63%), Bulgaria (100%), Czech Republic (100%), Estonia\n(100%), Finland (100%), Greece (67%), Hungary (95%), Latvia (100%), Lithuania (100%), Poland (77%),\nRomania (92%), Slovenia (58%) and Slovakia (100%). In contrast, in 2013, Norway held the position of the\nmain supplier of gas only in Luxemburg (64%), the Netherlands (60%) and the United Kingdom (57%). In\n2013, Algeria was the main gas supplier only in Spain with the market share of 54%. Qatar was not the main\nsupplier of gas in any EU member State in 2013. Thus, in 2013, not only was Russia the main gas supplier in\nmore EU member States than its three closest competitors (Algeria, Norway and Qatar), it also enjoyed a\nhigher degree of market dominance, being the only supplier in Bulgaria, Czech Republic, Estonia, Finland,\nLatvia, Lithuania and Slovakia. In comparison, the highest market share reached by Norway in 2013 was 64%\nin Luxemburg, and the highest share reached by Algeria in 2013 was 54% in Spain. Among the domestic\nsources of gas supply in the European Union, in 2013, the Netherlands maintained a 46% share in the total\nsupply of gas to Belgium, while Denmark and the United Kingdom were the only gas suppliers in Sweden and\nIreland, respectively. (Eurostat statistics on natural gas supplies and consumption, (Exhibit EU-190), p. 9).\nWe note that the Appellate Body in Dominican Republic – Import and Sale of Cigarettes rejected the\nargument that the measure at issue imposed a higher per-unit cost of the bonding requirement on the\nimported cigarettes due to a relatively small market share of the imported cigarettes. The Appellate Body\nconsidered that the difference between the per-unit costs of the bond requirement alleged by Honduras did not\ndepend on the foreign origin of the imported cigarettes (Appellate Body Report, Dominican Republic – Import\nand Sale of Cigarettes, para. 96). In contrast, we consider that, in the present dispute, the objective of\ndiversification of gas supply is directly connected to the origin of gas.\n\ndesignated as PCIs because they develop pipeline infrastructure to transport natural gas of non-\nRussian origin.\n7.1286. We now turn to provide separate analyses on how the criteria for PCI designation,\nincluding the objective of diversification of natural gas supply referred to therein, impact the\ncompetitive opportunities of Russian natural gas under Articles I:1 and III:4 of the GATT 1994, in\nlight of the conclusions reached in this subsection. We note that Russia first advances its claim\nunder Article III:4 and then its claim under Article I:1. We do not consider that there is a\npredetermined order of analysis of Russia's claims and see no compelling reason to deviate from\nthe order in which Russia has presented its claims. Therefore, we first examine Russia's claim\nunder Article III:4 and then Russia's claim under Article I:1.\n7.11.2.2.2 Russia's claim under Article III:4 of the GATT 1994\n7.11.2.2.2.1 Introduction\n7.1287. Russia submits that the inevitable consequence of the design of the TEN-E measure is the\nmodification of the conditions of competition to the detriment of Russian natural gas vis-à-vis\ndomestic natur al gas. 2090 The European Union, on the other hand, maintains that the TEN -E\nmeasure seeks to achieve a broad geographical balance, which would ensure equivalent\ncompetitive opportunities for all suppliers, and does not exclude projects concerning the supply\nand transmission of Russian-origin gas from PCI designation.2091\n7.11.2.2.2.2 Analysis by the Panel\n7.1288. In accordance with the legal standard under Article III:4 of the GATT 1994 , as set out in\nparagraphs 7.238 and 7.239 above, we proceed to examine whether Russia has demonstrated the\nfollowing elements: (a) the TEN-E measure falls within the scope of Article III:4; (b) the imported\nand domestic products at issue are like ; and (c) the TEN -E measur e accords less favourable\ntreatment to the relevant imported Russian products than the treatment it accords to the relevant\nlike domestic products.\n7.1289. With respect to the first element of the legal standard under Article III:4 of the\nGATT 1994, Russia argues that the TEN-E Regulation creates a regulatory framework that governs\nthe infrastructure used to transport, distribute and sell natural gas, and therefore constitutes a law\nor regulation that affects such transportation, distribution and sale. 2092 The European Union does\nnot contest Russia's argument.\n7.1290. We recall that the Appellate Body has found that the term \"affecting\" has a broad\nscope,2093 clarifying at the same time that it is \"not any 'laws, regulations and requirements' which\nare covered by Article III:4, but only those which 'affect' the specific transactions, activities and\nuses mentioned in that provision.\"2094\n7.1291. We observe that the TEN-E measure provides a regulatory framework for PCIs developing\ninfrastructure concerning transmission pipelines, LNG and natural gas storage facilities. 2095 The\nmentioned types of infrastructure may be used for one or several activities cove red by Article III:4\nof the GATT 1994, such as the internal transportation, sale or use of imported natural gas in the\nEuropean Union. In particular, we note the essential function of transmission pipelines in the\ntransportation of natural gas. In light of these considerations, we find that the TEN -E measure\n\"affects\" the internal transportation, sale and use of imported natural gas in the European Union,\nand therefore, falls within the scope of Article III:4 of the GATT 1994.\n\n2090 Russia's first written submission, para. 794; second written submission, para. 461; and response to\nPanel question No. 238(b), paras. 340–346.\n2091 European Union's first written submission, paras. 815–817 and 823-825.\n2092 Russia's second written submission, para. 462. See also Russia's response to Panel question\nNo. 113, para. 471.\n2093 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 210.\n2094 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 208. (emphasis original)\n\n7.1292. With respect to the second element, Russia submits that, in the context of this claim,\ndomestic and Russian natural gas are like products within the meaning of Article III:4 of the GATT\n1994. The European Union agrees with Russia that natural gas of differ ent origin(s) is like, in the\ncontext of the TEN -E measure.2096 We also note that, in advancing this claim, Russia asserts that\n\"Russian and domestic gas, like natural gas imported from any other country, including LNG, are in\na perfectly competitive relation ship\" and thus are \"like products\" within the meaning of Article\nIII:4 of the GATT 1994.2097\n7.1293. In paragraph 7.855, we have concluded that LNG is not like natural gas w ithin the\nmeaning of Article I:1 of the GATT 1994. It is well established that the determination of \"likeness\",\nin the context of the MFN and national treatment obligations is the determination about the nature\nand extent of the competitive relationship between and among the products at issue.2098\n7.1294. In our view, the origin of LNG – whether domestic for the purposes of an Article III:4\nclaim or imported for the purposes of an Article I:1 claim – has no bearing on the issue of whether\nLNG is in a competitive rela tionship with natural gas in the EU market. Therefore, having\nconcluded that LNG is not like natural gas within the meaning of Article I:1 of the GATT 1994, we\nfind that LNG and natural gas are not \"like products\" within the meaning of Article III:4 of the\nGATT 1994. Consequently, we do not proceed further with our assessment of the TEN -E measure\nconcerning its treatment of LNG, or natural gas in comparison to LNG.\n7.1295. In paragraph 7.536, we found that Russian and domestic natural gas are like products\nwithin the meaning of Article III:4 of the GATT 1994. On the basis of this finding, we also consider\nthat Russian and domestic natural gas are like products for the purposes of our assessment of this\nclaim. Thus, in the next step of our analysis, we focus on the treatment of like Russian and\ndomestic natural gas under the TEN-E measure.\n7.1296. In order to prove that the measure at iss ue is inconsistent with Article III:4 of the\nGATT 1994, under the third element of the legal standard articulated above, a complainant must\ndemonstrate that the measure modifies the conditions of competition to the detriment of imported\nproducts vis-à-vis like domestic products. 2099 The \"treatment no less favourable\" standard under\nArticle III:4 thus requires us to assess the impact of the TEN -E measure on the equality of\ncompetitive conditions between Russian and like domestic natural gas. An assessment of th e\nimpact of the contested measure on the equality of competitive conditions between domestic and\nimported products is based on close scrutiny of the measure, including its design, structure, and\nexpected operation.2100\n7.1297. In Russia's view, there is a \"genuine r elationship\" between the TEN -E measure and the\nadverse impact on the competitive opportunities for Russian natural gas in the EU gas market,\nbecause PCI designation makes domestic natural gas more readily available in the market and\npotentially less costly, thus incentivizing final customers and other market participants to purchase\ndomestic rather than Russian natural gas.2101\n7.1298. We recall that, under the TEN -E Regulation, projects designated as PCIs receive\nadministrative, regulatory and financial incentives. 2102 We consider that, as a result of\n\n2096 European Union response to Panel question No. 110(d), para. 288.\n2097 Russia's first written submission, para 789. See also Russia's response to Panel question No. 110(d),\npara. 448. (emphasis added)\n2098 We note that the Appellate Body has employed this approach to the determination of \"likeness\" in\nthe context of Articles III:2 and III:4 of the GATT (national treatment), as well as Article 2.1 of the TBT\nAgreement involving both the MFN and national treatment obligations. (See Appellate Body Reports, Philippines\nPanel Report, US – Tuna II (Mexico), para. 7.225).\n2099 Appellate Body Reports, EC – Seal Products, paras. 5.82 and 5.117 (referring to Appellate Body\nReports, US – Clove Cigarettes, para. 176 (referring to GATT Panel Report, US – Section 337 Tariff Act, para.\n5.10); China – Publications and Audiovisual Products, para. 305 (referring to Appellate Body Report, Korea –\nVarious Measures on Beef, paras. 135-136); Thailand – Cigarettes (Philippines), para. 126 (referring to\nAppellate Body Report, Japan – Alcoholic Beverages II, p. 16, DSR 1996:I, 97, at p. 109); and Korea –\nAlcoholic Beverages, para. 127).\n2100 Appellate Body Report, Thailand – Cigarettes (Philippines), paras. 130 and 134.\n2101 Russia's first written submission, paras. 801-802.\n2102 See above paras. 2.58-2.60.\n\nadministrative incentives granted to PCIs in the form of more streamlined administrative\nprocessing of the applications relating to such projects, such projects will be completed faster than\nprojects not designated as PCIs .2103 We also consider that financial incentives in the form of\napplicable financial assistance, as well as regulatory treatment incentives, for instance, in the form\nof project-related cost allocation, will make the completion of PCIs less costly than projec ts not\ndesignated as PCIs.2104 In view of such benefits accruing to projects designated as PCIs, economic\nactors are thus more likely to invest in the projects that meet the criteria for PCI designation.\n7.1299. We also recall our conclusion that, by virtue of the o bjective of diversification of natural\ngas supply, the criteria for PCI designation include those that in practice condition PCI designation\non projects developing infrastructure aimed at connecting certain EU member States with sources\nof natural gas supply other than Russia.2105 As a consequence, some projects will be designated as\nPCIs, and receive benefits associated with their PCI designation, because they develop pipeline\ninfrastructure to transport natural gas of non-Russian origin.\n7.1300. In our view, the TE N-E measure is thus designed to increase the availability of new\nprojects developing pipeline infrastructure to transport natural gas of non-Russian origin, including\ndomestic, and decrease the availability of new projects developing pipeline infrastructur e to\ntransport natural gas of Russian origin. We consider that, by this means, the TEN -E measure\nprovides more favourable conditions for the transportation of natural gas of any origin other than\nRussian, including natural gas of domestic origin. Therefore , for these reasons, we conclude that\nthe TEN-E measure negatively affects the competitive opportunities of Russian natural gas vis-à-\nvis domestic natural gas.\n7.11.2.2.2.3 Conclusion\n7.1301. In view of the foregoing, we conclude that the TEN -E measu re is inconsistent with\nArticle III:4 of the GATT 1994.\n7.11.2.2.3 Russia's claim under Article I:1 of the GATT 1994\n7.11.2.2.3.1 Introduction\n7.1302. Russia submits that the TEN -E measure is inconsistent with Article I:1 of the GATT 1994\nbecause the advantages of PCI eligibility and designation extended by th e TEN -E measure to\nimported third -country \"PCI gas \" are denied to Russian natural gas .2106 The European Union\nmaintains that Russia's claim under Article I:1 of the GATT 1994 is unfounded for the same\nreasons as Russia's claim under Article III:4.2107 In the European Union's view, the TEN-E measure\ndoes not distort market opportunities in favour of natural gas from other third countries and to the\ndetriment of Russian natural gas , but contributes instead to achieving greater equality of\ncompetitive opportunities for natural gas from all potential sources, including Russia.2108\n7.11.2.2.3.2 Analysis by the Panel\n7.1303. In light of the legal standard under Article I:1 of the GATT 1994 , as set out in\nparagraphs 7.236 and 7.237 above, we proceed to examine whether Russia has demonstrated the\nfollowing elements: (a) the TEN-E measure falls within the scope of A rticle I:1; (b ) the relevant\nimported products are like products; (c ) the TEN -E measure confers an \"advantage, favour,\nprivilege, or immunity\" on a product originating in the territory of any country; and (d ) that the\nadvantage so accorded is not extended \"immedia tely\" and \"unconditionally\" to like Russian\nproducts.\n7.1304. With respect to the first element, Russia considers that the TEN -E measure falls within\nthe scope of Article I:1 of the GATT 1994 because it falls within the scope of the \"matters\" referred\n\n2103 See above para. 2.58.\n2104 See above paras. 2.59-2.60.\n2105 See above para. 7.1285.\n2106 Russia's first written submission, paras. 806–807 and 809. See also Russia's second written\nsubmission, para. 486.\n2107 European Union's first written submission, para. 839.\n2108 European Union's first written submission, para. 839.\n\nto in Article III:4 of the GATT 1994. 2109 As observed by the Appellat e Body, Article I:1 of the\nGATT 1994 \"incorporates all matters referred to in paragraphs 2 and 4 of Article III\". 2110 Above,\nwe found that the TEN -E measure falls within the scope of Article III:4 of the GATT 1994. On this\nbasis, w e find that the TEN -E measure falls within the scope of the \" matters\" referred to in\nArticle III:4 and therefore falls within the scope of Article I:1 of the GATT 1994.\n7.1305. With respect to the second element, we note that the parties do not disagree that\nimported natural gas of different origins is like within the mea ning of Article I:1 of the\nGATT 1994.2111 We also recall that, in the context of the unbundling measure, we have already\nfound that imported Russian natural gas and imported natural gas from other non-EU countries are\nlike products within the meaning of Article I:1 of the GATT 1994. 2112 Guided by this finding, we\nconsider that imported Russian natural gas and imported natural gas from other non -EU countries\nconstitute like products within Article I:1 of the GATT 1994 also in the context of the TEN -E\nmeasure.\n7.1306. In what concerns the likeness of LNG and natural gas, we recall that, in the context of the\nLNG measure, we found that LNG is not like natural gas within the meaning of Article I:1 of the\nGATT 1994.2113 Guided by this finding, we conclude that LNG is not like natural gas also in the\ncontext of the TEN -E measure. Consequently, we do not proceed further with our assessment of\nthe TEN-E measure concerning its treatment of LNG, or natural gas in comparison t o LNG, and\nfocus instead on the treatment, under the TEN -E measure, of natural gas imported from Russia\nand like natural gas imported from any other non-EU country.\n7.1307. Article I:1 of the GATT 1994 prohibits Members from granting an advantage to imported\nproducts that is not \"immediately\" and \"unconditionally\" extended to like imported products from\nall Members.2114 Thus, under the last two elements of the legal standard under Article I:1 of the\nGATT 1994, a complainant must establish that the measure at issue co nfers an \"advantage on a\nproduct originating in the territory of any country and that the advantage so accorded is not\nextended \"immediately\" and \"unconditionally\" to like products originating in the territory of all\nMembers.\n7.1308. Russia argues that the TEN -E measure grants an advantage to natural gas originating in\nany third country, except Russia, because the TEN -E measure incentivizes the creation of\ninfrastructure that is not aimed at importing, transmitting, or distributing Russian natural gas.2115\nWe recall that, under the TEN -E measure, projects designated as PCIs receive administrative,\nregulatory and financial incentives.2116\n7.1309. Previous panels considered that a measure grants an advantage within the meaning of\nArticle I:1 of the GATT 1994 when such a measure c reates \"more favourable competitive\nopportunities\" to products of a particular origin.2117\n7.1310. We recall that, under the TEN -E Regulation, projects designated as PCIs receive\nadministrative, regulatory and financial incentives. 2118 We consider that, as a result of\nadministrative incentives granted to PCIs in the form of more streamlined administrative\nprocessing of the applications relating to such projects, such projects will be completed faster than\n\n2109 Russia's first written submission, paras. 787-788 and 804.\n2110 Appellate Body Reports, EC – Seal Products, para. 5.80.\n2111 Russia submits that Russian gas and gas from any other origin are like products for the purposes of\nits claim against the TEN-E measure under Article I:1 of the GATT 1994, relying on the arguments developed in\nthe context of its claims against the unbundling measure. (Russia's first written submission, paras. 343–349\nand 804, and fn 1092). The European Union agrees with Russia that natural gas of different origin is like, in the\ncontext of the TEN-E measure. (European Union response to Panel question No. 110(d), para. 288).\n2112 See above para. 7.577.\n2113 See above para. 7.855.\n2114 Appellate Body Reports, EC – Seal Products, para. 5.88.\n2115 Russia's response to Panel question No. 238(c), paras. 347–348.\n2116 See above paras. 2.58-2.60.\n2117 Panel Reports, EC – Bananas III (Guatemala and Honduras), para. 7.239; and Colombia – Ports of\nEntry, para. 7.346. The panel in EC – Seal Products considered that the advantage granted by the EU Seal\nRegime was in the form of market access. (Panel Reports, EC – Seal Products, para. 7.596).\n2118 See above paras. 2.58-2.60.\n\nprojects not designated as PCIs. 2119 We also consider that financial incentives in the form of\napplicable financial assistance, as well as regulatory treatment incentives, for instance, in the form\nof project-related cost allocation, will make the completion of PCIs less costly than projects not\ndesignated as PCIs.2120 In view of such benefits accruing to projects designated as PCIs, economic\nactors are thus more likely to invest in the projects that meet the criteria for PCI designation.\n7.1311. We also recall our conclusion that, by virtue of the objective of diversification of natural\ngas supply, the criteria for PCI designation include those that in practice condition PCI designation\non projects developing infrastructure aimed at connecting certain EU member States with sources\nof natural gas supply other than Russia.2121 As a consequence, some projects will be designated as\nPCIs, and receive benefits associated with their PCI designation, because they develop pipeline\ninfrastructure to transport natural gas of non-Russian origin.\n7.1312. In our view, the TEN -E measure is thus designed to increase the availability of new\nprojects developing pipeline infrastructure to transport natural gas of non -Russian origin and\ndecrease the availability of new projects developing pipeline infrastructure to transport natural gas\nof Russian origin. As we have concluded above, by this means, the TEN -E measure provides more\nfavourable conditions for the transportation of natural gas of any origin other than Russian.\nTherefore, we consider that imported natural gas of any origin other than Russian will benefit from\nmore favourable conditions of transportation, and as a result, from more favourable competitive\nopportunities. On this basis, we find that the TEN -E measure grants an advantage to imported\nnatural gas of any origin other than Russia within the meaning of Article I:1 of the GATT 1994 that\nis not \"immediately\" and \"unconditionally\" extended to imported natural gas of Russian origin.\n7.11.2.2.3.3 Conclusion\n7.1313. Based on the foregoing, we find that the TEN -E measure is inconsistent with Article I:1 of\nthe GATT 1994 by failing to provide \"immediately and unconditionally\" to natural gas imported\nfrom Russia an advantage accorded to like natural gas imported from any other country.\n7.11.2.2.4 Observations on certain additional arguments in respect of Russia's claims\nunder Articles I:1 and III:4 of the GATT 1994\n7.1314. We consider that the analysis that we have conducted above sufficiently supports our\nfindings that the TEN -E measure i s inconsistent with Articles I:1 and III:4 of the GATT 1994.\nHowever, we consider it appropriate to provide additional observations in response to certain\narguments raised by the European Union. We emphasise that our observations below are intended\nto clarify the scope of our findings and do not affect our overall conclusion on the inconsistency of\nthe TEN-E measure with Articles I:1 and III:4 of the GATT 1994.\n7.1315. First, we note the European Union's argument that, in order to meet the specific criteria\nfor PC I designation, a project does not necessarily have to contribute to the sub -criterion\n\"diversification of supply sources\".2122 We agree with the European Union that this sub -criterion\nconcerns only two out of four specific criteria for PCI designation. We further observe that, to be\neligible for PCI selection, a project is required to \"significantly contribute\" only to one of the four\nspecific criteria stipulated in Article 4(2)(b) of the TEN -E Regulation, in addition to me eting the\ngeneral criteria. On this basis, we confirm that projects not contributing to the sub -criterion\n\"diversification of supply sources\" may still be designated as PCIs, provided they meet the general\ncriteria.\n7.1316. However, in our view, the fact that the re are ways for projects to be designated as PCIs\nother than by enhancing the diversification of natural gas supply, which we determined to imply\ndeveloping infrastructure for the transportation of natural gas of non -Russian origin, does not\nchange our con clusion that the TEN -E measure modifies the conditions of competition to the\ndetriment of Russian natural gas. It is well-established that, in situations where a measure creates\na disincentive to use imported products, the overall conclusion that the measu re modified the\nconditions of competition to the detriment of imported products is \"not nullified by the fact that the\n\n2119 See above para. 2.58.\n2120 See above paras. 2.59-2.60.\n2121 See above para. 7.1285.\n2122 European Union's first written submission, para. 819.\n\n[measure] will not give rise to less favourable treatment for like imported products in each and\nevery case\".2123\n7.1317. The facts of the present case are distinct. However, our analysis shows that the TEN -E\nmeasure creates incentives for economic actors to develop transport infrastructure \"favouring\"\ndomestic or imported natural gas over Russian natural gas. Thus, deriving guidance from the\napproach of the Appellate Body and panels in previous disputes, we consider that the existence of\nsome criteria that condition PCI designation on projects developing infrastructure for the\ntransportation of natural gas of non -Russian origin is sufficient for our finding that the TEN -E\nmeasure negatively affects the conditions of competition of Russian natural gas within the meaning\nof Articles I:1 and III:4 of the GATT 1994. Conversely, the existence of some possibilities for\nprojects to be designated as PCIs othe r than by developing infrastructure for the transportation of\nnatural gas of non-Russian origin does not alter this finding.\n7.1318. Second, we note the European Union's contention that the existence of discrimination\ncannot be assessed by considering in isolatio n just one of the priority corridors, such as BEMIP\nGas, but should instead be based on an overall assessment of all corridors, as well as of the\nalready existing infrastructures outside the current priority corridors. 2124 In our scrutiny of the\nTEN-E measure , we have holistically assessed its design, structure and expected operation,\nincluding all gas priority corridors and specific criteria for PCI designation. We are, however,\nunconvinced by the European Union's argument that we need to assess existing infr astructure\noutside the current priority corridors. Our examination is limited to the assessment of the impact\non the competitive opportunities of Russian natural gas attributable to the TEN -E measure\nchallenged by Russia in these proceedings. 2125 We fail to s ee how the impact of existing\ninfrastructure outside the current priority corridors can be attributed to the TEN-E measure.\n7.1319. Third, we understand the European Union to argue that, because the ultimate goal of the\nTEN-E measure is to expose all market parti cipants to increased competition, creating bigger\nmarket opportunities for each of them, the TEN-E measure is not inconsistent with Articles I:1 and\nIII:4 of the GATT 1994. 2126 According to the European Union, in those EU member States that are\nalready adequately connected to sources of natural gas supply in Russia, the TEN -E measure will\ncontribute to achieve \"greater\" equality of competitive opportunities for natural gas from all\npotential sources.2127\n7.1320. It appears to us that the European Union's position is pre mised on the proposition that,\nunder Articles I:1 and III:4 of the GATT 1994, where existing market conditions do not afford\ndomestic or imported products equality of opportunities to compete with products of a particular\norigin, a Member \"is permitted, an d indeed required, to take measures in order to ensure such\nequality\".2128\n7.1321. We do not enter into a debate as to whether Article I:1 or III:4 of the GATT 1994\ncontains an obligation to address a perceived distortion of competition in the domestic market of a\nMember. In our view, to the extent the TEN -E measure seeks to address the perceived inequality\nof competition between and among domestic and imported natural gas in the EU market by\nsuppressing the competitive opportunities of natural gas imported from a pa rticular Member, it is\ninconsistent with Articles I:1 and III:4 of the GATT 1994.2129\n\n2123 Appellate Body Report, US – FSC (Article 21.5 - EC), paras. 220-221. See also Panel Reports,\n2124 European Union's second written submission, para. 383.\n2125 See Appellate Body Reports, Korea – Various Measures on Beef, para. 149; US – Tuna II (Mexico),\n2126 European Union's first written submission, paras. 823–824 and 839.\n2127 European Union's second written submission, para. 384.\n2128 European Union's first written submission, para. 823.\n2129 Appellate Body Report, Argentina – Financial Services, paras. 6.143–6.145. We note that, in the\ncontext of Article XVII of the GATS, the Appellate Body opined as follows:\n However, ensuring equal competitive conditions, which is required by the legal standard of\n\"treatment no less fa vourable\", is not the same as guaranteeing that one group of services or\nproducts does not have any competitive advantage over another group. As Panama rightly points\nout, ensuring equal conditions of competition under the national treatment obligation mea ns \"to\nguarantee equality of opportunities to compete in the marketplace\", rather than to guarantee\n\n7.1322. It is well established that a determination that a measure modifies the conditions of\ncompetition to the detriment of imported products of a particular origin is sufficient to find a\nviolation of Article I:1 or III:4 of the GATT 1994, without further enquiry into the regulatory\nobjectives of this measure.2130 Therefore, we consider that the ultimate goal of achieving \"greater\"\nequality of competitive opportunities 2131, allegedly p ursued by the TEN -E measure, does not alter\nour conclusion that the TEN-E measure has modified the conditions of competition to the detriment\nof Russian natural gas, and is therefore inconsistent with Articles I:1 and III:4 of the GATT 1994.\n7.1323. Fourth, the E uropean Union submits that, if upheld, Russia's claim would interfere in a\nmanifestly unreasonable manner with each Member's sovereign right to plan and develop its\ntransport infrastructures according to its own needs and resources. 2132 According to the Europ ean\nUnion, Russia's claim implies that a Member could not build, or support the building of, any\ntransport infrastructure which, in practice, is used more frequently for the transportation of\ndomestic products or of imported products from a certain origin. 2133 However, in the European\nUnion's view, this will often be the unavoidable consequence of geographical factors.2134\n7.1324. We do not agree with the European Union's position. We are not deciding, in the abstract,\non the issue of the WTO Members' rights to develop transport infrastructure. The TEN -E measure\nprovides a legal framework for the development of fixed pipeline infrastructure used specifically for\nthe transportation of natural gas. 2135 Natural gas is thus the only product transported via these\npipelines. Our finding concerns the consistency of the TEN-E measure with Articles I:1 and III:4 of\nthe GATT 1994 in light of this and other specific circumstances of this case.\n7.11.3 European Union's defence under Article XX(j) of the GATT 1994\n7.11.3.1 Introduction\n7.1325. In paragraphs 7.1301 and 7.1313 above, we found that the TEN -E measure is\ninconsistent with Articles I:1 and III:4 of t he GATT 1994. The European Union submits a single\ndefence under Article XX(j) of the GATT 1994, in the event we find that the TEN -E measure is\ninconsistent with Article I:1 and/or III:4 of the GATT 1994. 2136 We observe that the aspects of the\nTEN-E measure that violate both Articles I:1 and III:4 are the criteria for the selection of PCIs that\ncondition PCI designation on projects developing infrastructure aimed at connecting certain EU\nmember States with sources of natural gas supply other than Russia.2137 Therefore, we consider it\nappropriate to provide a joint analysis of the European Union's defence in respect of both the\ninconsistency of the TEN-E measure with Articles I:1 and III:4 of the GATT 1994.\n7.1326. The European Union contends that the TEN -E measure is justi fied under Article XX(j) of\nthe GATT 1994. The European Union argues that natural gas is a product \"in general or local short\n\nthat all like services and service suppliers are \"equally competitive\". (emphasis original; footnote\nomitted) (Appellate Body Report, Argentina – Financial Services, para. 6.144)\n2130 Appellate Body Reports, EC – Seal Products, paras. 5.90 and 5.117. See also Appellate Body\nReports, US – Clove Cigarettes, para. 179 and fn 372 to para. 179; Thailand – Cigarettes (Philippines),\n2131 European Union's first written submission, paras. 824 and 839.\n2132 European Union's first written submission, para. 825.\n2133 European Union's first written submission, para. 825.\n2134 European Union's first written submission, para. 825; and second written submission, para. 383.\n2136 European Union's second written submission, para. 394. We note that the European Union raised its\ndefence under Article XX(j) for the first time in its second written submission. Russia objects to the timing of\nthe European Union's defence, alleging due process concerns. (Russia's response to Panel question No. 149,\npara. 32). In its additional questions to the parties after the first meeting, the Panel provided Russia with the\nopportunity to comment on the European Union's defence. (Panel question No. 149). Russia had further\nopportunity to respond to the European Union's defence in the course of the second meeting of the Panel. We\nrecall that, in similar circumstances that involved the respondent raising its defence under Article XIV of the\nGATS for the first time in its second written submission, the Appellate Body considered that the Panel did not\nfail to ensure the complainant's due process rights in deciding to assess the defence, in light of the fact that\nthe complainant had had the opportunity to respond to that defence. (Appellate Body Report, US – Gambling,\nparas. 274–276). In the present case, we acknowledge that the European Union could have raised its defence\nearlier in the proceedings. However, given the opportunities provided to Russia to respond to the European\nUnion's defence, we consider that Russia's due process rights were respected.\n2137 See above paras. 7.1299. -7.1300. and 7.1311. -7.1312. .\n\nsupply\" because of the existence of \"genuine and serious risks of disruption of supply of gas\". 2138\nAccording to the European Union, the TEN-E measure seeks to develop and improve infrastructure\nto connect the European Union with the main potential sources of supply of gas within and around\nthe European Union in order to ensure security of gas supply, and is therefore \"essential\" to \"th e\nacquisition or distribution\" of natural gas. 2139 The European Union argues that the TEN -E measure\nis applied consistently with the chapeau of Article XX, emphasizing that any difference in treatment\nbetween Russian gas and gas of any other origin, which mig ht result from the application of the\ncriteria for PCI designation, would not amount to \"unjustified\" or \"arbitrary\" discrimination.2140\n7.1327. Russia contends that the European Union has not satisfied its burden, under Article XX(j)\nof the GATT 1994, to justify the inconsistency of the TEN -E measure with Articles I:1 and III:4 of\nthe GATT 1994.2141 According to Russia, the European Union failed to demonstrate that natural gas\nis a product \"in general or local short supply\" because the European Union has not established that\nthe quantity of available gas supply is insufficient to meet demand. 2142 Russia further argues that\nthe TEN-E measure is not \"essential\" to \"the acquisition or distribution\" of natural gas because, in\nRussia's view, the TEN-E measure is not aimed at ens uring the security of gas supply but is rather\naimed at decreasing the attractiveness of investing in infrastructure that would facilitate the\nimportation of Russian natural gas. 2143 Russia submits that, by removing discriminatory incentives\nto avoid projects that would facilitate imports of natural gas from Russia, the European Union\ncould have implemented a less trade restrictive alternative to the TEN -E measure that would\nequally contribute to the stated objective of the TEN -E measure. 2144 In Russia's view, th e\ndiscriminatory application of the criteria for PCI designation also results in \"arbitrary\" and\n\"unjustifiable\" discrimination within the meaning of the chapeau of Article XX of the GATT\n1994.2145\n7.11.3.2 Analysis by the Panel\n7.1328. In accordance with the legal standard u nder Article XX(j) of the GATT 1994, as set out in\nparagraphs 7.244 through 7.248 above, in order to justify the TEN -E measure under Article XX(j),\nthe European Union must demonstrate that the TEN -E measure (i) is provisionally justified under\nparagraph (j) of Article XX and (ii) satisfies the requirements of the chapeau of Article XX.\n7.1329. As indicated in paragraph 7.246 above, in order to provisionally justify a challenged\nmeasure under paragraph (j) of Article XX, the responding Member must establish the following\nelements: (i) the measure is \"designed\" to address \"the acquisition or distribution of products in\ngeneral or local short supply\"; and (ii) the measure is \"essential\" to the acquisition or distribution\nof products in general or local short supply. 2146 Thus, the first step in our analysis of whether the\nTEN-E measure is provisionally justified under paragraph (j) of Article XX consists of determining\nwhether the European Union ha s demonstrated that this measure is \"designed\" to address \"the\nacquisition or distribution of products in general or local short supply\". We proceed to this analysis\nimmediately below.\n7.11.3.2.1 Designed to address \"the acquisition or distribution of products in ge neral or\nlocal short supply\"\n7.1330. In order for a measure to be \"designed\" to address \"the acquisition or distribution of\nproducts in general or local short supply\", the respondent must first establish that the product in\n\n2138 European Union's second written submission, paras. 419–421; and opening statement at the second\nmeeting of the Panel, paras. 117–119.\n2139 European Union's second written submission, paras. 422–434; and opening statement at the second\nmeeting of the Panel, paras. 121–125.\n2140 European Union's second written submission, paras. 435–436.\n2141 Russia's response to Panel question No. 149, para. 32.\n2142 Russia's response to Panel question No. 149, paras. 37–40; and opening statement at the second\n2143 Russia's response to Panel question No. 149, paras. 41–48; and opening statement at the second\n2144 Russia's response to Panel question No. 149, paras. 49–53.\n2145 Russia's response to Panel question No. 149, paras. 54–58; and opening statement at the second\n2146 See also above para. 7.247.\n\nquestion is \"in general or local short s upply\".2147 In the present case, we need to determine\nwhether the European Union has demonstrated that natural gas is a product \"in general or local\nshort supply\".\n7.11.3.2.1.1 Products \"in general or local short supply\"\n7.1331. The Appellate Body in India – Solar Cells has provided extensive guidance for panels in\ntheir assessment of whether products are \"in general or local short supply\" in the context of Article\nXX(j) of the GATT 1994. We therefore find it useful to briefly recall this guidance here.\n7.1332. Having considered how the different terms used in Article XX(j) of the GATT 1994 inform\none other, the Appellate Body found that products can be said to be \"in short supply\" when the\n\"quantity\" of a product that is \"available\" does not meet \"demand\" for that product. 2148 The\nAppellate Body further observed that the phrase \"products in general or local short supply\" is\nfocused on products for which a situation of short supply exists within the territory of the Member\ninvoking Article XX(j), while acknowledging that a situation of \"general\" short supply may also\nextend beyond the boundaries of that territory, as long as it also occurs within that territory. 2149 In\nthe Appellate Body's view, the terms \"general\" and \"local\", together with the disjunctive \"or\",\nsuggest that there is no requirement for a Member to demonstrate that the shortage extends to all\nparts of its territory, but that, depending on the circumstances, it may be sufficient to demonstrate\nthat the existence of such a situation of shortage occurs locally, or is limite d to certain parts of its\nterritory.2150\n7.1333. Having recalled that Article XX(j) stipulates that any measures taken under paragraph (j)\n\"shall be discontinued as soon as the conditions giving rise to them have ceased to exist\", the\nAppellate Body considered that Article XX(j) contemplates situations of \"short supply\" that may\ncontinue over time, but are nonetheless expected not to last indefinitely.2151 Therefore, an analysis\nof whether a respondent has identified \"products in general or local short supply\" is not sa tisfied\nby considering only whether there is a mathematical difference at a single point in time between\ndemand and the quantity of supply that is \"available\" for purchase in a particular geographical\narea or market. 2152 According to the Appellate Body, Artic le XX(j) requires, instead, a careful\nscrutiny of the relationship between supply and demand based on a holistic consideration of trends\nin supply and demand as they evolve over time, as well as whether the conditions giving rise to\nshort supply have ceased to exist.2153\n7.1334. The Appellate Body thus determined that an assessment of whether products are \"in\ngeneral or local short supply\" involves an examination of the extent to which a particular product\nis \"available\" for purchase in a particular geographical area or market, and whether this is\nsufficient to meet demand in the relevant area or market. 2154 The Appellate Body further identified\na number of factors that, depending on the particularities of each case, may be relevant for this\nanalysis. These factors inclu de the following: the level of domestic production of a particular\nproduct and the nature of the product that is alleged to be \"in general or local short supply\"; the\nrelevant product and geographic market; potential price fluctuations in the relevant mark et; the\npurchasing power of foreign and domestic consumers; the role that foreign and domestic\nproducers play in a particular market, including the extent to which domestic producers sell their\nproduction abroad; the total quantity of imports that may be \" available\" to meet demand in a\nparticular geographical area or market; the extent to which international supply of a product is\nstable and accessible, including by examining factors such as the distance between a particular\ngeographical area or market and production sites, as well as the reliability of local or transnational\nsupply chains; the level of economic development of the relevant Members. 2155 We further note\n\n2147 See Appellate Body Report, India – Solar Cells, para. 5.60; and Panel Report, India – Solar Cells,\npara. 7.199.\n2148 Appellate Body Report, India – Solar Cells, paras. 5.64-5.66.\n2149 Appellate Body Report, India – Solar Cells, para. 5.67.\n2150 Appellate Body Report, India – Solar Cells, para. 5.67.\n2151 Appellate Body Report, India – Solar Cells, para. 5.70.\n2152 Appellate Body Report, India – Solar Cells, para. 5.70.\n2153 Appellate Body Report, India – Solar Cells, para. 5.70.\n2154 Appellate Body Report, India – Solar Cells, para. 5.71.\n2155 Appellate Body Report, India – Solar Cells, paras. 5.71-5.72 and 5.89.\n\nthat the Appellate Body recognized that a consideration of potential risks of disruption in su pply of\na given product may also inform the question of whether a situation of \"short supply\" exists.2156\n7.1335. According to the Appellate Body, in all cases, the responding party has the burden of\ndemonstrating that the quantity of \"available\" supply from both domestic and international sources\nin the relevant geographical market is insufficient to meet demand.2157\n7.1336. The European Union argues that natural gas is a product \"in general or local short supply\"\nbecause of the existence of \"genuine and serious risks of disru ption of supply of gas\". 2158 The\nEuropean Union observes that the supply of gas from any given source, or through any given\nroute, may be disrupted by events such as infrastructure breakdowns, commercial disputes,\nnatural disasters, social unrest, political actions or terrorism.2159 The European Union explains that,\nas the transmission of gas requires especially dedicated fixed infrastructure that is costly and time-\nconsuming to build, in the event of disruption of gas supply, it is not possible to resort to an\nalternative source or route of supply unless the required infrastructure is already in place.2160\n7.1337. The European Union points to two additional factors that, in its view, aggravate further\nthe risks of disruptions of gas supply in the European Union. The first factor is the European\nUnion's dependency on a relatively limited number of sources of supply. 2161 The European Union\nasserts that it imports 66% of the natural gas it consumes and that several EU member States\nimport all 2162 or almost all 2163 their gas from one si ngle external source of supply. 2164 For the\nEuropean Union, this makes it vulnerable to disruptions of supply of gas resulting from the events\nin its own territory, as well as those events that take place in the country of origin of gas or transit\ncountries and are beyond the control of the EU authorities.2165 The second factor referred to by the\nEuropean Union is the inadequacy of the infrastructure interconnecting the transmission networks\nof the various EU member States.2166\n7.1338. The European Union contends that the a bove factors expose it to genuine and serious\nrisks of disruption of supply of gas, adding that such risks materialised in the past. 2167 The\nEuropean Union submits that such disruptions may seriously compromise the stability and\nreliability of the existing \"local and transnational chains\" for the supply of gas into, and within, the\nEuropean Union.2168 In the European Union's view, due to the identified risks of disruption of gas\nsupply in the European Union, natural gas is thus a product in \"short supply\" in the European\nUnion within the meaning of Article XX (j) GATT.2169\n7.1339. Russia argues that the European Union failed to establish that natural gas is a product \"in\nshort supply\" in the European Union. 2170. Russia submits that, in order to demonstrate that a\nproduct is \"i n general or local short supply\", the respondent must show that the quantity of\navailable supply from both domestic and international sources in the relevant geographical market\nis insufficient to meet demand. 2171 In Russia's view, this requires the respondent to quantify the\navailable supply.2172\n\n2156 Appellate Body Report, India – Solar Cells, para. 5.76.\n2157 Appellate Body Report, India – Solar Cells, para. 5.71.\n2158 European Union's second written submission, paras. 419 and 420-421; and opening statement at\nthe second meeting of the Panel, paras. 117-119.\n2159 European Union's second written submission, para. 414.\n2160 European Union's second written submission, para. 415.\n2161 European Union's second written submission, para. 417.\n2162 European Union's second written submission, para. 417 (referring to Bulgaria, Finland and\nSlovakia).\n2163 European Union's second written submission, para., 417 (referring to Estonia, Latvia and Lithuania).\n2164 European Union's second written submission, para. 417.\n2165 European Union's second written submission, para. 417.\n2166 European Union's second written submission, para. 418.\n2167 European Union's second written submission, para. 419 (referring to disruptions of gas supply from\nRussia to the European Union via Ukraine in 2006 and 2009).\n2168 European Union's second written submission, paras. 420-421.\n2169 European Union's second written submission, para. 421.\n2170 Russia's response to Panel question No. 149, para. 37.\n2171 Russia's response to Panel question No. 149, para. 36 (referring to Appellate Body Report, India –\nSolar Cells, para. 5.71); and opening statement at the second meeting of the Panel, para. 200.\n2172 Russia's response to Panel question No. 149, paras. 37–38.\n\n7.1340. Russia further submits that, instead of addressing all the factors relevant for the\nassessment of whether a product is \"in general or local short supply\", as follows from t he\nclarifications of the Appellate Body in India – Solar Cells, the European Union focuses only on one\nfactor – the extent to which international supply of a product is stable and accessible, including the\nreliability of local or transnational supply chains.2173 According to Russia, the European Union rests\nits entire argument on the assertions relating to the disruptions of gas supply in 2006 and\n2009.2174 In Russia's view, however, these assertions are not sufficient to establish that local or\ntransnational sup ply chains are unstable or inaccessible, or that gas is in short supply in the\nEuropean Union.2175 Russia contends that accepting the European Union's position – that, as long\nas the risks of a major disruption of supply of gas in the European Union persist, natural gas will\nbe in short supply in the European Union – \"would hollow out the 'short supply' test into an empty\nshell\".2176\n7.1341. We understand the positions of the parties as follows. On the one hand, the European\nUnion maintains that, due to the alleged \"gen uine and serious risks\" of disruption of supply of\nnatural gas, which in its view, may seriously compromise the stability and reliability of the existing\n\"local and transnational chains\" for the supply of natural gas into and within the European Union,\nnatural gas is \"in short supply\" in the European Union. On the other hand, we understand Russia's\narguments as implying that the demonstration that natural gas is a product in \"short supply\"\nrequires the European Union to quantify the available gas supply in order to show that it is\ninsufficient to meet the demand in the European Union. 2177 We further understand Russia to argue\nthat such demonstration should be based on the consideration of all the relevant factors identified\nby the Appellate Body in India – Solar Cells, and not just the factor addressed by the European\nUnion.\n7.1342. We recall that the Appellate Body in India - Solar Cells determined that an assessment of\nwhether products are \"in general or local short supply\" involves an examination of the extent to\nwhich a particular product is \"available\" for purchase in a particular geographical area or market,\nand whether this is sufficient to meet demand in the relevant area or market. 2178 The Appellate\nBody further considered that this assessment requires a case -by-case analysis of the relationship\nbetween supply and demand based on a holistic consideration of all relevant factors. 2179 The\nAppellate Body stressed that whether and which factors are relevant will necessarily depend on the\nparticularities of each case.2180\n7.1343. It is our understanding that, in setting out the factors that may be relevant in an\nassessment of whether products are \"in general or local short supply\", the Appellate Body did not\nfocus solely on quantitative factors. The Appellate Body underscored inter a lia the potential\nrelevance of such factors as the role that foreign and domestic producers play in a particular\nmarket, the nature of the products that are alleged to be \"in general or local short supply\", the\nextent to which international supply of a pro duct is stable and accessible, and different levels of\neconomic development of the relevant Members.2181 These factors are rather more qualitative than\nquantitative in nature. We thus do not see any support for a proposition that the demonstration\nthat a product is \"in general or local short supply\" requires the respondent to necessarily quantify,\nat any given point in time or over any given period, the available supply in order to show that it is\ninsufficient to meet demand in the relevant geographical market . In our view, an assessment of\nwhether a product is \"in general or local short supply\" in the context of Article XX(j) is not limited\nonly to the quantitative analysis, and depending on the circumstances of a particular case, may\nalso be based on certain qualitative elements.\n7.1344. Therefore, we disagree with Russia that the demonstration that natural gas is a product\n\"in short supply\" requires the European Union to quantify the available gas supply in order to show\n\n2173 Russia's response to Panel question No. 149, paras. 38-39 (referring to Appellate Body Report, India\n– Solar Cells, para. 5.74).\n2174 Russia's response to Panel question No. 149, para. 40.\n2175 Russia's response to Panel question No. 149, para. 40.\n2176 Russia's response to Panel question No. 149, para. 40.\n2177 See Russia's response to Panel question No. 149, paras. 37-38; and opening statement at the\nsecond meeting of the Panel, para. 200.\n2178 Appellate Body Report, India – Solar Cells, para. 5.71.\n2179 Appellate Body Report, India – Solar Cells, para. 5.74.\n2180 Appellate Body Report, India – Solar Cells, paras. 5.71 and 5.89.\n2181 Appellate Body Report, India – Solar Cells, paras. 5.71 and 5.89.\n\nthat it is insufficient to meet demand in the European Union. Bearing this consideration in mind,\nwe now turn to the analysis of whether the European Union has demonstrated that natural gas is\n\"in short supply\" in the European Union.\n7.1345. We observe that the European Union bases its argument that natural gas is \"in short\nsupply\" in the European Union on the alleged existence of \"genuine and serious risks\" of disruption\nof supply of natural gas , which in the European Union's view, may seriously compromise the\nstability and reliability of the existing \"loca l and transnational chains\" for the supply of natural gas\ninto and within the European Union. We note that, in the context of the European Union's defence\nunder Article XX(j), Russia does not contest the European Union's arguments with respect to the\nexistence of risks that natural gas supply to the European Union may be disrupted. Similarly,\nRussia does not contest the European Union's characterization of such risks as \"genuine and\nserious\".\n7.1346. We recall that, in the context of our assessment of the Europea n Union's defence under\nArticle XIV(a) of the GATS, we have found that certain risks of natural gas supply disruptions that\nmay be caused by foreign controlled TSOs, identified by the European Union, are not merely\nhypothetical and the occurrence of an act ual disruption in natural gas supply may entail serious\nconsequences for the European Union. 2182 We consider that, taking into account the essential role\nof fixed pipeline infrastructure for the transportation of natural gas, such disruptions may\ncompromise the reliability of the local or transnational chains of natural gas supply to the\nEuropean Union.\n7.1347. We note that the extent to which international supply of a product is stable and\naccessible, including the reliability of local or transnational supply chain s, is one of the factors the\nAppellate Body in India – Solar Cells found relevant in an assessment of whether a product is \"in\ngeneral or local short supply\". 2183 We understand that for the European Union, the existence of\n\"genuine and serious\" risks that the international supply of natural gas to the European Union may\nbecome unstable or inaccessible is sufficient to establish that natural gas is a product \"in short\nsupply\". We disagree with this proposition.\n7.1348. In our view, the European Union's position implies that the existence of risks of disruption\nin the supply of a product necessarily means that this product is in \"general or local short supply\"\nwithin the meaning of Article XX(j) of the GATT 1994. We observe that the plain reading of the\nterms \"products in … short supply\" indicates that the products referred to in Article XX(j) of the\nGATT 1994 are those products that are presently in short supply. This indicates that Article XX(j)\ndoes not cover products that are currently not in short supply but that ma y become \"products in …\nshort supply\" in the future.\n7.1349. We recall that in considering whether Article XX(j) covers products at risk of being in\nshort supply, t he panel in India – Solar Cells concluded that Article XX(j) does not cover such\nproducts.2184 The findings of the panel in India – Solar Cells based on its conclusions regarding the\nmeaning of the terms \"products in general or local short supply\" were upheld by the Appellate\nBody.2185\n\n2182 See above paras. 7.1174-7.1199.\n2183 Appellate Body Report, India – Solar Cells, paras. 5.71 and 5.89.\n2184 Panel Report, India – Solar Cells, para 7.250. On the basis of the interpretation of Article XX(j) \"in\naccordance with customary rules of interpretation of public international law\", as required by Article 3.2 of the\nDSU, the panel concluded that the ordinary meaning of the terms \"products in general or local short supply\"\nrefers to a situation in which the quantity of available supply of a product does not meet demand in the\nrelevant geographical area or market. The panel then considered, \"in light of Articles 31 and 32 of the Vienna\nConvention\", the issue of whether the concept of \"products in general or local short supply\" may cover\nproducts at risk of being in short supply. (Panel Report, India – Solar Cells, paras. 7.202–7.218 and 7.243–\n7.250).\n2185 Appellate Body Report, India – Solar Cells, para. 5.90. The Appellate Body upheld the panel's\nfindings in paragraph 7.265 of its report, in which the panel stated that \"[f]or the reasons set forth above, we\nfind that solar cells and modules are not 'products in general or local short supply' in India within the meaning\nof Article XX(j) of the GATT 1994\". We understand that \"the reasons set forth above\" include the panel's\nconclusion in para. 7.250 of its report that the terms \"products in general or local short supply\" do not cover\nproducts at risk of becoming in short supply. (Appellate Body Report, India – Solar Cells, para. 5.90; and Panel\nReport, India – Solar Cells, paras. 7.250 and 7.265).\n\n7.1350. It is well established that the legal interpretation embodied in adopted panel and\nAppellate Body reports becomes \"part and parcel of the acquis of the WTO dispute settlement\nsystem\"; and ensuring \"security and predictability\" in the dispute settlement system, as\ncontemplated in Article 3.2 of the DSU, implies that absent \"cogent reasons\", an adjudicatory body\nwill resolve the same legal question in the same way in a subsequent case. 2186 We find no cogent\nreason to disagree with the legal interpretation of the panel in India – Solar Cells . Thus, we\nconsider that the terms \"products in general or local short supply\" do not cover products at risk of\nbeing in short supply.\n7.1351. We consider that the European Union has demonstrated that , due to certain risks of\nnatural gas supply disruptions, natural gas may become a product \"in short su pply\". However, the\nEuropean Union has provided neither arguments nor evidence that natural gas is currently \"in\nshort supply\" in the European Union. We are mindful that an analysis of whether a respondent has\nidentified \"products in general or local short supply\" is not satisfied by considering only whether\nthere is a mathematical difference at a single point in time between demand and the quantity of\nsupply that is \"available\" for purchase in a particular geographical area or market.2187\n7.1352. As indicated by the Appellate Body, Article XX(j) requires a careful scrutiny of the\nrelationship between supply and demand based on a holistic consideration of trends in supply and\ndemand as they evolve over time. 2188 However, to the extent the European Union seeks to\ndemonstrate a shortage of natural gas supply in the European Union over a certain period of time,\ntaking into account the inherent risks of supply disruptions, the European Union bears the burden\nof introducing evidence that would allow us to conduct a holistic co nsideration of trends in supply\nand demand as they evolve over time. The European Union has not provided such evidence.2189\n7.1353. In vi ew of the foregoing, we find that the European Union has not demonstrated that\nnatural gas is a product \"in short supply\" in the European Union.\n7.1354. This finding is sufficient for us to conclude that the European Union has not demonstrated\nthat the TEN -E measure is justified under Article XX(j) of the GATT 1994. However, we observe\nthat if our finding were modified or reversed on appea l, then the Appellate Body could be called\nupon to examine whether the TEN-E measure fulfils the other elements of the legal standard under\nArticle XX(j) of the GATT 1994, in particular, whether the TEN -E measure is \"essential\" to the\n\"acquisition or distribution\" of natural gas. Therefore, we consider it useful to follow the approach\nof certain previous panels in conducting a limited analysis and review so that the Appellate Body\nmay have the benefit of our factual findings related to these elements.2190\n\n2186 Appellate Body Report, US – Stainless Steel (Mexico), para. 160.\n2187 Appellate Body Report, India – Solar Cells, para. 5.70.\n2188 Appellate Body Report, India – Solar Cells, para. 5.70.\n2189 We requested the parties to provide statistical data on the annual demand/consumption of natural\ngas in the European Union and each EU member State (Panel question No. 246(c)). However, neither party\nprovided such data. In its response, the European Union refers to Table 246 c) contained in Exhibit EU-190.\n(European Union's response to Panel question No. 246(c), para. 336). Table 246 c) in Exhibit EU-190 provides\ngross inland consumption of natural gas (bcm) in the EU member States for the period of 2006 through 2015,\nbut contains no data on the annual demand for natural gas. The other tables contained in Exhibit EU-190\nprovide data on the natural gas supply to the European Union and individual EU member States for the period\nof 2006 through 2015, by partner, volume, share and year. In response to our request, Russia refers to its\nresponse to the previous question, which does not contain the requested data. (Russia's response to Panel\nquestion No. 246(c), para. 370).\nHowever, we observe that the European Union has provided statistical data on production, imports,\nexports and consumption of gas in the European Union between 2011 and 2015. According to these data, there\nwas more natural gas available for consumption than natural gas consumed in the European Union during the\nmentioned period. We understand that the volume of natural gas available for consumption in the European\nUnion would be determined by subtracting the volume of exported natural gas from the combined volumes of\ndomestically produced and imported natural gas. Based on this methodology, we have determined as follows:\nin 2011, there were 496.2 bcm of gas available for consumption and 496.7 bcm of gas consumed; in 2012, the\nnumbers were 459.8 bcm and 448.1 bcm respectively; in 2013 – 439.4 bcm and 437.1 bcm; in 2014 – 411.4\nbcm and 430.4 bcm; in 2015 – 409.1 bcm and 381.7 bcm. Overall, for the period of 2011 through 2015, there\nwere 2215.9 bcm of natural gas available for consumption and 2194.0 bcm of natural gas consumed in the\nEuropean Union. (Eurostat statistics on production, imports, exports and consumption of gas in the European\nUnion between 2011 and 2015, (Exhibit EU-146)).\n2190 See Panel Reports, India – Solar Cells, paras. 7.334–7.336; and US – COOL (Article 21.5 – Canada\nand Mexico), para. 7.672.\n\n7.1355. Our limited analysis and review is provided below. It will involve identifying the different\nissues that would need to be considered, the parties' positions on those different issues, and our\nfactual findings on those issues.\n7.11.3.2.1.2 Whether the TEN -E measure is desi gned to address \"the acquisition or\ndistribution\" of natural gas\n7.1356. A measure considered to be \"designed\" to \"address the particular interest specified\"2191 in\none of the paragraphs of Article XX of the GATT 1994 must, at a minimum, not be \"incapable\" of\naddressing this interest. 2192 The European Union does not provide any arguments with respect to\nthis aspect of its defence under Article XX(j) of the GATT 1994. As Article XX(j) covers measures\n\"essential to the acquisition or distribution\" of products in short supply, a measure \"design ed\" to\naddress the interest specified in this provision must be the one that is not \"incapable\" of\naddressing \"the acquisition or distribution of products in general or local short supply\".2193\n7.1357. As explained above, the TEN -E measure facilitates the developmen t of inter alia natural\ngas transport infrastructure , which includes transmission pipelines .2194 This infrastructure can be\nused in the course of the \"acquisition\" of natural gas from external sources, as well as for the\ntransportation of natural gas within t he European Union, for the purposes of its \"distribution\"\nbetween the different parts of the European Union. Thus, the TEN -E measure is responsible for\ndeveloping gas transport infrastructure that may serve both the \"acquisition\" and \"distribution\" of\nnatural gas. Provided that it is established that natural gas is a product in short supply, the TEN -E\nmeasure would therefore not be \"incapable\" of addressing the \"acquisition or distribution of\nproducts in general or local short supply\". In our view, this wou ld provide a sufficient basis for the\nconclusion that the TEN -E measure is \"designed\" to address the particular interest specified in\nArticle XX(j).\n7.11.3.2.2 Essential to \"the acquisition or distribution\" of natural gas\n7.1358. As indicated in paragraph 7.246 above, the second element to be established by the\nrespondent in order to demonstrate that a challenged measure is provisionally justified under\nparagraph (j) of Article XX of the GATT 1994 is that the measure is \"essential\" to the acquisition or\ndistribution of products in general or local short supply.\n7.1359. The Appellate Body India – Solar Cells opined that the \"plain meaning\" of the word\n\"essential\" suggests that this word is loc ated at least as close to the \"indispensable\" end of the\ncontinuum as the word \"necessary\". 2195 The Appellate Body further clarified that the process of\nweighing and balancing employed to determine whether the measure is \"necessary\" is relevant in\nassessing whether a measure is \"essential\" within the meaning of Article XX(j). 2196 In particular,\nthe Appellate Body considered that the following factors are relevant in assessing whether a\nmeasure is \"essential\": (a) the extent to which the measure sought to be justi fied contributes to\n\"the acquisition or distribution of products in general or local short supply\"; (b) the relative\nimportance of the societal interests or values that the measure is intended to protect; and (c) the\ntrade-restrictiveness of the challenged measure.2197 In most cases, a comparison between the\nchallenged measure and reasonably available alternative measures would also be undertaken.2198\nContribution to \"the acquisition or distribution\" of natural gas\n7.1360. We begin our assessment by determining the extent to which the measure sought to be\njustified contributes to \"the acquisition or distribution of products in general or local short supply\".\nAs the Appellate Body has explained, \"a contribution exists when there is a genuine relationship of\n\n2191 Appellate Body Reports, EC – Seal Products, para. 5.169 (quoting Appellate Body Report, US –\nGambling, para. 292).\n2192 Appellate Body Reports, India – Solar Cells, para. 5.58.\n2193 Appellate Body Report, India – Solar Cells, para. 5.60.\n2195 Appellate Body Report, India – Solar Cells, para. 5.62.\n2196 Appellate Body Report, India – Solar Cells, para. 5.63.\n2197 Appellate Body Report, India – Solar Cells, para. 5.63.\n2198 Appellate Body Report, India – Solar Cells, para. 5.63 (referring to Appellate Body Reports, EC –\nSeal Products, para. 5.169 (referring to Appellate Body Report, US – Gambling, para. 307, in turn referring to\nAppellate Body Report, Korea – Various Measures on Beef, para. 166)).\n\nends and means between the objective pursued and the measure at issue\". 2199 The selection of a\nmethodology to assess a measure's contribution \"depends on the nature, quantity, and quality of\nevidence existing at the time the analysis is made\". 2200 The contribution of a measure to the\nfulfilment of an objective can be demonstrated by way of \"quantitative projections in the future, or\nqualitative reasoning based on a set of hypotheses that are tested and supported by sufficient\nevidence\".2201\n7.1361. The European Union argues that the TEN-E measure facilitates building infrastructure that\nwould enable switching promptly to alternative sources or routes of gas supply in case of\ndisruption, thereby ensuring the \"continued\" \"acquisition\" and \"distribution\" of gas and hence the\nsecurity of gas supply. 2202 The European Union submits that the criteria for PCI designation are\nnecessary in order to ensure that the resources made available under the TEN–E measure are used\nto fill infrastructure gaps, rather than in order to promote infrastructu re that would merely\nduplicate already existing infrastructure.2203\n7.1362. We note that Russia does not disagree with the European Union that building new and\nadditional infrastructure may contribute to the acquisition and distribution of natural gas. 2204\nHowever, Russia considers that, due to the PCI selection criteria aimed at the exclusion of projects\nthat would result in developing infrastructure that could be used to import Russian natural gas, the\ncontribution of the TEN -E measure to its stated objective – ensuring the acquisition and\ndistribution of natural gas – is severely diminished.2205\n7.1363. We re call our analysis above in section 7.11.2.2.1, which led us to conclude that th e\ncriteria for PCI designation implement the objective of diversification of natural gas supply. Given\nthat the transportation of natural gas to, as well as within, the European Union from a particular\nsource of natural gas supply often requires specifical ly dedicated pipelines, a diversification of\nnatural gas supply sources will often also entail a diversification of natural gas supply routes. In\naddition, we note that two specific criteria for PCI designation include the diversification of supply\n\"routes\".2206 In our view, this shows that the criteria for PCI designation implement the objective\nof diversification of sources and routes of natural gas supply.\n7.1364. The European Union submits that the diversification of sources and routes of natural gas\nsupply contributes to the \"continued\" acquisition and distribution of gas, \"and hence the SoS of\ngas\", by mitigating the risks of natural gas supply disruptions.2207 We thus understand that, for the\nEuropean Union, the mitigation of the risks of natural gas supply disrup tions is the medium\nthrough which the TEN -E measure contributes to the objective of \"acquisition or distribution\" of\nnatural gas.\n7.1365. We consider that the diversification of sources and routes of natural gas supply can\nmitigate the risks of natural gas supply disruptions by providing alternative routes and sources of\nnatural gas supply to those that may be affected by a disruption. However, the degree to which\nthe diversification of sources and routes of natural gas supply contributes to the \"acquisition or\ndistribution\" of natural gas depends on the extent to which the \"acquisition or distribution\" of\nnatural gas is affected by the risks of natural gas supply disruptions. We note that the European\nUnion does not offer any explanation of how its ability to take measures for the \"acquisition or\ndistribution\" of natural gas is affected by natural gas supply disruptions.\n7.1366. We acknowledge that the words \"acquisition or distribution\", when read outside of the\ncontext of Article XX(j), may be interpreted as having a br oad coverage. Any \"acquisition or\ndistribution\" of any product could potentially fall within their scope. However, in our view, these\nwords should be read in the specific context of Article XX(j), which covers measures \"essential to\nthe acquisition or distribution of products in general or local short supply\". Thus, Article XX(j) does\n\n2199 Appellate Body Report, Brazil – Retreaded Tyres, para. 145.\n2200 Appellate Body Report, Brazil – Retreaded Tyres, para. 145.\n2201 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.\n2202 European Union's second written submission, para. 425.\n2203 European Union's second written submission, para. 426.\n2204 Russia's response to Panel question No. 149, para. 48.\n2205 Russia's response to Panel question No. 149, para. 48.\n2206 TEN-E Regulation, (Exhibit EU-4), Articles 4(2)(b)(ii) and 4(2)(b) (iii).\n2207 European Union's second written submission, para. 425; and opening statement at the second\n\nnot cover measures \"essential to the acquisition or distribution\" of any products but only those\nthat are \"essential to the acquisition or distribution\" of \" products in general or local short supply \".\nWe consider that the wording of Article XX(j) indicates that there is an already existing situation of\nshortage of supply of a particular product and that a Member is addressing this situation by taking\nmeasures \"essential to the acquisition or distribution\" of this product. In other words, Article XX(j)\nimplicitly points to the situation that the measures covered by this provision are to address (a\ngeneral or local shortage in the supply of a particular product) and the means by w hich this\nsituation is to be addressed (measures \"essential to the acquisition or distribution\" of this\nproduct).\n7.1367. We consider that, in arguing that the diversification of natural gas supply sources and\nroutes contributes to the \"acquisition or distributio n\" of natural gas because it reduces the risks of\nnatural gas supply disruptions, the European Union attempts to substitute the means of addressing\nthe shortage of natural gas supply with the circumstances that may cause this shortage. We recall\nthat the c entral premise of the European Union's argumentation that natural gas is a product \"in\ngeneral or local short supply\" is that there are serious risks of natural gas supply disruptions. 2208\nThus, to the extent that the European Union argues that the risks of natural gas supply disruptions\ncause a shortage of natural gas supply, these arguments pertain to whether natural gas is a\nproduct in short supply. The means of addressing this shortage covered by Article XX(j) would be\nmeasures \"essential to the acquisition or distribution\" of natural gas. While the risks of natural gas\nsupply disruptions may affect the product itself (i.e. they risk causing a shortage in natural gas\nsupply), they may not equally affect the European Union's ability to take measures seeking to\naddress this shortage (measures \"essential to the acquisition or distribution\" of natural gas).\n7.1368. In arguing that the diversification of sources and routes of natural gas supply contributes\nto the \"continued\" acquisition and distribution of natural gas, \"and hence the SoS of gas\", by\nmitigating the risks of natural gas supply disruptions, 2209 the European Union also attempts to\nsubstitute the means of addressing a shortage of natural gas supply covered by Article XX(j)\n(measures \"essential to the acquisition or distribution\" of natural gas) with other measures that\nmay contribute to addressing a shortage of natural gas supply (measures necessary for the\nsecurity of energy supply). However , the text of Article XX(j) is unequivocal that the only\nmeasures seeking to address a shortage of supply of a particular product covered by this provision\nare those that are \"essential to the acquisition or distribution\" of this product. Therefore, a\nrespondent arguing that its measure is provisionally justified under Article XX(j) needs to\ndemonstrate the contribution of its measure to the \"acquisition or distribution\" of a product found\nto be in short supply, and not merely that its measure contributes t o addressing a shortage of\nsupply of this product.\n7.1369. We have concluded, in the context of our assessment of the European Union's defence\nunder Article XIV(a) of the GATS, that the European Union has demonstrated that certain natural\ngas supply disruptions t hat may be caused by foreign controlled TSOs pose \"a genuine and\nsufficiently serious threat\" to the security of energy supply in the European Union. 2210 We have\nalso noted in paragraph 7.1365 above that the diversification of sources and routes of natural gas\nsupply can mitigate the risks of natural gas supply disruptions by providing alternative routes and\nsources of natural gas supply to those that may be affected b y a disruption. In our view, the\ndiversification of natural gas supply sources and routes can thus contribute to the security of\nenergy supply in the European Union.\n7.1370. However, we observe that the security of energy supply is a broad concept defined as the\n\"availability of usable energy supplies, at the point of final consumption, at economic price levels\nand in sufficient quantities and timeliness, so that, given due regard to encouraging energy\nefficiency, the economic and social development of a country i s not materially constrained\". 2211\nThe European Union explains that security of energy supply has a short -term and a long -term\ndimension. The former focuses on \"the ability to respond promptly to sudden changes within the\nsupply-demand balance\" 2212 caused by, e. g. \"infrastructure breakdown, natural disasters, social\n\n2208 We have addressed these arguments above in section 7.11.3.2.1.1.\n2209 European Union's second written submission, para. 425; and opening statement at the second\n2210 See above paras. 7.1174-7.1199.\n2211 European Union's first written submission, para. 482 (quoting United Nations Economic Commission\nfor Europe, Emerging Global Energy Security Risks, No. 36 (2007), pp. 8-9, (Exhibit EU-71), p. 8).\n2212 European Union's first written submission, para. 483.\n\nunrest, political action or terrorism\". 2213 The latter focuses on the need for \"adequate investments\nin the production and distribution of energy and efficient energy markets\" 2214 and includes\nobstacles rel ated to the \"traditional\" fragmentation of the EU market for natural gas and the\n\"relatively limited\" number of foreign sources of supply.2215\n7.1371. As follows from the definition of the concept of \"security of energy supply\", the means of\naddressing the security o f energy supply may encompass a broad range of measures, including\nthose that address a shortage of natural gas supply. However, not all such measures will be\n\"essential to the acquisition or distribution\" of natural gas. For this reason, measures that mitigate\nthe risks of natural gas supply disruptions, and thus contribute to the security of energy supply, do\nnot necessarily contribute to the \"acquisition or distribution\" of natural gas.\n7.1372. Therefore, in our view, the fact that the European Union has demons trated that, due to\nthe risks of natural gas supply disruptions, there is a threat to the security of energy supply does\nnot establish that natural gas supply disruptions, or a risk of such disruptions, affect the European\nUnion's ability to take measures \"essential to the acquisition or distribution\" of natural gas.\nConversely, a demonstration that the diversification of natural gas supply and routes contributes\nto the security of energy supply does not establish that the diversification of natural gas supply\nand routes also contributes to the \"acquisition or distribution\" of natural gas.\nRelative importance of the societal interests or values that the TEN -E measure is\nintended to protect\n7.1373. The next factor in our assessment is the relative importance of the societal interests or\nvalues that the TEN -E measure is intended to protect. The Appellate Body has clarified , in the\ncontext of Article XX(d) of the GATT 1994, that:\n[A]ssessing a measure claimed to be necessary to secure compliance of a WTO -\nconsistent law or regulation may, in appropriate cases, take into account the relative\nimportance of the common interests or values that the law or regulation to be\nenforced is intended to protect. The more vital or important those common interests\nor values are, the e asier it would be to accept as \"necessary\" a measure designed as\nan enforcement instrument.2216\n7.1374. The European Union submits that a particular interest that the TEN -E measure seeks to\nprotect is the security of natural gas supply, which according to the European Union, is a matter of\nfundamental importance.2217 We note that, according to Recital (17) of the TEN-E Regulation,\nThis Regulation lays down rules for the timely development and interoperability of\ntrans-European energy networks in order to achieve the energy policy objectives of\nthe Treaty on the Functioning of the European Union (TFEU) to ensure the functioning\nof the internal energy market and security of supply in the Union, to promote energy\nefficiency and energy saving and the development of new and renewable forms of\nenergy, and to promote the interconnection of energy networks. By pursuing these\nobjectives, this Regulation contributes to smart, sustainable and inclusive growth and\nbrings benefits to the entire Union in terms of competitiveness and economic, social\nand territorial cohesion.2218\n7.1375. We observe that, in the context of our assessment of the European Union's defence under\nArticle XIV(a) of the GATS, we have concluded that disru ptions in the supply of natural gas may\nlead to similar disruptions in the overall energy balance in the European Union. 2219 Therefore, the\nsecurity of natural gas supply can be understood as an integral component of the broader concept\nof security of energy supply, which we have found to constitute a fundamental interest of society\n\n2213 European Union's first written submission, para. 487.\n2214 European Union's first written submission, para. 483.\n2215 European Union's first written submission, paras. 488-489.\n2216 Appellate Body Report, Korea – Various Measures on Beef, para. 162.\n2217 European Union's second written submission, para. 422.\n2218 TEN-E Regulation, (Exhibit EU-4), Recital (17). (emphasis added)\n2219 See above paras. 7.1196. -7.1198. .\n\nin the European Union. In light of this finding, it would appear that the TEN -E measure seeks to\nprotect a societal interest of a high importance.\nTrade-restrictiveness of the TEN-E measure\n7.1376. The third factor in our analysis is the trade -restrictiveness of the TEN -E measure. The\nAppellate Body has clarified that the necessity analysis may include consideration of \"the extent to\nwhich the compliance measure produces restrictive effects on intern ational commerce, that is, in\nrespect of a measure inconsistent with Article III:4, restrictive effects on imported goods \", and\nstated that \"[a] measure with a relatively slight impact upon imported products might more easily\nbe considered as 'necessary' than a measure with intense or broader restrictive effects\". 2220 In our\nview, this consideration is equally valid for the \"essentiality\" analysis under Article XX(j) of the\nGATT 1994.\n7.1377. The European Union argues that the TEN -E measure places no restriction on t he\nimportation or sale of gas from Russia or from any other country and instead facilitates and\npromotes trade in natural gas.2221 The European Union contends that, in order to contribute to this\ngoal, the TEN -E measure provides certain regulatory and financi al incentives for building missing\ninfrastructure or improving inadequate existing infrastructure. 2222 According to the European\nUnion, to the extent that the benefits provided under the TEN -E measure to certain infrastructure\ndistorted competition between gas from different sources, such distortion would be, having regard\nto the nature of the benefits involved, minimal and temporary. 2223 In Russia's view, however, the\ntrade restrictive effect of the TEN-E measure on Russian gas is severe.2224\n7.1378. We note that the TEN-E measure certainly does not introduce a ban on the importation of\nnatural gas of any origin or prohibit the development of infrastructure to transport natural gas of\nany origin. As we have already established, the trade -restrictive impact of the TEN -E meas ure\nstems from the criteria of PCI designation that make it more burdensome to build infrastructure to\ntransport Russian natural gas than natural gas of any other origin.2225\nReasonably available alternative measures\n7.1379. The final step in our analysis of whether the measure is \"essential\" within the meaning of\nArticle XX(j) is the enquiry as to whether a less trade -restrictive alternative measure, which the\nMember concerned could \"reasonably be expected to employ\", is available.2226 Russia submits that,\nin light of the discriminatory criteria for PCI designation, the only significantly less trade restrictive\nmeasure, equally contributing to the objective of acquisition and distribution of natural gas, is the\nelimination of the discriminatory elements serving to incen tivize projects that will not improve the\ncompetitive opportunities of Russian natural gas on the EU market.2227\n7.1380. The European Union disagrees with the alternative measure proposed by Russia, pointing\nout that, in the absence of the selection criteria to which Russia objects, the European Union would\nhave to accord equal priority to projects that duplicate already existing infrastructure. 2228\nAccording to the European Union, such duplicate infrastructure would not contribute to reducing\nthe risks of shortage resu lting from the disruption of a source of supply because it would be\nvulnerable to the very same risks of disruption as the existing infrastructure, and would, at the\nsame time, consume resources that could otherwise be used to support infrastructure to bri ng\nnatural gas from alternative sources of supply. 2229 The European Union thus concludes that the\n\n2220 Appellate Body Report, Korea – Various Measures on Beef, para. 163. (emphasis original)\n2221 European Union's second written submission, para. 427.\n2222 European Union's second written submission, para. 428.\n2223 European Union's second written submission, para. 429.\n2224 Russia's response to Panel question No. 149, para. 49.\n2225 See our analysis above in sections 7.11.2.2.2 and 7.11.2.2.3.\n2226 Appellate Body Reports, EC – Seal Products, para. 5.261 (referring to Appellate Body Report, Korea\n2227 Russia's response to Panel question No. 149, para. 49.\n2228 European Union's opening statement at the second meeting of the Panel, para. 122.\n2229 European Union's opening statement at the second meeting of the Panel, para. 122.\n\nalternative measure proposed by Russia would diminish the overall contribution of the TEN -E\nmeasure to the objective of ensuring security of gas supply.2230\n7.1381. We consider that, if the diversification of sources and routes of natural gas supply, as\nreflected in the criteria for PCI designation, contributes to the \"acquisition\" or \"distribution\" of\nnatural gas, the removal of the criteria for PCI designation that require such diversification will\nindeed diminish the contribution of the TEN -E measure to the \"acquisition or distribution\" of\nnatural gas. The extent to which the removal of these criteria will diminish the contribution of the\nTEN-E measure to the \"acquisition or distribution\" of natural gas (in case there is such\ncontribution) is determined by the degree of contribution these criteria make in the first place. We\nrecall our observation above in paragraph 7.1372 that a demonstration that the diversification of\nnatural gas supply and routes contributes to the security of energy supply does not establish that\nthe diversification of natural gas supply and routes also contributes to the \"acquisition or\ndistribution\" of natural gas.\n7.11.3.2.3 Conclusion\n7.1382. We have found that the European Union has not demonstrated that natural gas is a\nproduct \"in short supply\" in the European Union, which is sufficient for us to conclude that the\nEuropean Union defence unde r Article XX(j) cannot succeed. Having made this finding, we,\nnevertheless, decided to proceed with a limited analysis and review of whether the TEN-E measure\nfulfils the other elements of the legal standard under Article XX(j) of the GATT 1994, in particular,\nwhether it is \"essential\" to the \"acquisition or distribution\" of natural gas. The primary purpose of\nour limited analysis and review was to provide factual findings on the issues relevant for the\nAppellate Body's analysis in the event our finding that the European Union has not demonstrated\nthat natural gas is a product \"in general or local short supply\" were modified or reversed on\nappeal. In light of this purpose, we do not see any compelling reason for us to reach an overal l\nconclusion, or make any finding, on whether the TEN -E measure is \"essential to the acquisition or\ndistribution\" of natural gas.\n7.11.4 Russia's claim under Article II:1 of the GATS\n7.1383. Russia submits that the TEN -E measure modifies the conditions of competition t o the\ndetriment of Russian services and service suppliers. In Russia's view, the criteria for PCI\ndesignation under the TEN -E measure are inherently biased against Russian services and service\nsuppliers.2231 According to Russia, while projects of other Members are eligible for PCI designation,\n\"and the services and service suppliers promoting and supplying those services are actually\nreceiving the administrative, regulatory and financial benefits available under the TEN-E measure\",\n\"Russian gas projects\" are excluded from PCI eligibility.2232\n7.1384. Russia further contends that the references in the text of the TEN -E Regulation to\nreducing dependency on \"a single supplier\", \"diversification of gas supply\" and \"diversification of\nsupply sources, supplying counterparts an d routes\", read in light of relevant policy documents,\nshow that the TEN-E measure targets Russian services and service suppliers.2233\n7.1385. Russia also argues that the TEN -E measure modifies the conditions of competition to the\ndetriment of Russian services and s ervice suppliers because projects that are likely to reduce\nreliance on Russian natural gas are eligible for PCI designation, whilst projects that are unlikely to\nreduce such reliance are unable to obtain PCI designation. 2234 In support of its contention that the\nTEN-E measure is inconsistent with Article II:1 of the GATS, Russia also invokes the \"internal\norganization of Gazprom\" and refers to the [*** ] project as the specific instance of the\ndiscriminatory application of the TEN-E measure.2235\n\n2230 European Union's opening statement at the second meeting of the Panel, para. 122.\n2231 Russia's second written submission, para. 456.\n2232 Russia's first written submission, para. 781. See also Russia's response to Panel question No. 48,\npara. 240.\n2233 Russia's first written submission, paras. 763–770; and second written submission, paras. 452–453.\n2234 Russia's second written submission, para. 456.\n2235 Russia's second written submission, paras 448 and 458; and response to Panel Question No. 48,\nparas. 239 and 243.\n\n7.1386. The European Uni on considers Russia's claim to be without merit. 2236 According to the\nEuropean Union, Article II:1 of the GATS is not concerned with discrimination between\ninfrastructures or \"projects\" but with discrimination between services and service suppliers. 2237 In\nthe European Union's view, Russia has not established that the benefits provided by the TEN -E\nmeasure to certain infrastructures or projects result in less favourable treatment being accorded to\nRussian service suppliers or services than to like service supplie rs or services of other\nMembers.2238\n7.1387. The European Union further considers that the reference in the definition of the BEMIP\nGas Corridor to the objective of ending dependency on a \"single supplier\" is a reference to a\nsupplier of natural gas rather than a sup plier of transmission services. 2239 Therefore, in the\nEuropean Union's view, the definition of the BEMIP Corridor would not translate into discrimination\nagainst Russian services or service suppliers.2240\n7.1388. The European Union submits that even if Russia's premise that the TEN -E measure\ndiscriminates against imports of Russian gas were correct, it would not follow that the TEN -E\nmeasure discriminates against Russian service suppliers or services. 2241 The European Union also\ncontests Russia's arguments regarding the [* **] project, submitting that non -designation of this\nproject was the result of the impartial application of objective selection criteria that did not involve\ndiscrimination against Russian gas or against Russian service suppliers or services.2242\n7.11.4.1 Analysis by the Panel\n7.1389. Pursuant to the legal standard under Article II:1 of the GATS, as set out in\nparagraphs 7.226 and 7.227 above, we shall examine whether Russia has demonstrated that: (a )\nthe TEN -E measure falls w ithin the scope of the GATS; (b ) the relevant services and service\nsuppliers are like ; and (c ) the T EN-E measure accords less favourable treatment to Russian\nservices and service suppliers than that accorded to like services and service suppliers of any other\ncountry.\n7.11.4.1.1 Scope of the GATS\n7.1390. In order to establish that a measure falls within the scope of the G ATS, a complainant\nmust show that: (a) \"there is 'trade in services' in the sense of Article I:2\"; and (b) the measure at\nissue \"'affects' such trade in services within the meaning of Article I:1\".2243\n7.1391. \"[T]rade in services\" within the meaning of Article I:2 o f the GATS is defined as \"the\nsupply of a service\" through the four modes of supply mentioned in paragraphs (a) through (d) of\nArticle I:2. We note that Russia has identified \"natural gas pipeline transport services\" as the\nrelevant services sector 2244, and m ode 3 (commercial presence) as the relevant mode of supply\nwith respect to all of the measures at issue in the dispute. 2245 We also note that the European\nUnion has not denied that there are suppliers of pipeline transport services, including from Russia,\nwhich are established through commercial presence in the territory of the European Union. Thus,\nwe consider that Russia has demonstrated that there is trade in services within the meaning of\nArticle I:2 of the GATS.\n7.1392. With respect to the second element, Russia asserts that the TEN-E measure affects trade\nin services because it affects infrastructure projects related to natural gas. 2246 The European Union\n\n2236 European Union's first written submission, para. 807.\n2237 European Union's first written submission, para. 807; and second written submission, paras. 358\nand 362.\n2238 European Union's first written submission, para. 807; and response to Panel question No. 76,\npara. 173.\n2239 European Union's second written submission, para. 365.\n2240 European Union's second written submission, paras. 365 and 367.\n2241 European Union's second written submission, para. 367.\n2242 European Union's second written submission, para. 371.\n2243 Appellate Body Report, Canada – Autos, para. 155.\n2244 Russia's panel request, page 1; Russia's first written submission, paras. 93 and 754; and Russia's\nsecond written submission, para. 75.\n2245 Russia's response to Panel question No. 56, para. 285.\n2246 Russia's first written submission, para. 754.\n\ndoes not contest Russia's argument.2247 The Appellate Body and previous panels have consistently\nheld that the use of the term \"affecting\" in Article I:1 means that the GATS covers not only\nmeasures that directly govern or regulate trade in services but also measures that, even though\nthey may regulate other matters, nevertheless \"affect\" trade in services.2248\n7.1393. The TEN-E measure provides a regulatory framework for PCIs. 2249 Infrastructure projects\nthat may qualify as PCIs include inter alia those that develop transmission pipelines for the\ntransport of natural gas. 2250 Thus, the TEN -E measure does not directly govern trade in services,\nbut regulates other matters, namely infrastructure projects developing inter alia transmission\npipelines. Given the essential function of transmission pipelines in the supply of pipeline transport\nservices, we believe that the regulatory framework of infrastructure projects that develop\ntransmission pipelines may have an \"effect on\" 2251 the supply of pipeline transport services.\nTherefore, we consider that the TEN -E measure affects trade in s ervices within the meaning of\nArticle I:1 of the GATS.\n7.1394. Having determined that Russia has demonstrated that there is \"trade in services\" within\nthe meaning of Article I:2 of the GATS and that the TEN -E measure \"affects trade in services\"\nwithin the meaning of Article I:1 of the GATS, we find therefore that the TEN -E measure falls\nwithin the scope of the GATS.\n7.11.4.1.2 Like services and service suppliers\n7.11.4.1.2.1 Introduction\n7.1395. Russia argues that Russian pipeline transport services and service suppliers are like\npipeline transport services and service suppliers of other third countries, including LNG services\nand service suppliers, within the meaning of Article II:1 of the GATS. In Russia's view, \"the\n'likeness' requirement under Article II:1 of the GATS is satisfied\" because t he TEN -E measure\ndistinguishes exclusively on the basis of origin between Russian services and service suppliers, on\nthe one hand, and domestic and other third -country services and service suppliers, on the\nother.2252 Russia further submits that, to the exten t we disagree that the TEN -E measure\ndistinguishes between Russian and other third -country pipeline transport services and service\nsuppliers exclusively on the basis of origin, Russian and other third -country pipeline transport\nservices and service supplie rs, including LNG services and service suppliers, are in a competitive\nrelationship with each other and therefore satisfy the likeness requirement on this basis within the\nmeaning of Article II:1 of the GATS.2253\n7.1396. The European Union does not contest that Russ ian pipeline transport services and service\nsuppliers are like within the meaning of Article II:1 of the GATS but opposes Russia's inclusion of\nLNG services within the scope of pipeline transport services. 2254 The European Union further\ncontests Russia's argu ments that pipeline transport services and service suppliers are like LNG\nservices and service suppliers within the meaning of Article II:1 of the GATS.2255\n7.1397. We recall that, in para graph 7.284 above, we have established that pipeline transport\nservices do not encompass LNG services. However, we have also found that, as far as pipeline\n\n2247 In Panel question No. 76, we asked the European Union whether the European Union was arguing\nthat the TEN-E measure is not \"covered by the GATS\" within the meaning of Article II:1 of the GATS. In its\nresponse, the European Union indicated that Article II:1 of the GATS is not concerned with the treatment of\ninfrastructures, and that, in its view, Russia has not demonstrated how the treatment of certain infrastructures\nunder the TEN-E measure results in less favourable treatment being accorded to Russian service suppliers or\nservices than to like service suppliers or services of other Members (European Union's response to Panel\nquestion No. 76, paras. 172–173).\n2248 Appellate Body Report, EC – Bananas III, para. 220. See also Panel Reports, Argentina – Financial\nServices, para. 7.103; and China – Publications and Audiovisual Products, paras. 7.970–7.971.\n2249 See above section 2.2.8.\n2250 Annex II.(2)(a) of the TEN-E Regulation refers specifically to transmission pipelines for the transport\nof natural gas. (TEN-E Regulation, (Exhibit EU-4), Annex II.2(a))\n2251 Appellate Body Report, EC – Bananas III, para. 220.\n2252 Russia's first written submission, para. 756.\n2253 Russia's first written submission, para. 757.\n2254 European Union's first written submission, paras. 80 and 282.\n2255 European Union's first written submission, para. 283.\n\ntransport services and service suppliers are concerned, such services and service sup pliers are like\nwithin the meaning of Article II:1 of the GATS. 2256 Given that we have already reached a\nconclusion that pipeline transport services and service suppliers are like under Article II:1 of the\nGATS, we do not find it necessary to address Russia's arguments that the likeness of pipeline\ntransport services and service suppliers can be presumed. Therefore, we now turn to the question\nof whether LNG services and service suppliers are like pipeline transport services and service\nsuppliers within the meaning of Article II:1 of the GATS.2257\n7.11.4.1.2.2 Likeness of LNG and pipeline transport services and service suppliers\n7.1398. Russia contends that LNG services and p ipeline transport services are like within the\nmeaning of Article II of the GATS. 2258 According to Russia, \"LNG services and service suppliers are\n'essentially or generally the same in competitive terms' and thus in a competitive relationship with\nother pipeline transport services and service suppliers in the EU market\". 2259 Russia further argues\nthat LNG services and pipeline transport services are substitutable. 2260 In Russia's view, these\nservices are supplied for the same purpose and their users/consumers, as well as nature and\ncharacteristics, are essentially the same. 2261 Russia also submits that LNG services are \"presu med\nto be included\" in pipeline transport services on the basis of the UN Central Product Classification\n(CPC) and Services Sectoral Classification (W/120).2262\n7.1399. The European Union contests Russia's arguments that LNG services and pipeline transport\nservices are like within the meaning of Article II of the GATS.2263 In the European Union's view, the\nnature and characteristics of LNG services and service suppliers are different from pipeline\ntransport services and service suppliers. 2264 The European Union further con siders that the\ndifferent nature and characteristics of LNG services and pipeline transport services mean that\nconsumers will not consider these services to be interchangeable, since they serve a different end -\nuse.2265 According to the European Union, the CPC also places LNG services and pipeline transport\nservices under a different classification.2266\n7.1400. The Appellate Body observed that the analysis of likeness in the context of both trade in\ngoods and trade in services is aimed at determining whether the products or services and service\nsuppliers, respectively, are in a competitive relationship with each other. 2267 On this basis, the\nAppellate Body considered that the criteria traditionally developed in the context of trade in goods\nmay be relevant for determining lik eness of services and service suppliers, provided that they are\nadapted as appropriate to account for the specific characteristics of trade in services. 2268 The\nAppellate Body noted that the criteria traditionally developed in the context of trade in goods ar e\nthe following: (i) the properties, nature, and quality of the products; (ii) the end -uses of the\nproducts; (iii) consumers' tastes and habits or consumers' perceptions and behaviour in respect of\nthe products; and (iv) the tariff classification of the products.2269 The Appellate Body also indicated\nthat the determination of likeness is a holistic analysis and further clarified that no evidence should\n\n2256 See above para. 7.422.\n2257 We observe that, according to Annex II.2(c) of the TEN-E Regulation, the energy infrastructure\ncategories concerning gas include reception, storage and regasification facilities for LNG. (TEN-E Regulation,\n(Exhibit EU-4), Annex II.2(c)) Infrastructure projects for the construction of such facilities may thus be\ndesignated as PCIs under the TEN-E Regulation. Therefore, in contrast to the unbundling, third-country\ncertification and the public body measures, the treatment of LNG service suppliers may be relevant for our\nassessment of Russia's GATS claim against the TEN-E measure. However, we note that Russia has not\ndeveloped any specific arguments that its pipeline transport services and service suppliers are treated less\nfavourably than LNG services and service suppliers of other third countries.\n2258 Russia's first written submission, para. 261.\n2259 Russia's response to Panel question No. 94, para. 403.\n2260 Russia's first written submission, paras. 260-261.\n2261 Russia's second written submission, para. 93; and response to Panel question No. 53(a), para. 271.\n2262 Russia's responses to Panel question No. 53(b), paras. 275–277, and No. 60, para. 286; and second\nwritten submission, paras. 83-85.\n2263 European Union's first written submission, para. 283.\n2264 European Union's first written submission, paras. 285 and 428-434.\n2265 European Union's first written submission, para. 286.\n2266 European Union's first written submission, para. 287.\n2267 Appellate Body Report, Argentina – Financial Services, para. 6.31.\n2268 Appellate Body Report, Argentina – Financial Services, para. 6.31.\n2269 Appellate Body Report, Argentina – Financial Services, para. 6.30.\n\nbe a priori excluded from a panel's analysis of likeness. 2270 The likeness of services and service\nsuppliers can only be determined on a case -by-case basis, taking into account the specific\ncircumstances of the particular case.2271\n7.1401. Thus, based on the clarifications of the Appellate Body, in the specific circumstances of\nthis case, we will conduct a holistic analysis of likeness, taking into account the following criteria:\n(a) the nature and characteristics of the relevant services; (b) the end -uses of the relevant\nservices; (c) the preferences of the consumers with respect to the relevant services; and (d) the\nclassification and description of the relevant services under the CPC.2272 We will also consider\nRussia's arguments that LNG services and pipeline transport services are substitutable.\n7.1402. We recall that we have determined that pipeline transport services concern the\ntransmission of natural gas via pipelines, while LNG services primarily concern the liquefaction of\nnatural gas and regasification of LNG.2273 Bearing this understanding in mind, we turn to our\nanalysis of whether LNG services and pipeline transport services are like on the basis of the\nanalytical framework set out above.\n Nature and characteristics of services\n7.1403. Russia is of the opinion that the nature and characteristics of LNG services and pipeline\ntransport services are \"essentially\" the same. 2274 In the Europea n Union's view, however, the\nnature and characteristics of LNG services differ from those of pipeline transport services, due to\nthe differences in the activities, infrastructure and infrastructure operators involved in the supply\nof these services.2275 We consider that one of the factors informing our analysis of the nature and\ncharacteristics of the services in question is the core activities involved in the supply of these\nservices.2276 As noted above, the core activity involved in the supply of pipeline trans port services\nis the conveyance of natural gas from one point to another through a pipeline. In contrast, the\ncore activities involved in the supply of LNG services are the liquefaction of natural gas and\nregasification of LNG.\n7.1404. According to industry definitions, liquefaction \"consists of chilling natural gas to the point\nwhere it becomes liquid, at an average temperature of –160º C ( –260º F)\", while regasification\n\"consists of returning LNG to its regular gaseous phase at about 5º C using heat exchang ers\".2277\nAs evident from these definitions, both liquefaction of natural gas and regasification of LNG entail\nchanging the physical state of natural gas and LNG, respectively . Thus, while pipeline transport\nservices concern the conveyance of natural gas from one point to another through a pipeline, LNG\nservices primarily concern changing the physical state of natural gas and LNG. This means that the\nsupply of pipeline transport services, on the one hand, and LNG services, on the other, involve\n\n2270 Appellate Body Report, Argentina – Financial Services, paras. 6.29-6.30 and 6.32.\n2271 Appellate Body Report, Argentina – Financial Services, para. 6.26.\n2272 Appellate Body Report, Argentina – Financial Services, paras. 6.30–6.32.\n2273 See above paras. 7.281. -7.283. .\n2274 Russia's second written submission, para. 93.\n2275 European Union's first written submission, paras. 286 and 431;\n2276 The panel in EC – Bananas III (Ecuador) applied this criterion in the following manner:\nFourth, in our view, the nature and the characteristics of wholesale transactions as such, as\nwell as of each of the different subordinated services mentioned in the headnote to section 6 of\nthe CPC, are \"like\" when supplied in connection with wholesale services, irrespective of whether\nthese services are supplied with respect to bananas of EC and traditional ACP origin, on the one\nhand, or with respect to bananas of third -country or non -traditional ACP origin, on the other.\nIndeed, it seems th at each of the different service activities taken individually is virtually the\nsame and can only be distinguished by referring to the origin of the bananas in respect of which\nthe service activity is being performed. Similarly, in our view, to the extent that entities provide\nthese like services, they are like service suppliers. (Panel Report, EC – Bananas III (Ecuador ),\npara. 7.322) (emphasis added)\n2277 United Nations Economic Commission for Europe, Study on Current Status and Perspectives for LNG\nin the UNECE Region (UN 2013), (Exhibit RUS-32), pp. 5-6; and UNECE LNG Study, (Exhibit RUS-271),\nChapter 2, p. 2. See also Gas Strategies industry glossary, (Exhibit RUS-268), definition of \"LNG (Liquefied\nNatural Gas)\".\n\ndifferent core activities.2278 Therefore, in our view, LNG services and pipeline transport services do\nnot share the same nature and characteristics.\nEnd-uses and consumer preferences\n7.1405. We observe that, in the context of trade in goods, the Appellate Body described end -uses\nas \"the extent to which products are capable of performing the same, or similar, functions\" and\nconsumer tastes and habits as \"the extent to which consumers are willing to use the products to\nperform these functions\". 2279 In our view, adapted to trade in serv ices, the end -uses criterion\nwould refer to the extent to which services are capable of performing the same or similar\nfunctions, while the consumer preferences criterion would concern the extent to which the relevant\nconsumers use the services to perform these functions.2280\n7.1406. We understand Russia to argue that the ultimate consumers of both pipeline transport\nservices and LNG services are the same.2281 Russia also appears to imply that the end-uses of LNG\nservices and pipeline transport services are the same because, in its view, the end-uses of LNG are\nthe same as the end-uses of natural gas.2282\n7.1407. The European Union considers that pipeline transport services and LNG services serve\ndifferent end -uses and therefore the consumers will not consider them as interchangea ble.2283\nAccording to the European Union, LNG services involve the liquefaction of natural gas and\nregasification of LNG and do not involve transport, whereas pipeline transport services carry\nnatural gas from one point (the processing plant, or the LNG facil ity) to another point (the place\nwhere the transmission pipeline connects to the distribution pipeline network). 2284 The European\nUnion further submits that the users of LNG services will be gas producers who want to have their\ngas transported by ships or tru cks, traders of LNG, or operators of LNG ships. 2285 We thus\n\n2278 We also note the European Union's arguments, uncontested by Russia, that the supply of LNG\nservices and pipeline transport services involve technically different types of infrastructure – LNG terminals in\ncase of the former and transmission pipelines in case of the latter (European Union's first written submission,\npara. 431).\n2279 Appellate Body Report, US – Clove Cigarettes, para. 125 (referring to Appellate Body Report, EC –\nAsbestos, para. 117). (emphasis original)\n2280 According to Article XXVIII(i) of the GATS, \"service consumer\" means any person that receives or\nuses a service.\n2281 In its response to Panel question No. 53(a), Russia argues that:\n[T]he users/consumers of LNG services are no different than the users/cons umers of other\npipeline transport services. Virtually all natural gas imported in the form of LNG is necessarily\nregasified and placed in the transmission system. The users/consumers of the services necessary\nto supply this reconverted LNG are, at the out set, the TSOs receiving that gas via pipelines form\nthe LNG facility – just as TSOs are supplied gas from an overland pipeline, along with the\nservices necessary to supply that gas. Once reconverted LNG -gas enters the transmission\nsystem, it blends indistinguishably with all other gas and is supplied to downstream consumers,\nincluding large utilities and distribution system operators and ultimately smaller commercial and\nprivate consumers. Given that the natural gas cannot be distinguished, these ultimate consumers\nare also the users/consumers of LNG services. (Russia's response to Panel question No. 53(a),\npara. 271).\n2282 Russia's second written submission, paras.93–94. In its second written submission, Russia asserts\nthat \"the EU itself makes explicit in the Directive and elsewhere that it views … LNG services as equivalent to\nand supplied for the same purpose as all other pipeline transport services\". (Russia's second written\nsubmission, para. 93) Russia continues as follows:\nLikewise, and again contrary to the EU's unsupported claim, the end -uses of the products are\nexactly the same. Similarly, \"consumers' tastes and habits or consumers' perceptions and\nbehavior in respect of\" LNG services and all other pipeline transport services are the same. LNG\nand all other natural gas are perfectly substitutable, or 100% interchangeable, as Russia has\nexplained. LNG is imported and re-gasified only to be reconverted into its natural gaseous state;\nthis reconversion takes place only so that natural gas can be placed into the transmission system\nand transported via pipeline to downstream consumers. Those consumers do not demand or\npurchase LNG, which is indistinguishable from, and exactly the same as, any other natural gas.\nRather, the consumers demand and purchase nat ural gas, some of which just happens to have\nonce been condensed in the form of LNG at one point in the transmission process. These\nconsumers do not know or care that some of the natural gas they purchase may have once been\nLNG. (Russia's second written submission, para. 94).\n2283 European Union's first written submission, para. 286.\n2284 European Union's first written submission, para. 286.\n2285 European Union's response to Panel question No. 53(a), para. 145.\n\nunderstand the European Union to imply that the consumers of pipeline transport services are\ndifferent from the consumers of LNG services.\n7.1408. It is undisputed that regasified LNG injected into a transm ission system will be ultimately\ndelivered to the same final customer and will serve the same end -uses as natural gas that has\nnever been liquefied. We note that the parties do not disagree that, following regasification, a\ncertain amount of reconverted LN G will be transported via pipelines in the European Union with a\nview to its subsequent delivery to the final customer. 2286 However, in our view, these\ncircumstances relate to the consumers and end-uses of natural gas as a product, and do not relate\nto the co nsumers and end-uses of services. We do not consider that services that concern\nproducts with allegedly the same end -uses will necessarily constitute services with the same end -\nuses.\n7.1409. As we have established above in paragraph 7.263, pipeline transport services for the\npurposes of this dispute cover the transmission of natural gas via pipelines. The function of\ntransmission pipelines is to deliver natural gas to the distribution system for its subsequent\ndelivery to the final customer. The liquefaction of natural gas and regasification of LNG, in\ncontrast, change the physical state of natural gas and LNG, respectively, in order to facilitate and\nenable their transportation. The regasification of LNG is a step that precedes the transmission of\nregasified LNG via pipelines. In a similar manner, the liquefaction of natural gas would precede its\ntransportation by seagoing vessels. Thus, we consider that the function performed by LNG services\nis the change of the physical state of natural gas and LNG for the purposes of their transportation,\neither via transmission pipelines or via seagoing vessels, while the function performed by pipeline\ntransport services is the delivery of natural gas to the distribution system. On this basis, we\nconclude that the end-uses of pipeline transport services and LNG services are different.\n7.1410. Russia has not provided any evidence regarding consumer preferences, and therefore we\ndo not make any findings regarding this criterion.\nClassification and description under the CPC\n7.1411. The parties disagree with respect to the version of the CPC that we should take into\naccount for the purposes of our likeness analysis. Russia insists that only CPC prov . is relevant\nbecause it formed the basis for the S ervices Sectoral Classification (W/120) used by the Members\nin drafting their services schedules.2287 The European Union, on the other hand, relies on the latest\nversion of the CPC, namely CPC 2.1, issued in 2015.2288\n7.1412. We recall that the Appellate Body in Argentina – Financial Services observed that the\nclassification and description of services under, for instance, the CPC could be relevant in the\ndetermination of whether the services at issue are like. 2289 While t he Appellate Body did not\nspecify which version of the CPC a panel should take into conside ration, it noted the existence of\nthe most recent version of the CPC.2290 For the purposes of our analysis, we will consider the latest\nversion of the CPC, namely CPC 2.1.\n7.1413. We observe that, in CPC 2.1, the transportation of natural gas via pipelines is included in\nsubclass 65131 (\"Transport services via pipeline of petroleum and natural gas\"). 2291 An\n\n2286 See above para 7.842.\n2287 Russia's response to Panel question No. 60, para. 286.\n2288 European Union's first written submission, paras. 75 and 79; and response to Panel question No. 60,\nparas. 165-166.\n2289 Appellate Body Report, Argentina – Financial Services, para. 6.32.\n2290 The Appellate Body made the following observation:\nWe note that, with regard to the national treatment obligation, Members' Schedules of\nCommitments define the scope of service transactions and sector s that are subject to the\nobligation. We further note that, in trade in services, the classification and description of services\nis based mainly on two instruments: (i) the Services Sectoral Classification List , established by\nthe WTO Secretariat in 1991; and (ii) the UN Central Product Classification (CPC). The Services\nSectoral Classification List was based on the 1991 provisional UN CPC. The most recent UN CPC\n(Ver.2.1) was released on 11 August 2015, and is available at:\n<http://unstats.un.org/unsd/cr/registry/cpc-21.asp>.\n(Appellate Body Report, Argentina – Financial Services, fn 185 to para. 6.27)\n2291 CPC 2.1 code 65131, (Exhibit EU-34).\n\nexplanatory note to this subclass provides that it does not include liquefaction and regasification\nservices, which belong to subclass 67990 (\"Other supporting transport services n.e.c.\"). 2292 Thus,\naccording to CPC 2.1, pipeline transport services and LNG services fall within different subclasses.\nThey also belong to differe nt broader groups of services, referred to in CPC 2.1 as \"divisions\".\nWhile pipeline transport services belong to division 65 (\"Freight transport services\"), LNG services\nare found in division 67 (\"Supporting transport services\").2293\nSubstitutability of services\n7.1414. We observe that Russia also submits that services supplied at an LNG facility and t hose\nsupplied via pipeline are like because they are \"responsive to the same market dynamics of supply\nand demand\". 2294 In Russia's view, this \"substitutability results i n cross -price elasticity, i.e. the\ndemand for one is impacted by a change in demand for the other\".2295\n7.1415. We do not find Russia's arguments convincing. Regasified LNG can be transported via\ntransmission pipelines only after LNG has been regasified. The service of LNG regasification\nprecedes, and in fact enables, pipeline transport services in relation to regasified LNG. 2296 Pipeline\ntransport services in relation to regasified LNG depend on, and therefore cannot substitute, LNG\nregasification services. For these r easons, we reject Russia's arguments that LNG services and\npipeline transport services are substitutable.\nConclusion\n7.1416. Based on the foregoing analysis, we conclude that LNG services and pipeline transport\nservices do not share the same nature and character istics and serve different end -uses. We have\nalso established that LNG services and pipeline transport services are not only found in different\nsubclasses of the latest version of the CPC, namely CPC 2.1, but also belong to different divisions –\n\"Supporting transport services\" and \"Freight transport services\", respectively. We have,\nfurthermore, rejected Russia's argument that LNG services and pipeline transport services are\nsubstitutable. In light of these conclusions, we consider that Russia has not demon strated that\nLNG services and pipeline transport services are like within the meaning of Article II of the GATS.\n7.11.4.1.2.3 Conclusion\n7.1417. In view of the foregoing, we conclude that, as far as pipeline transport services and\nservice suppliers are concerned, we consider that such serv ices and service suppliers are like\nwithin the meaning of Article II:1 of the GATS. As concerns the likeness of LNG services and\nservice suppliers and pipeline transport services and service suppliers, we conclude that Russia has\nnot demonstrated that LNG services and pipeline transport services are like within the meaning of\nArticle II:1 of the GATS. Therefore, we continue our examination of Russia's claim against the\nTEN-E measure under Article II:1 of the GATS focusing on pipeline transport services and service\nsuppliers.\n7.11.4.1.3 Less favourable treatment\n7.1418. In line with the Appellate Body jurisprudence, the \"less favourable treatment\" standard\nunder Article II:1 of the GATS calls for an examination of whether a measure modifies the\n\n2292 CPC 2.1 code 65131, (Exhibit EU-34); and CPC 2.1 code 67990, (Exhibit EU-37). The acronym\n\"n.e.c.\" stands for \"not elsewhere classified\".\n2293 CPC 2.1 code 65131, (Exhibit EU-34); and CPC 2.1 code 67990, (Exhibit EU-37). In addition, we\nrecall that sector 11.G in the Schedules of Croatia, Hungary and Lithuania corresponds to Group 713 of CPC\nprov., entitled \"Pipeline transport services\" (see para. 7.321 above). Moreover, we also found that sector 11.G,\n\"Pipeline Transport [Services]\", in the Schedules of Croatia, Hungary and Lithuania does not cover LNG\nservices (see paras. 7.332. -7.333. ). Hence, in our view, Group 713 of CPC prov., \"Pipeline transport\nservices\", does not cover LNG services.\n2294 Russia's first written submission, paras. 260-261. We note that Russia indicated that no commercial\nliquefaction takes place in the European Union, and therefore, \"liquefaction is not among the services in a\ndirect competitive relationship with other pipeline transport services in the EU\". (Russia's response to Panel\nquestion No. 63, para. 297).\n2295 Russia's first written submission, para. 260.\n2296 See above paras. 7.281. -7.283. .\n\nconditions of competition to the detriment of services or service suppliers of a ny Member, in\ncomparison to like services or service suppliers of any other country.2297\n7.1419. Russia argues that by excluding gas projects concerning Russian pipeline transport\nservices and service suppliers from eligibility for PCI designation, the TEN -E measure modifies the\nconditions of competition to the detriment of Russian pipeline transport services and service\nsuppliers.2298 In Russia's view, the projects of other Members are eligible for PCI designation, \"and\nthe services and service suppliers promoting and supplying those services are actually receiving\nthe administrative, regulatory and financial benefits available under the TEN -E measure\". 2299\nRussia submits that, in contrast, \"Russian gas projects\" are excluded from PCI eligibility.2300 Russia\nthus concludes th at service suppliers of other Members are thereby better positioned to compete\nin the European Union market, including against like Russian services and service suppliers.2301\n7.1420. The European Union considers that arguments concerning \"Russian projects\" submitted\nby Russia in the context of this claim are irrelevant 2302, as the provisions of the GATS invoked by\nRussia are not concerned with discrimination between \"infrastructures\" or \"projects\" but with\ndiscrimination between services and service suppliers.2303 According to the European Union, Russia\nhas neither explained nor proven how the benefits provided by the TEN -E measure to certain\ninfrastructure result in less favourable treatment being accorded to Russian service suppliers or\nservices than to like service suppliers or services of other Members.2304\n7.1421. We understand Russia to argue that the TEN -E measure discriminates against \"Russian\nprojects\", which, in Russia's view, necessarily implies discrimination against Russian services and\nservice suppliers. 2305 The European Uni on responds that Russia has not demonstrated that the\nalleged discriminatory treatment of infrastructure or infrastructure projects results in\ndiscrimination against Russian services or service suppliers. We note that, while referring to\n\"Russian projects\", Russia has not provided a consistent definition of this phrase. 2306 In any event,\nwe understand Russia's references to a \"project\", in the context of this claim, as references to an\ninfrastructure project within the meaning of the TEN -E Regulation. The addi tion of the adjective\n\"Russian\" does not, in our view, change this conclusion.\n\n2297 Appellate Body Report, Argentina – Financial Services, paras. 6.103–6.106 (referring to Appellate\nBody Report, EC – Bananas III, paras. 240-248).\n2298 Russia's first written submission, paras. 760, 779 and 781.\n2299 Russia's first written submission, para. 781.\n2300 Russia's first written submission, para. 781.\n2301 Russia's first written submission, para. 781.\n2302 European Union's second written submission, para. 358.\n2303 European Union's first written submission, para. 807; and second written submission, paras. 358\nand 362.\n2304 European Union's first written submission, para. 807; and response to Panel question No. 76,\npara. 173.\n2305 It appears that, throughout its submissions to the Panel, Russia at times uses the concepts of\n\"service\" and \"service suppliers\" interchangeably with the concept of \"Russian projects\". For instance, in its\nfirst written submission, Russia makes the following allegations in respect of the treatment of \"Russian\nprojects\": \"[b]y excluding Russian gas projects from PCI eligibility, the TEN-E measure provides formally\ndifferent treatment to Russian pipeline transport services and service suppliers than to those of other\nMembers\" (Russia's first written submission, para. 770); \"[t]he TEN-E measure excludes Russian gas projects,\nde jure, from eligibility for PCI designation\" (Russia's first written submission, para. 771); \"[e]ven if the Panel\ndisagrees with this conclusion, it cannot be denied that Russian projects have been de facto entirely excluded\nfrom PCI designation\" (Russia's first written submission, para. 784). In its second written submission, Russia\nasserts as follows:\nSecond, should the Panel find itself unable to agree with the preceding argument, a specific\ninstance of application by the EU of the TEN -E measure evidences the inability of Russian\nprojects to be designated as PCIs. This constitutes further evidence of the de facto discrimination\nthat the TEN-E measure results in. (Russia's second written submission, para. 454)\n2306 In its response to Panel question No. 49, Russia explains that \"Russian projects\" refers to \"projects\nthat would maintain the presence of Russian natural gas, and Russian services and service suppliers on the EU\nmarket\" (Russia's response to Panel question No. 49(a), para. 246); \"projects that would maintain the\ncompetitive position of Russian natural gas on the EU market\" (Russia's response to Panel question No. 49(b),\npara. 250); projects that \"are designed to facilitate or promote the transmission or storage of Russian natural\ngas\" (Russia's response to Panel question No. 49(c), para. 252; \"projects that would likely, but not necessarily,\nbe operated by Russian pipeline transport service suppliers, and which would involve Russian supplied\ntransport services\" (Russia's response to Panel question No. 49(c), para. 252).\n\n7.1422. In light of the arguments of the parties, we examine whether Russia has demonstrated\nthat the alleged discriminatory treatment, under the TEN -E measure, of \"Russian projects\" r esults\nin discrimination against Russian pipeline transport services and service suppliers within the\nmeaning of Article II:1 of the GATS. In our analysis, we shall first determine what an infrastructure\n\"project\" covered by the TEN-E Regulation entails. Then, we will examine any relationship between\ninfrastructure \"projects\" covered by the TEN -E Regulation and pipeline transport services and\nservice suppliers covered by the GATS. If we conclude that Russia has established a sufficiently\nclose connection be tween infrastructure \"projects\" covered by the TEN -E Regulation and pipeline\ntransport services and service suppliers covered by the GATS such that the alleged discriminatory\ntreatment of \"Russian\" infrastructure projects will necessarily result in discrim ination against\nRussian pipeline transport services or service suppliers, we will examine whether Russia has\ndemonstrated discrimination against \"Russian\" infrastructure \"projects\".\n7.1423. The TEN -E Regulation provides a regulatory framework for infrastructure p rojects and\ndoes not regulate the supply of pipeline transport services. 2307 A \"project\" is defined in Article 2(3)\nof the TEN -E Regulation as \"one or several lines, pipelines, facilities, equipment or installations\nfalling under the energy infrastructure categories\". A \"project of common interest\" is defined as \"a\nproject necessary to implement the energy infrastructure priority corridors and areas set out in\nAnnex I and which is part of the Union list of projects of common interest referred to in Article\n3\".2308 It is clear from these definitions that the concept of infrastructure project under the TEN -E\nRegulation does not coincide with the concept of pipeline transport service or service supplier.\n7.1424. We further note that the TEN -E Regulation provides the definit ion of such notions as\n\"studies\", \"works\" and \"commissioning\", which in our view, could constitute distinct stages in the\nexecution of an infrastructure project designated as a PCI. Pursuant to Article 2(9) of the TEN -E\nRegulation, \"studies\" means \"activit ies needed to prepare project implementation, such as\npreparatory, feasibility, evaluation, testing and validation studies, including software, and any\nother technical support measure including prior action to define and develop a project and decide\non its financing, such as reconnaissance of the sites concerned and preparation of the financial\npackage\". According to Article 2(8) of the TEN -E Regulation, \"works\" means \"the purchase, supply\nand deployment of components, systems and services including softwar e, the carrying out of\ndevelopment and construction and installation activities relating to a project, the acceptance of\ninstallations and the launching of a project\". \"Commissioning\" means \"the process of bringing a\nproject into operation once it has been constructed\".2309 We observe that none of these activities,\nperformed as part of the execution of a project designated as a PCI, involves the supply of pipeline\ntransport services.\n\n2307 We note that the regulatory ambit of the TEN-E Regulation is defined in Article 1 of the TEN-E\nRegulation as follows:\nArticle 1\n\nSubject matter and scope\n\n1. This Regulation lays down guidelines for the timely development and interoperability of priority\ncorridors and areas of trans -European energy infrastructure set out in Annex I (\"energy\ninfrastructure priority corridors and areas\").\n\n2. In particular, this Regulation:\n\n(a) addresses the identification of projects of common interest necessary to implement priority\ncorridors and areas falling under th e energy infrastructure categories in electricity, gas, oil,\nand carbon dioxide set out in Annex II (\"energy infrastructure categories\");\n\n(b) facilitates the timely implementation of projects of common interest by streamlining,\ncoordinating more closely, and accelerating permit granting processes and by enhancing\npublic participation;\n\n(c) provides rules and guidance for the cross -border allocation of costs and risk -related\nincentives for projects of common interest;\n\n(d) determines the conditions for eligibility of projects of common interest for Union financial\nassistance. (TEN-E Regulation, (Exhibit EU-4), Article 1)\n\n2308 TEN-E Regulation, (Exhibit EU-4), Article 2(4).\n2309 TEN-E Regulation, (Exhibit EU-4), Article 2(11).\n\n7.1425. Thus, we consider that the concept of infrastructure project under the TEN -E Regulation\ndoes not coincide with the concept of pipeline transport service or service supplier and the\nactivities regulated by the TEN-E measure do not involve the supply of pipeline transport services.\n7.1426. In its response to a question by the Panel, Russia explains that, for the purposes of its\nGATS claim, \"Russian projects\" are to be understood as \"projects that would likely, but not\nnecessarily, be operated by Russian pipeline transport service suppliers, and which would involve\nRussian supplied transport services\".2310 We thus understand Russia to imply that an infrastructure\nproject would involve the supply of pipeline transport services or \"be operated\" by a pipeline\ntransport service supplier. We cannot agree with Russia. We acknowledge that, once the pip eline\ninfrastructure developed by an infrastructure project has been put in operation, it will involve the\nsupply of gas pipeline transport services. However, a project to develop infrastructure precedes\nthe use of such infrastructure, and therefore does not itself involve the supply of pipeline transport\nservices.\n7.1427. In our view, infrastructure projects ma y conceivably have an effect on the supply of\npipeline transport services because they lead to the construction of infrastructure that will be used\nin the supply of such services. 2311 However, we do not read Russia's assertion that \"Russian\"\ninfrastructure \"projects\" would involve the supp ly of \"Russian\" pipeline transport services or \"be\noperated\" by \"Russian\" pipeline transport service suppliers as relating to the impact of the TEN -E\nmeasure on the supply of pipeline transport services in the future. To our mind, this assertion\nreflects R ussia's understanding of the relationship between infrastructure projects and pipeline\ntransport services and service suppliers. As we have already determined, the activities regulated\nby the TEN -E measure concern infrastructure projects that develop pipel ine infrastructure, which\nwill be used to supply pipeline transport services only after the infrastructure becomes operational.\nThus, we see no basis for the proposition that infrastructure projects would \"involve\" the supply of\npipeline transport services or be \"operated\" by service suppliers in the course of supplying pipeline\ntransport services. Consequently, we reject Russia's understanding of the relationship between\ninfrastructure projects and pipeline transport services and service suppliers reflecte d in its\nassertion referred to above.\n7.1428. We note that a supplier of pipeline transport services may, in certain cases, be a \"project\npromoter\" under the TEN -E measure.2312 Thus, assuming arguendo that the TEN-E measure were\ndistinguishing between project promot ers on the basis of origin, it could be then argued, on this\nbasis, that the TEN -E measure is inconsistent with Article II:1 of the GATS. However, Russia has\nadvanced no argument to the effect that the TEN -E measure distinguishes between project\npromoters on the basis of origin. 2313 We observe that the text of the TEN -E measure contains no\nreference to the origin of a project promoter. In the absence of specific arguments and evidentiary\nsupport from Russia, we do not see a compelling reason, nor do we have su fficient information on\nthe record, to make any other findings on this issue. We emphasi ze, nevertheless, that the\nregulatory treatment by the TEN -E measure of a TSO promoting an infrastructure project would\nconcern this TSO in its capacity as project prom oter rather than as supplier of pipeline transport\nservices. The burden is on Russia to provide arguments and evidence to demonstrate that the\nregulatory treatment of a project promoter, which may be a TSO, results in the modification of the\nconditions of competition to the detriment of Russian suppliers of pipeline transport services.\n7.1429. Based on the foregoing analysis, we conclude that Russia has not established that there is\na sufficiently close connection between infrastructure projects covered by the TEN -E Regulation\n\n2310 Russia's response to Panel question No. 49(c), para. 252.\n2311 See also our conclusion in paragraph 7.1393.\n2312 According to Article 2(6)(a) of the TEN-E Regulation, a \"project promoter\" may be a TSO,\ndistribution system operator or other operator or investor developing a project of common interest. (TEN-E\nRegulation, (Exhibit EU-4), Article 2(6)(a)) A TSO is a natural or legal person who carries out the function of\ntransmission of gas. (TEN-E Regulation, (Exhibit EU-4), Article 2(6)(a); and Directive 2009/73/EC, (Exhibit EU-\n5), Article 2(4)). According to Article XXVIII(g) of the GATS, \"service supplier\" means \"any person that supplies\na service\". (footnote omitted) A TSO owned or controlled by a non-EU person could thus fall within a definition\nof a service supplier contained in Article XXVIII(g) of the GATS. It follows that a supplier of pipeline transport\nservices may, but will not always, be a promoter of an infrastructure project under the TEN-E Regulation.\n2313 We note that the European Union contends that the origin of the promoter of an infrastructure\nproject is not among the selection criteria prescribed by the TEN-E Regulation and plays no role in the\ndesignation of PCIs under the TEN-E measure. (European Union's response to Panel question No. 77(a)).\nRussia does not make any argument in this regard.\n\nand pipeline transport services and service suppliers covered by the GATS such that the alleged\ndiscriminatory treatment of \"Russian\" infrastructure projects will necessarily result in\ndiscrimination against Russian pipeline transport service s or service suppliers. Therefore, Russia\ncannot establish that the alleged discrimination against Russian infrastructure projects results in\ndiscrimination against Russian pipeline transport services and service suppliers within the meaning\nof Article II:1 of the GATS. Thus, we find that, to the extent Russia claims that the TEN -E measure\nis inconsistent with Article II:1 of the GATS because of the alleged discrimination against Russian\ninfrastructure projects, its claim cannot succeed.\n7.1430. In light of our fi nding that Russia has not established that there is a sufficiently close\nconnection between infrastructure projects covered by the TEN-E Regulation and pipeline transport\nservices and service suppliers covered by the GATS such that the alleged discriminato ry treatment\nof \"Russian\" infrastructure projects will necessarily result in discrimination against Russian pipeline\ntransport services or service suppliers, we do not consider it necessary to make a separate finding\non whether the TEN -E measure discrimina tes against Russian infrastructure projects. This being\nsaid, we find it useful to address Russia's other arguments that the TEN -E measure is inconsistent\nwith Article II:1 of the GATS, to the extent such arguments may be understood as not being\npremised on the allegedly discriminatory treatment of Russian infrastructure projects.\n7.1431. Russia submits that the language of the TEN -E measure, and the policy documents that\nsupport it, constitutes evidence of de jure discrimination.2314 In Russia's view, the reference t o\nreducing dependency on \"a single supplier\" – and the clear identification of that supplier as Russia\nin policy documents supporting the Regulation – makes clear that the text of the Regulation\ntargets Russian services and service suppliers. 2315 As we have d etermined above in section\n7.11.2.2.1, the references to \"single supplier\", \"diversification of gas supply\" and \"diversification of\nsupply sources, supplying counterparts and routes\" concern suppliers, and sources of supply, of\nnatural gas. Russia has not demonstrated that these references ma y also encompass pipeline\ntransport services or service suppliers. Therefore, we do not consider that these references\nsupport Russia's argument that the TEN -E measure results in a de jure discrimination within the\nmeaning of Article II:1 of the GATS.\n7.1432. Russia contends that private actors are likely to invest in projects reducing reliance on\nRussian natural gas because such projects are eligible for PCI designation. 2316 Russia thus infers\nthat the TEN -E measure modifies the conditions of competition to the d etriment of like Russian\nservices and service suppliers within the meaning of Article II:1 of the GATS. 2317 We understand\nRussia to claim that by allegedly discriminating against Russian natural gas, the TEN -E measure\nalso discriminates against Russian pipeline transport services and service suppliers.\n7.1433. We refer to our analysis of Russia's claims under the GATT 1994, where we have\nconcluded that the TEN-E measure discriminates against Russian natural gas within the meaning of\nArticles I:1 and III:4 of the GATT .2318 However, we do not consider that, in and of itself, our\nfinding of violation under the GATT is automatically transposable to the GATS. We recall the\nfindings of the Appellate Body in EC – Bananas III that the GATT 1994 and the GATS may apply to\nthe same measure concurrently.2319 Nonetheless, the Appellate Body clarified that, while the same\nmeasure could be scrutinized under both agreements, the specific aspects of that measure\nexamined under each agreement could be different: under the GATT 1994, the focus is on how the\nmeasure affects the goods involved; under the GATS, the focus is on how the measure affects the\nsupply of services or service supplier.2320\n7.1434. In sections 7.11.2.2.2 and 7.11.2.2.3 above, we have examined the effect of the TEN -E\nmeasure on the competitive opportunities of Russian natural gas, focusing on the pertinent aspects\nof this measure. In this section, we must focus our analysis on the effect of the TEN -E measure on\nRussian pipeline transport services and service suppliers. Aside from referring to the aspects of the\nTEN-E measure that we have already found to be inconsistent with Articles I:1 and III:4 of the\n\n2314 Russia's second written submission, para. 451.\n2315 Russia's second written submission, para. 453.\n2316 Russia's second written submission, para. 456.\n2317 Russia's second written submission, para. 456.\n2318 See above paras. 7.1301 and 7.1313.\n2319 Appellate Body Report, EC – Bananas III, para. 221.\n2320 Appellate Body Report, EC – Bananas III, para. 221.\n\nGATT, Russia does not point to any other aspect of the TEN -E measure that, in its view, is\ninconsistent with Article II:1 of the GATS. As we have stated above, we do not consider that our\nfinding of inconsistency under Articles I:1 and III:4 of the GATT in respect of the TEN -E measure\nleads to a violation of Article II:1 of the GATS.\n7.1435. Russia also appears to argue that, in our assessment of the impact of the TEN -E measure\non Russian pipeline transport servi ce suppliers, we should take into account the \"internal\norganization\" of Gazprom. 2321 According to Russia, due to Gazprom's internal organization, which\nalso includes the sale of Russian natural gas, Gazprom will have an interest in developing\ninfrastructure that can contribute to such sale. 2322 Thus, we understand Russia to argue that, in\nview of Gazprom's \"internal organization\", the TEN -E measure operates in a manner that\ndiminishes Gazprom's opportunities to develop projects eligible for PCI designation.\n7.1436. We recall that Article II:1 of the GATS requires the equality of competitive opportunities\nfor service suppliers as concerns their activities in \"supplying\" the services at issue. 2323 In the\npresent case, the focus of our analysis is on the competitive opportuni ties of Russian service\nsuppliers regarding their ability to supply pipeline transport services in the European Union via\nmode 3.2324 We understand Russia's argument to imply that it would be contrary to Gazprom's\ncommercial interests to promote infrastructur e projects that reduce the European Union's\ndependence on Russian natural gas, while projects that contribute to the sale of Russian natural\ngas would not be eligible for PCI designation. However, Russia offers no explanation – even less\nevidence – as to h ow and why Gazprom's alleged consequential inability to promote, under the\nTEN-E measure, PCIs that contribute to the sale of Russian natural gas negatively affects the\ncompetitive opportunities of Gazprom as a supplier of pipeline transport services in th e European\nUnion. Consequently, we find that Russia has not demonstrated that the competitive opportunities\nof Gazprom to supply pipeline transport services in the European Union, as opposed to developing\ninfrastructure that can contribute to the sale of R ussian natural gas, are hindered by the TEN -E\nmeasure.\n7.1437. Russia further refers to the [*** ] project as evidence of the alleged discrimination by the\nTEN-E measure against Russian services and service suppliers. 2325 In Russia's view, this\ndiscrimination is evid enced by the low score obtained by this project, because it would have\ntransported Russian natural gas .2326 The European Union contests Russia's allegation that the\n[***] project failed because of the European Union's decision \"to score the project so low as to\nmake it unable to ever obtain PCI designation\", pointing out that the promoters of this project\ncancelled it more than one year after the first Union list of PCIs had been adopted.2327\n7.1438. We do not consider it necessary to resolve this issue. Even assuming arguendo that the\nfailure of the [*** ] project may be attributed to the European Union and that it was the result of\ndiscrimination against this infrastructure project, it would still, in our view, be insufficient to\nestablish a violation of Article II:1 of the GATS. As we have already concluded, Russia has not\ndemonstrated that the alleged discriminatory treatment of infrastructure projects leads to a\nmodification of competitive opportunities to the detriment of Russian pipeline transport services or\nservice suppliers. Thus, the allegedly discriminatory treatment of the [***] project would not\nestablish an inconsistency of the TEN-E measure with Article II:1 of the GATS.\n7.11.4.2 Conclusion\n7.1439. In view of the foregoing , we conclude that Russia has not demonstrated that the TEN-E\nmeasure is inconsistent with Article II:1 of the GATS.\n\n2321 Russia's second written submission, para. 458.\n2322 Russia's second written submission, para. 458.\n2323 According to Article XXVIII(b) of the GATS, \"'supply of a service' includes the production,\ndistribution, marketing, sale and delivery of a service\".\n2324 Russia indicated that mode 3 is the only relevant mode of supply in connection with each of Russia’s\nclaims under the GATS. (Russia's response to Panel question No. 56, para. 285).\n2325 Russia's response to Panel question No. 48, paras. 239 and 243. See also Russia's second written\nsubmission, para. 448.\n2326 Russia's response to Panel question No. 48, para 243, and No. 74, paras. 325–327.\n2327 European Union's second written submission, para. 379.\n\n8 CONCLUSIONS AND RECOMMENDATION\n8.1. Recalling our terms of reference , as set out in Russia's panel request and as clarified in our\nfindings on the contours of these terms of reference 2328, and for t he reasons set forth in this\nReport, the Panel concludes that:\na. With respect to the unbundling measure:\ni. Russia has not demonstrated that the unbundling measure in the Directive is\ninconsistent with Article II:1 of the GATS, or with Ar ticles I:1 or III:4 of the\nGATT 1994.\nii. Russia has not demonstrated that the unbundling measure in the national\nimplementing laws of Croatia and Lithuania is inconsistent with Article XVI:2(a) of\nthe GATS. As we have not found an inconsistency with Article XVI:2(a) of the GATS,\nwe do not consider it necessary to rule on the European Union's defences under\nArticles XIV(a) or (c) of the GATS.\niii. Russia has not demonstrated that the unbundling measure in the national\nimplementing laws of Croatia, Hungary and Lithuania is inconsistent wit h\nArticles XVI:2(e) or (f) of the GATS . As we have not found an inconsistency with\nArticles XVI:2(e) or (f) of the GATS, we do not consider it necessary to rule on the\nEuropean Union's defences under Articles XIV(a) or (c) of the GATS.\nb. With respect to the public body measure:\ni. Russia has not demonstrated that the public body measure in the national\nimplementing laws of Croatia, Hungary and Lithuania is inconsistent with Article XVII\nof the GATS. As we have not found an inconsistency with Article XVII of the GATS,\nwe do not consider it necessary to rule on the European Union's defence under\nArticle XIV(c) of the GATS.\nc. With respect to the LNG measure:\ni. Russia has not demonstrated that the LNG measure is inconsistent with Article I:1 of\nthe GATT 1994.\nd. With respect to the infrastructure exemption measure:\ni. Russia has not demonstrated that the European Union has administered Article 36 of\nthe Directive inconsistently with Article X:3(a) of the GATT 1994.\nii. Russia has not demonstrated that the European Union applied or implemented\nArticle 36 in an \"inconsistent\" or \"discriminatory\" manner for the purposes of its\nclaims under Article II:1 of the GATS or Article I:1 of the GATT 1994.\niii. Russia has demonstrated that the two challenged OPAL conditions , that is, the 50%\ncapacity cap and 3 bcm/year gas re lease programme, are inconsistent with\nArticle XI:1 of the GATT 1994.\ne. With respect to the upstream pipeline networks measure:\ni. Russia has not demonstrated that the upstream pipeline networks measure is\ninconsistent with Articles I:1 or III:4 of the GATT 1994.\nf. With respect to the third-country certification measure:\ni. Russia has not demonstrated that the third -country certification measure in the\nDirective is inconsistent with Article II:1 of the GATS.\n\n2328 See section 7.2 above.\n\nii. Russia has demonstrated that the third-country certification measure implemented in\nArticle 24 of Croatia's Gas Market Act, Section 128/A of Hungary's Gas Act and\nArticle 29 of Lithuania's Law on Natural Gas2329 is inconsistent with Article XVII of the\nGATS and the European Union has not demonstrated that it is justified under the\ngeneral exception in Article XIV(a) of the GATS. Furthermore, Russia has\ndemonstrated that the third -country certification measure implemented in\nSections 123(5) and 123(6) of Hungary's Gas Act is inconsistent with Article XVII of\nthe GATS.\niii. we exercise judicial economy in respect of Russia's claims under Articles VI:1 and\nVI:5(a) of the GATS.\ng. With respect to the TEN-E measure:\ni. Russia has demonstrated that the TEN -E measure is inconsisten t with Articles I:1\nand III:4 of the GATT 1994 and the European Union has not demonstrated that it is\njustified under the general exception in Article XX(j) of the GATT 1994.\nii. Russia has not demonstrated that the TEN-E measure is inconsistent with Article II:1\nof the GATS.\n8.2. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations\nassumed under a covered agreement, the action is considered prima facie to constitute a case of\nnullification or impairment. We conclude that, to th e extent that the measures at issue are\ninconsistent with Article XVII of the GATS and Articles I:1, III:4 and XI:1 of the GATT 1994, they\nhave nullified or impaired benefits accruing to Russia under those agreements.\n8.3. Pursuant to Article 19.1 of the DSU, we recommend that the European Union and its member\nStates bring the measures into conformity with their obligati ons under the GATS and the\nGATT 1994.\n\n2329 With the exception of Article 29(4)(3), which we have found to fall outside our terms of reference.\nSee section 7.2.2.3.2.3 above."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:37.177963"}}},{"rowIdx":7793,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ01_Request_For_Consultations.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ01_Request_For_Consultations.pdf"},"doc_sequence":{"kind":"number","value":1,"string":"1"},"doc_type":{"kind":"string","value":"Request_For_Consultations"},"doc_type_raw":{"kind":"string","value":"REQUEST FOR CONSULTATIONS BY"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"null"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST FOR CONSULTATIONS BY NEW ZEALAND"},"date":{"kind":"string","value":"15 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/1; G/L/1068; G/AG/GEN/118; G/LIC/D/47; G/PSI/D/3"},"agreement_indicators":{"kind":"string","value":"Agriculture (AG); General Council; Import Licensing (LIC)"},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":4,"string":"4"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST FOR CONSULTATIONS BY NEW ZEALAND\nThe following communication, dated 8 May 2014, from the delegation of New Zealand to the\ndelegation of Indonesia and to the Chairperson of the Dispute Settlement Body, is circulated in\naccordance with Article 4.4 of the DSU.\n\nMy authorities have instructed me to request consultations with the Government of the Republic of\nIndonesia (\"Indonesia\") pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures\nGoverning the Settlement of Disputes , Article XXII of the General Agreement on Tariffs and Trade\n1994 (\"GATT 1994\"), Article 19 of the Agreement on Agriculture (\"Agriculture Agreement\"),\nArticle 6 of the Agreement on Import Licensing Procedures (\"Import Licensing Agreement\") and\nArticles 7 and 8 of the Agreement on Preshipment Inspection concerning certain measures\nimposed by Indonesia on the importation of horticultural products,\n1 animals, and animal products 2\ninto Indonesia.\n\nAs described below, Indonesia: (1) imposes prohibitions or restrictions on imports of horticultural\nproducts, animals, and animal products; (2) imposes unjustified and trade-restrictive\nnon-automatic import licensing requirements on imports of such products; (3) accords less\nfavourable treatment to imported products than to like products of national origin; (4) has\nimposed unreasonable and discriminatory pre-shipment inspection requirements; and (5) has\nfailed to notify and publish sufficient information concerning its import licensing measures.\n\nWith respect to horticultural products, Indonesia's non-automatic import licensing regime involves\nat least three elements: (1) designation from the Ministry of Trade (\"MOT\") as a Producer\nImporter (\"PI\") or Registered Importer (\"RI\") for Horticultural Products; (2) a horticultural product\nImport Recommendation (\"RIPH\")\n3 from the Ministry of Agriculture (\"MOA\"); and (3) an Import\nApproval from the MOT. The PI/RI designation restricts the uses for which horticultural products\nmay be imported. RIPHs and Import Approvals are valid for one six-month period. 4 Applications\nfor these documents may only be submitted, and the documents issued, during two time periods in\nthe year. 5 Import Approvals specify, inter alia , the total quantity and country of origin of a\nhorticultural product that an importer may import during that period.\n\n1 The relevant Indonesian measure defines horticulture as \"all matters relating to fruits, vegetables,\nplant medicinal materials, and floriculture\" and horticultural products as \"all products originating from fresh or\nprocessed horticultural plant.\" Ministry of Trade (MOT) Regulation 16/2013, Articles 1(1) and 1(2) as amended\nby MOT Regulation 47/2013.\n2 The relevant Indonesian measures define animal products as \"all materials originating from animal\nthat are fresh and/or processed for consumption, pharmaceutical, farming, and/or other purposes for fulfilling\nthe needs and welfare of human.\" MOT Regulation 46/2013, Article 1(5). The Indonesian measures at issue\nalso cover \"carcasses, meats, edible offals, and/or their derivatives.\" Ministry of Agriculture (MOA) Regulation\n84/2013.\n3 Rekomendasi Impor Produk Hortikultura.\n4 For chili and shallots, the Import Approval validity period is three months, see MOT Regulation\n16/2013, as amended by MOT Regulation 47/2013, Article 14, and the RIPH validity period is not specified, see\nMOA Regulation 86/2013, Article 13(4).\n5 The time periods for applications vary for chili and shallots, see MOT Regulation 16/2013, as amended\nby MOT Regulation 47/2013, Article 14B.\nWT/DS477/1 • G/L/1068 • G/AG/GEN/118 • G/LIC/D/47 • G/PSI/D/3\n\nWith respect to animals and animal products, Indonesia's non-automatic import licensing regime\ninvolves at least four elements: (1) satisfying the MOA requirements for importers; (2) a\nRI-Animals and Animal Products designation from the MOT;\n6 (3) a Recommendation 7 from the\nMOA; and (4) an Import Approval from the MOT. Recommendations restrict the quantity, type,\ncountry of origin, and intended use of the imported products. They are valid for a specified period,\nup to the end of the current year, and may only be applied for during four time periods throughout\nthe year.8 Import Approvals are valid for one three-month period, and applications may only be\nsubmitted and permits issued during four time windows throughout the year. Import Approvals\nspecify, inter alia, the total quantity and country of origin of product the holder may import during\nthe specified period.\n\nIndonesia's import licensing regime is not an automatic licensing regime, and it cannot be justified\nas a non-automatic licensing regime implementing a WTO-consistent measure.\n\nIndonesia's non-automatic import licensing regime prohibits and restricts imports in the following\nways:\n\n• With respect to horticultural products, RIPH certificates do not permit the importation\nof fresh horticultural products for consumption that were harvested more than six\nmonths ago.\n\n• With respect to animals and animal products, any animal products not listed in the\nappendices to the import licensing regulations may not be imported at all.\n9\n\n• With respect to horticultural products, animals and animal products, importers may\napply for Import Approvals only during specified time periods that can be months\nahead of the time of importation, and, once issued, an Import Approval restricts\nimports during the specified time periods to set products, in set quantities, from set\ncountries, and under set conditions.\n\n• Importers must predict in advance the quanti ty of product they will wish to import\nduring a given period, and apply accordingly for a specific amount, to be stated on\ntheir Import Approval covering that three- or six-month period. Importers face\nhaving their designation as a RI/PI suspen ded or revoked if the actual quantity\nimported is less than a certain percentage of the stated quantity.\n\n• The importation of horticultural products and animals and animal products with\nrespect to certain types of intended use, sale, purchase, and/or distribution is\nprohibited or restricted.\n\n• The importation of horticultural products, animals, and animal products is prohibited\nwhen domestic production is deemed sufficient to fulfill domestic demand.\n\n• Imports of certain horticultural products, animals and animal products are prohibited\nor restricted when the prices of those products falls below certain reference prices,\nwhich are set by a ministerial body (either the Price of Horticulture Product Monitoring\nTeam or the Beef Price Monitoring Team).\n10\n\n6 With respect to animals and animal products listed in Appendix II, this requirement appears to apply\nonly to importers that are business operators and not to other categories of importers, such as social\ninstitutions or State Owned Enterprises. See MOT Regulation 46/2013, Articles 4, 9, and 10; MOA Regulation\n84/2013, Article 22.\n7 Rekomendasi Persetujuan Pemasukan.\n8 The timeframes appear to apply only to business operators and not to other types of importers. See\nMOA Regulation 84/2013, Article 21.\n9 This applies to all animals and animal products not listed in the appendices to MOA Regulation\n84/2013 and MOT Regulation 46/2013.\n10 These products include the animals and animal products listed in Appendix I of MOT Regulation\n46/2013 and the horticultural products listed in Article 14B of MOT Regulation 16/2013, as amended by MOT\nRegulation 47/2013.\nWT/DS477/1 • G/L/1068 • G/AG/GEN/118 • G/LIC/D/47 • G/PSI/D/3\n\n• For the above reasons, and due to the regime's complexity, Indonesia's import\nlicensing regime is a restriction on imports, is not as simple as possible, is more\nadministratively burdensome than absolutely necessary, unnecessarily requires\napproaches to more than one administrative body, and is trade-restrictive.\n\nIn connection with its import licensing regime, Indonesia also has adopted measures limiting the\ninternal sale, offering for sale, purchase, distribution, or use of imported horticultural products,\nanimals, and animal products, in a manner that accords less favourable treatment than that\naccorded to like domestic products. For example, Indonesia's measures limit the internal sale of\nimported horticultural products to distributors, and limit the sale of imported beef to use in\nindustry and the hotel, restaurant and catering sectors. Indonesia does not impose similar\nlimitations on like domestic products.\n\nIndonesia's measures include preshipment inspection requirements. Such requirements, which\nduplicate information already provided in the phyto-sanitary certificate, are more trade-restrictive\nthan necessary, as is the administration of pre-shipment inspection activities which Indonesia has\nrestricted to a sole company in New Zealand, Bureau Veritas. Indonesia has failed to ensure that\npreshipment inspection activities do not result in unreasonable delays, are carried out in a\nnon-discriminatory manner, and are applied on an equal basis to all exporters.\n\nFinally, New Zealand understands that Indonesia, with respect to its import-licensing regime, has\nfailed to comply with notification obligations under Article 5 of the Import Licensing Agreement and\nwith publication requirements under Article 3 of the Import Licensing Agreement.\n\nThe legal instruments through which Indonesia imposes and administers the above-described\nmeasures include, but are not limited to, the following instruments:\n\n• Law of the Republic of Indonesia Number 7 of Year 2014 Concerning Trade (\"Trade\nLaw\");\n\n• Law of the Republic of Indonesia Number 13 of Year 2010 Concerning Horticulture\n(\"Horticulture Law\");\n\n• Regulation of the Ministry of Agriculture Number 86/Permentan/OT.140/8/2013\nConcerning Import Recommendation of Horticulture Products (\"MOA Regulation\n86/2013\"), which repeals and replaces Regulation of the Minister of Agriculture\nNumber 47/Permentan/OT.140/4/2013 Concerning Recommendation on the\nImportation of Horticulture Products (\"MOA Regulation 47/2013\"), which repealed and\nreplaced Regulation of the Mi nister of Agriculture Number\n60/Permentan/OT.140/9/2012 (\"MOA Regulation 60/2012\");\n\n• Regulation of the Minister of Trade Number 16/M-DAG/PER/4/2013 Concerning\nProvisions on Horticulture Product Import (\"MOT Regulation 16/2013\"), which repeals\nand replaces Regulation of the Minister of Trade Number 30/M-DAG/PER/5/2012\nConcerning the Provisions on Import of Horticultural Products (\"MOT Regulation\n30/2012\") and Regulation of the Minister of Trade Number 60/M-DAG/PER/9/2012\nRegarding Second Amendment of Regulati on of the Minister of Trade Number\n30/M-DAG/PER/5/2012 Regarding Provisions on Import of Horticultural Products\n(\"MOT Regulation 60/2012\");\n\n• Regulation of the Ministry of Trade Number 47/M-DAG/PER/8/2013 Concerning\nAmendment of Regulation of the Minister of Trade Number 16/M-DAG/PER/4/2013\nConcerning Import Provision of Horticulture Product (\"MOT Regulation 47/2013\");\n\n• Law of the Republic of Indonesia Number 18/2009 on Animal Husbandry and Animal\nHealth (\"Animal Law\");\n\n• Regulation of the Ministry of Agri culture Number 84/Permentan/PD.410/8/2013\nConcerning Importation of Carcass, Meat, Offal and/or Their Derivatives into the\nTerritory of the Republic of Indonesia (\" MOA Regulation 84/2013\"), which repeals and\nreplaces Regulation of the Minister of Agriculture Number\n50/Permentan/OT.140/9/2011 Concerning Recommendation for Approval on Import of\nWT/DS477/1 • G/L/1068 • G/AG/GEN/118 • G/LIC/D/47 • G/PSI/D/3\n\nCarcasses, Meats, Edible Offals and/or Processed Products Thereof to Indonesian\nTerritory (\"MOA Regulation 50/2011\") as amen ded by Regulation of the Minister of\nAgriculture Number 63/Permentan/OT.140/5/2013 Concerning Amendment of\nRegulation of the Minister of Agriculture Number 50/Permentan/OT.140/9/2011\nConcerning Import Approval Recommendation of Carcass, Meat, Offal, and/or their\nDerivatives into the Territory of the Republic of Indonesia\n(\"MOA Regulation 63/2013\");\n\n• Regulation of the Minister of Trade Number 46/M-DAG/PER/8/2013 Concerning Animal\nand Animal Product Import and Export Pr ovision (\"MOT Regulation 46/2013\"), which\nrepeals and replaces Regulation of the Minister of Trade Number\n22/M-DAG/PER/5/2013 Concerning Import and Export of Animals and Animal Products\n(\"MOT Regulation 22/2013\"), which repealed and replaced Regulation of the Minister\nof Trade Number 24/M-DAG/PER/9/2011 Conc erning Provisions on the Import and\nExport of Animal and Animal Product (\"MOT Regulation 24/2011\");\n\n• Law of the Republic of Indonesia Number 18/2012 Concerning Food (\"Food Law\"); and\n\n• Law of the Republic of Indonesia Number 19/2013 Concerning Protection and\nEmpowerment of Farmers (\"Farmers' Law\");\n\nas well as any amendments, replacements, related measures, or implementing measures.\n\nIndonesia's measures appear to be inconsistent with Indonesia's obligations under the following\nprovisions of the covered agreements:\n\n(i) Articles III:4, X:1, XI:1 of the GATT 1994;\n\n(ii) Article 4.2 of the Agriculture Agreement;\n\n(iii) Articles 1.2, 1.5, 1.6, 2.2, 3.2, 3.3, 5.1, and 5.2 of the Import Licensing Agreement;\nand\n\n(iv) Articles 2.1 and 2.15 of the Ag reement on Preshipment Inspection.\n\nWe look forward to receiving your reply to the present request and to fixing a mutually convenient\ndate and location for consultations. In light of the request by the United States for consultations\non the same measures, dated May 8, 2014, we propose that consultations be held jointly with the\nUnited States."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.891543"}}},{"rowIdx":7794,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ02_Communication_00.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ02_Communication_00.pdf"},"doc_sequence":{"kind":"number","value":2,"string":"2"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"Communication from the United States"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":0,"string":"0"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS"},"date":{"kind":"string","value":"22 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/2; WT/DS477/1"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST TO JOIN CONSULTATIONS\nCommunication from the United States\nThe following communication, dated 20 May 2014, from the delegation of the United States to the\ndelegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of the Dispute\nSettlement Body, is circulated in accordance with Article 4.11 of the DSU.\n\nThis concerns the request for consultations by New Zealand on Indonesia – Importation of\nHorticultural Products, Animals, and Animal Products , circulated to Members on 15 May 2014\n(). My authorities have instructed me to notify the consulting Members and the\nDispute Settlement Body of the desire of the Unit ed States to be joined in these consultations\npursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the Settlement\nof Disputes.\n\nThe United States has a substantial trade interest in these consultations. They concern measures\nrelated to the importation of horticultural products, animals, and animal products into Indonesia on\nwhich the United States has also requested co nsultations (). US exports of the\naffected horticultural, animals, and animal products totaled $152.8 million in 2013."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.891986"}}},{"rowIdx":7795,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ03_Communication_01.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ03_Communication_01.pdf"},"doc_sequence":{"kind":"number","value":3,"string":"3"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"Communication from Thailand"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":1,"string":"1"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS"},"date":{"kind":"string","value":"26 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/3; WT/DS477/1; G/L/1068; G/AG/GEN/118; G/LIC/D/47; G/PSI/D/3"},"agreement_indicators":{"kind":"string","value":"Agriculture (AG); General Council; Import Licensing (LIC)"},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST TO JOIN CONSULTATIONS\nCommunication from Thailand\nThe following communication, dated 22 May 2014, from the delegation of Thailand to the\ndelegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of the Dispute\nSettlement Body, is circulated in accordance with Article 4.11 of the DSU.\n\nOn 15 May 2014, in a communication circulated to WTO Members as document ,\n, , , , New Zealand requested consultations with\nIndonesia on measures affecting the importation of certain horticultural products. Pursuant to\nArticle XXII of the General Agreement on Tariffs and Trade 1994 (\"GATT 1994\") and Article 4.11 of\nthe Understanding on Rules and Procedures Governing the Settlement of Disputes (\"DSU\"), the\nKingdom of Thailand hereby notifies the consulting Members and the Dispute Settlement Body of\nits desire to be joined in these consultations.\n\nAs one of the largest exporters to Indonesia of the horticultural products at issue in this dispute,\nThailand has also been affected by Indonesia’s measures. Thailand, therefore, has a substantial\ntrade interest in the consultations.\n\nThailand looks forward to receiving confirmation of acceptance of this request, as well as advice\nregarding the time and venue for these consultations."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.892395"}}},{"rowIdx":7796,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ04_Communication_02.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ04_Communication_02.pdf"},"doc_sequence":{"kind":"number","value":4,"string":"4"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"Communication from the European Union"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":2,"string":"2"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS"},"date":{"kind":"string","value":"26 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/4"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST TO JOIN CONSULTATIONS\nCommunication from the European Union\nThe following communication, dated 23 May 2014, from the delegation of the European Union to\nthe delegation of Indonesia, the delegation of New Zealand and to the Chairperson of the Dispute\nSettlement Body, is circulated in accordance with Article 4.11 of the DSU.\n\nPursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the Settlement\nof Disputes (DSU), the European Union hereby notifi es the Government of New Zealand, the\nGovernment of Indonesia, and the Dispute Settlem ent Body that, in the light of the substantial\ntrade interest of the European Union, it desires to be joined in the consultations requested by\nNew Zealand in a communication circulated to WTO Members on 15 May 2014 (,\n, , , ) entitled Indonesia – Importation of\nhorticultural products, animals and animal products.\n\nThe European Union is a major exporter of agricultural products (including horticultural products)\nand maintains important trade relations with Indo nesia. In 2013, the European Union exported\nagricultural goods valuing approximately €615m to Indonesia. The Indonesian import licensing\nrequirements may have a substantial impact on future trade flows between the European Union\nand Indonesia. Accordingly, the European Union has a substantial trade interest in this dispute.\n\nThe European Union looks forward to being informed of the date and venue of the consultations."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.892840"}}},{"rowIdx":7797,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ05_Communication_03.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ05_Communication_03.pdf"},"doc_sequence":{"kind":"number","value":5,"string":"5"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"Communication from Canada"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":3,"string":"3"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS"},"date":{"kind":"string","value":"27 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/5"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST TO JOIN CONSULTATIONS\nCommunication from Canada\nThe following communication, dated 23 May 2014, from the delegation of Canada to the delegation\nof Indonesia, the delegation of New Zealand an d to the Chairperson of the Dispute Settlement\nBody, is circulated in accordance with Article 4.11 of the DSU.\n\nPursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the Settlement\nof Disputes (DSU), the Government of Canada hereby notifies its desire to join in the consultations\nrequested by New Zealand pursuant to Articl es 1 and 4 of the DSU, Article XXII of the General\nAgreement on Tariffs and Trade 1994 , Article 19 of the Agreement on Agriculture, Article 6 of the\nAgreement on Import Licensing Procedures and Articles 7 and 8 of the Agreement on Preshipment\nInspection, concerning certain measures imposed by Indonesia on the importation of horticultural\nproducts, animals and animal products.\n\nThe relevant communication was circulated to WTO Members on May 15, 2014, as Indonesia –\nImportation of Horticultural Products, Animals and Animal Products (, ,\n\nCanada has a substantial trade interest in these proceedings, as Indonesia is a priority export\nmarket for Canadian agricultural products. As many of these products could be subject to non-\nautomatic import licensing and quotas in Indonesia, Canada is concerned that the measures at\nissue may restrict trade and, therefore, negati vely affect Canadian exports to Indonesia.\nAccordingly, Canada requests to join in these consultations.\n\nA copy of this letter is being sent to the Chairman of the Dispute Settlement Body, with a request\nthat it be circulated to Members."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.893352"}}},{"rowIdx":7798,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ06_Communication_04.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ06_Communication_04.pdf"},"doc_sequence":{"kind":"number","value":6,"string":"6"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"Communication from Chinese Taipei"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":4,"string":"4"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS"},"date":{"kind":"string","value":"27 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/6; WT/DS477/1; G/L/1068; G/AG/GEN/118; G/LIC/D/47; G/PSI/D/3"},"agreement_indicators":{"kind":"string","value":"Agriculture (AG); General Council; Import Licensing (LIC)"},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST TO JOIN CONSULTATIONS\nCommunication from Chinese Taipei\nThe following communication, dated 23 May 2014, fr om the delegation of Chinese Taipei to the\ndelegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of the Dispute\nSettlement Body, is circulated in accordance with Article 4.11 of the DSU.\n\nI wish to refer to the consultations requested by the Government of New Zealand in the\ncommunication circulated to WTO Members on 15 May 2014 (, ,\n, , ) titled Indonesia – Importation of Horticultural Products,\nAnimals and Animal Products.\n\nPursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the Settlement\nof Disputes, the Government of the Separate Customs Territory of Taiwan, Penghu, Kinmen and\nMatsu notifies the consulting Members and the Dispute Settlement Body of its desire to be joined\nin these consultations.\n\nThe exportation of relevant horticultural products from the Separate Customs Territory of Taiwan,\nPenghu, Kinmen and Matsu to the Republic of In donesia has been negatively affected by the\nmeasures referred to in the request for consultations. Therefore, the Separate Customs Territory\nof Taiwan, Penghu, Kinmen and Matsu has a substantial trade interest in these consultations.\n\nThe Separate Customs Territory of Taiwan, Penghu , Kinmen and Matsu looks forward to receiving\nconfirmation of acceptance of this request, as well as advice regarding the time and venue for\nthese consultations."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.893798"}}},{"rowIdx":7799,"cells":{"folder_number":{"kind":"string","value":"477"},"case_number":{"kind":"string","value":"477"},"original_filename":{"kind":"string","value":"DS477_SEQ07_Communication_05.pdf"},"new_filename":{"kind":"string","value":"DS477_SEQ07_Communication_05.pdf"},"doc_sequence":{"kind":"number","value":7,"string":"7"},"doc_type":{"kind":"string","value":"Communication"},"doc_type_raw":{"kind":"string","value":"Communication from Australia"},"doc_class":{"kind":"string","value":"NUMBERED"},"variant":{"kind":"null"},"part_number":{"kind":"number","value":5,"string":"5"},"case_title":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS"},"date":{"kind":"string","value":"28 May 2014"},"header_codes":{"kind":"string","value":"WT/DS477/7"},"agreement_indicators":{"kind":"string","value":""},"complainant":{"kind":"string","value":"['New Zealand']"},"respondent":{"kind":"string","value":"['Indonesia']"},"third_parties":{"kind":"string","value":"['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand']"},"dispute_stage":{"kind":"string","value":"Appellate Body"},"agreements_cited":{"kind":"string","value":"Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994"},"case_summary":{"kind":"string","value":"The summary below was up-to-date at \n 17 February 2023\n\t\t\n\t\tSee also: One-page summary of key findings of this dispute\nConsultations\nComplaint by New Zealand. (See DS455, DS465, DS466 and DS478)\nOn 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.\nNew Zealand claims that the measures are inconsistent with:\nOn 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.\n\nPanel and Appellate Body proceedings\nOn 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.\nAt its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.\nOn 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.\nOn 22 December 2016, the panel report was circulated to Members.\nOn 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.\nOn 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.\nOn 9 November 2017, the Appellate Body report was circulated to Members. This Appellate Body Report pertains to the disputes in DS477 and DS478.\nAt its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.\n\nReasonable period of time"},"page_count":{"kind":"number","value":1,"string":"1"},"clean_text":{"kind":"string","value":"INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,\nANIMALS AND ANIMAL PRODUCTS\nREQUEST TO JOIN CONSULTATIONS\nCommunication from Australia\nThe following communication, dated 26 May 2014, from the delegation of Australia to the\ndelegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of the Dispute\nSettlement Body, is circulated in accordance with Article 4.11 of the DSU.\n\nPursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the Settlement\nof Disputes (DSU), Australia notifies the Government of the Republic of Indonesia that, in light of\nthe substantial trade interest of Australia, it desires to be joined in Indonesia's consultations with\nthe New Zealand pursuant to the communication entitled Indonesia – Importation of Horticultural\nProducts, Animals and Animal Products circulated to WTO Members on 15 May 2014\n\nAustralia appreciated the opportunity to participate as a third party in the previous consultations\n(for DS466) held in Jakarta on 23 September 2013. Australia has substantial trade and\ncommercial interests in this matter as a significant exporter of horticultural products, animals and\nanimal products to Indonesia. In 2013, Indonesia was estimated to be Australia's third largest\nagricultural market, with exports totalling A$2.7 billion. In that year, Australia was Indonesia's\nmain source of live cattle (A$361 million), its largest supplier of beef imports (A$169 million) and\nits fourth largest supplier of horticultural products (A$75 million).\n\nMindful of the rights and obligations of WTO Me mbers under Article 4.11 of the DSU, Australia\nlooks forward to receiving your reply, and advice of the date and venue of the consultations."},"processing_date":{"kind":"string","value":"2026-03-15T16:01:51.894296"}}}],"truncated":false,"partial":false},"paginationData":{"pageIndex":77,"numItemsPerPage":100,"numTotalItems":9414,"offset":7700,"length":100}},"jwt":"eyJhbGciOiJFZERTQSJ9.eyJyZWFkIjp0cnVlLCJwZXJtaXNzaW9ucyI6eyJyZXBvLmNvbnRlbnQucmVhZCI6dHJ1ZX0sImlhdCI6MTc3OTU0MjQ5Mywic3ViIjoiL2RhdGFzZXRzL2RlYW4yMjAyOS9XVE9fRG9jcyIsImV4cCI6MTc3OTU0NjA5MywiaXNzIjoiaHR0cHM6Ly9odWdnaW5nZmFjZS5jbyJ9.rizlGsLFlxlrx8DFc3uZ1AQunpIWGBCehfz9UX1FPoJMrBR-d-r-zBcUo9ZKiB9cfPrxE9C4Ut9N1Y_MQZCTAg","displayUrls":true,"splitSizeSummaries":[{"config":"default","split":"train","numRows":9414,"numBytesParquet":235278256}]},"discussionsStats":{"closed":0,"open":1,"total":1},"fullWidth":true,"hasGatedAccess":true,"hasFullAccess":true,"isEmbedded":false,"savedQueries":{"community":[],"user":[]}}">
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
471 | 471 | DS471_SEQ85_Report_Of_Appellate_Body_01.pdf | DS471_SEQ85_Report_Of_Appellate_Body_01.pdf | 85 | Report_Of_Appellate_Body | Report of the Appellate Body | AB_REPORT | null | 1 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA COMMUNICATION FROM THE APPELLATE BODY | 12 May 2017 | WT/DS471/11; WT/DS471/AB/R | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 1 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 11 May 2017, from the Chair of the Appellate Body addressed
to the Chair of th e Dispute Settlement Body, is circulated to Members in accordanc... | 2026-03-15T16:00:43.431421 | |
471 | 471 | DS471_SEQ86_Report_Of_Appellate_Body_02.pdf | DS471_SEQ86_Report_Of_Appellate_Body_02.pdf | 86 | Report_Of_Appellate_Body | Appellate Body report | AB_REPORT | null | 2 | UNITED STATES - CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA RECOURSE TO ARTICLE 22.2 OF THE DSU BY CHINA | 11 September 2018 | WT/DS471/18 | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 1 | UNITED STATES - CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
RECOURSE TO ARTICLE 22.2 OF THE DSU BY CHINA
The following communication, dated 9 September 2018 , from the delegation of China to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 22.... | 2026-03-15T16:00:43.432311 | |
471 | 471 | DS471_SEQ87_Report_Of_Appellate_Body_03.pdf | DS471_SEQ87_Report_Of_Appellate_Body_03.pdf | 87 | Report_Of_Appellate_Body | Report of the Appellate Body | AB_REPORT | null | 3 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA AB-2016-7 | 11 May 2017 | WT/DS471/AB/R | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 65 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
AB-2016-7
Report of the Appellate Body
ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
AFA Norm Adverse Facts Available Norm
alleged target price weighted-average price to the alleged target in a particul... | 2026-03-15T16:00:43.482594 | |
471 | 471 | DS471_SEQ88_Report_Of_Appellate_Body_Add.pdf | DS471_SEQ88_Report_Of_Appellate_Body_Add.pdf | 88 | Report_Of_Appellate_Body | Report of the Appellate Body Addendum | AB_REPORT | Add | null | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA AB-2016-7 | 11 May 2017 | WT/DS471/AB/R/Add.1; WT/DS471/AB/R. | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 34 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
AB-2016-7
Report of the Appellate Body
Addendum
This Addendum contains Annexes A to D to the Report of the Appellate Body circulated as
document
The Notice of Appeal and the executive summaries of written submission... | 2026-03-15T16:00:43.498202 | |
471 | 471 | DS471_SEQ89_Recourse.pdf | DS471_SEQ89_Recourse.pdf | 89 | Recourse | RECOURSE TO ARTICLE 22.6 | RECOURSE | null | null | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES | 20 September 2018 | WT/DS471/19 | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 1 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES
The following communication, dated 19 September 2018, from the delegation of the United States
to the Chairperson of the Dispute Settlement Body, is circulated... | 2026-03-15T16:00:43.498866 | |
471 | 471 | DS471_SEQ90_Request_For_Arbitration.pdf | DS471_SEQ90_Request_For_Arbitration.pdf | 90 | Request_For_Arbitration | REQUEST BY CHINA FOR ARBITRATION | ARBITRATION | null | null | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA REQUEST BY CHINA FOR ARBITRATION UNDER ARTICLE 21.3(C) OF THE DSU | 20 October 2017 | WT/DS471/14 | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 1 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
REQUEST BY CHINA FOR ARBITRATION UNDER ARTICLE 21.3(C) OF THE DSU
The following communication, dated 17 October 2017 , from the delegation of China to t he
Chairperson of the Dispute Settlement Body, is circulated at... | 2026-03-15T16:00:43.499445 | |
471 | 471 | DS471_SEQ91_Arbitration.pdf | DS471_SEQ91_Arbitration.pdf | 91 | Arbitration | Arbitration Award | ARBITRATION | null | null | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO THE ANTI-DUMPING PROCEEDINGS INVOLVING CHINA ARBITRATION UNDER ARTICLE 21.3(C) OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES | 19 January 2018 | WT/DS471/16 | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 1 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO THE
ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
ARBITRATION UNDER ARTICLE 21.3(C)
OF THE UNDERSTANDING ON RULES AND PROCEDURES
GOVERNING THE SETTLEMENT OF DISPUTES
The following communication, dated 19 January 2018, from the Arbitrator, Mr Simon Farbenbloom,
... | 2026-03-15T16:00:43.499907 | |
471 | 471 | DS471_SEQ92_Arbitration_Award_00.pdf | DS471_SEQ92_Arbitration_Award_00.pdf | 92 | Arbitration_Award | DECISION BY THE ARBITRATOR | ARBITRATION | null | 0 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES DECISION BY THE ARBITRATOR | 1 November 2019 | WT/DS471/ARB | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 68 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES
DECISION BY THE ARBITRATOR
BCI redacted, as indicated [[***]]
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE ARBITRATOR
Contents Page
Annex A-1 Working Pr... | 2026-03-15T16:00:43.549064 | |
471 | 471 | DS471_SEQ93_Arbitration_Award_01.pdf | DS471_SEQ93_Arbitration_Award_01.pdf | 93 | Arbitration_Award | Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes Award of the Arbitrator Simon Farbenbloom | ARBITRATION | null | 1 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA | 19 January 2018 | WT/DS471/RPT | ['China'] | ['U.S.'] | ['Brazil', 'Canada', 'EU', 'India', 'Japan', 'South Korea', 'Norway', 'Russia', 'Saudi Arabia', 'Ukraine', 'Vietnam', 'Turkey', 'Taiwan'] | Implementation & Compliance | Art. VI:2 GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1 Anti-dumping | The summary below was up-to-date at
1 November 2019
See also: One-page summary of key findings of this dispute
Consultations
Complaint by China.
On 3 December 2013, China requested consultations with the United States regarding the use of certain methodologies in anti-dumping investigations involvi... | 28 | UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
Arbitration
under Article 21.3(c) of the
Understanding on Rules and Procedures
Governing the Settlement of Disputes
Award of the Arbitrator
Simon Farbenbloom
*NOTE CONCERNING DOCUMENT SYMBOL: As of 13 April 2017, f... | 2026-03-15T16:00:43.574143 | |
472 | 472 | DS472_SEQ01_Communication_00.pdf | DS472_SEQ01_Communication_00.pdf | 1 | Communication | Communication from Japan | NUMBERED | null | 0 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REQUEST TO JOIN CONSULTATIONS | 17 January 2014 | WT/DS472/2 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REQUEST TO JOIN CONSULTATIONS
Communication from Japan
The following communication, dated 15 January 2014, from the delegation of Japan to the
delegation of Brazil, the delegation of the Euro pean Union and to the Chairperson of the Dispute
Settlement Body, is c... | 2026-03-15T16:01:04.866362 | |
472 | 472 | DS472_SEQ02_Communication_01.pdf | DS472_SEQ02_Communication_01.pdf | 2 | Communication | Communication from Argentina | NUMBERED | null | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REQUEST TO JOIN CONSULTATIONS | 20 January 2014 | WT/DS472/3 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REQUEST TO JOIN CONSULTATIONS
Communication from Argentina
The following communication, dated 16 January 2014, from the delegation of Argentina to the
delegation of Brazil, the delegation of the Eu ropean Union and the Chairperson of the Dispute
Settlement Body,... | 2026-03-15T16:01:04.869423 | |
472 | 472 | DS472_SEQ03_Communication_02.pdf | DS472_SEQ03_Communication_02.pdf | 3 | Communication | Communication from the United States | NUMBERED | null | 2 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REQUEST TO JOIN CONSULTATIONS | 21 January 2014 | WT/DS472/4; WT/DS472/1 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REQUEST TO JOIN CONSULTATIONS
Communication from the United States
The following communication, dated 17 January 2014, from the delegation of the United States to
the delegation of Brazil, the delegation of the European Union and to the Chairperson of the
Disput... | 2026-03-15T16:01:04.869843 | |
472 | 472 | DS472_SEQ04_Request_For_Establishment_Of_Panel.pdf | DS472_SEQ04_Request_For_Establishment_Of_Panel.pdf | 4 | Request_For_Establishment_Of_Panel | REQUEST FOR THE ESTABLISHMENT OF A PANEL | NUMBERED | null | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN UNION | 7 November 2014 | WT/DS472/5 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 11 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN UNION
The following communication, dated 31 October 2014, from the delegation of the European Union
to the Chairperson of the Dispute Settlement Body, is circulated pursuant to the Article 6.2 of the
DSU.
... | 2026-03-15T16:01:04.881401 | |
472 | 472 | DS472_SEQ05_Note_By_Secretariat.pdf | DS472_SEQ05_Note_By_Secretariat.pdf | 5 | Note_By_Secretariat | NOTE BY THE SECRETARIAT | NUMBERED | null | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE EUROPEAN UNION NOTE BY THE SECRETARIAT | 27 March 2015 | WT/DS472/6; WT/DS472/5; WT/DS472/5 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE EUROPEAN UNION
NOTE BY THE SECRETARIAT
1. At its meeting on 17 December 2014, the Dispute Settlement Body (DSB) established a
panel pursuant to the request of the European Union in document , in accorda... | 2026-03-15T16:01:04.882418 | |
472 | 472 | DS472_SEQ06_Communication_03.pdf | DS472_SEQ06_Communication_03.pdf | 6 | Communication | COMMUNICATION FROM | NUMBERED | null | 3 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES (EU) BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES (JAPAN) COMMUNICATION FROM THE PANELS | 26 October 2015 | WT/DS472/7; WT/DS497/5 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES (EU)
BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES (JAPAN)
COMMUNICATION FROM THE PANELS
The following communication, dated 22 October 2015, was received from the Chairperson of the
Panels with the request that it be circulated to the Dispute Settlem... | 2026-03-15T16:01:04.883293 | |
472 | 472 | DS472_SEQ07_Working_Procedures_00.pdf | DS472_SEQ07_Working_Procedures_00.pdf | 7 | Working_Procedures | AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | 0 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES NOTIFICATION OF AN APPEAL BY BRAZIL UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | 6 October 2017 | WT/DS472/8; WT/DS497/6 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 8 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
NOTIFICATION OF AN APPEAL BY BRAZIL
UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
The following communication, dated ... | 2026-03-15T16:01:04.891626 | |
472 | 472 | DS472_SEQ08_Working_Procedures_01.pdf | DS472_SEQ08_Working_Procedures_01.pdf | 8 | Working_Procedures | THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES NOTIFICATION OF AN OTHER APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | 6 October 2017 | WT/DS472/9 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 2 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
NOTIFICATION OF AN OTHER APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4
AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING
THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF
THE WORKING PROCEDURES FOR APPELLATE REVIEW
The following com... | 2026-03-15T16:01:04.893353 | |
472 | 472 | DS472_SEQ09_DSB_Action.pdf | DS472_SEQ09_DSB_Action.pdf | 9 | DSB_Action | Action by the Dispute Settlement Body | NUMBERED | null | null | BRAZIL - CERTAIN MEASURES CONCERNING TAXATION AND CHARGES APPELLATE BODY REPORTS AND PANEL REPORTS | 14 January 2019 | WT/DS472/13; WT/DS497/11; WT/DS472/AB/R; WT/DS472/AB/R/Add.1; WT/DS472/R; WT/DS472/R/Add.1; WT/DS497/R; WT/DS497/R/Add.1 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL - CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
APPELLATE BODY REPORTS AND PANEL REPORTS
Action by the Dispute Settlement Body
At its meeting on 11 January 2019, the Dispute Settlement Body adopted the Appellate Body reports
on Brazil - Certain Measures Concerning Taxation and Charges ( and
, WT/DS 497/AB/R a... | 2026-03-15T16:01:04.894003 | |
472 | 472 | DS472_SEQ10_Communication_04.pdf | DS472_SEQ10_Communication_04.pdf | 10 | Communication | COMMUNICATION FROM | NUMBERED | null | 4 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES COMMUNICATION FROM THE EUROPEAN UNION AND BRAZIL CONCERNING ARTICLE 21.3(B) AND 21.3(C) OF THE DSU | 22 February 2019 | WT/DS472/14 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
COMMUNICATION FROM THE EUROPEAN UNION AND BRAZIL CONCERNING
ARTICLE 21.3(B) AND 21.3(C) OF THE DSU
The following communication, dated 20 February 2019, from the delegation of the European Union
and the delegation of Brazil to the Chairperson of the Dispute Settl... | 2026-03-15T16:01:04.894738 | |
472 | 472 | DS472_SEQ11_Agreement_Art_21_3.pdf | DS472_SEQ11_Agreement_Art_21_3.pdf | 11 | Agreement_Art_21_3 | AGREEMENT UNDER ARTICLE 21.3 | NUMBERED | null | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES AGREEMENT UNDER ARTICLE 21.3(B) OF THE DSU | 14 May 2019 | WT/DS472/15 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
AGREEMENT UNDER ARTICLE 21.3(B) OF THE DSU
The following communication, dated 10 May 2019, from the delegation of Brazil and the delegation
of the European Union to the Chairperson of the Dispute Settlement Body, is circulated in accordance
with Article 21.3(b) ... | 2026-03-15T16:01:04.895626 | |
472 | 472 | DS472_SEQ12_Status_Report.pdf | DS472_SEQ12_Status_Report.pdf | 12 | Status_Report | STATUS REPORT | NUMBERED | null | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES STATUS REPORT REGARDING IMPLEMENTATION OF THE DSB RECOMMENDATIONS AND RULINGS BY BRAZIL | 12 November 2019 | WT/DS472/16 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
STATUS REPORT REGARDING IMPLEMENTATION OF THE
DSB RECOMMENDATIONS AND RULINGS
BY BRAZIL
The following communication, dated 11 November 2019, from the delegation of Brazil to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 21.6 o... | 2026-03-15T16:01:04.896696 | |
472 | 472 | DS472_SEQ13_Addendum_Add.pdf | DS472_SEQ13_Addendum_Add.pdf | 13 | Addendum | Addendum | NUMBERED | Add | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES STATUS REPORT REGARDING IMPLEMENTATION OF THE DSB RECOMMENDATIONS AND RULINGS BY BRAZIL | 6 December 2019 | WT/DS472/16/Add.1 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
STATUS REPORT REGARDING IMPLEMENTATION OF
THE DSB RECOMMENDATIONS AND RULINGS
BY BRAZIL
Addendum
The following communication, dated 5 December 2019, from the delegation of Brazil to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Articl... | 2026-03-15T16:01:04.897469 | |
472 | 472 | DS472_SEQ14_Addendum_Add2.pdf | DS472_SEQ14_Addendum_Add2.pdf | 14 | Addendum | Addendum | NUMBERED | Add | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES STATUS REPORT REGARDING IMPLEMENTATION OF THE DSB RECOMMENDATIONS AND RULINGS BY BRAZIL | 17 January 2020 | WT/DS472/16/Add.2 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
STATUS REPORT REGARDING IMPLEMENTATION OF
THE DSB RECOMMENDATIONS AND RULINGS
BY BRAZIL
Addendum
The following communication, dated 16 January 2020 , from the delegation of Brazil to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Artic... | 2026-03-15T16:01:04.898134 | |
472 | 472 | DS472_SEQ15_Agreed_Procedures.pdf | DS472_SEQ15_Agreed_Procedures.pdf | 15 | Agreed_Procedures | Agreed Procedures | NUMBERED | null | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES UNDERSTANDING BETWEEN BRAZIL AND THE EUROPEAN UNION REGARDING PROCEDURES UNDER ARTICLES 21 AND 22 OF THE DSU AND ARTICLE 4 OF THE SCM AGREEMENT | 9 January 2020 | WT/DS472/17 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 3 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
UNDERSTANDING BETWEEN BRAZIL AND THE EUROPEAN UNION REGARDING
PROCEDURES UNDER ARTICLES 21 AND 22 OF THE DSU
AND ARTICLE 4 OF THE SCM AGREEMENT
The following communication, dated 23 December 2019 , from the delegation of Brazil and the
delegation of the European... | 2026-03-15T16:01:04.900053 | |
472 | 472 | DS472_SEQ16_Addendum_Add.pdf | DS472_SEQ16_Addendum_Add.pdf | 16 | Addendum | Addendum | NUMBERED | Add | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REPORTS OF THE PANEL | 30 August 2017 | WT/DS472/R/Add.1; WT/DS497/R/Add.1; WT/DS472/R; WT/DS497/R. | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 107 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REPORTS OF THE PANEL
Addendum
This addendum contains Annexes A to C to the Report s of the Panel to be found in documents
•
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additiona... | 2026-03-15T16:01:04.981513 | |
472 | 472 | DS472_SEQ17_Corrigendum_Corr.pdf | DS472_SEQ17_Corrigendum_Corr.pdf | 17 | Corrigendum | Corrigendum Footnote 142 states "Law 8,248/1991, (Exhibit JE -1), Articles 9 and 11 §9, as amended by". This footnote should read "Law 8,248/1991, (Exhibit JE -1), Articles 9 and 11 §9; and Decree 5,906/2006, (Exhibit JE-7), Articles 33 and 36." Paragraph 8.6, sub -paragraph (a), refers to "Article III:2 of the GATT 1... | NUMBERED | Corr | null | BRAZIL - CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REPORTS OF THE PANEL | 4 October 2017 | WT/DS472/R/Corr.1; WT/DS497/R/Corr.1 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL - CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REPORTS OF THE PANEL
Corrigendum
Footnote 142 states "Law 8,248/1991, (Exhibit JE -1), Articles 9 and 11 §9, as amended by". This
footnote should read "Law 8,248/1991, (Exhibit JE -1), Articles 9 and 11 §9; and Decree 5,906/2006,
(Exhibit JE-7), Articles 33 and ... | 2026-03-15T16:01:04.982369 | |
472 | 472 | DS472_SEQ18_Addendum_Add.pdf | DS472_SEQ18_Addendum_Add.pdf | 18 | Addendum | Reports of the Appellate Body Addendum | NUMBERED | Add | null | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES AB-2017-7 AB-2017-8 | 13 December 2018 | WT/DS472/AB/R/Add.1; WT/DS497/AB/R/Add.1; WT/DS472/AB/R; WT/DS497/AB/R. | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 42 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
AB-2017-7
AB-2017-8
Reports of the Appellate Body
Addendum
This Addendum contains Annexes A to D to the Report of the Appellate Body circulated as documents
The Notices of Appeal and Other Appeal and the executive summaries of written submissions
contained in t... | 2026-03-15T16:01:05.007324 | |
472 | 472 | DS472_SEQ19_Report_Of_Panel_00.pdf | DS472_SEQ19_Report_Of_Panel_00.pdf | 19 | Report_Of_Panel | Panel Report | PANEL_REPORT | null | 0 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES COMMUNICATION FROM THE APPELLATE BODY | 14 March 2018 | WT/DS472/10; WT/DS497/8 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 27 November 2017, from the Chair of the Appellate Body to
the Chair of the Dispute Settlement Body, is being circulated to Members.
I am writing to you pursuant to Article 17.5 of the Unde... | 2026-03-15T16:01:05.008445 | |
472 | 472 | DS472_SEQ20_Report_Of_Panel_01.pdf | DS472_SEQ20_Report_Of_Panel_01.pdf | 20 | Report_Of_Panel | PANEL_REPORT | null | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES REPORTS OF THE PANEL | 30 August 2017 | WT/DS472/R; WT/DS497/R | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 417 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
REPORTS OF THE PANEL
•
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures of the Panel Concerning Business Confidential
Information
A-7
Annex A-3 Joint wor... | 2026-03-15T16:01:05.316369 | ||
472 | 472 | DS472_SEQ21_Report_Of_Appellate_Body_00.pdf | DS472_SEQ21_Report_Of_Appellate_Body_00.pdf | 21 | Report_Of_Appellate_Body | Appellate Body Report | AB_REPORT | null | 0 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES COMMUNICATION FROM THE APPELLATE BODY | 22 November 2018 | WT/DS472/11; WT/DS497/9 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 19 November 2018, from the Chair of the Appellate Body to the
Chair of the Dispute Settlement Body, is being circulated to Members.
I refer to my letter of 27 November 2017, setting out th... | 2026-03-15T16:01:05.316709 | |
472 | 472 | DS472_SEQ22_Report_Of_Appellate_Body_01.pdf | DS472_SEQ22_Report_Of_Appellate_Body_01.pdf | 22 | Report_Of_Appellate_Body | Report of the Appellate Body | AB_REPORT | null | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES COMMUNICATION FROM THE APPELLATE BODY | 18 December 2018 | WT/DS472/12; WT/DS497/10 | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 1 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 13 December 2018, from the Chair of the Appellate Body to the
Chair of the Dispute Settlement Body, is being circulated to Members.
It is my honour to provide to you a confidential advance... | 2026-03-15T16:01:05.316979 | |
472 | 472 | DS472_SEQ23_Report_Of_Appellate_Body_02.pdf | DS472_SEQ23_Report_Of_Appellate_Body_02.pdf | 23 | Report_Of_Appellate_Body | Reports of the Appellate Body | AB_REPORT | null | 2 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES AB-2017-7 AB-2017-8 | 13 December 2018 | WT/DS472/AB/R; WT/DS497/AB/R | ['EU'] | ['Brazil'] | ['Argentina', 'Australia', 'Canada', 'China', 'Colombia', 'India', 'Japan', 'South Korea', 'Russia', 'South Africa', 'Taiwan', 'Turkey', 'U.S.'] | Appellate Body | Art. I:1, III:2, III:4, III:5 GATT 1994Art. 3.1(b), 3.2, 1.1 Subsidies and Countervailing Measures (SCM)Art. 2.1, 2.2 Trade-Related Investment Measures (TRIMs) | The summary below was up-to-date at
3 April 2020
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union. (See also DS497)
On 19 December 2013, the European Union requested consultations with Brazil with respect to certain measures concerning taxation... | 154 | BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES
AB-2017-7
AB-2017-8
Reports of the Appellate Body
•
ABBREVIATIONS USED IN THESE REPORTS
Abbreviation Description
Anti-Dumping
Agreement
Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994
CIDE Contribution of Interventi... | 2026-03-15T16:01:05.442190 | |
473 | 473 | DS473_SEQ01_Request_For_Consultations.pdf | DS473_SEQ01_Request_For_Consultations.pdf | 1 | Request_For_Consultations | REQUEST FOR CONSULTATIONS BY | NUMBERED | null | null | EUROPEAN UNION - ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA REQUEST FOR CONSULTATIONS BY ARGENTINA | 8 January 2014 | WT/DS473/1; G/L/1062; G/ADP/D101/1 | Anti-Dumping Practices (ADP); General Council | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 3 | EUROPEAN UNION - ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
REQUEST FOR CONSULTATIONS BY ARGENTINA
The following communication, dated 19 December 2013, from the delegation of Argentina
to the delegation of the European Union and to the Chairperson of the Dispute Settlement Body,
is circulated in accordance with... | 2026-03-15T16:01:12.914898 |
473 | 473 | DS473_SEQ02_Communication_00.pdf | DS473_SEQ02_Communication_00.pdf | 2 | Communication | Communication from the Russian Federation | NUMBERED | null | 0 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA REQUEST TO JOIN CONSULTATIONS | 14 January 2014 | WT/DS473/2 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
REQUEST TO JOIN CONSULTATIONS
Communication from the Russian Federation
The following communication, dated 9 January 2014, from the delegation of the Russian
Federation to the delegation of the European Union, the delegation of Argentina and to the
Chai... | 2026-03-15T16:01:12.915427 | |
473 | 473 | DS473_SEQ03_Communication_01.pdf | DS473_SEQ03_Communication_01.pdf | 3 | Communication | Communication from Indonesia | NUMBERED | null | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA REQUEST TO JOIN CONSULTATIONS | 20 January 2014 | WT/DS473/3 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
REQUEST TO JOIN CONSULTATIONS
Communication from Indonesia
The following communication, dated 15 January 2014, from the delegation of Indonesia to the
delegation of the European Union, the delegati on of Argentina and to the Chairperson of the
Dispute S... | 2026-03-15T16:01:12.915786 | |
473 | 473 | DS473_SEQ04_Request_To_Join_Consultations.pdf | DS473_SEQ04_Request_To_Join_Consultations.pdf | 4 | Request_To_Join_Consultations | ACCEPTANCE BY THE EUROPEAN UNION OF THE REQUESTS TO JOIN CONSULTATIONS | NUMBERED | null | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA ACCEPTANCE BY THE EUROPEAN UNION OF THE REQUESTS TO JOIN CONSULTATIONS | 24 January 2014 | WT/DS473/4 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
ACCEPTANCE BY THE EUROPEAN UNION
OF THE REQUESTS TO JOIN CONSULTATIONS
Indonesia and the Russian Federation notified the Dispute Settlement Body (DSB) of their desire to
be joined in the consultations requested by Argentina, pursuant to Article 4.11 of ... | 2026-03-15T16:01:12.916445 | |
473 | 473 | DS473_SEQ05_Request_For_Establishment_Of_Panel.pdf | DS473_SEQ05_Request_For_Establishment_Of_Panel.pdf | 5 | Request_For_Establishment_Of_Panel | REQUEST FOR THE ESTABLISHMENT OF A PANEL | NUMBERED | null | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA REQUEST FOR THE ESTABLISHMENT OF A PANEL BY ARGENTINA | 14 March 2014 | WT/DS473/5 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 4 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY ARGENTINA
The following communication, dated 13 March 2014, from the delegation of Argentina to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.
On 19 December... | 2026-03-15T16:01:12.919242 | |
473 | 473 | DS473_SEQ06_Note_By_Secretariat_00.pdf | DS473_SEQ06_Note_By_Secretariat_00.pdf | 6 | Note_By_Secretariat | Note by the Secretariat | NUMBERED | null | 0 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF ARGENTINA | 24 June 2014 | WT/DS473/6; WT/DS473/5 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF ARGENTINA
Note by the Secretariat
1. At its meeting on 25 April 2014, the Dispute Settlement Body (DSB) established a panel
pursuant to the request of Argentina in document , in accordance with Art... | 2026-03-15T16:01:12.920001 | |
473 | 473 | DS473_SEQ07_Communication_02.pdf | DS473_SEQ07_Communication_02.pdf | 7 | Communication | COMMUNICATION FROM | NUMBERED | null | 2 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA COMMUNICATION FROM THE PANEL | 11 December 2014 | WT/DS473/7 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
COMMUNICATION FROM THE PANEL
The following communication, dated 10 December 2014, was received from the Chairperson of the
Panel with the request that it be circulated to the Dispute Settlement Body.
Article 12.8 of the Understanding on Rules and Proce... | 2026-03-15T16:01:12.920501 | |
473 | 473 | DS473_SEQ08_Note_By_Secretariat_01.pdf | DS473_SEQ08_Note_By_Secretariat_01.pdf | 8 | Note_By_Secretariat | Note by the Secretariat Following the resignation on 15 February 2015 of Mr Scott Gallacher, a member of the Panel, the Director-General on 18 February 2015 has appointed a new member of the Panel. Accordingly, the composition of the Panel is as follows: Chairperson: Mr Arumugamangalam V. Ganesan Members: Mr Gilles L... | NUMBERED | null | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA REPLACEMENT OF A MEMBER OF THE PANEL | 19 February 2015 | WT/DS473/8 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
REPLACEMENT OF A MEMBER OF THE PANEL
Note by the Secretariat
Following the resignation on 15 February 2015 of Mr Scott Gallacher, a member of the Panel, the
Director-General on 18 February 2015 has appointed a new member of the Panel. Accordingly, the
c... | 2026-03-15T16:01:12.920781 | |
473 | 473 | DS473_SEQ09_Communication_03.pdf | DS473_SEQ09_Communication_03.pdf | 9 | Communication | COMMUNICATION FROM | NUMBERED | null | 3 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA COMMUNICATION FROM THE PANEL | 21 December 2015 | WT/DS473/9 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
COMMUNICATION FROM THE PANEL
The following communication, dated 18 December 2015, was received from the Chairperson of the
Panel with the request that it be circulated to the Dispute Settlement Body.
Article 12.8 of the Understanding on Rules and Pr oc... | 2026-03-15T16:01:12.921223 | |
473 | 473 | DS473_SEQ10_Working_Procedures.pdf | DS473_SEQ10_Working_Procedures.pdf | 10 | Working_Procedures | AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA NOTIFICATION OF AN APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | 26 May 2016 | WT/DS473/10 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 2 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
NOTIFICATION OF AN APPEAL BY THE EUROPEAN UNION
UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
The following ... | 2026-03-15T16:01:12.922447 | |
473 | 473 | DS473_SEQ11_DSB_Action.pdf | DS473_SEQ11_DSB_Action.pdf | 11 | DSB_Action | Action by the Dispute Settlement Body | NUMBERED | null | null | EUROPEAN UNION - ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA APPELLATE BODY REPORT AND PANEL REPORT | 28 October 2016 | WT/DS473/15; WT/DS473/AB/R | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION - ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
APPELLATE BODY REPORT AND PANEL REPORT
Action by the Dispute Settlement Body
At its meeting on 26 October 2016 , the Dispute Settlement Body adopted the Appellate Body
report on European Union - Anti-Dumping Measures on Biodiesel from Argentina (
and WT... | 2026-03-15T16:01:12.923034 | |
473 | 473 | DS473_SEQ12_Agreement_Art_21_3.pdf | DS473_SEQ12_Agreement_Art_21_3.pdf | 12 | Agreement_Art_21_3 | AGREEMENT UNDER ARTICLE 21.3 | NUMBERED | null | null | EUROPEAN UNION - ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA AGREEMENT UNDER ARTICLE 21.3(B) OF THE DSU | 15 December 2016 | WT/DS473/16 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION - ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
AGREEMENT UNDER ARTICLE 21.3(B) OF THE DSU
The following communication, dated 9 December 2016, from the delegation of the European Union
and the delegation of Argentina to the Chairperson of the Dispute Settlement Body, is circulated in
accordance with ... | 2026-03-15T16:01:12.923540 | |
473 | 473 | DS473_SEQ13_Status_Report.pdf | DS473_SEQ13_Status_Report.pdf | 13 | Status_Report | Status Report Regarding Implementation of the DSB Recommendations and Rulings in the Dispute European Union – Anti-Dumping Measures on Biodiesel from Argentina (WT/DS473) The European Union submits this report in accordance with Article 21.6 of the Understanding on Rules and Procedures Governing the Settlement of Dispu... | NUMBERED | null | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA STATUS REPORT BY THE EUROPEAN UNION | 9 June 2017 | WT/DS473/17 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
STATUS REPORT BY THE EUROPEAN UNION
Status Report Regarding Implementation of the
DSB Recommendations and Rulings in the Dispute
European Union – Anti-Dumping Measures
on Biodiesel from Argentina
(WT/DS473)
The European Union submits this report in acc... | 2026-03-15T16:01:12.924273 | |
473 | 473 | DS473_SEQ14_Addendum_Add.pdf | DS473_SEQ14_Addendum_Add.pdf | 14 | Addendum | Addendum | NUMBERED | Add | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA STATUS REPORT BY THE EUROPEAN UNION | 10 July 2017 | WT/DS473/17/Add.1 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
STATUS REPORT BY THE EUROPEAN UNION
Addendum
The following communication, dated 7 July 2017, from the delegation of the European Union to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 21.6 of the DSU.
Status Report R... | 2026-03-15T16:01:12.924860 | |
473 | 473 | DS473_SEQ15_Addendum_Add2.pdf | DS473_SEQ15_Addendum_Add2.pdf | 15 | Addendum | Addendum | NUMBERED | Add | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA STATUS REPORT BY THE EUROPEAN UNION | 21 August 2017 | WT/DS473/17/Add.2 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
STATUS REPORT BY THE EUROPEAN UNION
Addendum
The following communication, dated 18 August 2017, from the delegation of the European Union
to the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 21.6 of the
DSU.
Status Repor... | 2026-03-15T16:01:12.925472 | |
473 | 473 | DS473_SEQ16_Addendum_Add3.pdf | DS473_SEQ16_Addendum_Add3.pdf | 16 | Addendum | Addendum | NUMBERED | Add | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA STATUS REPORT BY THE EUROPEAN UNION | 19 September 2017 | WT/DS473/17/Add.3 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
STATUS REPORT BY THE EUROPEAN UNION
Addendum
The following communication, dated 18 September 2017, from the delegation of the European
Union to the Chairperson of the Dispute Settlement Bod y, is circulated pursuant to Article 21.6 of
the DSU.
Status R... | 2026-03-15T16:01:12.926081 | |
473 | 473 | DS473_SEQ17_Addendum_Add4.pdf | DS473_SEQ17_Addendum_Add4.pdf | 17 | Addendum | Addendum | NUMBERED | Add | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA STATUS REPORT BY THE EUROPEAN UNION | 13 October 2017 | WT/DS473/17/Add.4 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
STATUS REPORT BY THE EUROPEAN UNION
Addendum
The following communication, dated 10 October 2017, from the delegation of the European Union
to the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 21.6 of the
DSU.
Status Repo... | 2026-03-15T16:01:12.926690 | |
473 | 473 | DS473_SEQ18_Agreed_Procedures.pdf | DS473_SEQ18_Agreed_Procedures.pdf | 18 | Agreed_Procedures | Agreed Procedures | NUMBERED | null | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA COMMUNICATION CONCERNING ARTICLE 21.3(B) UNDERSTANDING BETWEEN ARGENTINA AND THE EUROPEAN UNION REGARDING PROCEDURES UNDER ARTICLES 21 AND 22 OF THE DSU | 14 August 2017 | WT/DS473/18 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 3 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
COMMUNICATION CONCERNING ARTICLE 21.3(B)
UNDERSTANDING BETWEEN ARGENTINA AND THE EUROPEAN UNION REGARDING
PROCEDURES UNDER ARTICLES 21 AND 22 OF THE DSU
The following communication, dated 9 August 2017, from the delegation of Argentina and the
delegatio... | 2026-03-15T16:01:12.928206 | |
473 | 473 | DS473_SEQ19_Report_Of_Panel_00.pdf | DS473_SEQ19_Report_Of_Panel_00.pdf | 19 | Report_Of_Panel | Panel Report | PANEL_REPORT | null | 0 | EUROPEAN UNION — ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA NOTIFICATION OF AN OTHER APPEAL BY ARGENTINA UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | 31 May 2016 | WT/DS473/11 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 4 | EUROPEAN UNION — ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
NOTIFICATION OF AN OTHER APPEAL BY ARGENTINA UNDER ARTICLE 16.4 AND ARTICLE 17 OF
THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES
(DSU), AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
The following com... | 2026-03-15T16:01:12.931105 | |
473 | 473 | DS473_SEQ20_Report_Of_Panel_01.pdf | DS473_SEQ20_Report_Of_Panel_01.pdf | 20 | Report_Of_Panel | Panel Report | PANEL_REPORT | null | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA COMMUNICATION FROM THE APPELLATE BODY | 26 July 2016 | WT/DS473/12 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 19 July 2016, fr om the Chair of the Appellate Body to the
Chair of the Dispute Settlement Body, is being circulated to Members.
I am writing to you pursuant to Article 17.5 of th... | 2026-03-15T16:01:12.931885 | |
473 | 473 | DS473_SEQ21_Report_Of_Panel_02.pdf | DS473_SEQ21_Report_Of_Panel_02.pdf | 21 | Report_Of_Panel | REPORT OF THE PANEL | PANEL_REPORT | null | 2 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA | 29 March 2016 | WT/DS473/R | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 154 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
REPORT OF THE PANEL
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures of the Panel Concerning Business Confidential
Information
A-7
ANNEX B
ARGU... | 2026-03-15T16:01:13.055567 | |
473 | 473 | DS473_SEQ22_Report_Of_Panel_Add.pdf | DS473_SEQ22_Report_Of_Panel_Add.pdf | 22 | Report_Of_Panel | REPORT OF THE PANEL Addendum | PANEL_REPORT | Add | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA | 29 March 2016 | WT/DS473/R/Add.1; WT/DS473/R. | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 130 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to D to the Report of the Panel to be found in document
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additio... | 2026-03-15T16:01:13.141338 | |
473 | 473 | DS473_SEQ23_Report_Of_Appellate_Body_00.pdf | DS473_SEQ23_Report_Of_Appellate_Body_00.pdf | 23 | Report_Of_Appellate_Body | Appellate Body report | AB_REPORT | null | 0 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA COMMUNICATION FROM THE APPELLATE BODY | 11 August 2016 | WT/DS473/13 | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 9 August 2016, from the Chair of the Appellate Body to the
Chair of the Dispute Settlement Body, is being circulated to Members.
I refer to the letter from the Chair of the Appell... | 2026-03-15T16:01:13.141643 | |
473 | 473 | DS473_SEQ24_Report_Of_Appellate_Body_01.pdf | DS473_SEQ24_Report_Of_Appellate_Body_01.pdf | 24 | Report_Of_Appellate_Body | Report of the Appellate Body | AB_REPORT | null | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA COMMUNICATION FROM THE APPELLATE BODY | 6 October 2016 | WT/DS473/14; WT/DS473/AB/R. | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 1 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 6 October 2016, from the Chair of the Appellate Body to the
Chair of the Dispute Settlement Body, is being circulate d to Members in accordance with
Article 17.5 of the Understandi... | 2026-03-15T16:01:13.141926 | |
473 | 473 | DS473_SEQ25_Report_Of_Appellate_Body_02.pdf | DS473_SEQ25_Report_Of_Appellate_Body_02.pdf | 25 | Report_Of_Appellate_Body | Report of the Appellate Body | AB_REPORT | null | 2 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA AB-2016-4 | 6 October 2016 | WT/DS473/AB/R | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 101 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
AB-2016-4
Report of the Appellate Body
ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994
Basic Regulation Council Regulation (E... | 2026-03-15T16:01:13.220852 | |
473 | 473 | DS473_SEQ26_Report_Of_Appellate_Body_Add.pdf | DS473_SEQ26_Report_Of_Appellate_Body_Add.pdf | 26 | Report_Of_Appellate_Body | Report of the Appellate Body Addendum | AB_REPORT | Add | null | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA AB-2016-4 | 6 October 2016 | WT/DS473/AB/R/Add.1; WT/DS473/AB/R. | ['Argentina'] | ['EU'] | ['Australia', 'China', 'Malaysia', 'Norway', 'Russia', 'Saudi Arabia', 'Turkey', 'U.S.', 'Colombia', 'Indonesia', 'Mexico'] | Appellate Body | Art. 2.2 Anti-dumpingArt. VI:1 GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4 Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4 Anti-dumpingArt. VI:2 GATT 1994Art. 3.1, 3.4, 3.5, 1 Anti-dumpingArt. VI GATT 1994 | The summary below was up-to-date at
16 November 2017
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Argentina.
On 19 December 2013, Argentina requested consultations with the European Union regarding (a) provisional and definitive anti-dumping measures impose... | 42 | EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
AB-2016-4
Report of the Appellate Body
Addendum
This Addendum contains Annexes A to D to the Report of the Appellate Body circulated as
document
The Notices of Appeal and O ther Appeal and the executive summaries of written submissions
contained in thi... | 2026-03-15T16:01:13.243041 | |
474 | 474 | DS474_SEQ01_Request_For_Consultations.pdf | DS474_SEQ01_Request_For_Consultations.pdf | 1 | Request_For_Consultations | REQUEST FOR CONSULTATIONS BY | NUMBERED | null | null | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA REQUEST FOR CONSULTATIONS BY THE RUSSIAN FEDERATION | 9 January 2014 | WT/DS474/1; G/L/1063; G/ADP/D102/1; G/SCM/D101/1 | Anti-Dumping Practices (ADP); General Council; Subsidies and Countervailing Measures (SCM) | ['Russia'] | ['EU'] | ['Argentina', 'Australia', 'Canada', 'China', 'Indonesia', 'Norway', 'Turkey', 'Ukraine', 'U.S.', 'Saudi Arabia', 'Brazil', 'Mexico', 'Vietnam'] | Panel | Art. I, VI:1, VI:2 GATT 1994Art. 2.1, 2.2, 2.2.1, 2.2.1.1, 2.2.2, 2.4 Anti-dumpingArt. VI:6 GATT 1994Art. 3.1, 3.2, 3.4, 3.5, 5.8, 8.1, 9.2, 9.3, 11.1, 11.2, 11.3, 18.1, 6.8, Annex II Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. X:3 GATT 1994 | The summary below was up-to-date at
3 November 2015
Consultations
Complaint by the Russian Federation. (See also DS494)
On 23 December 2013, the Russian Federation requested consultations with the European Union regarding “cost adjustment” methodologies used by the EU for the calculation of dumping ma... | 5 | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND
CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA
REQUEST FOR CONSULTATIONS BY THE RUSSIAN FEDERATION
The following communication, dated 23 December 2013, from the delegation of the
Russian Federation to the delegation of the Euro pean Union and to the Chairperson o... | 2026-03-15T16:01:13.365376 |
474 | 474 | DS474_SEQ02_Communication_00.pdf | DS474_SEQ02_Communication_00.pdf | 2 | Communication | Communication from China | NUMBERED | null | 0 | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA REQUEST TO JOIN CONSULTATIONS | 16 January 2014 | WT/DS474/2 | ['Russia'] | ['EU'] | ['Argentina', 'Australia', 'Canada', 'China', 'Indonesia', 'Norway', 'Turkey', 'Ukraine', 'U.S.', 'Saudi Arabia', 'Brazil', 'Mexico', 'Vietnam'] | Panel | Art. I, VI:1, VI:2 GATT 1994Art. 2.1, 2.2, 2.2.1, 2.2.1.1, 2.2.2, 2.4 Anti-dumpingArt. VI:6 GATT 1994Art. 3.1, 3.2, 3.4, 3.5, 5.8, 8.1, 9.2, 9.3, 11.1, 11.2, 11.3, 18.1, 6.8, Annex II Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. X:3 GATT 1994 | The summary below was up-to-date at
3 November 2015
Consultations
Complaint by the Russian Federation. (See also DS494)
On 23 December 2013, the Russian Federation requested consultations with the European Union regarding “cost adjustment” methodologies used by the EU for the calculation of dumping ma... | 1 | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND
CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA
REQUEST TO JOIN CONSULTATIONS
Communication from China
The following communication, dated 14 January 2014, from the delegation of China to the
delegation of the European Union, the delegation of the Russian Federatio... | 2026-03-15T16:01:13.366025 | |
474 | 474 | DS474_SEQ03_Communication_01.pdf | DS474_SEQ03_Communication_01.pdf | 3 | Communication | Communication from Indonesia | NUMBERED | null | 1 | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA REQUEST TO JOIN CONSULTATIONS | 22 January 2014 | WT/DS474/3 | ['Russia'] | ['EU'] | ['Argentina', 'Australia', 'Canada', 'China', 'Indonesia', 'Norway', 'Turkey', 'Ukraine', 'U.S.', 'Saudi Arabia', 'Brazil', 'Mexico', 'Vietnam'] | Panel | Art. I, VI:1, VI:2 GATT 1994Art. 2.1, 2.2, 2.2.1, 2.2.1.1, 2.2.2, 2.4 Anti-dumpingArt. VI:6 GATT 1994Art. 3.1, 3.2, 3.4, 3.5, 5.8, 8.1, 9.2, 9.3, 11.1, 11.2, 11.3, 18.1, 6.8, Annex II Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. X:3 GATT 1994 | The summary below was up-to-date at
3 November 2015
Consultations
Complaint by the Russian Federation. (See also DS494)
On 23 December 2013, the Russian Federation requested consultations with the European Union regarding “cost adjustment” methodologies used by the EU for the calculation of dumping ma... | 1 | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND
CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA
REQUEST TO JOIN CONSULTATIONS
Communication from Indonesia
The following communication, dated 16 January 2014, from the delegation of Indonesia to the
delegation of the European Union, the delegation of the Russian F... | 2026-03-15T16:01:13.366414 | |
474 | 474 | DS474_SEQ04_Request_For_Establishment_Of_Panel.pdf | DS474_SEQ04_Request_For_Establishment_Of_Panel.pdf | 4 | Request_For_Establishment_Of_Panel | REQUEST FOR THE ESTABLISHMENT OF A PANEL | NUMBERED | null | null | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE RUSSIAN FEDERATION | 6 June 2014 | WT/DS474/4 | ['Russia'] | ['EU'] | ['Argentina', 'Australia', 'Canada', 'China', 'Indonesia', 'Norway', 'Turkey', 'Ukraine', 'U.S.', 'Saudi Arabia', 'Brazil', 'Mexico', 'Vietnam'] | Panel | Art. I, VI:1, VI:2 GATT 1994Art. 2.1, 2.2, 2.2.1, 2.2.1.1, 2.2.2, 2.4 Anti-dumpingArt. VI:6 GATT 1994Art. 3.1, 3.2, 3.4, 3.5, 5.8, 8.1, 9.2, 9.3, 11.1, 11.2, 11.3, 18.1, 6.8, Annex II Anti-dumpingArt. XVI:4 Agreement Establishing the World Trade OrganizationArt. X:3 GATT 1994 | The summary below was up-to-date at
3 November 2015
Consultations
Complaint by the Russian Federation. (See also DS494)
On 23 December 2013, the Russian Federation requested consultations with the European Union regarding “cost adjustment” methodologies used by the EU for the calculation of dumping ma... | 5 | EUROPEAN UNION – COST ADJUSTMENT METHODOLOGIES AND
CERTAIN ANTI-DUMPING MEASURES ON IMPORTS FROM RUSSIA
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE RUSSIAN FEDERATION
The following communication, dated 4 June 2014, from the delegation of the Russian Federation to
the Chairperson of the Dispute Settlement Body, is c... | 2026-03-15T16:01:13.370097 | |
475 | 475 | DS475_SEQ01_Note_By_Secretariat_00.pdf | DS475_SEQ01_Note_By_Secretariat_00.pdf | 1 | Note_By_Secretariat | NOTE BY THE SECRETARIAT | NUMBERED | null | 0 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE EUROPEAN UNION NOTE BY THE SECRETARIAT | 27 October 2014 | WT/DS475/3; WT/DS475/2 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE EUROPEAN UNION
NOTE BY THE SECRETARIAT
1. At its meeting on 22 July 2014, the Dispute Settlement Body (DSB) established a panel
pursuant to the r... | 2026-03-15T16:01:23.797681 | |
475 | 475 | DS475_SEQ02_Note_By_Secretariat_01.pdf | DS475_SEQ02_Note_By_Secretariat_01.pdf | 2 | Note_By_Secretariat | Note by the Secretariat Following the resignation on 30 October 2014 of Mr Ulrich Kihm, Panel member, and pursuant to a request from the European Union on 3 November 2014, the Director-General appointed a new member of the Panel on 6 November 2014. Accordin gly, the composition of the Panel is now as follows: Chairpers... | NUMBERED | null | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION REPLACEMENT OF A MEMBER OF THE PANEL | 10 November 2014 | WT/DS475/4 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
REPLACEMENT OF A MEMBER OF THE PANEL
Note by the Secretariat
Following the resignation on 30 October 2014 of Mr Ulrich Kihm, Panel member, and pursuant to a
request from the European Union on 3 November 20... | 2026-03-15T16:01:23.798081 | |
475 | 475 | DS475_SEQ03_Note_By_Secretariat_02.pdf | DS475_SEQ03_Note_By_Secretariat_02.pdf | 3 | Note_By_Secretariat | Note by the Secretariat Following the resignation on 26 November 2014 of Mr Steve Hathaway, Panel member, and | NUMBERED | null | 2 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION REPLACEMENT OF A MEMBER OF THE PANEL | 8 December 2014 | WT/DS475/5 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
REPLACEMENT OF A MEMBER OF THE PANEL
Note by the Secretariat
Following the resignation on 26 November 2014 of Mr Steve Hathaway, Panel member, and
pursuant to a request from the European Unio n on 28 Novem... | 2026-03-15T16:01:23.798311 | |
475 | 475 | DS475_SEQ04_Communication_00.pdf | DS475_SEQ04_Communication_00.pdf | 4 | Communication | COMMUNICATION FROM | NUMBERED | null | 0 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION COMMUNICATION FROM THE PANEL | 23 April 2015 | WT/DS475/6 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK
AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE PANEL
The following communication, dated 22 April 2015, was received from the Chairperson of the Panel
with the request that it be circulated to the Dispute Settlement Body.
Article... | 2026-03-15T16:01:23.798926 | |
475 | 475 | DS475_SEQ05_Communication_01.pdf | DS475_SEQ05_Communication_01.pdf | 5 | Communication | COMMUNICATION FROM | NUMBERED | null | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION COMMUNICATION FROM THE PANEL | 11 January 2016 | WT/DS475/7; WT/DS475/6 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK
AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE PANEL
The following communication, dated 7 January 2016, was received from the Chairperson of the
Panel with the request that it be circulated to the Dispute Settlement Body.
The Pa... | 2026-03-15T16:01:23.799213 | |
475 | 475 | DS475_SEQ06_Working_Procedures_00.pdf | DS475_SEQ06_Working_Procedures_00.pdf | 6 | Working_Procedures | AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | 0 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION NOTIFICATION OF AN APPEAL BY THE RUSSIAN FEDERATION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WO... | 28 September 2016 | WT/DS475/8 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 2 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
NOTIFICATION OF AN APPEAL BY THE RUSSIAN FEDERATION
UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 20(1) OF THE WO... | 2026-03-15T16:01:23.801169 | |
475 | 475 | DS475_SEQ07_Working_Procedures_01.pdf | DS475_SEQ07_Working_Procedures_01.pdf | 7 | Working_Procedures | AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION NOTIFICATION OF AN OTHER APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23(1) OF THE ... | 30 September 2016 | WT/DS475/9 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
NOTIFICATION OF AN OTHER APPEAL BY THE EUROPEAN UNION
UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 23(1) OF THE ... | 2026-03-15T16:01:23.802423 | |
475 | 475 | DS475_SEQ08_Communication_02.pdf | DS475_SEQ08_Communication_02.pdf | 8 | Communication | COMMUNICATION FROM | NUMBERED | null | 2 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION COMMUNICATION FROM THE APPELLATE BODY | 29 November 2016 | WT/DS475/10 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 21 November 2016, from the Chair of the
Appellate Body addressed to the Chair of the Dispute Settlement Body, is circulated to Memb... | 2026-03-15T16:01:23.803152 | |
475 | 475 | DS475_SEQ09_Understanding.pdf | DS475_SEQ09_Understanding.pdf | 9 | Understanding | The f ollowing communication, dated 23 February 2017 , from the Chair of the Appellate Body addressed to the Chair of the Dispute Settlement Body, is circulated to Members in accordance with Article 17.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes. | NUMBERED | null | null | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION COMMUNICATION FROM THE APPELLATE BODY | 28 February 2017 | WT/DS475/12; WT/DS475/AB/R | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE APPELLATE BODY
The f ollowing communication, dated 23 February 2017 , from the Chair of the Appellate Body
addressed to the Chair of the Dispute Settlement Body, is circulated to Mem... | 2026-03-15T16:01:23.803473 | |
475 | 475 | DS475_SEQ10_DSB_Action.pdf | DS475_SEQ10_DSB_Action.pdf | 10 | DSB_Action | Action by the Dispute Settlement Body | NUMBERED | null | null | RUSSIAN FEDERATION - MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION APPELLATE BODY REPORT AND PANEL REPORT | 22 March 2017 | WT/DS475/13; WT/DS475/AB/R; WT/DS475/AB/R/Add.1; WT/DS475/R; WT/DS475/R/Add.1 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION - MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
APPELLATE BODY REPORT AND PANEL REPORT
Action by the Dispute Settlement Body
At its meeting on 21 March 2017, the Dispute Settlement Body ad opted the Appellate Body report
on Russian Federation - Measures... | 2026-03-15T16:01:23.804184 | |
475 | 475 | DS475_SEQ11_Communication_03.pdf | DS475_SEQ11_Communication_03.pdf | 11 | Communication | COMMUNICATION FROM THE RUSSIAN FEDERATION AND THE EUROPEAN UNION | NUMBERED | null | 3 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION | 23 May 2017 | WT/DS475/14 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE RUSSIAN FEDERATION AND THE EUROPEAN UNION
The following communication, dated 19 May 2017, from the delegation of t he Russian Federation
and the delegation of the European Union to ... | 2026-03-15T16:01:23.804813 | |
475 | 475 | DS475_SEQ12_Agreement_Art_21_3.pdf | DS475_SEQ12_Agreement_Art_21_3.pdf | 12 | Agreement_Art_21_3 | AGREEMENT UNDER ARTICLE 21.3 | NUMBERED | null | null | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION AGREEMENT UNDER ARTICLE 21.3(B) OF THE DSU | 7 June 2017 | WT/DS475/15 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
AGREEMENT UNDER ARTICLE 21.3(B) OF THE DSU
The following communication, dated 2 June 2017 , from the delegation of the Russian Federation
and the delegation of the European Union to the Chairperson of the ... | 2026-03-15T16:01:23.805353 | |
475 | 475 | DS475_SEQ13_Note_By_Secretariat_03.pdf | DS475_SEQ13_Note_By_Secretariat_03.pdf | 13 | Note_By_Secretariat | NOTE BY THE SECRETARIAT | NUMBERED | null | 3 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EUROPEAN UNION CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE EUROPEAN UNION NOTE BY THE SECRETARIAT | 5 December 2018 | WT/DS475/22; WT/DS475/21. | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EUROPEAN UNION
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE EUROPEAN UNION
NOTE BY THE SECRETARIAT
1. At its meeting on 21 November 2018, the Dispu... | 2026-03-15T16:01:23.806002 | |
475 | 475 | DS475_SEQ14_Addendum_Add.pdf | DS475_SEQ14_Addendum_Add.pdf | 14 | Addendum | Addendum | NUMBERED | Add | null | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION REPORT OF THE PANEL | 19 August 2016 | WT/DS475/R/Add.1; WT/DS475/R. | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 89 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE
PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to C to the Report of the Panel to be found in document
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Workin... | 2026-03-15T16:01:23.859008 | |
475 | 475 | DS475_SEQ15_Report_Of_Panel.pdf | DS475_SEQ15_Report_Of_Panel.pdf | 15 | Report_Of_Panel | REPORT OF THE PANEL | PANEL_REPORT | null | null | RUSSIAN FEDERATION - MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION REPORT OF THE PANEL | 19 August 2016 | WT/DS475/R | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 381 | RUSSIAN FEDERATION - MEASURES ON THE IMPORTATION OF LIVE
PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
REPORT OF THE PANEL
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures concerning strictly confiden... | 2026-03-15T16:01:24.150847 | |
475 | 475 | DS475_SEQ16_Report_Of_Appellate_Body_00.pdf | DS475_SEQ16_Report_Of_Appellate_Body_00.pdf | 16 | Report_Of_Appellate_Body | Appellate Body report | AB_REPORT | null | 0 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION COMMUNICATION FROM THE APPELLATE BODY | 10 January 2017 | WT/DS475/11 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 16 December 2016, from the Chair of the Appellate Body to
the Chair of the Dispute Settlement Body, is being circulated to Members.
... | 2026-03-15T16:01:24.151152 | |
475 | 475 | DS475_SEQ17_Report_Of_Appellate_Body_01.pdf | DS475_SEQ17_Report_Of_Appellate_Body_01.pdf | 17 | Report_Of_Appellate_Body | Appellate Body report | AB_REPORT | null | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION COMMUNICATION FROM THE RUSSIAN FEDERATION | 13 December 2017 | WT/DS475/16 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 2 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
COMMUNICATION FROM THE RUSSIAN FEDERATION
The following communication, dated 8 December 2017 , was received from the delegation of the
Russian Federation with the request that it be circulated to the Dispu... | 2026-03-15T16:01:24.152185 | |
475 | 475 | DS475_SEQ18_Report_Of_Appellate_Body_02.pdf | DS475_SEQ18_Report_Of_Appellate_Body_02.pdf | 18 | Report_Of_Appellate_Body | Appellate Body report | AB_REPORT | null | 2 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION RECOURSE TO ARTICLE 22.2 OF THE DSU BY THE EUROPEAN UNION | 20 December 2017 | WT/DS475/17 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 2 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
RECOURSE TO ARTICLE 22.2 OF THE DSU BY THE EUROPEAN UNION
The following communication, dated 19 December 2017 , from the delegation of the European
Union to the Chairperson of the Dispute Settlement Body, ... | 2026-03-15T16:01:24.153295 | |
475 | 475 | DS475_SEQ19_Report_Of_Appellate_Body_03.pdf | DS475_SEQ19_Report_Of_Appellate_Body_03.pdf | 19 | Report_Of_Appellate_Body | Appellate Body Report | AB_REPORT | null | 3 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EUROPEAN UNION REQUEST FOR THE ESTABLISHMENT OF A PANEL | 19 October 2018 | WT/DS475/21 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 3 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EUROPEAN UNION
REQUEST FOR THE ESTABLISHMENT OF A PANEL
The following communication, dated 18 October 2018, from the delegation of the European Union
to the Chair... | 2026-03-15T16:01:24.155363 | |
475 | 475 | DS475_SEQ20_Report_Of_Appellate_Body_04.pdf | DS475_SEQ20_Report_Of_Appellate_Body_04.pdf | 20 | Report_Of_Appellate_Body | Report of the Appellate Body | AB_REPORT | null | 4 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION AB-2016-5 | 23 February 2017 | WT/DS475/AB/R | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 59 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND
OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
AB-2016-5
Report of the Appellate Body
ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
2006 Memorandum Memorandum dated 4 April 2006 between the European Community
represented by DG Health and ... | 2026-03-15T16:01:24.197089 | |
475 | 475 | DS475_SEQ21_Report_Of_Appellate_Body_Add.pdf | DS475_SEQ21_Report_Of_Appellate_Body_Add.pdf | 21 | Report_Of_Appellate_Body | Report of the Appellate Body Addendum | AB_REPORT | Add | null | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION AB-2016-5 | 23 February 2017 | WT/DS475/AB/R/Add.1; WT/DS475/AB/R. | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 27 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE
PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
AB-2016-5
Report of the Appellate Body
Addendum
This Addendum contains Annexes A to D to the Report of the Appellate Body circulated as
document
The Notice of Appeal and the executive summaries of written... | 2026-03-15T16:01:24.209740 | |
475 | 475 | DS475_SEQ22_Recourse.pdf | DS475_SEQ22_Recourse.pdf | 22 | Recourse | RECOURSE TO ARTICLE 22.6 | RECOURSE | null | null | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS, PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE RUSSIAN FEDERATION | 3 January 2018 | WT/DS475/18; WT/DS475/17 | ['EU'] | ['Russia'] | ['Australia', 'China', 'India', 'Japan', 'South Korea', 'Norway', 'Taiwan', 'U.S.', 'Brazil', 'South Africa'] | Appellate Body | Art. 2.2, 3.1, 3.2, 3.3, 5.1, 5.2, 5.7, 6.1, 6.2, 6.3, 5.3, 5.4, 5.6, 2.3, 5.5, 8, Annex C, 7, Annex B Sanitary and Phytosanitary Measures (SPS)Art. I:1, III:4, XI:1 GATT 1994 | The summary below was up-to-date at
3 March 2021
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with the Russian Federation concerning certain measures adopted by the Russian Federa... | 1 | RUSSIAN FEDERATION – MEASURES ON THE IMPORTATION OF LIVE PIGS,
PORK AND OTHER PIG PRODUCTS FROM THE EUROPEAN UNION
RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE RUSSIAN FEDERATION
The following communication, dated 20 December 2017 , from the delegation of the R ussian
Federation to the Chairperson of the Dispute Settleme... | 2026-03-15T16:01:24.210308 | |
476 | 476 | DS476_SEQ01_Request_For_Establishment_Of_Panel.pdf | DS476_SEQ01_Request_For_Establishment_Of_Panel.pdf | 1 | Request_For_Establishment_Of_Panel | REQUEST FOR THE ESTABLISHMENT OF A PANEL | NUMBERED | null | null | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE RUSSIAN FEDERATION | 28 May 2015 | WT/DS476/2 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 9 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE RUSSIAN FEDERATION
The following communication, dated 11 May 2015, fr om the delegation of the Russian Federation
to the Chairperson of the Dispute Settlement Body, is circulated pursuan... | 2026-03-15T16:01:36.809006 | |
476 | 476 | DS476_SEQ02_Note_By_Secretariat.pdf | DS476_SEQ02_Note_By_Secretariat.pdf | 2 | Note_By_Secretariat | NOTE BY THE SECRETARIAT | NUMBERED | null | null | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE RUSSIAN FEDERATION NOTE BY THE SECRETARIAT | 8 March 2016 | WT/DS476/3; WT/DS476/2; WT/DS476/2 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF THE RUSSIAN FEDERATION
NOTE BY THE SECRETARIAT
1. At its meeting on 20 July 2015, the Dispute Settlement Body (DSB) established a panel
pursuant to the request of the Russian Fed... | 2026-03-15T16:01:36.809957 | |
476 | 476 | DS476_SEQ03_Communication_00.pdf | DS476_SEQ03_Communication_00.pdf | 3 | Communication | COMMUNICATION FROM | NUMBERED | null | 0 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL | 22 August 2016 | WT/DS476/4 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL
The following communication, dated 18 August 2016, addressed to the Chairperson of the Dispute
Settlement Body (DSB), is circulated in accordance with Article 12.9 of the Dispute Settlem... | 2026-03-15T16:01:36.810552 | |
476 | 476 | DS476_SEQ04_Communication_01.pdf | DS476_SEQ04_Communication_01.pdf | 4 | Communication | COMMUNICATION FROM | NUMBERED | null | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL | 7 April 2017 | WT/DS476/5 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL
The following communication, dated 4 April 2017, addressed to the Chairperson of the Dispute
Settlement Body (DSB), is ci rculated in accordance with Article 12.9 of the Dispute Settleme... | 2026-03-15T16:01:36.811092 | |
476 | 476 | DS476_SEQ05_Working_Procedures_00.pdf | DS476_SEQ05_Working_Procedures_00.pdf | 5 | Working_Procedures | AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | 0 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR NOTIFICATION OF AN APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE RE... | 25 September 2018 | WT/DS476/6 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 3 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
NOTIFICATION OF AN APPEAL BY THE EUROPEAN UNION UNDER
ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE RE... | 2026-03-15T16:01:36.813305 | |
476 | 476 | DS476_SEQ06_Working_Procedures_01.pdf | DS476_SEQ06_Working_Procedures_01.pdf | 6 | Working_Procedures | AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW | NUMBERED | null | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR NOTICE OF AN OTHER APPEAL BY THE RUSSIAN FEDERATION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE R... | 28 September 2018 | WT/DS476/7 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 2 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
NOTICE OF AN OTHER APPEAL BY THE RUSSIAN FEDERATION UNDER
ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND
UNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE R... | 2026-03-15T16:01:36.815102 | |
476 | 476 | DS476_SEQ07_Addendum_Add.pdf | DS476_SEQ07_Addendum_Add.pdf | 7 | Addendum | Addendum | NUMBERED | Add | null | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR REPORT OF THE PANEL | 10 August 2018 | WT/DS476/R/Add.1; WT/DS476/R. | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 79 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES
RELATING TO THE ENERGY SECTOR
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to D to the Report of the Panel to be found in document
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2... | 2026-03-15T16:01:36.863905 | |
476 | 476 | DS476_SEQ08_Report_Of_Panel_00.pdf | DS476_SEQ08_Report_Of_Panel_00.pdf | 8 | Report_Of_Panel | Panel Report | PANEL_REPORT | null | 0 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR COMMUNICATION FROM THE APPELLATE BODY | 21 November 2018 | WT/DS476/8 | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING
TO THE ENERGY SECTOR
COMMUNICATION FROM THE APPELLATE BODY
The following communication, dated 20 November 2018, from the Chair of the Appellate Body to the
Chair of the Dispute Settlement Body, is being circulated to Members.
I am writing pursuant to Art... | 2026-03-15T16:01:36.864719 | |
476 | 476 | DS476_SEQ09_Report_Of_Panel_01.pdf | DS476_SEQ09_Report_Of_Panel_01.pdf | 9 | Report_Of_Panel | REPORT OF THE PANEL | PANEL_REPORT | null | 1 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES RELATING TO THE ENERGY SECTOR REPORT OF THE PANEL BCI DELETED, AS INDICATED [***] | 10 August 2018 | WT/DS476/R | ['Russia'] | ['EU'] | ['Brazil', 'China', 'India', 'Japan', 'Ukraine', 'U.S.', 'Colombia', 'South Korea', 'Saudi Arabia'] | Panel | Art. XVI:1, XVII Services (GATS)Art. III:4 GATT 1994Art. II:1, VI:1, VI:5(a) Services (GATS)Art. I:1, XI:1, X:3(a) GATT 1994Art. XVI Services (GATS) | The summary below was up-to-date at
27 November 2018
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the Russian Federation
On 30 April 2014, the Russian Federation requested consultations with the European Union and its member States regarding measures relating... | 376 | EUROPEAN UNION AND ITS MEMBER STATES – CERTAIN MEASURES
RELATING TO THE ENERGY SECTOR
REPORT OF THE PANEL
BCI DELETED, AS INDICATED [***]
LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures on BCI A-7
ANNEX B
ARGUME... | 2026-03-15T16:01:37.177963 | |
477 | 477 | DS477_SEQ01_Request_For_Consultations.pdf | DS477_SEQ01_Request_For_Consultations.pdf | 1 | Request_For_Consultations | REQUEST FOR CONSULTATIONS BY | NUMBERED | null | null | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST FOR CONSULTATIONS BY NEW ZEALAND | 15 May 2014 | WT/DS477/1; G/L/1068; G/AG/GEN/118; G/LIC/D/47; G/PSI/D/3 | Agriculture (AG); General Council; Import Licensing (LIC) | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 4 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST FOR CONSULTATIONS BY NEW ZEALAND
The following communication, dated 8 May 2014, from the delegation of New Zealand to the
delegation of Indonesia and to the Chairperson of the Dispute Settlement Body, is circulated in
accordance with... | 2026-03-15T16:01:51.891543 |
477 | 477 | DS477_SEQ02_Communication_00.pdf | DS477_SEQ02_Communication_00.pdf | 2 | Communication | Communication from the United States | NUMBERED | null | 0 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS | 22 May 2014 | WT/DS477/2; WT/DS477/1 | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST TO JOIN CONSULTATIONS
Communication from the United States
The following communication, dated 20 May 2014, from the delegation of the United States to the
delegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson... | 2026-03-15T16:01:51.891986 | |
477 | 477 | DS477_SEQ03_Communication_01.pdf | DS477_SEQ03_Communication_01.pdf | 3 | Communication | Communication from Thailand | NUMBERED | null | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS | 26 May 2014 | WT/DS477/3; WT/DS477/1; G/L/1068; G/AG/GEN/118; G/LIC/D/47; G/PSI/D/3 | Agriculture (AG); General Council; Import Licensing (LIC) | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST TO JOIN CONSULTATIONS
Communication from Thailand
The following communication, dated 22 May 2014, from the delegation of Thailand to the
delegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of the Dispute
Se... | 2026-03-15T16:01:51.892395 |
477 | 477 | DS477_SEQ04_Communication_02.pdf | DS477_SEQ04_Communication_02.pdf | 4 | Communication | Communication from the European Union | NUMBERED | null | 2 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS | 26 May 2014 | WT/DS477/4 | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST TO JOIN CONSULTATIONS
Communication from the European Union
The following communication, dated 23 May 2014, from the delegation of the European Union to
the delegation of Indonesia, the delegation of New Zealand and to the Chairperso... | 2026-03-15T16:01:51.892840 | |
477 | 477 | DS477_SEQ05_Communication_03.pdf | DS477_SEQ05_Communication_03.pdf | 5 | Communication | Communication from Canada | NUMBERED | null | 3 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS | 27 May 2014 | WT/DS477/5 | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST TO JOIN CONSULTATIONS
Communication from Canada
The following communication, dated 23 May 2014, from the delegation of Canada to the delegation
of Indonesia, the delegation of New Zealand an d to the Chairperson of the Dispute Settle... | 2026-03-15T16:01:51.893352 | |
477 | 477 | DS477_SEQ06_Communication_04.pdf | DS477_SEQ06_Communication_04.pdf | 6 | Communication | Communication from Chinese Taipei | NUMBERED | null | 4 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS | 27 May 2014 | WT/DS477/6; WT/DS477/1; G/L/1068; G/AG/GEN/118; G/LIC/D/47; G/PSI/D/3 | Agriculture (AG); General Council; Import Licensing (LIC) | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST TO JOIN CONSULTATIONS
Communication from Chinese Taipei
The following communication, dated 23 May 2014, fr om the delegation of Chinese Taipei to the
delegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of t... | 2026-03-15T16:01:51.893798 |
477 | 477 | DS477_SEQ07_Communication_05.pdf | DS477_SEQ07_Communication_05.pdf | 7 | Communication | Communication from Australia | NUMBERED | null | 5 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS, ANIMALS AND ANIMAL PRODUCTS REQUEST TO JOIN CONSULTATIONS | 28 May 2014 | WT/DS477/7 | ['New Zealand'] | ['Indonesia'] | ['Australia', 'Brazil', 'Canada', 'China', 'EU', 'India', 'Japan', 'Norway', 'Paraguay', 'Singapore', 'Taiwan', 'Argentina', 'South Korea', 'Thailand'] | Appellate Body | Art. XI:1 GATT 1994Art. 4.2 AgricultureArt. 3.2, 2.2(a) Import LicensingArt. III:4 GATT 1994 | The summary below was up-to-date at
17 February 2023
See also: One-page summary of key findings of this dispute
Consultations
Complaint by New Zealand. (See DS455, DS465, DS466 and DS478)
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the ... | 1 | INDONESIA – IMPORTATION OF HORTICULTURAL PRODUCTS,
ANIMALS AND ANIMAL PRODUCTS
REQUEST TO JOIN CONSULTATIONS
Communication from Australia
The following communication, dated 26 May 2014, from the delegation of Australia to the
delegation of Indonesia, the delegation of Ne w Zealand and to the Chairperson of the Dispute
... | 2026-03-15T16:01:51.894296 |
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