CANADA—CERTAIN MEASURES AFFECTING THE AUTOMOTIVE INDUSTRY
WT/DS139/AB/R
WT/DS142/AB/R
AB-2000-2
31 May 2000

Report of the Appellate Body
 (Excerpt and footnotes omitted)

注：此为上诉机构报告节选。加拿大汽车案专家组和上诉机构报告免费全文下载地址http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds139_e.htm

IV. Issues Raised in this Appeal （上诉中提出的争议问题）
63. This appeal raises the following issues:
…
(e) whether the Panel erred in its interpretative approach with respect to Article I of the GATS; and in concluding that Canada acts inconsistently with Article II of the GATS by failing to accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favorable than that it accords to like services and service suppliers of any other country, with respect to the granting of the import duty exemption to a limited number of manufacturers/wholesalers of motor vehicles pursuant to the MVTO 1998 (注：这是指一项加拿大立法，即the Motor Vehicles Tariff Order, 1998) and the SROs (注：这是指Special Remission Orders).
…
IX. Article I:1 and Article II:1 of the GATS
(注：此处分析GATS第1条第1款“GATS适用范围”以及GATS第2条第1款“最惠国待遇”)
147. Canada appeals the Panel's conclusion that the import duty exemption is inconsistent with Article II:1 of the GATS. Canada first appeals the Panel's finding that the measure is one "affecting trade in services" within the scope of Article I:1 of the GATS.78 It then appeals the finding that Canada does not accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favorable than that it accords to like services and service suppliers of any other country contrary to its obligations under Article II:1 of the GATS.

A. Article I:1 of the GATS
148. Canada maintains that the Panel erred in finding that the import duty exemption falls within the scope of the GATS. In the view of Canada, the Panel mistakenly concluded that whether a measure is within the scope of the GATS is determined by whether that measure is consistent with certain substantive obligations, such as Article II, and not by whether the measure falls within Article I of the GATS.

149. The Panel first examined the general issue of whether the import duty exemption constitutes a measure "affecting trade in services" within the meaning of Article I of the GATS. The Panel then referred to （提及）the reports of the panel and the Appellate Body in European Communities — Bananas （欧共体香蕉案III）for the proposition that "the term 'affecting' in Article I of the GATS has a broad scope of application and that accordingly no measures are a priori excluded from the scope of application of the GATS."

150. The Panel ultimately found that: 

 [t]he determination of whether a measure affects trade in services cannot be done in abstract terms in isolation from   examining whether the effect of such a measure is consistent with the Member's obligations and commitments under the GATS. In this case, the determination of whether the MVTO 1998 and SROs are measures affecting trade in services within the meaning of Article I of the GATS should be done on the basis of the determination of whether these measures constitute less favorable treatment for the services and service suppliers of some Members as compared to those of others (Article II) and/or for services and service suppliers of other Members as compared to domestic ones (Article XVII).

151. In United States — Import Prohibition of Certain Shrimp and Shrimp Products, we said, in the context of Article XX of the GATT 1994, that a panel may not ignore the "fundamental structure and logic" （基本结构和逻辑）of a provision in deciding the proper sequence of steps in its analysis, save at the peril of reaching flawed results. Similarly, here, the fundamental structure and logic of Article I:1, in relation to the rest of the GATS, require that determination of whether a measure is, in fact, covered by the GATS must be made before the consistency of that measure with any substantive obligation of the GATS can be assessed.

152. Article II:1 of the GATS states expressly that it applies only to "any measure covered by this Agreement". This explicit reference to the scope of the GATS confirms that the measure at issue must be found to be a measure "affecting trade in services" within the meaning of Article I:1, and thus covered by the GATS, before any further examination of consistency with Article II can logically be made. We find, therefore, that the Panel should have inquired, as a threshold question, into whether the measure is within the scope of the GATS by examining whether the import duty exemption is a measure "affecting trade in services" within the meaning of Article I. In failing to do so, the Panel erred in its interpretative approach.
153. We proceed to the threshold (入门问题，门槛问题) analysis of Article I of the GATS. Article I:1 of the GATS states, in pertinent part:

Article I
Scope and Definition （范围与定义）

1. This Agreement applies to measures by Members affecting trade in services.（影响服务贸易）
2. For the purposes of this Agreement, trade in services is defined as the supply of a service:
(a) from the territory of one Member into the territory of any other Member;
(b) in the territory of one Member to the service consumer of any other Member;
(c) by a service supplier of one Member, through commercial presence in the territory of any other Member;
(d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member. (emphasis added)

154. Article XXVIII defines certain terms used in the GATS. We refer, in particular, to the following:

(a) "measure" means any measure by a Member, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form;
(b) "supply of a service" includes the production, distribution, marketing, sale and delivery of a service;
(c) "measures by Members affecting trade in services" include measures in respect of…
    (iii) the presence, including commercial presence, of persons of a Member for the supply of a service in the territory of another Member;
(d) "commercial presence" means any type of business or professional establishment, including through
    (i) the constitution, acquisition or maintenance of a juridical person, within the territory of a Member for the purpose of supplying a service;

          ...
 (f) "service of another Member" means a service which is supplied,…
     (ii) in the case of the supply of a service through commercial presence or through the presence of natural persons, by a service supplier of that other Member;
(g) "service supplier" means any person that supplies a service;

           ...

155. With these treaty provisions in mind, we believe that at least two key legal issues must be examined to determine whether a measure is one "affecting trade in services"(判断措施是否“影响服务贸易”需要分析两项关键法律问题): first, whether there is "trade in services" in the sense of Article I:2 （首先，是否存在GATS第1条第2款意义上的“服务贸易”）; and, second, whether the measure in issue "affects" such trade in services within the meaning of Article I:1 （其次，在第1条第1款意义上，争议措施是否“影响”此类服务贸易）.

156. We look first at whether there is "trade in services" in this case（注：第一个法律问题，即是否存在服务贸易）. For the purposes of the GATS, "trade in services" is defined in Article I:2 as the "supply of a service" in any one of four listed modes of supply. At issue here is the supply of a service under mode (c) of Article I:2, that is, the supply of a service "by a service supplier of one Member, through commercial presence in the territory of any other Member". (emphasis added) "Commercial presence" is, in turn, defined in Article XXVIII(d) as "any type of business or professional establishment, including through (i) the constitution, acquisition or maintenance of a juridical person…".

157. The complainants in this case allege that the "trade in services" here relevant is "wholesale trade services of motor vehicles", which is a category of services recognized in the Central Product Classification. Canada does not dispute （加拿大未提出异议）that there are service suppliers of the United States, the European Communities and Japan which are established in Canada and which provide wholesale trade services of motor vehicles. Accordingly, we hold that the "trade in services" here in issue is wholesale trade services of motor vehicles supplied by service suppliers of certain Members through commercial presence in Canada.（案件所涉服务为汽车批发贸易服务）

158. Having concluded that there is, in fact, "trade in services" in this case, we consider next whether the measure at issue "affects" trade in services （注：分析第二项法律问题，措施是否“影响”服务贸易）. In European Communities — Bananas, we said:

In our view, the use of the term "affecting" reflects the intent of the drafters to give a broad reach to the GATS. The ordinary meaning of the word "affecting" implies a measure that has "an effect on", which indicates a broad scope of application. This interpretation is further reinforced by the conclusions of previous panels that the term "affecting" in the context of Article III of the GATT is wider in scope than such terms as "regulating" or "governing".

159. We also found in that case that, although the subject matter of the GATT 1994 and that of the GATS are different, particular measures "could be found to fall within the scope of both the GATT 1994 and the GATS", and that such measures include those "that involve a service relating to a particular good or a service supplied in conjunction with a particular good."  We further stated, in that case, that:

Whether a certain measure affecting the supply of a service related to a particular good is scrutinized under the GATT 1994 or the GATS, or both, is a matter that can only be determined on a case-by-case basis.(注：说明GATT与GATS是否调整有关措施时，需逐案认定)

160. In cases where the same measure can be scrutinized under both the GATT 1994 and the GATS, however, the focus of the inquiry, and the specific aspects of the measure to be scrutinized, under each agreement, will be different because the subjects of the two agreements are different. Under the GATS, as we stated in European Communities — Bananas, "the focus is on how the measure affects the supply of the service or the service suppliers involved."

161. We note that Canada argues that the import duty exemption is not a measure "affecting trade in services" within the meaning of Article I of the GATS, because it is a tariff measure that affects the goods themselves and not the supply of distribution services. As such, Canada maintains, the measure at issue does not "affect" a service supplier in its capacity as a service supplier and in its supply of a service. Canada relies on our report in European Communities — Bananas to support its argument that the import duty exemption falls exclusively within the scope of the GATT 1994, as it affects trade in goods as goods, and does not involve a service relating to a particular good or a service supplied in conjunction with a particular good.

162.  The Panel, however, determined that:

Like the measures at issue in the EC — Bananas III case, the import duty exemption granted only to manufacturer beneficiaries bears upon conditions of competition in the supply of distribution services, regardless of whether it directly governs or indirectly affects the supply of such services. In our view, therefore, the import duty exemption falls in the third category of measures, identified by the Appellate Body in EC — Bananas III, as involving "a service relating to a particular good or a service supplied in conjunction with a particular good", which "could be scrutinized under both the GATT 1994 and the GATS".

163. In European Communities — Bananas, we agreed with the panel that "the operators as defined under the relevant regulations of the European Communities are, indeed, suppliers of 'wholesale trade services' within the definition set out in the Headnote to Section 6 of the CPC." Although the operators in that case were engaged in certain activities that were not, strictly speaking, within the definition of "distributive trade services" in the Headnote to Section 6 of the Central Product Classification, we concluded there that "there is no question that they are also engaged in other activities involving the wholesale distribution of bananas that are within that definition." With respect to the fact that the operators were vertically integrated with producers, ripeners and retailers, we stated, in that case, that "even if a company is vertically-integrated, and even if it performs other functions related to the production, importation, distribution and processing of a product, to the extent that it is also engaged in providing 'wholesale trade services' and is therefore affected in that capacity by a particular measure of a Member in its supply of those 'wholesale trade services', that company is a service supplier within the scope of the GATS."

164. In this case, the Panel did not examine any evidence relating to the provision of wholesale trade services of motor vehicles within the Canadian market and, as a result, did not make any factual findings as to the structure of the market for motor vehicles in Canada, nor as to which companies actually provide wholesale trade services of motor vehicles. As a result, the Panel also never examined whether or how the import duty exemption affects wholesale trade service suppliers in their capacity as service suppliers. Rather, the Panel simply stated:

Like the measures at issue in the EC — Bananas III case, the import duty exemption granted only to manufacturer beneficiaries bears upon conditions of competition in the supply of distribution services, regardless of whether it directly governs or indirectly affects the supply of such services. (emphasis added)

165. We do not consider this statement of the Panel to be a sufficient basis for a legal finding that the import duty exemption "affects" wholesale trade services of motor vehicles as services, or wholesale trade service suppliers in their capacity as service suppliers. （专家组声明未提供充分依据来支持以下法律认定，即进口税豁免“影响”了作为服务的汽车批发贸易服务，或者以服务提供商身份行事的批发贸易服务提供者）The Panel failed to analyze the evidence on the record relating to the provision of wholesale trade services of motor vehicles in the Canadian market. It also failed to articulate what it understood Article I:1 to require by the use of the term "affecting". Having interpreted Article I:1, the Panel should then have examined all the relevant facts, including who supplies wholesale trade services of motor vehicles through commercial presence in Canada(谁通过商业存在方式在加拿大提供汽车批发贸易服务), and how such services are supplied （此类服务如何得以提供）. It is not enough to make assumptions（仅凭推断是不够的）. Finally, the Panel should have applied its interpretation of "affecting trade in services" to the facts it should have found.

166. The European Communities and Japan may well be correct in their assertions that the availability of the import duty exemption to certain manufacturer beneficiaries of the United States established in Canada, and the corresponding unavailability of this exemption to manufacturer beneficiaries of Europe and of Japan established in Canada, has an effect on the operations in Canada of wholesale trade service suppliers of motor vehicles and, therefore, "affects" those wholesale trade service suppliers in their capacity as service suppliers. However, the Panel did not examine this issue. The Panel merely asserted its conclusion, without explaining how or why it came to its conclusion. This is not good enough.

167. For these reasons, we believe that the Panel has failed to examine whether the measure is one "affecting trade in services" as required under Article I:1 of the GATS. The Panel did not show that the measure at issue affects wholesale trade services of motor vehicles, as services, or wholesale trade service suppliers of motor vehicles, in their capacity as service suppliers. Nonetheless, we continue our analysis of the issues raised on appeal under Article II:1, and examine whether, in the terms of that provision, the measure accords treatment "no less favorable" to like services and service suppliers of other Members.

B. Article II:1 of the GATS （注：GATS最惠国待遇问题分析）

168. Canada argues that even if the GATS was held applicable to the measure at issue, the Panel is still in error in finding that this measure accords less favorable treatment to services and service suppliers of any other Member under Article II:1.98 Canada states that neither the European Communities nor Japan contended that the import duty exemption discriminates "in law"; rather, they argue that the import duty exemption discriminates "in fact" by according less favorable treatment in practice to certain services and service suppliers. In Canada's view, the Panel "was required to set out the basis on which the measures accord less favorable treatment to certain services and service suppliers and to show how such less favorable treatment is accorded, either in fact or in law, to the services or service suppliers of certain Members."

169. In examining Canada's appeal under Article II:1 of the GATS, we begin with the text of that provision:

Article II
Most-Favoured-Nation Treatment

1. With respect to any measure covered by this Agreement, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favorable than that it accords to like services and service suppliers of any other country.

170. The wording of this provision suggests that analysis of the consistency of a measure with Article II:1 should proceed in several steps. （注：认定是否符合GATS第2条第1款最惠国待遇条款需通过数个步骤） First, as we have seen, a threshold determination must be made under Article I:1 that the measure is covered by the GATS. （注：首先，起始问题在于措施需要受到GATS调整）This determination requires that there be "trade in services" in one of the four modes of supply （注：需要存在“服务贸易”，这属于四项服务提供方式中的一项）, and that there be also a measure which "affects" this trade in services （措施“影响”服务贸易）. We have already held that the Panel failed to undertake this analysis.

171. If the threshold determination is that the measure is covered by the GATS, appraisal of the consistency of the measure with the requirements of Article II:1 is the next step. The text of Article II:1 requires, in essence, that treatment by one Member of "services and services suppliers" of any other Member be compared with treatment of "like" services and service suppliers of "any other country". Based on these core legal elements, the Panel should first have rendered its interpretation of Article II:1. It should then have made factual findings as to treatment of wholesale trade services and service suppliers of motor vehicles of different Members commercially present in Canada. Finally, the Panel should have applied its interpretation of Article II:1 to the facts as it found them.（注：对GATS第2条第1款的解读：分析一项措施是否符合最惠国待遇条款的两个步骤）

172. The Panel did none of this. The Panel did not inquire into how the market for wholesale trade services of motor vehicles in Canada is structured. Nor did it explain how less favorable treatment resulted from the measure at issue. Instead, it engaged in speculation about the "possibility" of certain relationships. In response to Canada's argument that there is no competition between service suppliers at the wholesale level because of vertical integration and exclusive distribution arrangements in the motor vehicle industry, the Panel stated that vertical integration:

   _neither rules out potential competition in the wholesale Rmanufacturer relationship, nor actual competition in the wholesaler-retailer relationship. Although due to  the existing structure of the market, wholesale trade service suppliers procure their vehicles from the same manufacturers, no government measure prevents even a vertically integrated wholesale distributor from approaching different manufacturers for the procurement of motor vehicles.

173. Based on this speculative analysis, the Panel proceeded to make the following "findings":(注：这是专家组的一项重要认定，主要是采用了“不排除可能性”“可能”等分析)

We therefore find that vertical integration and exclusive distribution arrangements between manufacturers and
wholesalers in the motor vehicle industry do not rule out the possibility that treatment less favorable may be granted   to suppliers of wholesale trade services for motor vehicles. We also find that vertical integration and exclusive distribution arrangements do not preclude potential competition among wholesalers for the procurement of vehicles from manufacturers and actual interbrand competition for sales to retailers. (emphasis in italics added)

174. We consider these "findings" of the Panel to be pure speculation. As we stated above, the Panel did not provide an interpretation of Article II:1; nor did it apply its interpretation to findings of fact. The Panel did not identify any evidence defining the relationship between manufacturers and wholesale trade service suppliers of motor vehicles in the Canadian market. Furthermore, the Panel did not examine, in concreto, the structure of competition in the wholesale trade services market for motor vehicles in Canada. Its reasoning seems to be based solely on Canada's argument that the motor vehicle industry is characterized by vertical integration of production and distribution as well as exclusive distribution arrangements. The Panel failed to conduct an analysis of whether and how the import duty exemption affects wholesalers related to manufacturers which benefit from the import duty exemption, as compared with wholesalers related to manufacturers which do not benefit from the import duty exemption. For these reasons, we reverse the Panel's "findings" in paragraph 10.254 of the Panel Report.

175. The Panel also considered two additional arguments of the complainants. The European Communities and Japan argued before the Panel that, although the criteria for eligibility for the import duty exemption are not expressly based on nationality, the import duty exemption constitutes de facto discrimination under Article II of the GATS as all, or almost all, service suppliers of other Members which benefit from the exemption are of the United States. Canada disputed this point and argued that at least two manufacturer beneficiaries are of European Communities' origin (Volvo Canada Ltd. and DaimlerChrysler Canada Inc.). Canada also maintained, before the Panel, that CAMI is a 50/50 joint venture between juridical persons of Japan and of the United States. The European Communities and Japan alleged, before the Panel, that the import duty exemption also results in de jure discrimination under Article II, because, in their view, the existence of the closed list of manufacturer beneficiaries constitutes formally different treatment.

176. After finding that Daimler Chrysler Canada Inc. and Volvo Canada Ltd. are both juridical persons of the United States, and deciding that there is no evidence which would allow it to determine which juridical person "controls" CAMI, the Panel stated:

    Although none of the criteria for granting the import duty exemption is expressly based on nationality, the manufacturing presence requirement, referring to the period 1 August 1963 — 31 July 1964 in the MVTO 1998, has allowed only three service suppliers of the United States (Chrysler Canada Ltd., General Motors of Canada Ltd. and Ford Motor Company of Canada Ltd.) and one service supplier of Sweden (Volvo Canada Ltd.) to qualify for the import duty exemption. It was noted above that Volvo Canada Ltd. recently passed under the control of a juridical person of the United States (Ford Motor Co.). SROs have been used to expand the category of manufacturer beneficiaries by allowing two other manufacturers/wholesalers of automobiles (Intermeccanica of Canada and CAMI, a 50/50 joint venture between Suzuki Motor Co. of Japan and General Motors Corp. of the United States) and several manufacturers/wholesalers of buses and specified commercial vehicles to qualify for the import duty exemption.109 (footnote omitted) （注：这涉及服务原产地认定问题，包括如何认定服务提供商的股权由2个来自不同成员的法人各持有50%的情形下，该服务提供者国籍认定问题，此处上诉机构未作出明确认定。扩展阅读建议 王衡，《服务原产地规则研究》，法律出版社2010年版；王衡，"WTO Origin Rules for Services and the Defects: Substantial Input Test as One Way Out?", Journal of World Trade, Vol. 44(5), http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=578571）

177. Having determined which manufacturer beneficiaries are "of " which Members, the Panel does not go on to explain the relevance of these findings to its analysis under Article II:1（注：判断了制造商受益人属于何成员后，专家组未继续分析此认定对于GATS第2条第1款最惠国待遇分析的相关性）. In particular, the Panel does not clearly link these "manufacturer beneficiaries" to the suppliers of wholesale trade services of motor vehicles, which are the relevant entities under Article II:1.

178. The Panel concludes as follows:（注：这是专家组的另一项重要认定，认为汽车进口免税使得一些制造商/批发服务商获得利益，而上诉机构在此后第180段等部分中认为其未分析为何针对制造商的免税待遇会影响批发服务商）

In our view, the import duty exemption, as provided in the MVTO 1998 and SROs, results in less favorable treatment accorded to services and service suppliers of any other Member within the meaning of Article II:1 of the GATS, as such benefit is granted to a limited and identifiable group of manufacturers/wholesalers of motor vehicles of some Members, selected on the basis of criteria such as the manufacturing presence in a given base year. We also note that the manufacturing presence requirements in the MVTO 1998 and in the SROs explicitly exclude suppliers of wholesale trade services of motor vehicles, which do not manufacture vehicles in Canada, from qualifying for the import duty exemption. In addition, the fact that in 1989 the Government of Canada stopped granting SROs makes the list of the beneficiaries of the import duty exemption a closed one. As a result, manufacturers/wholesalers of motor vehicles of some Members can import vehicles into Canada duty-free, while manufacturers/wholesalers of other Members are explicitly prevented from importing vehicles duty free into Canada.

179. The Panel ultimately found, on the basis of this reasoning, that "with respect to the import duty exemption, granted to a limited number of manufacturers/wholesalers of motor vehicles, Canada has failed to accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favorable than it accords to like services and service suppliers of any other country." On this basis, the Panel found that the import duty exemption is inconsistent with the requirements of Article II:1 of the GATS.

180. Here, the Panel has compounded its earlier error in finding that the import duty exemption which benefits certain manufacturers of motor vehicles "is granted to a limited and identifiable group" of manufacturer/wholesalers of motor vehicles. （注：上诉机构认为，专家组未分析针对制造商的免税为何影响批发服务商）The Panel appears to be saying here that the import duty exemption is granted to certain wholesalers of a limited number of Members, and not to wholesalers of other Members. Furthermore, the Panel states that, as a result of the closed list, wholesalers of motor vehicles of a limited number of Members can import vehicles into Canada duty-free, while wholesalers of other Members are explicitly prevented from importing vehicles duty-free into Canada.

181. Clearly, here the Panel is confusing the application of the import duty exemption to manufacturers with its possible effect on wholesalers （将针对制造商的进口税豁免之适用，与其可能对批发商店影响相混淆）. In our view, the Panel has conducted a "goods" analysis of this measure （对措施采取了“货物”分析）, and has simply extrapolated its analysis of how the import duty exemption affects manufacturers to wholesale trade service suppliers of motor vehicles. The Panel surmised, without analyzing the effect of the measure on wholesalers as service suppliers, that the import duty exemption, granted to a limited number of manufacturers, ipso facto （就该事实而论）affects conditions of competition among wholesalers in their capacity as service suppliers. As we stated earlier in respect of whether the measure at issue "affects trade in services", the Panel failed to demonstrate how the import duty exemption granted to certain manufacturers, but not to other manufacturers, affects the supply of wholesale trade services and the suppliers of wholesale trade services of motor vehicles. In reaching its conclusions under Article II:1 of the GATS, the Panel has neither assessed the relevant facts — we see no analysis of any evidence relating to the supply of wholesale trade services of motor vehicles — nor has it interpreted Article II of the GATS and applied that interpretation to the facts it found.

182. For these reasons, we reverse the Panel's conclusion that the import duty exemption accorded pursuant to the MVTO 1998 and the SROs is inconsistent with the requirements of Article II:1 of the GATS114, and its findings leading to that conclusion.

183. In coming to this conclusion, we do not suggest that the import duty exemption does not affect wholesale trade services of motor vehicles in Canada. Nor do we conclude that Canada accords no less favorable treatment to services and service suppliers of any Member than that which it accords to like services and service suppliers of another country consistently with Article II:1 of the GATS. We make no such conclusion. We mean only to say that the Panel, in this case, failed to substantiate its conclusion that the import duty exemption is inconsistent with Article II:1 of the GATS. As such, we have no choice but to reverse the findings and conclusions of the Panel relating to Article II:1 of the GATS.

184. In reaching this conclusion, we are mindful of the importance of the GATS as a new multilateral trade agreement covered by the WTO Agreement. This appeal is only the second case in which we have been asked to review a panel's findings on provisions of the GATS. Given the complexity of the subject-matter of trade in services, as well as the newness of the obligations under the GATS, we believe that claims made under the GATS deserve close attention and serious analysis. （注：鉴于服务贸易这一主体的复杂性，以及GATS项下义务的新颖性，上诉机构认为，GATS项下权利主张值得密切关注和严肃分析）We leave interpretation of Article II of the GATS to another case and another day.

X. Findings and Conclusions

185. For the reasons set out in this Report, the Appellate Body:
(…)
(e) finds that the Panel has failed to examine whether the measure is one "affecting trade in services" as required under Article I:1 of the GATS; reverses the Panel's conclusion that the import duty exemption accorded pursuant to the MVTO 1998 and the SROs is inconsistent with the requirements of Article II:1 of the GATS; and also reverses the Panel's findings leading to its conclusion on Article II:1.

186. The Appellate Body recommends that the DSB request that Canada bring its measure found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with Canada's obligations under Articles I:1 and III:4 of the GATT 1994, Article XVII of the GATS and paragraph (a) of Article 3.1 of the SCM Agreement into conformity with its obligations in those agreements.