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WTO & Dispute Resolution Mechanism

WTO & Dispute Resolution Mechanism

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INTRODUCTION TO WTO In 1947, 23 countries came into an agreement in Geneva on multilateral Trade. This agreement was termed as The General Agreement on Tariffs and Trade GATT! which came into effect on 1st of "an. 194#. These countries sought to e$%and multilateral trade among them. India was one of the founder mem&ers of GATT. 'an( countries signed this agreement in 1994 which resulted no. of mem&ers of GATT to 124.

The agreement consists of two main themes)*

4 4 4 4 4 4 4 4 4 4

1! The agreement formulated some regulations which were to &e o&served &( the mem&er countries. 2! The mem&er countries were to com%l( with was the 'ost +avoured ,ation '+,! clause. GATT was not an organi-ation &ut was a

multilateral treat(, it had no legal status. It %rovided a %latform to its mem&er nations to negotiate and enlarge their trade.


PRINCIPLES 1! +ollow the 'ost +avoured .ation '+.! clause.ective of GATT was to e$%and international trade &( /i&eralising trade to &ring economic %ros%erit(. 2! 1nsuring full em%lo(ment through a stead( growth of effective demand and real income. GATT mentions the following im%ortant o&. 4! 1$%ansion in %roduction e$change of goods and services on a glo&al level.ectives. 3! 2evelo%ing o%timum utilisation of resources of the world. 1! 0aising standard of living of the mem&er countries.5 5 5 5 5 5 5 5 5 5 The %rimar( o&. .

%rocedures for settling dis%utes were ineffective and time consuming since a single nation.ect of com%laint.6 6 6 6 6 6 6 6 6 6 2! 3arr( on trade in a non discriminator( wa(. :nder the GATT. could effectivel( &loc. 4! 3ondemn the use of 4uantitative restrictions or 4uotas. 1! It remains to &e seen . 3! Grant %rotection to domestic industries. including the nation who8s actions were the su&. or dela( ever( stage of the dis%ute resolution %rocess. INTRODUCTION TO WTO DISPUTE RESOLUTION The 6T78s 2is%ute 9ettlement :nderstanding 29:! evolved out of the ineffective means used under the GATT for settling disagreements among mem&ers. 5! /i&eralise tariff and non*tariff measures through multilateral negotiations.

7 7 7 7 7 7 7 7 7 7 whether countries will com%l( with the new 6T7 dis%ute settlement mechanism. +re4uentl(. In the earl( (ears of the GATT. in the a&sence of tariffs.ing it more difficult or costl( for foreign com%etitors to do &usiness in a countr(. most of the %rogress in reducing trade &arriers focused on trade in goods and in reducing or eliminating the tariff levels on those goods. such non*tariff trade &arriers are the inadvertent . A non*tariff trade &arrier can &e almost an( government %olic( or regulation that has the effect of ma. 'ore recentl(. &ut thus far the %rocess has met with relative success. This has meant that non*tariff trade &arriers have &ecome more im%ortant since. onl( such &arriers significantl( distort the overall %attern of trade* li&erali-ation. The 29: was designed to deal with the com%le$it( of reducing and eliminating non*tariff &arriers to trade. tariffs have &een all &ut eliminated in a wide variet( of sectors.

%erha%s more than an( other countr(.8 8 8 8 8 8 8 8 8 8 conse4uence of well meaning attem%ts to regulate to ensure safet( or %rotection for the environment. to the detriment of the international free*trade regime. The 6T78s strengthened dis%ute resolution mechanism was designed to have the authorit( to sort out this <fine line &etween national %rerogatives and unacce%ta&le trade restrictions< 9everal of the su%%lemental agreements to the GATT created during the :rugua( 0ound. In other cases. or other %u&lic %olic( goals. has found . such as the 9=9 Agreement. sought to s%ecif( the conditions under which national regulations were %ermissi&le even if the( had the effect of restraining trade. countries have &een sus%ected of deli&eratel( creating such regulations under the guise of regulator( intent. The :nited 9tates. &ut which have the effect of %rotecting domestic industries from o%en international com%etition.

laws and regulations ma( &e reversed &( the 29: %anels or the A%%ellate >od(. it was the :nited 9tates who %ushed for strengthening the 2is%ute 9ettlement %rovisions of the GATT during the :rugua( 0ound. the :nited 9tates har&ors reservations in regards to its sovereignt(. <the GATT.9 9 9 9 9 9 9 9 9 9 itself on &oth sides of this delicate &alance. 7n the other hand. as it stood. 3ritics argued that the 6T7 would <com%el 3ongress and our states to a&andon man( health and environmental standards< if the( were at odds with international trade rules.< The concern was that formal concessions granted to :. in %art &ecause 3ongress was not convinced that. could offer the :nited 9tates an e4uita&le &alance of advantage. with much of the negative reaction to the 6T7 itself centered around the concern that :. e$%orts going into other countries would &e eroded &( hidden &arriers to trade.9.9. =articularl(. these critics noted that the . In 19##.

It was argued &( some that the cumulative effect of 6T7 dis%ute %anel decisions would &e to erode the sovereignt( of the :nited 9tates. O ER IEW O! THE DISPUTE SETTLEMENT UNDERSTANDING: . The( further noted that the A%%ellate >od( and the dis%ute settlement %anels vote in secret. and that the( could authori-e nations to retaliate against violations of the trade agreements with unilateral sanctions. which ultimatel( votes to ado%t or re.10 10 10 10 10 10 10 10 10 10 :nited 9tates would not have a veto in the 6T7 and that each nation would have an e4ual sa( in the 29>. 7ne of the %ur%oses of this review is to assess the validit( of this claim in light of the actual functioning of the 6T7 s(stem over the last three (ears.ect %anel re%orts.

All 6T7 mem&er nation*states are su&.11 11 11 11 11 11 11 11 11 11 The 2is%ute 9ettlement :nderstanding 29:!. 9trengthened rules and %rocedures .nown as the :nderstanding on 0ules and =rocedures Governing the 9ettlement of 2is%utes. It %rovides strict time frames for the dis%ute settlement %rocess and esta&lishes an a%%eals s(stem to standardi-e the inter%retation of s%ecific clauses of the agreements. formall( .ect to it and are the onl( legal entities that ma( &ring and file cases to the 6T7. consisting of all 6T7 mem&ers. esta&lishes rules and %rocedures that manage various dis%utes arising under the 3overed Agreements of the +inal Act of the :rugua( 0ound. It also %rovides for the automatic esta&lishment of a %anel and automatic ado%tion of a %anel re%ort to %revent nations from sto%%ing action &( sim%l( ignoring com%laints. which administers dis%ute settlement %rocedures. The 29: created the 2is%ute 9ettlement >od( 29>!.

12 12 12 12 12 12 12 12 12 12 with strict time limits for the dis%ute settlement %rocess aim at %roviding <securit( and %redicta&ilit( to the multilateral trading s(stem< and achieving <?a@ solution mutuall( acce%ta&le to the %arties to a dis%ute and consistent with the covered agreements. a %anel %hase. conciliation and mediation.< The &asic stages of dis%ute resolution covered in the understanding include consultation.< If the res%ondent fails to res%ond within ten da(s or enter into consultations within thirt( da(s. good offices. C%&'()*+*. the com%laint <ma( %roceed directl( to re4uest the esta&lishment of a %anel. A%%ellate >od( review.< .%& A mem&er*countr( ma( re4uest consultations when it considers another mem&er* countr( to have <infringed u%on the o&ligations assumed under a 3overed Agreement. and remedies.

An( %art( ma( initiate or terminate them at an( time. no nation could sim%l( ignore its o&ligations under .o re4uirements on form.+*.e consultation in which <a com%lainant has the %ower to force a res%ondent to re%l( and consult or face a %anel.%& +&... conciliation or mediation %rocess has failed to settle the dis%ute.en voluntaril( if the %arties to the dis%ute so agree. 9till.13 13 13 13 13 13 13 13 13 13 G%%.< . The com%laining %art( ma( re4uest the formation of %anel. or %rocedure for them e$ist. and that sometimes the formal 6T7 dis%ute resolution %rocess would not &e the &est wa( to find such an accord. time.< Thus the 29: recogni-ed that what was im%ortant was that the nations involved in a dis%ute come to a wor.ointl( consider that the good offices.+*. good offices./0'1 C%&/. conciliation and mediation <are underta.%& :nli. <if the %arties to the dis%ute .a&le understanding on how to %roceed.O.M0-.).

. that a 6T7 %anel would ta. good offices. <unless at that meeting the 29> decides &( consensus not to esta&lish a %anel.< Three %anelists com%ose a %anel unless the %arties agree to have five %anelists.< and whose governments are not the %arties to the dis%ute. the com%laining %art( ma( re4uest the formation of %anel.14 14 14 14 14 14 14 14 14 14 international trade agreements without ta.< <=anels shall &e com%osed of well* 4ualified governmental andAor non*governmental individuals< <with a view to ensuring the inde%endence of the mem&ers.ing the ris. P+&0) P2+'0 If consultation. <unless the %arties to the dis%ute agree otherwise. conciliation or mediation fails to settle the dis%ute. The 29> shall form a %anel.e note of its &ehavior.

6hen multi%le %arties re4uest the esta&lishment of a %anel with regard to the same matter. the 29: suggests a strong %reference for a single %anel to &e esta&lished <to e$amine these com%laints ta.15 15 15 15 15 15 15 15 15 15 The 9ecretariat %ro%oses nominations for %anels that the %arties shall not o%%ose <e$ce%t for com%elling reasons.< The 29: gives an( mem&er that has <a su&stantial interest in a matter &efore a %anel< and notifies <its interest to the 29><! an o%%ortunit( <to &e heard &( the %anel and to ma. <the director*general in consultation with the chairman of the 29> and the chairman of the relevant council or committees< shall a%%oint the %anellists.e written su&missions to the %anel. u%on the re4uest of either %art(.< .ing into account the rights of all mem&ers concerned.< If the %arties disagree on the %anelists.

< 6ithin si$t( da(s after the re%ort is circulated to the mem&ers. <the re%ort shall &e ado%ted at a 29> meeting unless a %art( to the dis%ute formall( notifies the 29> of its decision to a%%eal or the 29> decides &( consensus not to ada%t the re%ort. the %anel su&mits an interim re%ort to the %arties.06 .< As a general rule. The %anel <shall hold a further meeting with the %arties< if the %arties %resent written comments. it shall not e$ceed si$ months from the formation of the %anel to su&mission of the re%ort to the 29>. the <re%ort shall &e the final re%ort and circulated %rom%tl( to the mem&ers. If no comments are %rovided &( the %arties within the comment %eriod.16 16 16 16 16 16 16 16 16 16 <The %anel shall su&mit its findings in the form of written re%ort to the 29>.< A330))+*0 B%-4 R05. In interim review stage.

The A%%ellate >od( <shall &e com%osed of seven %ersons. with demonstrated e$%ertise in law. unli.< The >od( shall consider onl( <issues of law covered in the %anel re%ort and legal inter%retations develo%ed &( the %anel. the( would &e su&. This means that if their decisions were %u&lic. international trade and the su&. 2ecisions made &( the A%%ellate .e . thus corru%ting the fairness of the %rocess.< Its %roceedings shall &e confidential. the mem&ers of the a%%ellate %anel do not serve for life. and its re%orts anon(mous.udges in the :nited 9tates.17 17 17 17 17 17 17 17 17 17 The 29> esta&lishes a standing A%%ellate >od( that will hear the a%%eals from %anel cases. This %rovision is im%ortant &ecause. three of whom shall serve on an( one case.< Those %ersons serving on the A%%ellate >od( are to &e <%ersons of recogni-ed authorit(.ect matter of the 3overed Agreements generall(.ect to %ersonal retaliation &( governments unha%%( with decisions.

< R070-. If the mem&er fails to do so within the determined <reasona&le %eriod of time. or reverse the legal findings and conclusions of the %anel.< the com%lainant ma( re4uest negotiations for com%ensation.18 18 18 18 18 18 18 18 18 18 >od( <ma( u%hold.< The 29> and the %arties shall acce%t the re%ort &( the A%%ellate >od( without amendments <unless the 29> decides &( consensus not to ado%t the A%%ellate >od( re%ort within thirt( da(s following its circulation to the mem&ers.0' There are conse4uences for the mem&er whose measure or trade %ractice is found to violate the 3overed Agreements &( a %anel or A%%ellate >od(. if . modif(. 6ithin twent( da(s after the e$%iration of the reasona&le %eriod of time. The dis%ute %anel issues recommendations with suggestions of how a nation is to come into com%liance with the trade agreements.

19 19 19 19 19 19 19 19 19 19 satisfactor( com%ensation is not agreed.< The defendent ma( o&.*8+*.< 0etaliation shall &e first limited to the same sector s!. the com%laining %art( <ma( re4uest authori-ation from the 29> to sus%end the a%%lication to the mem&er concerned of concessions or other o&ligations under the 3overed Agreements. if mem&ers are availa&le.ect the re4uest. or an ar&itrator a%%ointed &( the director*general< ma( conduct ar&itration. A89. it ma( see.ect to the level of sus%ension %ro%osed.%& . retaliation across sectors. The 29> <shall grant authori-ation to sus%end concessions or other o&ligations within thirt( da(s of the e$%ir( of the reasona&le time unless the 29> decides &( consensus to re. If the com%laining %art( considers the retaliation insufficient. <The original %anel.

< .20 20 20 20 20 20 20 20 20 20 'em&ers ma( see. <Ar&itration awards shall &e notified to the 29> and the 3ouncil or 3ommittee of an( relevant agreement where an( mem&er ma( raise an( %oint relating thereto. ar&itration within the 6T7 as an alternative means of dis%ute settlement <to facilitate the solution of certain dis%utes that concern issues that are clearl( defined &( &oth %arties.< Those %arties must reach mutual agreement to ar&itration and the %rocedures to &e followed.< The %arties to the %roceeding must agree to a&ide &( the ar&itration award. Agreed ar&itration must &e notified to all mem&ers %rior to the &eginning of the ar&itration %rocess. Third %arties ma( &ecome %art( to the ar&itration <onl( u%on the agreement of the %arties that have agreed to have recourse to ar&itration.

9ee +igure 1! These include com%laints against countries with economies as small as Guatemala. A rich variet( of cases have &een addressed &( the 6T7 dis%ute settlement %rocedures. and as large as the 1uro%ean :nion.21 21 21 21 21 21 21 21 21 21 THE WTO#S DISPUTE SETTLEMENT SYSTEM IN OPERATION .ow that the 6T7 2is%ute 9ettlement %rocedures have &een in use for three (ears. The( have also targeted countries at vastl( different stages of develo%ment. it is %ossi&le to ma.e India at one end of the s%ectrum and the :nited 9tates and "a%an on the other.e a tentative anal(sis of the im%act of this institutional evolution of the international trading s(stem. . including countries li.

in =roducts 1lectronics Telecommunications Automo&iles Aircraft 9atellite 9(stems 3ement =roducts N(7908 %.:(80 1 WTO DISPUTE CASES BY INDUSTRY I&-('*84 Agricultural =roducts Alcoholic and other >everages Te$tile and 3lothing Animal 9.22 22 22 22 22 22 22 22 22 22 !. /+'0' 32 B 1C 2 3 3 5 2 1 1 .

The increased use of the dis%ute settlement %rocedures under the 6T7 suggests that nations see value in the reforms that were im%lemented. resulting in the ado%tion of a%%ellate re%orts &( the 29>. including settled and inactive casesD a&ove statistics include five cases of dis%utes involving more than two industries.23 23 23 23 23 23 23 23 23 23 3hemical =roducts =harmaceutical =roducts 7ther Industrial =roducts B 5 4 . In the first three (ears of the 6T7. dealing with eight(*three distinct matters.ote) Among eight(*three distinct matters. . In the entire fort(*seven (ears of the GATT. and that the( have increased confidence that other . 11# com%laints have &een &rought.ine of these cases have gone through the entire %rocess. onl( some 2CC cases were dis%uted.

a few earl( trends are evident. 2ue to the wide range of to%ics addressed &( the dis%ute settlement %anels. The ma. 9ee +igure 2! !.24 24 24 24 24 24 24 24 24 24 nations will a&ide &( their trade o&ligations if the 29> finds them to &e in violation of s%ecific %rovisions.orit( of com%laints have &een &rought &( develo%ed countries against other develo%ed countries. with the ne$t largest categor( &eing com%laints &( develo%ed countries against develo%ing nations.e generali-ations a&out the overall im%act of the 29:.:(80 2 CASE CHARACTERISTICS BY COUNTRY . . at least twent(* five com%laints have &een initiated &( develo%ing countries. it is difficult to ma. Eowever.evertheless.

manufactures. These com%laints have dealt with traditional sectors such as trade in goods.0' 7+**08 27 3B 1B 9 94 .&+&*' 2evelo%ed 3ountr( against 2evelo%ing 3ountr( 2evelo%ed 3ountr( against 2evelo%ed 3ountr( 2evelo%ing 3ountr( against 2evelo%ed 3ountr( 2evelo%ing 3ountr( against 2evelo%ing 3ountr( !80. 9ee +igure 3! .(0&/. and agricultural %roducts. &ut the( have also dealt with newer trade issues such as intellectual %ro%ert( rights.ote) +our matters were more than dou&l( counted &ecause the suits were &rought &( multi%le com%lainants.25 25 25 25 25 25 25 25 25 25 C%73)+.

:(80 3 NEW AREAS BEGIN TO EMERGE S0/*%8 'anufacturing Agricultural General Goods Intellectual =ro%ert( 7thers B4 R0./4 .%&+) P%).N+*.ote) 9tatistics are from data %rovided through the 6T7 we&site and :9T0 %ress releases.(0'* 4# 42 9 1C B .26 26 26 26 26 26 26 26 26 26 !. WTO DISPUTE PANELS AND THE BALANCE BETWEEN TRADE A:80070&*' +&.

there has &een a tendenc( to write decisions in a wa( that minimi-es the &urden on nations to change their regulations and laws in order to com%l( with their 6T7 trade o&ligations. This %laces 6T7 dis%ute %anels in a delicate %osition. the( must &e cautious when ma.27 27 27 27 27 27 27 27 27 27 9ince the various agreements that constitute the 6T7 cover such a wide range of to%ics. in the decisions of the %anels and the A%%ellate >od(. 7n the one hand the( must identif( cases where nations are failing to com%l( with international trade agreementsD on the other.ects come under their authorit(.ing recommendations that reverse the %references of national governments. 6hen the( . dis%ute settlement %anelists find that a num&er of su&. Thus far. This does not mean that dis%ute settlement %anels have not found nations in violation of the trade agreements.

Two cases in which %anel re%orts were ado%ted reflect the 6T78s tendenc( to avoid &ecoming overl( involved in the internal regulator( affairs of nations. one against the 1uro%ean :nion 1:! regarding restrictions on im%ort of hormone treated meat. These cases have &een selected as e$am%les &ecause the( have received a lot of attention. In the first case the :nited 9tates won the concessions it soughtD in the second case the %anel found no evidence of violation of the trade agreements. and the other against "a%an regarding the %hotogra%hic film industr(. >oth e$am%les are com%laints &( the :nited 9tates. however. the( have left national governments with a variet( of o%tions in order to come into com%liance. &ut the trend descri&ed can &e found in each case where a %anel re%ort has &een issued. .28 28 28 28 28 28 28 28 28 28 have.

since the hormone restrictions were initiall( ado%ted under intense %u&lic %ressure. The %anel sided with the :nited 9tates &( finding that the %rovisions were ar&itrar( and had the effect of restricting trade. &ut.ustif(ing the &an. as e$%ressed through their national legislatures and the 1uro%ean =arliament. &ut left o%tions for the 1: as well &( suggesting that more com%lete scientific evidence would . This was a case where the 6T7 %anel clearl( confronted the democratic will of the %eo%le. in effect. Alternativel(.ustif( the restriction on trade. left o%en a wide variet( of wa(s for the 1: to com%l(.29 29 29 29 29 29 29 29 29 29 E(8%30+& H%87%&0 C+'0 In the 1uro%ean Eormone 3ase the %anel found the scientific evidence for the im%ort restrictions on &eef treated with growth hormones to &e insufficient to . the %anel indicated that technical changes in the . The 1: is conducting further studies in the ho%es of .ustif( the &an.

*+u. some F2CC million %er (ear according to the :nited 9tates.9. the %anel was firm in ruling that the current %olic( is inconsistent with the 9=9 Agreement. was involved in <anti*com%etitive trade .i =hoto +ilm.ed the :. 9till.30 30 30 30 30 30 30 30 30 30 wa( the %olic( is im%lemented could reduce the %olic(8s negative im%act on trade. 3o. 3o. as. The 1: has until 1999 to com%l(. In 'a( 1995. and the 1: will have to ma.et.i film dis%ute centers on the distri&ution s(stem in "a%an. If it does not. charged that +u. 1astman Goda. K%-+<=!(>. Goda.e su&stantive changes to come into com%liance. C+'0 The Goda... the 1: will &e re4uired to offer other trading concessions to com%ensate for losses. "a%an8s &iggest %hotogra%hic film and %a%er %roducer. Trade 0e%resentative :9T0! to investigate the "a%anese %hotogra%hic film and %a%er mar.

tacitl( dominated the consumer film mar.31 31 31 31 31 31 31 31 31 31 %ractices< in "a%an. Accordingl(. also said that some sho%s in "a%an were not allowed to carr( Goda. asserted that +u. room deals with +u.ing it difficult for im%orted consumer %hotogra%hic film and %a%er to &e mar. Goda.eted in "a%anese sho%s.i.i8s e$clusive distri&ution s(stem. Goda. According to Goda.. this e$%lained wh( +u.et in "a%an using unfair %ractices.8s %roducts &ecause of &ac. . estimated its losses since the 197Cs due to the unfair %ractices at F5. "a%anese regulations im%licitl( favored +u.i &( ma.et share in "a%an while Goda. According to Goda. u% +u. Goda.i. re4uested that "a%anese regulations &e changed in order to &rea. Goda.. had onl( a 7 %ercent share in 199B.i had a 75 %ercent mar. with the su%%ort of the "a%anese government.B &illion.

*+u. the %anel ruled that "a%anese regulations %redated the reductions in tariffs that had &een negotiated on %hotogra%hic film.32 32 32 32 32 32 32 32 32 32 In the Goda. The ruling suggests that the :nited 9tates and other nations need not &e overl( concerned that the 6T78s dis%ute settlement mechanism will overtl( threaten national sovereignt(. 3urrentl(. it would have &een involved in creating new international o&ligations. there is no international standard for anti*trust regulation. those regulations could not have negated the &enefits accruing to the :nited 9tates in the trade agreement. . This technical ruling allowed the 6T7 to avoid a far*reaching decision that could have found "a%anese vertical integration of &usiness in conflict with the intent of the 6T7 regime. 3onse4uentl(.i case. an act not sanctioned &( the 6T7 Agreement. If the 6T7 dis%ute settlement %anel had found in favor of the :nited 9tates.

re4uesting consultations with "a%an.i8s. The :nited 9tates argued that the im%ort*resistant mar. The .et &arriers for %hotogra%hic films and %a%ers. this law discouraged large stores from carr(ing film other than +u.iD the second was the large*stores law enacted in 1974.et structure created &( the "a%anese government violated the national treatment %rinci%le of the GATT Article III. the :nited 9tates &egan to investigate "a%anese mar. The first measure was e$clusive wholesaling arrangements currentl( dominated &( +u. and found that three <li&erali-ation countermeasures< discriminated against im%orted goods. the :nited 9tates filed a com%laint in the 6T7 on "une 13.33 33 33 33 33 33 33 33 33 33 In "une of 1995. According to the :nited 9tates. 199B. The third discriminator( measure cited involved controls on %rice com%etition and %romotion as su%ervised &( the "a%anese +air Trade 3ommission. After eleven months of investigation.

i claimed that Goda.8s assertion. even if "a%an a%%ears to offer neutral treatment of im%orted goods. A <non*violation< claim is s%ecificall( authori-ed in the GATT Agreements if the actions of another nation reduce the value of negotiated trade concessions. however. are limited. The :nited 9tates also made a <non*violation< claim that these measures nullif( or im%air &enefits accruing to the :nited 9tates.8s loss of mar. The t(%es of redress availa&le under such com%laints.en &( the other countr( does not directl( violate an( of the Articles of the trade agreements. even if the s%ecific measure ta.i asserted that it had never cons%ired with the "a%anese government to discriminate against im%orted goods. +u. +u.et share in "a%an . +u. +urthermore.34 34 34 34 34 34 34 34 34 34 :nited 9tates also asserted that "a%an8s restrictions on retail o%erations and %romotional activities ran counter to the trans%arenc( standard set out in the GATT Article H.i denied Goda.

These mar.et of its rival.eting strateg( was not su%erior to that of +u.8s mar. the %ro%ortion is e$actl( the reverse of the situation in "a%an suggesting that &oth Goda.et channels included selling directl( to retailers. +irst. consumers8 lo(alt( to the domestic &rand.i have difficult( %enetrating the domestic mar. Goda. and not formal restrictions on trade. can e$%lain low mar. failed to introduce innovative %roducts to com%ete with +u. selling to secondar( dealers. from the mar. there was no &ottlenec.et since it had the same access to consumers as +u. and +u.i8s new %roducts. for a num&er of reasons.et %enetration &( foreign . Goda.i8s. Third.et with a 75 %ercent share. +u. and selling to smaller retailers through %hoto finishing la&s.et share in the :nited 9tates is onl( 11 %ercent while Goda. 9econd.35 35 35 35 35 35 35 35 35 35 could &e attri&uted to Goda. Thus.i. +ourth. to &loc.i stated that its mar. Goda. dominates the mar. Therefore.

36 36 36 36 36 36 36 36 36 36 com%etition.ills and services.eting s. re4uested a dis%ute settlement %anel on 9e%tem&er 2C. customers &u( +u. com%laint against +u.ed to investigate Goda. 9wit-erland. is chea%er in "a%an. The :nited 9tates. . After more than a (ear8s investigation. The( determined that the :nited 9tates had not demonstrated that its 6T7 rights had &een im%aired. the 6T7 interim re%ort was su&mitted on 2ecem&er 5. The re%ort re. The %anel was tas.i film. and .ew Iealand. although Goda. The tri&unal ar&itration %anelists were from >ra-il.8s allegations that "a%anese regulations had the effect of su%%orting anti*com%etitive %ractices &( +u.i &ecause of its investment in innovative %roducts and its creative mar. There is also a claim that.ected the :.9. failing to reach an agreement with "a%an. 199B. 1997.i.

et share in "a%an has diminished from 74 %ercent in the earl( 199Cs to B7 %ercent at the end of 1997. &ut this has also fallen. +u. Goda. In the :. has dou&led its mar. there is evidence that +u. In the .et.et share to 2C %ercent.et is also im%roving. The %rofit margin of the color film industr( in "a%an used to &e close to 12 %ercent. Goda. however. though +u. +u.8s mar.ed. mar.et share in "a%an now accounts for a&out 11 %ercent since it won the .i .i8s &usiness in the :. with %rices a&out 3C to 4C %ercent &elow com%ara&le %rices in the :nited 9tates.9.37 37 37 37 37 37 37 37 37 37 1ven though the %anel did not rule as Goda.i8s mar. mar.agano area where the Games were held.8s %rofits decreased &( 25 %ercent in 1997 from the (ear &efore. com%ared to B %ercent on overseas sales. 3urrent retail %rices for %hotogra%hic film and %a%er in "a%an reflect this.i denies this. Goda.9.agano 7l(m%ic Games s%onsorshi% &( %a(ing F44 million in 199B. would have li.

' M%&*2?Y0+8 "anuar( 1993 J%9' C(* 2.:(80 " K%-+<#' L+4%. had 7B %ercent of the mar.CCC .et..et share to 14 %ercent while Goda. Goda.38 38 38 38 38 38 38 38 38 38 increased its mar.CCC . announced %lans to cut costs &( a &illion dollars and la( off 1C. 9ee +igure 4! !.o&s over ne$t two (ears in order to remain com%etitive.

Inc.39 39 39 39 39 39 39 39 39 39 August 1993 .i in the :nited 9tates. suggests that consumers are increasingl( tr(ing the im%orted &rand.CCC 1997 T%*+) 2B. !.CCC 1C. and for Goda. in "a%an.ovem&er 1994 +e&ruar( 1995 . Gra( J 3hristmas.:(80 5 .CCC #CC 4. Increased mar.ovem&er 1C. it is consumers who &enefit from increased glo&al com%etition through lower %rices.et share for +u.#CC 9ource) 3hallenger. In the end.

40 40 40 40 40 40 40 40 40 40 WTO COMPLAINTS BY COUNTRY .

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