INTERNATIONAL TRADE LAW AND POLICY.

Ángela Yanguas Luque

SESSION 7
IMF principle

Japan – Alcoholic PARTIES:

beverages II case - Complainants: Canada, US, EU communities
- Respondents: Japan

AGREEMENT: GATT Art. III (national treatment)

1. VIOLATION:
a. National treatment (NT) principle → YES

2. LIKE PRODUCTS:
a. If consider like products
b. Shochu and vodka were like

3. JUSTIFICATION:
a.

Excise tax: An excise tax is an indirect tax charged by the government on the
sale of a particular good or service.

WHAT IS THE PROBLEM:

1) Measure: tax
2) Difference: in the level of the tax → based on the origin
a) NT principle discrimination
3) Like product
a) Shochu and vodka were like products.
b) Article III:2 → like products
c) GATT panel to establish which are the like products
d) What really are like products: characteristics, end use, level of
alcohol, classification, etc.
e) But the fact that other treat them as the same, is a way of
proving the decision is right. But it was based on the
characteristics
4) Directly competitive or substitutable
a) WTO Panel that Shochu was directly competitive with or
substitutable for ‘the other products subject to dispute’
b) They are substitutable: survey if they would be willing to buy
another alcohol
5)

Arguments claimants says

- They are in disadvantage

Protection of the domestic product

AIM AND EFFECT TEST:

- Why did the
- AIM not that relevant but about the effect

WHAT IS THE DIFFERENCE BETWEEN LIKE PRODUCTS AND

SUBSTITUTABLE PRODUCTS

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 INTERNATIONAL TRADE LAW AND POLICY. Ángela Yanguas Luque

SESSION 8
National Treatment Principle (cont. Art.III:4 GATT)

General Exceptions → Art. XX GATT – Korea Beef case

● Continues next time: for next time see two more cases. Choose at least one of them and prepare it
for our next session: Brazil-Tyres and EC-Asbestos (both are cases on General Exceptions)

1st GROUP ASSIGNMENT: will be posited soon. Deadline: Friday 16 February

● Send an email
● Recommendation: footnotes

LAST CLASS REVIEW LIKE PRODUCTS: similar needs and physical characteristics
● If they are already like products →
○ Apply in excess?

Art III:1, 2, 4 → relevant paragraphs

- Any taxes shall not be subject to internal taxes or other internal charges
of any kind in excess of those applied to like domestic products.

Art III:2 → Japan Beverages case

● Like products: similar needs and physical characteristics
○ Any kind of tax apply to excess to foreign products is di
● DCS products: does not have to be exactly “like products”
○ You have to demonstrate it that is “to afford protection”
○ Appellation body says that you have to demonstrate how that tax
plays in reality
■ It is hitting really on foreign products?
■ Yes

* ADDITIONAL DOC: interpretative notes on Art. III GATT

● Paragraph 2
● A tax conforming to the requirements of the first sentence of paragraph 2 would be
considered to be inconsistent with the provisions of the second sentence only in cases
where competition was involved between, on the one hand, the taxed product and, on
the other hand, a directly competitive or substitutable product which was not similarly
taxed.

Article III:2 MEASURES:

● Internal taxes or other internal charges

Taxes just one type of border

● The rest under the paragraph 4

Article III:4 MEASURES:

● Laws, regulations and requirements affecting their internal sale, offering
for sale, purchase, transportation, distribution or use.
● → Anything that treats foreign products less favorable than national
products
○ Except taxes on charges
● ONLY if they are like products this art. applies.
○ What would mean to add also DCS products and not only like
products:
○ Art.4 affects all kinds of products. If you include a very wide
types of products (that is also DCS products). Is a very far
requirement that does not let competition, and no country would
accepted it.
○ Mutual recognition principle → accept the products as they are in
other countries, that is the EU, but NOT the WTO.

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 INTERNATIONAL TRADE LAW AND POLICY. Ángela Yanguas Luque

KOREAN BEEF CASE DBS = Dispute Settlement Body

Dual retail system → confining sales of imported beef to specialized store

FINDINGS AND CONCLUSIONS

● upholds the Panel's ultimate conclusion that Korea's dual retail system
for beef is inconsistent with Article III:4 of the GATT 1994;
● upholds the Panel's conclusion that Korea's dual retail system for beef is
not justified under Article XX(d) of the GATT 1994; and
● finds it unnecessary to pass upon separately whether the ancillary sign
requirement is consistent with Article III:4 or justified under Article XX(d)
of the GATT 1994.

Article XX → General Exceptions

Article XX(d) of the GATT 1994;

STEPS Korean Case EXAMINATION OF THE EXCEPTIONS:

STEPS:
1. State what is the possible principle that is violated (MFN, NT, subsidy,
anti dumplings, etc. )
a. NT → Art.III:4
b. MEASURE: why it goes under this art.IV → Korea limited the
places where the korean beef can be sold
2. Whether if they are like products (+DSC → Art.III:2, ss)
3. Exceptions: if they are look for the possible justification
a. Look for the general exceptions Art.XX of the GATT
b. We only go to exceptions if have establish a violation

Korean invoke fraud

- How to analyze it.
- Korea had a national law that was in accordance with WTO agreements

Exceptions Art.XX of the GATT

- Go with the objective
- And is “necessary”

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 INTERNATIONAL TRADE LAW AND POLICY. Ángela Yanguas Luque

SESSION 9
IMF principle

General exceptions Is there something in the list that you can use as a justification.
● E.g. GATT article XX General Exceptions (d)
● Korea → (d) to avoid a situation in which foreign meet is sell as
domestic meet, that is why you have to separate the place of

Steps
1. Violation → Art.III:4 GATT
2. Like products?
(Justification → )
3. General exception under Art.XX → Art.XX:d
4. Necessity test → Review the proportionality. The contribution to the objective.
STEPS necessity test
a. Contributed to the goal (appropriate to reach that goal that we want to reach)
b. Balance the different interests (societal of preventing fraud and international trade)
c. Is there any other less restrictive forms/means of achieving this goal
5. Chapeau → Art.XX:1. (If they pass the necessity test)
a. Cannot be arbitrary discrimination
b. Bonna Fide → you are really doing it in good faith and is necessary and not with second
intentions.

Necessity test… → according to the Korea beef case

… is to see whether another means exists which is less restrictive than the one used and which can reach the
objective sought. Whether such means will be applied consistently to other products or not is not a matter of
concern for the necessity requirement under Article XX(d).
KOREA:
- It is not fulfilled by Korea
- Other sectors more important than are also concern of fraud, they took other kind of measures
- Therefore, is not really necessary, since there are other less restrictive measures → LOST case

Other exceptions under the GATT agreement

Art.XXI →
Safeguards exceptions

Case: US-Shrimp 1998
● India, Malaysia, Pakistan and Thailand requested consultations with the
US concerning a ban on importation of shrimp and shrimp products.
● The nam was imposed for the protection of sea turtles
● Countries that had any of the endangered species of the sea tutles
within their jurisdiction, and harcested shrimp with mechanical means,
had to impose on their fishermen requirements comparable to those
borne by US shrimper if they wanted to be certifies to export shrimp
products to the US. Essentially this meant the use of turtle excluder
devices TEDs at all time
● An alleged violation of the Art.I (MNF) and Art.XI (elimination of quotas
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 INTERNATIONAL TRADE LAW AND POLICY. Ángela Yanguas Luque

→ because it blocked imports to the country)

● The AB made clear that under the WTO rules, countries have the right to
take trade action to protect the environment (in particular …
● The US provided countries
● …

(Class notes)
Consultation: requirement under WTO → under the DSU
- Before you put a legal formal request under the court

Justified under Exception GATT Art.XX:d

(g) relating to the conservation of exhaustible natural resources if such measures are made effective in
conjunction with restrictions on domestic production or consumption.
- Discriminatory under the chapeau

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