UNITED STATES - MEASURES

AFFECTING ALCOHOLIC AND

MALT BEVERAGES
Presented by:- Aditi Saxena
500084704
 FACTS OF THE CASE
 The case was initiated by the European Communities (EC) against the United States regarding certain
measures affecting the importation and sale of alcoholic beverages, particularly wine and malt beverages.
 The European Communities challenged various U.S. regulations and practices that they claimed
discriminated against imported alcoholic beverages and favored domestic products. These measures
included labeling requirements, distribution systems, and taxation policies.
 The EC argued that the U.S. regulations unfairly advantaged domestic producers and disadvantaged
imported products, thereby violating the principles of non-discrimination and national treatment under
GATT.
 The case had significant implications for the trade of alcoholic beverages between the United States and
the European Communities, as well as for other countries affected by similar regulations.
 The panel, after examining the arguments and evidence presented by both parties, issued a report on June
19, 1992. The report likely contained findings regarding whether the U.S. measures were consistent with
GATT rules and recommendations for any necessary changes to bring them into compliance.
 ISSUES OF THE CASE
 Discriminatory Taxes and Regulations:
The EU alleged that various state-level regulations and taxes in the US unfairly favored domestic
alcoholic beverages over imported ones. These regulations included distribution and licensing
requirements that were more burdensome for foreign producers.
 Labeling and Certification Requirements:
The EU also challenged certain labeling and certification requirements imposed by the US, arguing that
they placed undue burden on foreign alcoholic beverage producers and inhibited their market access.
 ARGUMENTS OF THE PARTIES
United States' Argument:
1. The United States contends that Canada requested the Panel to examine measures that were not subject
to prior consultations. According to the U.S., GATT dispute settlement procedures require
consultations between disputing parties before panel examination.
2. Consultations are seen as crucial opportunities to resolve disputes amicably. They allow for potential
modification of practices or convincing the complaining party of the GATT consistency of measures,
thus potentially avoiding the need for a panel.
3. Due process is essential, especially in a federal nation like the United States, where state authorities
have significant law-making authority, particularly in regulating alcoholic beverage sales. Adequate
notice of complained state measures is necessary for consultations with relevant state authorities.
 ARGUMENTS OF THE PARTIES
Canada's Argument:
1. Canada argues that during bilateral consultations with the United States under Article XXIII, it
raised all issues now before the Panel, including specific examples in certain states.
2. Specific issues, such as a tax credit in Wisconsin and distribution problems in various states, were
raised orally and/or through written materials during consultations.
3. Canada maintains that issues like listing/delisting regulations were discussed during consultations
and were also included in the Agreed Terms of Reference.
 CONCLUSION
The Panel concluded that numerous measures implemented by the United States at both federal and state
levels were inconsistent with its obligations under the General Agreement on Tariffs and Trade (GATT). These
measures included provisions such as lower excise tax rates for domestic alcoholic beverages, tax credits for
domestic producers, and various exemptions and preferences for domestic products not extended to imports.
Specifically, the Panel found that:
• Differential treatment in federal excise tax rates on beer and wine favored domestic products and violated
GATT Article III:2.
• State-level measures, including excise tax exemptions, tax credits, and preferential treatment for domestic
alcoholic beverages, similarly discriminated against imported products and contravened GATT provisions.
• Certain state practices, such as distribution requirements and price affirmation obligations, also ran afoul of
GATT rules.
Based on these findings, the Panel recommended that the United States rectify its inconsistent federal and
state measures to align with its obligations under the General Agreement. This recommendation aimed to
ensure compliance with GATT principles and promote fair and non-discriminatory trade practices in the
alcoholic beverages sector.