NON-DISCRIMINATION EXERCISE THIBAULT BOSCART HILLARY HASE AITANA - - PowerPoint PPT Presentation

NON-DISCRIMINATION EXERCISE

THIBAULT BOSCART HILLARY HASE AITANA ÁLVAREZ SIMÓ

THE MAJORIA CASE

You are legal adviser to the Majorian Ministry of Finance.

• Since Majoria joined the WTO in the spring of 2015,
• many Majorian factories have established production in countries with lower production costs,
• (...) factories have scaled down their production in Majoria.
• Worker unions and politicians have increasingly called for adoption of domestic measures to prevent such

developments.

MAIN TOPIC

NON DISCRIMINATION

MOST FAVOURED NATION (Article I ) NATIONAL TREATMENT (ARTICLE III) GATT, 1994

QUESTION 1

LIKENESS (narrow) Article III (2), first sentence GATT 1994 DIRECTLY COMPETITIVE OR SUBSTITUTABLE (broad) Article III (2), second sentence GATT 1994

There are a some basic criteria for determining likeness, as acknowledged in Japan - Alcoholic beverages, 1996 and the Border tax adjustments report 1970.

• Product’s end-uses
• Consumers’ tastes and habits
• Product’s properties
• Nature
• Quality: maybe if production cost is lower, the quality can

differ

• PPM (process and production method) not relevant in

determination of likeness, see US - Malt Beverages 1992; US- Tuna (Mexico) 1991.

• Substitutable (Korea- Alcoholic Beverages, 1999);

(Philippines - Distilled Spirits, 2012).

• Directly competitive
• Latent demand, potential competition

a) Would products with differences in production costs be considered “like products” or “directly competitive or substitutable product” under article III:2 of GATT?

QUESTION 2

b) According to articles II and III of GATT, to what extent can Majoria impose border taxes on imports from countries with low production costs?

• Article II = Tariff Concessions and applies to border measures Relationship ?
• Article III = National Treatment and applies to internal measures

Article II:2 (a) of the GATT 1994 :

“Nothing in this Article shall prevent any contracting party from imposing at any time on the importation of any product : (a) a charge equivalent to an internal tax imposed consistently with the provisions of paragraph 2 of Article III in respect of the like domestic product (…)”.

• Ad Note of Article III of the GATT 1994 about internal taxes

QUESTION 2

• National Treatment Test for internal taxation on “directly competitive or substitutable products”
• 1. Internal tax or other internal charge
• 2. Products directly competitive or substitutable
• 3. Dissimilarly taxed
• 4. Dissimilar taxation in order to afford protection to domestic production

QUESTION 3

c) If Majoria imposes a border tax that is subsequently challenged by other countries before the WTO dispute settlement mechanism, what could be the consequences if Majoria loses the case? ➔ Recommendation ➔ Negotiations - compensation ➔ Authorisation for retaliation