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Government Participation or Acquiescence in Trade-Affecting Consumer Information: Does Culpability Arise under the GATT?

Published online by Cambridge University Press:  21 May 2009

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The 1988 GATT panel decision in Canada-Import, Distribution and Sale of Alcoholic Drinks by Provincial Marketing Authorities (hereinafter: Canada Liquor) involved Canadian subcentral government regulatory objectives aimed at, among other things, discouraging over consumption of alcoholic beverages, with the particular regulatory limitations chosen falling upon foreign suppliers who regarded their GATT rights as having been violated. The 1987 decision in Japan-Customs Duties, Taxes and Labelling Practices on Imported Wines and Alcoholic Beverages (hereinafter: Japan Liquor), though not concerning measures adopted with an eye towards steering people away from drinking, nonetheless had occasion to comment on the irrelevancy of consumer traditions in ascertaining whether domestic products are to be seen as ‘like’ or different from certain imported products in the context of evaluating a claim of GATT national treatment violation. The case of Thailand-Restrictions on Importation of and Internal Taxes on Cigarettes (hereinafter: Thai Cigarette) saw a GATT panel in 1990 examine efforts by the government of Thailand to specifically address health matters relating to smoking by implementing measures affecting imports of cigarettes.

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Articles
Copyright
Copyright © T.M.C. Asser Press 2002

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References

2. See 35th Supp. BISD (1989) p.37.

3. See idem, at para. 2.3 (nothing one goal of provincial regulation was to guard against over consumption of liquaor).

4. See 34th Supp. BISD (1988) p. 83.

5. See idem, at para. 5.7 (Japanese consumer habits regarding shochu as unlike vodka deemed not relevant).

6. See 37th BISD (1991) p. 200.

7. See idem, at para. 21 (specific invocation by Thailand of exception in GATT Art. XX(b)).

8. See WT/DS26/R/USA(18 August 1997)(Panel Report); WT/DS26/AB/R(16 January 1998)(Appellate Body Report).

9. See WT/DS135/R (18 September 2000) (Panel Report).

10. See supra n. 8 (Panel Report), at paras 2.26–2.35 (history); ‘EU May Appeal Expected WTO Ruling Against European Ban of U.S. Meat Imports’, 14 BNA's Int'l Trade Rptr. (21 May 1997) p. 913Google Scholar (link to ‘mad cow’ scare).

11. See supra n. 9, at paras. 3.8–3.11.

12. See, e.g., United States-Taxeson Petroleum and Cerlain Imported Substances, 34th Supp. BISD (1988), p. 136, para. 5.1.9; Japan-Customs Duties, Taxes and Labelling Practices on Imported Wines and Alcoholic Beverages, idem, at p. 83, para. 5.11; Korea-Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/R and WT/DS169/R, paras. 148, 155, 157, and 623–634 (31 July 2000) (Panel Report) (examining Korea's dual retail system).

13. See Jackson, J. H., World Trade and the Law of GATT (Charlottesville, VA, The Michie Cie. 1969) p. 9Google Scholar (indicating comparative advantage is one of the premises on which international trade regulation has beenbuilt) and p. 330 (the role of comparative advantage in context of GATT Art. XVII's limits on state-trading enterprises); Zedalis, R. J., ‘A Theory of the GATT “Like” Product Common Language Cases’, 27 Vand. J Transnat 'I L (1994) p. 33Google Scholar (suggesting comparative advantage has guided GATT panel interpretation of ‘like’ product provisions).

14. See Report on the Withdrawal by the United States of a Tariff Concession Under Article XIX of the GATT (November 1951).

15. The case determined, however, that the US was entitled to invoke Art. XIX escape or safeguard rights, despite the fact purchasing shifts due to fashion changes were anticipated, largely because XIX's requirement of ‘unforeseen developments’ is satisfied whenever the scope, magnitude, or impact of the changes are not foreseen. See idem.

16. See 16 CFR (1993) sec. 301.Google Scholar

17. See, e.g., ‘France Seeks EU Debate on GMO Corn, Soybean Policies’, 15 BNA's Int'l Trade Rptr. (2 December 1998) p. 2000;Google Scholar ‘EU Parliament Says Members Have Power to Ban GM Crops in Sensitive Environments’, 16 BNA's Int'l Trade Rptr. (17 February 1999) p. 278;Google Scholar ‘US Considering Filing Complaint with WTO Over EU Barriers to GMO Imports, Aide Says’, 16 BNA's Int'l Trade Rptr. (30 June 1999) p. 1089;Google Scholar ‘Panelists Say Labeling Requirements Pose Trade Barriers, Stifle Information’, 18 BNA's Int'l Trade Rptr. (7 June 2001) p. 884;Google Scholar ‘U.S. Protests New EU Biotech Rules, Saying They May Violate WTO Agreement’, idem, at p. 891; ‘Regulation of Biotech Foods Worldwide Characterized by Confusion, Uncertainty’, 18 BNA's Int'l Trade Rptr. (12 July 2001) p. 1091;Google Scholar ‘EU Proposes Strict GMO Labeling Rule; Action Likely to Aggravate U.S. Concerns’, 18 BNA's Int'l Trade Rptr. (2 August 2001) p. 1225;Google Scholar ‘EU Defends Labeling, Traceability Rules for Products Containing GMOs’, 18 BNA's Int'l Trade Rptr. (9 September 2001) p. 1384.Google Scholar

18. See FDA Issues Cyber-Letters to Web sites Selling Unapproved Foreign Ciprofloxacin (1 November 2001), available at www.fda.gov/bbs/topics/ANS WERS/2001/ANS01115.html (accessed 8 November 2001).

19. See e.g., ‘U.S., EU Agree to Pursue High-Level Talks On Biotech Trade as New Group Is Set Up’, 17 BNA's lnt'l Trade Rptr. (8 June 2000) p. 886;Google Scholar ‘France, Other EU Members to Keep Blocking Approval ofNewGMOs, Despite EU Directive’, 17 BNA's lnt'l Trade Rptr. (29 June 2000) p. 1006;Google Scholar ‘Italy Blocks Sale of Four Types of GM Corn, Cites Health, Environmental Impact Concerns’, 17 BNA's lnt'l Trade Rptr. (7 August 2000) p. 1267;Google Scholar ‘U.S.-Euro Panel Urges Testing, Labeling For Biotech Crops, Transparent EU Rules’, 18 BNA's lnt'l Trade Rptr. (11 January 2001) p. 61;Google Scholar ‘EU Parliament Approves GMO Rules; Tracing Rule Draft Expected in March’, 18 BNA's Int'l Trade Rptr. (22 February 2001) p. 310;Google Scholar ‘Bioengineered Products in Europe Face Political, Regulatory Opposition, Panel Says’, 18 BNA's lnt'l Trade Rptr. (7 June 2001) p. 892.Google Scholar

20. See General Agreement on Tariffs and Trade, Art. III.

21. See idem, at Art. I, para. 1.

22. See idem, at Art. III, para. 4.

23. See General Agreement on Tariffs and Trade, Art. I, para. 1.

24. For an interesting GATT panel decision that, at least in part, turned on a determination that the measure in question constituted a ‘rule or formalit[y] in connection with’ importation or exportation, See United Slates-Denial of Most-Favored Nation Treatment as to Non-Rubber Footwear from Brazil, 39th Supp. BISD (1993) p. 128 (characterizing measures dealing with preferential treatment accorded lesser developing nations as subject to Art. I(1)).

25. See idem, at Art. XI, para. 1.

26. Idem.

27. Idem.

28. Idem.

29. See 25th Supp. BISD (1979) p. 68

30. Idem, at para. 4.1.

31. For additional cases beyond the four alluded to here, See United States-Prohibitions on Imports of Tuna and Tuna Products from Canada, 29th Supp. BISD (1982) p. 91; Japan-Restrictions on Imports of Certain Agricultural Products, 35th Supp. BISD (1989) p. 163; Canada-Measures Affecting Exports of Unprocessed Herring and Salmon, 35th Supp. BISD (1989) p. 98; E.E.C. Restrictions on Imports of Dessert Apples-Complaint by Chile, 36th Supp. BISD (1990) p. 93; Republic of Korea-Restrictions on Imports of Beef-Complaint by the United States, 36th Supp. BISD (1990) p. 268; Thailand-Restrictions on Importation of and Internal Taxes on Cigarettes, 37th Supp. BISD (1991) p. 200; Australia-Measures Affecting Importation of Salmon, WT/DS18/R(12 June 1998) (Panel Report) and WT/DS18/AB/R (20 October 1998) (Appellate Body Report).

32. 35th Supp. BISD (1989) p. 37.

33. 35th Supp. BISD (1989) p. 116.

34. WT/DS90/R (6 April 1999) (Panel Report); WT/DS90/AB/R (23 August 1999) (Appellate Body Report).

35. WT/DS161/R(31 July2000)(PanelReport);WT/DS161/AB/R(llDecember2000)(AppellateBody Report).

36. See supra n. 33, at para. 118.

37. See supra n. 32, at para. 4.24.

38. See idem, at para. 4.23.

39. See idem, at paras. 4.24—4.25.

40. See supra n. 34 (Appellate Body Report), especially at para. 154.

41. See idem (Panel Report), at para. 5.129 (in context of the ‘negative list’).

42. See idem, at para. 5.134.

43. See idem, at para. 5.142.

44. See supra n. 35 (Panel Report), at para. 751.

45. See idem, at para. 126.

46. See idem, at paras. 774 and 777.

47. See idem, at para. 770.

48. See supra n. 33, at paras. 106–109.

49. See General Agreement on Tariffs and Trade, Art. XX, paras, (b) and (g).

50. See supra n. 6.

51. See supra n. 8.

52. See supra n. 9.

53. Agreement on the Application of Sanitary and Phytosanitary Measures, Art. 5.7, reprinted in Uruguay Round: Final Texts of the GATTUruguay Round Agreements, Including the Agreement Establishing the World Trade Organization (Washington, DC, US GPO 1994) p. 69.

54. At this juncture, one might be inclined to ask about factual information that deals with a product’s place of origin. What if there exists in the public domain a preference for, say, domestic as opposed to imported products. Would the idea that linking accurate factual information about origin with preferences already present among the general public potentially violate Art. XI(1)’s prohibition on ‘restrictions’? In answer to this query, one cannot ignore that, when it comes to product origin, GATT Art. IX very clearly and explicitly permits states to require that origin be marked. Indeed, the existence of that authority suggests the permissibility of origin information, despite the fact competitive goods of certain states are disadvantaged over others.

55. See General Agreement on Tariffs and Trade, Preamble.

56. See idem, at Art. I, para. 1.

57. See idem, at Art. II, para. 1.

58. See idem, at Art. III, paras. 2 and 4.

59. See idem, at Art. XI, para. 1.

60. GATT Art. III(2), first sentence, prohibits the use of internal tax schemes that impose a greater rate of taxation on imports as opposed to like domestic products. The second sentence prohibits even schemes that impose the same rate, if they contravene the principles of Art. III(1), with the operative principle being that of not ‘afford[ing] protection to domestic production’.

61. See supra n. 4.

62. See idem, at paras. 5.8 and 5.9 (condemning impermissible ‘tax specialization’ in the context of what were determined to be ‘like products’) and 5.11 (condemning permissible tax differentiation when unlike products are taxed in a way that ‘afford[s] protection to domestic production’).

63. Without intending to unnecessarily disrupt the line of thought being developed, it would seem appropriate at this juncture to call attention to an important fact. Specifically, some might suggest the critical, operative terminology in relevant GATT provisions (e.g., ‘grant[ing]’ of an Art. I advantage; ‘subject[ing]’ foreign products to, ‘applying]’ or ‘according]’ to such, an Art. III tax or measure; or ‘institut[ing]’ or ‘maintaining]’ Art. XI restrictions) is capable of accommodating situations in which the direct affect on competitive relationships is not immediately proximate to a particular government measure. By this it is meant that, in the context of Art. XI(1)’s reference to ‘restrictions’, for instance, it may be the judgments of consumers that play themselves out in advantaging goods of one sort over those of another. But nonetheless, in the absence of a governmental measure that, say, requires labeling, or placards, or advertisements that capitalize on information consumers use to make their judgments, the essential catalyst would be absent. Clearly, such an understanding of the operative GATT obligations would place less emphasis on the need for direct government affect on competition, and more on the central question of whether the measure taken by the government proves the sine qua non, the thing that bears the teeth producing competitive interference.

64. See General Agreement on Tariffs and Trade, Art. III, para. 5.

65. See text accompanying supra n. 60.

66. See EEC-Measures on Animal Feed Proteins, 25th Supp. BISD (1979) p. 49 as example of III(5).

67. See text accompanying supra n. 60–62.

68. See 36th Supp. BISD (1990)p. 93.

69. See idem, at para. 3.16.

70. See idem, at paras. 12.8–12.9. For an early additional case, see ‘Report of Panel on Review Pursuant to Article XVI.5’, 9th Supp. BISD (1961) p. 192.

71. See idem, at paras. 12.8–12.9.

72. See WT/DS44/R, 31 March 1998.

73. There can be no doubt about the fact that much of the Kodak-Fuji opinion that deals with holding governments responsible for private entity action addresses this in the context of GATT Art. XXIII(1)(b), and not Art. XI(1)’s prohibition on ‘restrictions’. That provision, however, allows requests for remedial action in situations where competitive benefits are said to have been nullified or impaired by a measure taken by another member state, whether or not the measure is inconsistent with some specific GATT obligation. In recognition that its comments regarding attributing private actions to member states apply as well in situations where specific GATT obligations are said to have been violated, the panel explicitly noted, idem, at para. 10.376, in connection with its examination of national treatment claims under GATT Art. III, that ‘we consider … our previous discussion of GATT cases … in relation to what may constitute a “measure” under Article XXIII:1(b)… equally applicable to the definitional scope of… Article III:4’. Clearly, since both Art. III(4) and Art. XI(1) speak of measures adopted by GATT members, the panel’s comment would apply with equal force to situations where it is contended private entity action results in government violation of XI(1)’s prohibition on trade ‘restrictions’.

74. Idem, at para. 10.52.

75. Idem, at para. 10.56.

76. Idem.

77. In this regard, it again needs to be recalled that bulk of the opinion’s discussion of attribution to the government revolves around the effort to determine whether there existed Art. XXIII(1)(b) ‘measures’ as a result of private entity action. See supra n. 73. When examining that matter, the most informative analyses of the panel concerned Japan’s so-called ‘distribution systemization’ program, aimed at integrating and tying Japan’s photographic film manufacturing, wholesale, and retail sectors. See supra n. 72, at paras. 10.90–10.208. Some additional interesting analysis can also be found in the context of the panel’s examination of Japan’s so-called ‘promotion measures’ plan. See idem, at paras. 10.293–10.346 in particular.

78. See idem, at paras. 10.176 and 10.180 (regarding the existence of such facts in regard to Japan’s socalled ‘ 1971 Basic Plan for Systemization of Distribution’ with the photographic film industry, and thus finding the existence of a GATT Art. XXIII(1)(b) ‘measure’).

79. See idem, at paras. 10.190 and 10.194 (finding Japan’s ‘1975 Manual for Systemization of Distribution’ not to constitute a GATT Art. XXIII(1)(b) ‘measure’ for such reasons). It requires notation, however, that the WTO panel considering the complexities of the case acknowledged the ‘evidence [to be] somewhat conflicting’ on whether a GATT ‘measure’ existed, and ultimately decided that ‘[o]n balance’ such was present. See idem, at para. 10.194.

80. See idem, at paras. 10.321–10.337 (analyzing Japan’s 1987 Retailers Fair Competition Code and the Retailers Council).

81. Idem, at para. 10.328.

82. Idem.

83. Idem (emphasis added).

84. See supra n. 63 exploring this approach.

85. See text and notes accompanying sections 3 and 4.

86. See supra nn. 72–83.