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

QUESTION 1 a) Would products with differences in production costs be considered “like products” or “directly competitive or substitutable product” under article III:2 of GATT? DIRECTLY COMPETITIVE OR SUBSTITUTABLE (broad) LIKENESS (narrow) Article III (2), second sentence GATT 1994 Article III (2), first sentence GATT 1994 There are a some basic criteria for determining likeness, as ● Substitutable ( Korea- Alcoholic Beverages, 1999 ); acknowledged in Japan - Alcoholic beverages, 1996 and the ( Philippines - Distilled Spirits, 2012 ). Border tax adjustments report 1970. ● Directly competitive ● ● Product’s end -uses Latent demand, potential competition ● 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 .

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