WT/DS162/R/Add.1 Page 78
Japan considers that the 1916 Act regulates prices of imported products under a regime separate from the analogous US law regulating prices of domestic products, i.e. the Robinson-Patman Act. The resulting differential and less favourable treatment is inconsistent with the United States' national treatment obligation under Article III:4 of the GATT 1994.257
Japan notes that, to establish a violation of Article III:4, the complaining party must demonstrate that the 1916 Act (i) is a "law, regulation or requirement", (ii) "affecting" the "internal sale, offering for sale, purchase, transportation, distribution or use" of imported products, and (iii) which accords less favourable treatment to imports than is accorded to domestic like products.
Japan considers that these three criteria are met in the present case. Japan notes, first of all, that the 1916 Act is a statute, i.e. a law, of the United States. The 1916 Act affects the sale of imported products within the United States because it regulates, by prohibiting, the sale or causing to be sold of imported products below the price threshold set out in the 1916 Act (home market price or third market price). The fact that the 1916 Act applies also to importers is inapposite. The 1916 Act applies not merely to the importing of products but also to the domestic US sale ("internal sale") of imported products.258
Japan recalls, moreover, that panels commonly apply Article III:4 of the GATT 1994 in cases where conditions of competition are affected. For years, panels have interpreted Article III:4 to have an exceedingly broad scope by virtue of its use of "affecting" – "[…] all laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation distribution or use of products […]." For example, in the 1958 Report on Italian Discrimination Against Imported Agricultural Machinery, the panel said:
"The selection of the word 'affecting' would imply, in the opinion of the Panel, that the drafters of the Article intended to cover in paragraph 4 not only the laws and regulations which directly governed the conditions of sale or purchase but also any laws or regulations which might adversely modify the conditions of competition between the domestic and imported products on the internal market."259
This is precisely the case in the present dispute; the 1916 Act sets minimum price levels on a product-specific basis that are applicable only to imports.
Regarding the "no less favourable treatment" standard laid down in Article III:4 of the GATT 1994, Japan argues that the situation in the present case is very similar to that resolved by the panel in United States – Section 337. In United States - Section 337, the panel found that the United States was in violation of its obligations under Article III:4 of the GATT 1994. Section 337 is a US law administered by the US International Trade Commission that provides a remedy for US patent holders
257 The first sentence of Article III:4 of the GATT 1994:
"The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use."
258 Japan also refers to the Panel Report on United States - Section 337, adopted on 7 November 1983, BISD 36S/345, para. 5.10 (hereinafter "United States – Section 337"), which according to Japan, found inconsistent with Article III:4 a US measure that applied to importers, concluding that it nonetheless affected imported products within the meaning of Article III:4.
259 Panel Report on Italian Discrimination Against Imported Agricultural Machinery, adopted on 23 October 1958, BISD 7S/60, para. 12 (emphasis added by Japan).