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WT/DS162/R/Add.1 Page 81

(c)

the conduct subject to penalties under the 1916 Act exceed the conduct under the Robinson-Patman Act; and

(d)

because a plaintiff can more easily prove a violation of the 1916 Act than of the Robinson-Patman Act, a domestic competitor can more easily impose significant litigation costs and business burdens on foreign producers than on domestic competitors.

3.15

Japan argues that even if the United States could establish (which, Japan believes, it cannot) that in some respects treatment under the 1916 Act is more favourable than under the Robinson-Patman Act, it would not prevail.  As ruled by the panel in United States - Section 337, more favourable treatment of imported products in some areas cannot offset less favourable treatment in other areas.265  Moreover, whether less favourable treatment actually has been suffered in a particular instance is irrelevant.  As was the case in European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, a regulation which does not necessarily  discriminate against imported products but is capable of doing so violates Article III of the GATT 1994.266  Thus, the mere possibility that a measure may in some circumstances result in less favourable treatment of imported products is sufficient to establish a violation.  Such is clearly the case in the present case.267

3.16

The United States argues that, in order to determine whether the 1916 Act violates the national treatment guarantee of Article III:4, Japan must establish that the 1916 Act treats foreign products less favourably than any similar domestic statute treats like domestic products.  Japan correctly recognizes that the comparable statute applicable to domestic goods is Section 2 of the Clayton Act, as amended by the RobinsonPatman Act.268

265 Japan refers to United States - Section 337, Op. Cit., para. 5.14.

266 Japan refers to the Panel Report on European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, adopted on 25 January 1990, BISD 37S/86, para. 141 (hereinafter "EEC – Oilseeds").

267 In response to a question of the United States regarding how Japan reconciles its position that the mandatory/non-mandatory distinction may be applied to a measure under Article III:4 of the GATT 1994 with its reading of the EEC – Oilseeds case, Japan argues that, when a law or a regulation is mandatory, the simple fact that it merely exposes imported products to a risk of discrimination constitutes less favourable treatment and thus is in violation of Article III:4.  Since the 1916 Act is clearly mandatory on its face,  the mere possibility of discrimination is sufficient to establish an Article III:4 violation.  In the EEC - Oilseeds case, the panel made the following findings: "[…] the Panel examined whether a purchase regulation which does not necessarily discriminate against imported products but is capable of doing so is consistent with Article III:4. The Panel noted that the exposure of a particular imported product to a risk of discrimination constitutes, by itself, a form of discrimination. The Panel therefore concluded that purchase regulations creating such a risk must be considered to be according less favourable treatment within the meaning of Article III:4." (EEC – Oilseeds, Op. Cit., para. 141; emphasis in original).  The panel report on United States - Tobacco, citing this precedent, also notes that "an internal regulation which merely exposed imported products to a risk of discrimination had previously been recognized by GATT panels to constitute, by itself, a form of discrimination, and therefore less favourable treatment within the meaning of Article III" (United States – Tobacco, Op. Cit., para. 96).  Thus, Japan's proposition that the mere possibility of discrimination is enough to establish an Article III:4 violation is confirmed by well-established GATT 1947 precedents.  Where, as in the present case, the legislation at issue is mandatory, there can be no other conclusion.  This proposition is fully compatible with the mandatory/non-mandatory distinction.  In fact, the panel report on United States - Tobacco applied both principles to the case.  As noted above, regarding Article III, the panel found a violation because of the mere possibility of discrimination.  It did so because the regulation at issue was of a mandatory nature.  However, regarding Article VIII, it applied the mandatory/non-mandatory distinction, and ultimately concluded that there was no violation.  Thus, there is no conflict between mandatory/non-mandatory distinction and "the mere possibility" theory in Japan's argument.  

268  The United States refers to Zenith III, Op. Cit., pp. 121314.

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