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WT/DS162/R/Add.1 Page 82

3.17

The United States notes that Japan suggests, however, that "the mere possibility that a measure may in some circumstances result in less favourable treatment of imported products is sufficient to establish a violation".  Moreover, Japan suggests that "[l]ess favourable treatment is inherent" because the 1916 Act purportedly creates "a separate regime" for importers and sellers of imports.  In short, Japan argues in effect that the mere existence of the 1916 Act which of course was enacted years before Article III:4 of the GATT 1994, and has never been amended since then is sufficient to establish a violation of that Article.

3.18

The United States submits that these arguments, and the standard of liability under Article III:4 of the GATT 1994 that they appear to suggest, are not correct.  Article III:4 does not require every statute of every Member that applies in any way to imported products to apply in exactly the same way to domestic products as well.  It rather requires WTO Members to accord products of foreign origin no less favourable treatment than products of domestic origin.  In short, Article III:4 focuses on the treatment of imported products across the whole spectrum of the "laws, regulations and requirements" of WTO Members.  Thus, in order to establish that the 1916 Act violates the national treatment guarantee of Article III:4, it is not sufficient to establish simply that the 1916 Act exists and that it does not apply to domestic products.  Japan must establish that the United States relies on the 1916 Act to treat foreign products less favourably than any similar domestic statute treats like domestic products.269

3.19

The United States notes that, consistent with this standard, the panel report in United States - Section 337 specifically rejected the argument that different treatment necessarily translates into unfavourable treatment.  Thus, the panel explained that

"[...] the mere fact that imported products are subject under Section 337 to legal provisions that are different from those applying to products of national origin is in itself not conclusive in establishing inconsistency with Article III:4.  In such cases, it has to be assessed whether or not such differences in the legal provisions applicable do or do not accord to imported products less favourable treatment."270

3.20

The United States notes, second, that if Japan's arguments were accepted, any statute or portion of a statute in any country that expressly applied just to importers regardless of when and under what circumstances it was enacted could be found to violate Article III:4 of the GATT 1994 without any review or analysis whatsoever.  These arguments cannot and should not be accepted as a substitute for the type of careful review and analysis that should be conducted under Article III:4 of the GATT 1994.271   

3.21

In the view of the United States, a careful review and analysis of the historical applications of the 1916 Act and the RobinsonPatman Act conclusively demonstrate that the 1916 Act raises no

269 The United States recalls that the European Communities suggests a reversal of this burden of proof; that is, that the United States must "show that [the 1916 Act] prevents less favourable treatment of imported products."  This is not correct; the burden of proof rests with Japan.   

270  United States Section 337, Op. Cit., para.5.11.

271 In this connection, the United States disagrees with Japan's argument (as well as the European Communities' similar argument) that US law permits a US enterprise, but not a foreign one, to engage in international price discrimination.  The United States argues that, even setting aside the question whether this perspective is the right one under Article III, such conduct would in fact be prohibited by the Sherman Act whenever it has a predatory effect in a relevant US market.  The Sherman Act has a very broad but flexible mandate for courts to prevent anti-competitive conduct in the foreign commerce as well as the domestic commerce of the United States.  Also, Japan fails to recognize that the 1916 Act does apply to US companies that import goods.  For example, one of the defendants in the Geneva Steel case is a US company headquartered in Houston, Texas.

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