Published on October 9, 2007
Japan- Measures Affecting Consumer Photographic Film and Paper: Japan- Measures Affecting Consumer Photographic Film and Paper Outline: Outline Facts Conclusion (Panel) Procedural matters - DSU 6.2 Legal Issues - GATT Art. XXIII:1 (b) - GATT Art. III:4 - GATT Art. X:1 Facts (1/2): Facts (1/2) Four manufacturers supplied Japan’s market: 2 domestic companies (Fuji & Konica) and 2 foreign ones (Kodak & Agfa) US challenged 3 broad categories of measures (next page) Facts (2/2): Facts (2/2) Namely, (1) Distribution measures: Serving as countermeasures to protect domestic companies. (2) Restrictions on large retail stores: Large Stores Law requires notification, explanation of store plans and a waiting period before opening the store. (3) Promotion measures: laws to regulate the dispatch of employees and the use of promotional money in photographic industry. Conclusion: Conclusion Panel US failed to demonstrate the measures at issue violate Art. XXIII:1 (b) US failed to demonstrate the measures violate Art.III: 4 US failed to demonstrate Japan is in violation of Art. X:1 No AB Report DSU 6.2: DSU 6.2 Japan: Panel should exclude 8 measures that are not listed within US panel request. Panel: A measure not explicitly described in the request must have a clear relationship to a measure explicitly described. Only if a measure is subsidiary or closely related to a specifically identified measure will notice be adequate. Conclusion: Panel rejected 5 measures because two of them only indirectly related to and other 3 not related to specifically identified measures. GATT Art. XXIII:1(b) (1/10): GATT Art. XXIII:1(b) (1/10) EEC-Oilseeds, Panel: The improved competitive opportunities can be frustrated not only by measures proscribed by the General Agreement but also by measures consistent with that Agreement. Panel: It is appropriate to apply the non-violation remedies to governmental actions other than subsidies as well. Elements of XX:1 (b) (1) application of a measure by a WTO member; (2) a benefit accruing under relevant agreement; (3) nullification or impairment of the benefit as the result of the application of the measure. GATT Art. XXIII:1(b) (2/10): GATT Art. XXIII:1(b) (2/10) “Application of a measure” “Measure” encompasses and is broader than laws and regulations. Japan-Semi-Conductors, Panel: Where administrative guidance create incentives or disincentives largely dependent upon governmental action for private parties to act in a particular manner, it may be considered as a governmental measure. Japan-Agricultural Products, Panel: Administrative guidance may be a measure if it emanated from the government and is effective. GATT Art. XXIII:1(b) (3/10): GATT Art. XXIII:1(b) (3/10) “Application of a measure” A broader test of the term “measure” is supported by the purpose of Art. XXIII:1 (b), which is to protect the balance of concessions under the GATT. Private actions fall within the scope of measure if there is sufficient government involvement with it. Non-violation remedy is limited to measures that are currently being applied. GATT Art. XXIII:1(b) (4/10): GATT Art. XXIII:1(b) (4/10) Benefit accruing under the GATT In GATT precedents: The claimed benefit has been that of legitimate expectations of improved market-access opportunities arising out of relevant tariff concessions. Legitimate expectations: They must take into account all measures of the party making the concession that could have been reasonably anticipated at the time of the concession. GATT Art. XXIII:1(b) (5/10): GATT Art. XXIII:1(b) (5/10) Benefit accruing under the GATT May legitimate expected benefits derive from successive rounds of tariff negotiations? Panel: Expectations may continue to exist in successive rounds. VCLT Art. 30 doesn’t apply, since there is no conflict. What should be considered to determine the existence of reasonable anticipation? Panel: Whether the measure predates the negotiation? & Members should not be held to have reasonably anticipated all GATT-consistent measures or all measures that are similar to measures in other Member’s markets. Must be assessed case-by-case. GATT Art. XXIII:1(b) (6/10): GATT Art. XXIII:1(b) (6/10) Nullification or impairment of benefit Standard: Upsetting the competitive relationship, not equality. Causation: (1) whether the measure has been made more than a de minimis contribution to nullification or impairment; (2) de facto discrimination; (3) the intent to cause nullification or impairment; (4) the measures should be examined in combination as well as individually. GATT Art. XXIII:1(b) (7/10): GATT Art. XXIII:1(b) (7/10) Distribution measures 4 of 8 challenged measures do not constitute measures. For measures adopted after of within the Kennedy Round, the US could not have reasonable anticipation. But the US may not claim legitimate expectation arising from Tokyo or Uruguay Round. US failed to demonstrate nullification because they failed to prove causality. Conclusion: No violation of Art. XXIII:1 (b) GATT Art. XXIII:1(b) (8/10): GATT Art. XXIII:1(b) (8/10) Restriction on large retail stores Large Stores Law and its amendments are measures. US could not have reasonably anticipated them in 1967 It is not sufficient to claim that a specific measure should have been anticipated because it is a continuation of a past general policy. But with respect to Tokyo and Uruguay Round, US should be charged with knowledge. No nullification they are origin-neutral; objective of the measure; inconclusive evidence; measures impact upon a certain type of store ≠nullification; regulations have been liberalized; no expectation of market evolution. GATT Art. XXIII:1(b) (9/10): GATT Art. XXIII:1(b) (9/10) Promotion measures All 8 are measures, but some of them no longer in effect. And some developed by “private actors” there is enough of a connection to the government and private parties would act in conformity with the measures. All measures were imposed before Uruguay Round US could not have expectation of benefit. No impairment: The measures were tailored to specific form of promotion; the objective of the measures; they are origin-neutral; failing to prove impact on foreign film. GATT Art. XXIII:1(b) (10/10): GATT Art. XXIII:1(b) (10/10) Combined effects It is possible that individual measure could potentially impair benefits when examined collectively. US failed to prove how each measure operating as a set adversely impact foreign film. GATT Art. III:4: GATT Art. III:4 Distribution measures General principle set forth in III:1 must be taken into account. Art. III obliges Members to provide equality of competitive conditions for imported products in relation to domestic products. Art. III examines imported products in general. The measures are origin-neutral and do not have disparate impact on imported film or paper. And the vertical distribution structure was in place before the measures came into effect. GATT Art. X:1: GATT Art. X:1 Panel: The publication requirement applies to administrative rulings in individuals cases where such rulings establish or revise principles applicable in future cases, but does not apply to administrative rulings to specific individuals or entities. Enforcement actions and actions under Fair Competition Codes: US fail to demonstrate the measures will effect changes. Large Stores Law: US failed to show these actions are rules of general application.