BATCH 2019-24

SYNOPSIS:

SUBJECT: International Trade Law

SUBMITTED TO: SUBMITTED BY:

DR. RAHUL NIKAM MUDIT BALIA

Associate Professor ROLL NO.- 92121040003

Faculty of law, B.A. LL.B (Hons.)

Marwadi University X Semester

 CASE ANALYSIS

US - Import Prohibition on Certain Shrimp and Shrimp Products

from India

Facts:

1. In 1989, the United States enacted Section 609 of Public Law 101-162, an
environmental legislation aimed at conserving sea turtles. This law, known as the
“Shrimp-Turtle Law,” required the use of turtle excluder devices (TEDs) on
commercial shrimp trawlers operating in waters where there was a likelihood of
intercepting sea turtles.
2. In 1996, the U.S. Court of International Trade ruled that the Shrimp-Turtle Law
could be applied to shrimp imports as well. Consequently, the U.S. banned the
importation of shrimp and shrimp products from countries that did not have a
regulatory program for the use of TEDs comparable to the U.S. program.
3. India, Malaysia, Pakistan, and Thailand challenged the U.S. measure as a
violation of WTO rules, claiming that it constituted an unjustified barrier to trade.

Issues:

1. Whether the U.S. import prohibition on certain shrimp and shrimp products from
India, Malaysia, Pakistan, and Thailand was consistent with the General
Agreement on Tariffs and Trade (GATT) Article XI (prohibition on quantitative
restrictions) and Article XIII (non-discriminatory administration of quantitative
restrictions).
2. Whether the U.S. measure could be justified under GATT Article XX(g) as a
measure relating to the conservation of exhaustible natural resources (sea turtles).
3. Whether the U.S. measure met the requirements of the chapeau (preamble) of
GATT Article XX, which requires that such measures are not applied in a manner
that would constitute arbitrary or unjustifiable discrimination between countries
where the same conditions prevail.
Judgment:

The WTO Panel found that the U.S. import prohibition was a quantitative restriction
inconsistent with GATT Article XI and Article XIII. The Panel also found that the
U.S. measure was provisionally justified under GATT Article XX(g) as a measure
relating to the conservation of exhaustible natural resources (sea turtles). However,
the Panel concluded that the U.S. measure failed to meet the requirements of the
chapeau of GATT Article XX because the application of the measure constituted
arbitrary and unjustifiable discrimination between members of the WTO. The United
States appealed the Panel's findings to the WTO Appellate Body.The Appellate Body
upheld the Panel's findings that the U.S. import prohibition was a quantitative
restriction inconsistent with GATT Article XI and Article XIII, and that it was
provisionally justified under GATT Article XX(g).

On the issue of the chapeau of GATT Article XX, the Appellate Body agreed with the
Panel that the U.S. measure constituted arbitrary and unjustifiable discrimination
between WTO members. The Appellate Body noted the following:

a) The United States had negotiated and concluded an agreement with some WTO
members (the Western Hemisphere nations) but not others (the Asian nations).
b) The inflexible and rigid application of the measure did not allow for inquiries into
the appropriateness of the regulatory programs of other WTO members.
c) The measure required other countries to adopt essentially the same policy as the
United States, without taking into account the different conditions prevailing in
those countries.
d) The Appellate Body recommended that the United States bring its measure into
conformity with its WTO obligations.

In response to the WTO ruling, the United States revised its guidelines for the
importation of shrimp and shrimp products, allowing for a more flexible and
transparent certification process that took into account the different conditions
prevailing in other countries.

Analysis

This case highlighted the balance between trade liberalization and environmental
protection, and it established important principles for interpreting the GATT Article
XX exceptions. Specifically, the Appellate Body emphasized that while trade
measures aimed at protecting the environment can be justified under Article XX(g),
their application must be transparent, flexible, and non-discriminatory, allowing for
different regulatory approaches in different countries as long as the same level of
protection is achieved. The case also underscored the importance of multilateral
cooperation and dialogue in addressing global environmental issues. The Appellate
Body recognized that unilateral measures, while well-intentioned, could potentially
undermine the multilateral trading system and the sovereign rights of other nations to
adopt their own environmental policies.

Overall, the Shrimp-Turtle case set a precedent for balancing trade and environmental
considerations, promoting international cooperation, and providing guidance on the
proper interpretation and application of GATT Article XX exceptions.
 EU - Measures Affecting the Import of Certain Poultry Products
from the United States

Facts:

1) In 1997, the European Union (EU) prohibited the importation of poultry products
that had been treated with certain antimicrobial rinses, specifically those
containing substances like chlorine dioxide, acidified sodium chlorite, trisodium
phosphate, and peroxyacids.
2) The EU's measure was based on its concern that the use of these antimicrobial
rinses could lead to the development of antimicrobial-resistant strains of bacteria,
posing a risk to human health.
3) The United States challenged this measure before the World Trade Organization
(WTO), arguing that the EU's ban violated the Agreement on Sanitary and
Phytosanitary Measures (SPS Agreement) and the General Agreement on Tariffs
and Trade (GATT) 1994.
4) The United States claimed that the EU's ban was not based on scientific evidence
and was more trade-restrictive than necessary to achieve the EU's appropriate
level of sanitary protection.

Issues:

1) Whether the EU's ban on the importation of poultry products treated with
antimicrobial rinses was consistent with the SPS Agreement and the GATT 1994.
2) Whether the EU's measure was based on scientific principles and not maintained
without sufficient scientific evidence, as required by Article 2.2 of the SPS
Agreement.
3) Whether the EU's measure was more trade-restrictive than required to achieve the
EU's appropriate level of sanitary protection, in violation of Article 5.6 of the
SPS Agreement.
Judgment:

The WTO Panel found that the EU's ban on the importation of poultry products
treated with antimicrobial rinses was inconsistent with Articles 2.2, 5.6, and 5.7 of the
SPS Agreement. The Panel determined that the EU's measure was not based on a
proper risk assessment, as required by Articles 5.1 and 5.2 of the SPS Agreement, and
was therefore not based on scientific principles and maintained without sufficient
scientific evidence, in violation of Article 2.2.

a) The Panel noted that the EU had not evaluated the specific risks arising from the
antimicrobial rinses used in the United States, nor had it considered the potential
risks arising from the alternative techniques used in the EU.
b) The Panel found that the EU's measure was based on a general concern about
antimicrobial resistance, rather than a specific risk assessment related to the use
of antimicrobial rinses on poultry products.

The Panel also found that the EU's measure was more trade-restrictive than required
to achieve the EU's appropriate level of sanitary protection, in violation of Article 5.6
of the SPS Agreement. The EU appealed the Panel's findings, but the Appellate Body
upheld the Panel's conclusions. The Appellate Body agreed that the EU's measure was
not based on a proper risk assessment and was therefore inconsistent with Articles 5.1,
5.2, and 2.2 of the SPS Agreement. The Appellate Body also upheld the Panel's
finding that the EU's measure was more trade-restrictive than required to achieve the
EU's appropriate level of sanitary protection, in violation of Article 5.6 of the SPS
Agreement.

However, the Appellate Body reversed the Panel's finding that the EU's measure was
inconsistent with Article 5.7 of the SPS Agreement, which deals with situations where
relevant scientific evidence is insufficient. The Appellate Body recommended that the
EU bring its measure into conformity with its obligations under the SPS Agreement.

Ananlysis:

The case reinforced the principles of the SPS Agreement, which aim to strike a
balance between the right of WTO members to take measures to protect health and the
obligation to ensure that such measures are scientifically justified and do not
constitute disguised restrictions on international trade.

Overall, the ruling provided guidance on the proper application of the SPS Agreement
and emphasized the importance of basing sanitary measures on scientific evidence
and risk assessments, while also considering the potential trade impacts and exploring
alternative, less trade-restrictive measures where possible.
 EC - Measures Affecting the Import of Bananas

Facts:

1. The European Communities (EC) had a common market organization for bananas,
which involved a complex system of import licensing and tariff-rate quotas.
2. The EC's banana import regime gave preferential treatment to bananas imported
from former European colonies in Africa, the Caribbean, and the Pacific (ACP
countries), while imposing higher tariffs and quotas on bananas from other
countries, particularly Latin American producers.
3. Several Latin American banana-producing countries, including Ecuador,
Guatemala, Honduras, Mexico, and the United States (on behalf of its banana
companies operating in Latin America), challenged the EC's banana import
regime as a violation of the General Agreement on Tariffs and Trade (GATT) and
other WTO agreements.

Issues:

1. Whether the EC's preferential treatment of ACP banana imports was consistent
with GATT Article I (Most-Favored-Nation Treatment) and Article XIII (Non-
Discriminatory Administration of Quantitative Restrictions).
2. Whether the EC's banana import licensing procedures were consistent with
GATT Article III (National Treatment on Internal Taxation and Regulation) and
the Import Licensing Agreement.
3. Whether the EC's banana import regime was covered by the Lomé Convention,
which allowed for preferential treatment of ACP countries as an exception to
GATT rules.

Judgment:

The WTO Panel found that the EC's preferential treatment of ACP banana imports
violated GATT Articles I and XIII, as it discriminated against bananas from other
WTO members. The Panel also found that the EC's import licensing procedures for
bananas were inconsistent with GATT Article III and the Import Licensing
Agreement, as they created discriminatory and trade-restrictive conditions. The Panel
rejected the EC's argument that its banana import regime was justified under the
Lomé Convention, which the Panel deemed was not a permanent waiver from WTO
rules. The EC appealed the Panel's findings, but the Appellate Body largely upheld
the Panel's conclusions. The Appellate Body agreed that the EC's preferential
treatment of ACP banana imports violated GATT Articles I and XIII, and that the
import licensing procedures were inconsistent with GATT Article III and the Import
Licensing Agreement. However, the Appellate Body modified the Panel's findings
regarding the Lomé Convention, stating that while the Convention did not provide a
permanent waiver, the preferential treatment of ACP bananas could be justified as a
temporary measure under the GATT's provisions for non-reciprocal preferential
treatment for developing countries. The Appellate Body recommended that the EC
bring its banana import regime into conformity with its WTO obligations.

Analysis:

This case was significant as it addressed the tension between the EC's preferential
trade arrangements with former colonies and its obligations under the WTO's non-
discrimination principles. It clarified that preferential treatment based on non-
economic criteria, such as historical ties, could violate WTO rules unless specifically
justified under exceptions for developing countries. The case also highlighted the
importance of transparent and non-discriminatory import licensing procedures and the
need for such procedures to comply with WTO agreements like the Import Licensing
Agreement. Additionally, the ruling provided guidance on the interpretation of the
relationship between the WTO agreements and other international agreements, such
as the Lomé Convention, emphasizing that exceptions to WTO rules should be
narrowly construed and temporary in nature.

Overall, the Bananas case reinforced the principles of non-discrimination and

transparency in international trade, while recognizing the need for some flexibility in
preferential treatment for developing countries. It set precedents for future disputes
involving preferential trade arrangements and import licensing regimes.
 Japan - Measures Affecting the Import of Apples

Facts:

1) Japan maintained a quarantine measure that prohibited the importation of apples

from the United States due to concerns about the risk of introducing fire blight, a
plant disease that affects apples and other plants.
2) The United States challenged Japan's import prohibition, arguing that it was not
based on scientific evidence and was inconsistent with the Agreement on the
Application of Sanitary and Phytosanitary Measures (SPS Agreement).
3) Japan claimed that its measure was justified to protect plant life or health within
its territory, as permitted under the SPS Agreement.

Issues:

1) Whether Japan's import prohibition on apples from the United States was
consistent with the SPS Agreement, particularly Articles 2.2 and 5.7.
2) Whether Japan's measure was based on scientific principles and maintained with
sufficient scientific evidence, as required by Article 2.2 of the SPS Agreement.
3) Whether Japan's measure was more trade-restrictive than required to achieve its
appropriate level of phytosanitary protection, in violation of Article 5.6 of the
SPS Agreement.

Judgment:

The WTO Panel found that Japan's import prohibition on apples from the United
States was inconsistent with Articles 2.2 and 5.7 of the SPS Agreement. The Panel
determined that Japan's measure was not based on a proper risk assessment, as
required by Articles 5.1 and 5.2 of the SPS Agreement, and was therefore not based
on scientific principles and maintained without sufficient scientific evidence, in
violation of Article 2.2.
 The Panel noted that Japan had not evaluated the specific risk of fire blight
transmission from mature, symptomless apples, nor had it considered the
available scientific evidence and expert opinions on this issue.

The Panel also found that Japan's measure was more trade-restrictive than required to
achieve its appropriate level of phytosanitary protection, in violation of Article 5.6 of
the SPS Agreement. Japan appealed the Panel's findings, but the Appellate Body
upheld the Panel's conclusions. The Appellate Body agreed that Japan's measure was
not based on a proper risk assessment and was therefore inconsistent with Articles 2.2,
5.1, and 5.2 of the SPS Agreement. The Appellate Body also upheld the Panel's
finding that Japan's measure was more trade-restrictive than required, in violation of
Article 5.6 of the SPS Agreement. The Appellate Body recommended that Japan bring
its measure into conformity with its obligations under the SPS Agreement.

Analysis:

This case highlighted the importance of basing sanitary and phytosanitary measures
on scientific risk assessments, as required by the SPS Agreement. The WTO ruled
that Japan's blanket import prohibition on apples from the United States was not
supported by scientific evidence and a proper evaluation of the specific risks involved.
The case also emphasized the need to consider alternative measures that could achieve
the desired level of protection while being less trade-restrictive, as required by Article
5.6 of the SPS Agreement.

Overall, the ruling reinforced the principles of the SPS Agreement, which aim to
ensure that measures taken to protect human, animal, or plant life or health are based
on scientific principles and risk assessments, and do not constitute unjustified barriers
to international trade.

The case provided guidance on the proper application of the SPS Agreement's
provisions related to risk assessment, scientific evidence, and the least trade-
restrictive measures, setting precedents for future disputes involving sanitary and
phytosanitary measures in the agricultural sector.
 Japan - Taxes on Alcoholic Beverages

Facts:

1. Japan maintained a complex system of internal taxes on alcoholic beverages,

which differentiated between various types of alcoholic beverages, including
shochu (a traditional Japanese spirit), whisky, brandy, rum, gin, vodka, liqueurs,
and others.
2. The tax rates were significantly lower for shochu compared to other imported
liquors like whisky, brandy, and vodka.
3. The European Communities, Canada, and the United States challenged Japan's
tax system, arguing that it violated the General Agreement on Tariffs and Trade
(GATT) by discriminating against imported alcoholic beverages in favor of
domestically produced shochu.

Issues:

1. Whether Japan's tax system for alcoholic beverages was consistent with GATT
Article III:2, which prohibits the application of internal taxes in a manner that
affords protection to domestic production.
2. Whether the various alcoholic beverages subject to different tax rates were "like
products" within the meaning of GATT Article III:2.
3. If the products were "like products," whether Japan's tax system provided less
favorable treatment to imported alcoholic beverages than to domestic shochu.

Judgment

The WTO Panel initially found that shochu and other distilled spirits were not "like
products" and therefore did not violate GATT Article III:2. However, the Panel ruled
that certain liqueurs were "like products" and that Japan's tax system discriminated
against imported liqueurs. Both Japan and the complainants (EC, Canada, and the US)
appealed the Panel's findings to the Appellate Body. The Appellate Body rejected the
Panel's approach of determining "likeness" based solely on the origin and
manufacturing processes of the products. Instead, the Appellate Body adopted a more
holistic approach, considering factors such as physical characteristics, end-uses,
consumer tastes and habits, and tariff classifications. Applying this approach, the
Appellate Body found that shochu and other distilled spirits were "like products"
within the meaning of GATT Article III:2. The Appellate Body then examined
whether Japan's tax system provided less favorable treatment to imported alcoholic
beverages than to domestic shochu. The Appellate Body concluded that Japan's tax
system, by imposing significantly lower tax rates on shochu compared to other
directly competitive or substitutable imported products, afforded protection to
domestic production, in violation of GATT Article III:2.m. The Appellate Body
recommended that Japan bring its tax system into conformity with its GATT
obligations.

Analysis:

It clarified the interpretation of the "like product" concept under GATT Article III:2,
establishing a more comprehensive approach based on multiple factors rather than
solely on product origin or manufacturing processes. It reinforced the principle of
national treatment, which prohibits discriminatory internal taxation that affords
protection to domestic products over imported "like products." It highlighted the
importance of examining the actual effects of a tax system, rather than just its formal
structure, in determining whether it violates the non-discrimination obligations under
GATT Article III:2. The case provided guidance on the application of the "aim-and-
effect" test, which examines whether a measure affords protection to domestic
production, even if that was not the stated intent. Overall, the Alcoholic Beverages
case set important precedents for interpreting the national treatment principle and the
concept of "like products" in the context of internal taxation, influencing subsequent
WTO disputes involving discriminatory tax regimes.