session 5 Flashcards

Question

less favorable treatment

Answer 1

expresses the general principle, in Article III:1. That internal regulation “should not be applied …so as to afford protection to domestic production. Of there is “less favorable treatment” of the group of “like” imported products there is, conversely, protection” of the group of “like” domestic products.

Answer 2

(the measure offers better treatment to domestic products as compared to like imports based on origin. (Such as banning imported asbestos but permitting domestic asbestos on the basis of origin) The harder cases are when the measure is on its face origin-neutral, but is argued to amount to a de facto discrimination against imports.

Answer 3

against imports. In this case is the condition of less favorable treatment a matter of effects, such as demonstrating that fewer products in the import group meet the requirement or that the tax or burden actually imposed on the import group is high

Answer 4

The Panel and the Appellate Body in this case both rejected Canada’s challenge to France import ban on asbestos and asbestos-containing products, reinforcing the view that the WTO Agreements support members’ ability to protect human health and safety at the level of protection they deem appropriate.

Answer 5

Occurs when goods are exported at a price less than their normal value, generally meaning they are exported for less than they are sold in the domestic market or third-country markets, or at less than production cost.

Answer 6

Dispute Settlement Understanding, the WTO agreement that covers dispute settlement — in full, the Understanding on Rules and Procedures Governing the Settlement of Disputes.

Answer 7

Dispute Settlement Body — when the WTO General Council meets to settle trade disputes.

Answer 8

A tariff that is not a percentage (eg, dollars per ton) can be estimated as a percentage of the price — the ad valorem equivalent.

Answer 9

A tariff rate charged as percentage of the price.

Answer 10

GATT’s Article 6 allows anti-dumping duties to be imposed on goods that are deemed to be dumped and causing injury to producers of competing products in the importing country. These duties are equal to the difference between the goods’ export price and their normal value, if dumping causes injury.

Answer 11

An independent seven-person body that considers appeals in WTO disputes. When one or more parties to the dispute appeals, the Appellate Body reviews the findings in panel reports.

Answer 12

Before and after a measure is applied.

Answer 13

A casual term used to infer that a country which does not make any trade concessions, profits, nonetheless, from tariff cuts and concessions made by other countries in negotiations under the most-favoured-nation principle.

Answer 14

Trade within the group is duty free but members set their own tariffs on imports from non-members (e.g. NAFTA).

Answer 15

An international nomenclature developed by the World Customs Organization, which is arranged in six-digit codes allowing all participating countries to classify traded goods on a common basis. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs and many other purposes.

Answer 16

Used in tariff negotiations for much steeper reductions in higher tariffs than in lower tariffs, the final rates being “harmonized” i.e. closer together.

Answer 17

The World Customs Organization’s Harmonized System (HS) uses code numbers to define products. A code with a low number of digits defines broad categories of products; additional digits indicate sub-divisions into more detailed definitions. Six-digit codes are the most detailed definitions that are used as standard. Countries can add more digits for their own coding to subdivide the definitions further according to their own needs. Products defined at the most detailed level are “tariff lines”

Answer 18

Most-favoured-nation treatment (GATT Article I, GATS Article II and TRIPS Article 4), the principle of not discriminating between one’s trading partners.

Answer 19

Normal non-discriminatory tariff charged on imports (excludes preferential tariffs under free trade agreements and other schemes or tariffs charged inside quotas).

Answer 20

In the WTO, involving all members.

Answer 21

In services, the equivalent of tariff schedules in GATT, laying down the commitments accepted — voluntarily or through negotiation — by WTO members.

Answer 22

The principle of giving others the same treatment as one’s own nationals. GATT Article 3 requires that imports be treated no less favourably than the same or similar domestically-produced goods once they have passed customs. GATS Article 17 and TRIPS Article 3 also deal with national treatment for services and intellectual property protection.

Answer 23

In the WTO dispute settlement procedure, an independent body is established by the Dispute Settlement body, consisting of three experts, to examine and issue recommendations on a particular dispute in the light of WTO provisions.

Answer 24

In financial services, terms used to describe an objective of market regulation by authorities to protect investors and depositors, to avoid instability or crises.

Answer 25

In the WTO, involving only some members.

Answer 26

Quantitative restrictions — specific limits on the quantity or value of goods that can be imported (or exported) during a specific time period.

Answer 27

Canada, EU, Japan and the United States.

Answer 28

Laws, regulations and administrative procedures which determine a product’s country of origin. A decision by a customs authority on origin can determine whether a shipment falls within a quota limitation, qualifies for a tariff preference or is affected by an anti-dumping duty. These rules can vary from country to country

Answer 29

Action taken to protect a specific industry from an unexpected build-up of imports — generally governed by Article 19 of GATT. The Agriculture Agreement and Textiles and Clothing Agreement have different specific types of safeguards: “special safeguards” in agriculture, and “transitional safeguards” in textiles and clothing.

Answer 30

In general, a WTO member’s list of commitments on market access (bound tariff rates, access to services markets). Goods schedules can include commitments on agricultural subsidies and domestic support. Services commitments include bindings on national treatment. Also: “schedule of concessions”, “schedule of specific commitments”.

Answer 31

List of bound tariff rates.

Answer 32

Temporary increase in import duty to deal with import surges or price falls, under provisions that are special to the Agriculture Agreement.

Answer 33

In Doha Round agriculture: a tool that will allow developing countries to raise tariffs temporarily to deal with import surges or price falls.

Answer 34

There are two general types of subsidies: export and domestic. An export subsidy is a benefit conferred on a firm by the government that is contingent on exports. A domestic subsidy is a benefit not directly linked to exports.

Answer 35

Commitment not to increase a rate of duty beyond an agreed level. Once a rate of duty is bound, it may not be raised without compensating the affected parties.

Answer 36

Higher import duties on semi-processed products than on raw materials, and higher still on finished products. This practice protects domestic processing industries and discourages the development of processing activity in the countries where raw materials originate.

Answer 37

A product as defined in lists of tariff rates. Products can be sub-divided, the level of detail reflected in the number of digits in the Harmonized System (HS) code use to identify the product.

Answer 38

Relatively high tariffs, usually on “sensitive” products, amidst generally low tariff levels. For industrialized countries, tariffs of 15% and above are generally recognized as “tariff peaks”.

Answer 39

When quantities inside a quota are charged lower import duty rates, than those outside (which can be high).

Answer 40

Procedures relating to the agricultural market-access provision in which all non-tariff measures are converted into tariffs.

Answer 41

1. The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.* 2. The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1. 3. … 4. 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. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.

Answer 42

Japan – Alcoholic Beverages II (1996)- Purpose: to avoid protectionism in the application of internal tax and regulatory measures >>> to ensure that internal measures not be applied to imported or domestic so as to afford protection to domestic products - Provide equality of competitive conditions for imported products in relation to domestic products

Answer 43

- Covers both de jure (in law) and de facto (in fact) discrimination - De jure discrimination  origin-based discrimination (Korea – Various Measures on Beef (2001)) - De facto d.  might not be origin based, but in fact still a discrimination (Japan –Alcoholic Beverages II (1996))

Answer 44

- Applies only to internal measures NOT to border measures Ad Article III Any internal tax or other internal charges, or any law, regulation or requirement of the kind referred to in paragraph 1 which applies to an imported product and to the like domestic product and is collected or enforced in the case of the imported product at the time or point of importation, is nevertheless to be regarded as an internal tax or other internal charge, or a law, regulation or requirement of the kind referred to in paragraph 1, and is accordingly subject to the provisions of Article III. - example: if the importation of a product is barred at the border because the product fails to meet public health requirements >>> it affects the internal sale and thus falls within article III

Answer 45

Article III:1 >>> creates a general principle that internal measures should not be applied so as to afford protection to domestic production >>> a guide to understanding and interpreting the specific obligations contained in article III:2 and III:4 - Article III:2 >>> internal taxation >>>two obligations: (1) relating to internal taxation of ‘like products’ and (2) relating to internal taxation of ‘directly competitive or substitutable products’- Article III:4 >>> internal regulation

Answer 46

Three-tier test for the first sentence of Article III:2 1. Is the measure at issue an internal tax or other internal charges on products? 2. Are the imported and domestic products ‘like products’? 3. Are the imported products taxed in excess of the domestic products?

Answer 47

Examples: Value-added taxes (VAT), sales taxes, excise duties - (customs duties or border charges are NOT covered because they are not internal taxes/charges) - China – Auto Parts (2009): the obligation to pay charge must accrue due to an internal event, such as the distribution, sale, use or transportation of the imported product - Indirect taxation: taxes imposed on the raw material used during production

Answer 48

Japan – Alcoholic Beverages II (1996)- an Internal tax imposed on sochu was same as that imposed on imported sochu - the Higher tax imposed on imported vodka was also imposed on domestic vodka - Sochu and vodka = like products? - Narrow construction of likeliness - Yes >>> sochu and vodka were considered like products >>> both white/clean spirits, made of similar raw materials, and the end-uses were virtually identical Philippines – Distilled Spirits (2012)- Criteria: 1) The products’ properties, nature, and quality their physical characteristics 2) The products’ end-uses 3) Consumers’ tastes and habits consumers’ perceptions and behaviors in respect of the products 4) The products’ tariff classification = these criteria are tools available to panels for organizing and assessing the evidence relating to the competitive relationship between and among the products - Products with very similar physical characteristics may not be ‘like’ (within meaning of article III:2) if their competitiveness or substitutability is low - Products with physical differences may be considered ‘like’ if such physical differences have limited impact on the competitive relationship among the products

Answer 49

- Whether imported products are taxed in excess of domestic products Japan – Alcoholic Beverages II (1996)- The prohibition of discriminatory taxes in Article III:2 is not qualified by a de minimis standard >>> even the smallest amount of “excess” is too much- Examination of actual tax burdens

Answer 50

If measure is consistent with Article III:2, first sentence, then it must be examined whether measure is consistent with Article III:2, second sentence. - Article III:2, second sentence, contemplates a broader category of products than article III:2, first sentence. = broader category = different four-tier test: 1) Is the measure at issue an internal tax or other internal charge? 2) Are the imported and domestic products directly competitive or substitutable products which are in competition with each other? 3) Are the directly competitive or substitutable imported and domestic products dissimilarly taxed? 4) Is the dissimilar taxation applied so as to afford protection to domestic production?

Answer 51

- Examples: Value added taxes (VAT), sales taxes, excise duties - (customs duties or border charges are NOT covered because they are not internal taxes/charges) - China – Auto Parts (2009): the obligation to pay charge must accrue due to an internal event, such as the distribution, sale, use or transportation of the imported product - Indirect taxation: taxes imposed on the raw material used during productio

Answer 52

Japan – Alcoholic Beverages II (1996) - traditional local alcoholic beverage ‘sochu’ was found to be directly competitive and substitutable with imported western-style liquors such as whisky, brandy, cognac, vodka … Canada – Periodicals (1997)- to be directly competitive or substitutable within the meaning of the second sentence of article III:2, products do not have to be perfectly substitutable Korea – Alcoholic Beverages (1999)- all like products are, by definition, directly competitive or substitutable products BUT not all directly competitive or substitutable products are like the notion of like must be construed narrow, whereas competitive/substitutable is a broader category - given products may not (at a given moment) considered by consumers as substitutes BUT a relevant relationship nevertheless exists if they are capable of being substituted for one another

Answer 53

- Tax differential has to be more than de minimis to be GATT-inconsistent with regards to article III:2, second sentence - No official de minimis standard case-to-case basis

Answer 54

- Members are allowed to apply dissimilar taxes  as long as not to afford protection to domestic production Japan – Alcoholic Beverages II (1996)- Objective analysis of the structure and application of the measure in question on domestic as compared to imported products

Answer 55

National treatment obligation also concerns internal regulations as per article III:4 - Three-tier test: 1) Is the measure at issue a law, regulation or requirement covered by article III:4? 2) Are the imported and domestic products like products? 3) Are the imported products accorded less favourable treatment?

Answer 56

Applies to domestic regulations affecting the sale and use of products Italy – Agricultural Machinery (1958)- Scope: includes all measures that may modify the conditions of competition in the market - Examples Article III:4 applies to: 1) Minimum price requirements applicable to domestic and imported beer (Canada –Provincial Liquor Boards (1992)) 2) The requirement that imported beer and wine be sold only through in-State wholesalers or other middlemen (US – Malt Beverages (1992)) 3) A ban on cigarette advertising (Thailand – Cigarettes (1990)) 4) Trade-related investment measures (Canada – FIRA (1984)); …and so on = the concept is very broad !

Answer 57

- Concept of likeliness not construed as narrowly as in article III:2 - Like products must be interpreted as to give proper scope and meaning to the anti- protectionism principle of article III:1 EC – Asbestos (2001) - Determination of likeliness under article III:4 is, fundamentally, a determination about the nature and extent of a competitive relationship between and among products - Product scope broader than first sentence of article III:2 BUT not broader than the combined product scope of the two sentences of article III:2

Answer 58

- Treatment no less favourable = effective equality of opportunities

Answer 59

is a Latin expression that means "in fact, in reality, in actual existence, force, or possession, as a matter of fact" (literally "of fact"). In law, it often means "in practice but not necessarily ordained by law" or "in practice or actuality, but not officially designated or established". It is commonly used in contrast to de jure (which means "according to law"; literally "from law"), when referring to matters of law, governance, or technique (such as standards) that are found in the common experience as created or developed without or contrary to a regulation. When discussing a legal situation, de jure designates what the law says, while de facto designates what happens in practice.

Answer 60

Classical Latin: de iure [deː ˈjuːrɛ]; (lit. 'concerning law') means 'a state of affairs that is in accordance with law', i.e. that is officially designated. In contrast, de facto (lit. 'concerning fact'), means 'a state of affairs that is true in fact, but that is not officially designated'. In law, and in government, the terms de jure and de facto are used instead of 'in law' and 'in practice', respectively. In a legal context, de jure (laws) are contrasted to de facto practices, where, for example, the people obey a contract as though there were a law enforcing it, yet there is no such law. A process known as 'desuetude' may allow de facto practices to replace de jure laws that have fallen out of favour locally.

Answer 61

An import license is a document issued by a national government authorizing the importation of certain goods into its territory. Import licenses are considered to be non-tariff barriers to trade when used as a way to discriminate against another country's goods in order to protect a domestic industry from foreign competition. Each license specifies the volume of imports allowed, and the total volume allowed should not exceed the quota. Licenses can be sold to importing companies at a competitive price, or simply a fee. However, it is argued that this allocation methods provides incentives for political lobbying and bribery. Government may put certain restrictions on what is imported as well as the amount of imported goods and services. For example, if a business wishes to import agricultural products such as vegetables, then the government may be concerned about the impact of such importations of the local market and thus impose a restriction.

Answer 62

A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of general consumption tax that is collected incrementally, based on the value added, at each stage of production and is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer. VATs raise about a fifth of total tax revenues both worldwide and among the members of the Organisation for Economic Co-operation and Development (OECD). As of 2014, 160 of the world's approximately 193 countries employ a VAT, including all OECD members except the United States. There are two main methods of calculating VAT: the credit-invoice or invoice-based method and the subtraction or accounts-based method. Using the credit-invoice method, sales transactions are taxed, with the customer informed of the VAT on the transaction, and businesses may receive a credit for VAT paid on input materials and services. The credit-invoice method is the most widely employed method, used by all national VATs except for Japan. Using the subtraction method, at the end of a reporting period, a business calculates the value of all taxable sales then subtracts the sum of all taxable purchases and the VAT rate is applied to the difference. The subtraction method VAT is currently only used by Japan, although subtraction method VATs, often using the name "flat tax", have been part of many recent tax reform proposals by US politicians. With both methods, there are exceptions in the calculation method for certain goods and transactions, created for either pragmatic collection reasons or to counter tax fraud and avoidance.

Answer 63

A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow (or require) the seller to collect funds for the tax from the consumer at the point of purchase. When a tax on goods or services is paid to a governing body directly by a consumer, it is usually called a use tax. Often laws provide for the exemption of certain goods or services from sales and use tax.

Answer 64

The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994). The WTO is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on developing countries. As of June 2012, the future of the Doha Round remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete. The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sector (requested by developed countries) and the substantiation of fair trade on agricultural products (requested by developing countries) remain the major obstacles. This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round. As a result, there have been an increasing number of bilateral free trade agreements between governments. As of July 2012, there were various negotiation groups in the WTO system for the current agricultural trade negotiation which is in the condition of stalemate. The WTO's current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement in the organization's history.

Answer 65

Rules of origin are used to determine the country of origin of a product for purposes of international trade. There are two common types of rules of origin depending upon application, the preferential and non-preferential rules of origin (19 CFR 102). The exact rules vary from country to country, from agreement to agreement.

Answer 66

National treatment is a principle in international law vital to many treaty regimes. It essentially means treating foreigners and locals equally. Under national treatment, if a state grants a particular right, benefit or privilege to its own citizens, it must also grant those advantages to the citizens of other states while they are in that country. In the context of international agreements, a state must provide equal treatment to those citizens of other states that are participating in the agreement. Imported and locally produced goods should be treated equally — at least after the foreign goods have entered the market. While this is generally viewed as a desirable principle, in custom it conversely means that a state can deprive foreigners of anything of which it deprives its own citizens. An opposing principle calls for an international minimum standard of justice (a sort of basic due process) that would provide a base floor for the protection of rights and of access to judicial process. The conflict between national treatment and minimum standards has mainly played out between industrialized and developing nations, in the context of expropriations. Many developing nations, having the power to take control over the property of their own citizens, wished to exercise it over the property of aliens as well. Though support for national treatment was expressed in several controversial (and legally non-binding) United Nations General Assembly resolutions, the issue of expropriations is almost universally handled through treaties with other states and contracts with private entities, rather than through reliance upon international custom. National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally produced products are not charged an equivalent tax.

Answer 67

An ad valorem tax (Latin for "according to value") is a tax whose amount is based on the value of a transaction or of property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ad valorem tax may also be imposed annually, as in the case of a real or personal property tax, or in connection with another significant event (e.g. inheritance tax, expatriation tax, or tariff). In some countries a stamp duty is imposed as an ad valorem tax.

Answer 68

In regulatory jurisdictions that provide for this (a list including most or all developed countries with free market economies) consumer protection is a group of laws and organizations designed to ensure the rights of consumers, as well as fair trade, competition, and accurate information in the marketplace. The laws are designed to prevent the businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors. They may also provide additional protection for those most vulnerable in society. Consumer protection laws are a form of government regulation that aim to protect the rights of consumers. For example, a government may require businesses to disclose detailed information about products—particularly in areas where safety or public health is an issue, such as food. Consumer protection is linked to the idea of consumer rights, and to the formation of consumer organizations, which help consumers make better choices in the marketplace and get help with consumer complaints. Other organizations that promote consumer protection include government organizations and self-regulating business organizations such as consumer protection agencies and organizations, ombudsmen, the Federal Trade Commission in America, and Better Business Bureaus in America and Canada, etc. A consumer is defined as someone who acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing. Consumer interests can also be protected by promoting competition in the markets which directly and indirectly serve consumers, consistent with economic efficiency, but this topic is treated in competition law. Consumer protection can also be asserted via non-government organizations and individuals as consumer activism.

Answer 69

A border adjustment tax is a short name for a destination-based cash flow tax (DBCFT). It is a value added tax levied on imported goods. It's also called a border-adjusted tax, border tax adjustment or destination tax. Exported goods are exempt from tax; imported goods sold domestically are subject to the tax.

Answer 70

The term “directly competitive or substitutable” describes a particular type of relationship between two products, one imported and the other domestic. It is evident from the wording of the term that the essence of that relationship is that the products are in competition. “Like” products are a subset of directly competitive or substitutable products: all like products are, by definition, directly competitive or substitutable products, whereas not all “directly competitive or substitutable” products are “like”. The notion of like products must be construed narrowly but the category of directly competitive or substitutable products is broader. While perfectly substitutable products fall within Article III:2, first sentence, imperfectly substitutable products can be assessed under Article III:2, second sentence.