CIE3871 WT DS 6 Japan v USA Imposition of Automobile duties PDF

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RESTRICTED

WORLD TRADE

WT/DS6/5 27 June 1995

ORGANIZATION (95-1727)

Original: English

UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974 Communication by Japan

The following communication dated 13 June 1995 from the Permanent Mission of Japan in Geneva to the WTO Secretariat is circulated at the request of the Permanent Mission of Japan. _______________ The Article XXII:1 consultations requested by Japan (WT/DS6/1) were held on 12 June 1995 in the WTO. During the consultations, the delegation of Japan presented the attached paper to the delegation of the United States.

_______________

WT/DS6/5 Page 2

CONSULTATIONS PURSUANT TO ARTICLE XXII:1 OF GATT 1994 AND ARTICLE 4 OF THE DSU CONCERNING UNITED STATES IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974

A.

Introduction

(1) the Government of Japan (the "GOJ") requested the Government of the United States of America (the "USG") to enter into consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") and Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") with respect to the affirmative determination against Japan under Sections 301 and 304 of the Trade Act of 1974, as amended, made on May 10, 1995 and the announcement made on May 16, 1995. (2) The purpose of this paper is to further clarify the legal basis of the "Request for Consultations by Japan". (3) The GOJ emphasizes its desire to seek a settlement of this dispute, which can be achieved by the USG withdrawing the affirmative determination made on May 10 and the announcement made on May 16, inter alia, not proceeding to the imposition of 100 per cent duties and terminating immediately the withholding of liquidation of entries of the listed Japanese products. B.

Violation of Article I of GATT 1994

The withholding of liquidation of entries of the listed Japanese products announced on May 16, 1995, which has been implemented since May 20, 1995, combined with the announcement of the proposed imposition of 100 per cent duties which can retroactively go into effect as of May 20, is discriminatory and therefore violates Article I of GATT 1994. The imposition of 100 per cent duties or any other discriminatory duty on the listed Japanese products by the USG, if implemented, will also violate Article I of GATT 1994. C.

Violation of Article II of GATT 1994

The imposition of 100 per cent duties or any other duty in excess of those set forth and provided for in the Schedule of concessions of the United States of America (in case of automobiles, 2.5 per cent) on the listed Japanese products by the USG, if implemented, will violate the obligation of the USG under Article II of GATT 1994. D.

Violations of Articles XI and XIII of GATT 1994

Since the said withholding of liquidation, combined with the announcement of the proposed imposition of 100 per cent duties which can retroactively go into effect as of May 20, restricts importation of the listed Japanese products into the territory of the United States, it is in violation of Article XI of GATT 1994. It is discriminatory and thus also violates Article XIII of GATT 1994, because this restriction applies only to the listed Japanese products.

WT/DS6/5 Page 3

E.

Violation of Article 23 of the DSU

The affirmative determination made on May 10, the said withholding of liquidation and the announcement made on May 16 of the proposed imposition of 100 per cent duties, both individually and collectively, violate Article 23 of the DSU. The imposition of 100 per cent duties or any other increase in duties on the listed Japanese products, if implemented, will also violate Article 23 of the DSU. F.

Nullification and Impairment in the Sense of Article XXIII:1(b) of GATT 1994

The said withholding of liquidation, combined with the announcement of the proposed imposition of 100 per cent duties which can retroactively go into effect as of May 20, has resulted in upsetting the competitive relationship in the luxury car markets, could not have been reasonably anticipated by the GOJ at the time of negotiation of the tariff concession on the products concerned, and therefore nullifies and impairs the benefit accruing to Japan under Article II of GATT 1994 in the sense of Article XXIII:1(b) of GATT 1994. G.

Need for Treatment as a Case of Urgency

The GOJ believes that this case represents a "case of urgency" referred to in Articles 4 and 12 of the DSU. (1) These consultations, followed, if necessary, by panel procedures, must move forward as expeditiously as possible before the situation worsens with the actual imposition of 100 per cent duties. (2) The said withholding of liquidation, combined with the announcement of the proposed imposition of 100 per cent duties which can retroactively go into effect as of May 20, has already caused significant damage not only to the Japanese automobile industry but also to the US dealers handling the listed Japanese luxury cars. Unless urgently addressed, the damage, because of its accumulative nature, would become irreparable. (3) Since the USG's recourse to the unilateral measures constitutes such a clear-cut violation of the WTO Agreement, it must be redressed immediately.

RESTRICTED

WORLD TRADE

WT/DS6/1 22 May 1995

ORGANIZATION (95-1326)

Original: English

UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974 Request for Consultations by Japan

The following communication dated 17 May 1995 from the Permanent Mission of Japan in Geneva to the Office of the United States Trade Representative in Geneva is circulated in accordance with Article 4.4 of the DSU. _______________

The Government of Japan hereby requests the Government of the United States of America ("the United States") to enter into consultations pursuant to Article 4 of the Understanding on Rules and Procedures governing the Settlement of Disputes ("DSU") and Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("the Agreement") with respect to the following by the Government of the United States: (1) the affirmative determination against Japan under Sections 301 and 304 of the Trade Act of 1974, as amended, made on May 10, 1995; and (2) the announcement of a list of products that could be subject to increased tariffs, made on May 16, 1995. The Government of Japan considers that: (1)

The measures announced on May 16, 1995, are in violation of United States obligations under the Agreement in particular but not limited to those under Articles I and II of the Agreement, thereby nullifying and impairing benefits accruing to Japan under the Agreement. The unilateral measures targeted at only Japan ignore fundamental WTO obligations not to discriminate against one country and not to impose customs duties in excess of thoseset forth and provided for in the Schedule of Concessions of the United States.

(2)

The announcement of an affirmative "determination" and of the above-said list as well as its eventual implementation are inconsistent with the obligations of the Government of the United States under Article 23 of the DSU which seeks "strengthening the multilateral system" by specifically prohibiting recourse to unilateral actions.

(3)

The announcement of the above-said list itself, together with a decision to withhold liquidation of entries of the listed products as of May 20, 1995, creates an immediate impact on business opportunities for the affected Japanese firms, nullifying and impairing benefits accruing to Japan under the Agreement. ./.

WT/DS6/1 Page 2

Since the Government of the United States intends to make the final determination on June 28, 1995, and has decided to withhold liquidation of entries of the listed products as of May 20, 1995, only four days after the announcement, the Government of Japan regards this matter as "a case of urgency". The announcement and implementation of the unilateral measures cause a significant negative impact on Japanese industry. The Government of Japan therefore requests that consultations be held within the period of no more than ten days after the date of receipt by the Government of the United States of this request pursuant to Article 4.8 of the DSU. The Government of Japan proposes that these consultations be held in Geneva. In accordance with Article 4.4 of the DSU, the Government of Japan is notifying the WTO General Council, the Dispute Settlement Body, and the Council for Trade in Goods of this request for consultations. Finally, the Government of Japan reserves the right to raise additional legal matters during the course of the consultations.

RESTRICTED

WORLD TRADE

WT/DS6/2 2 June 1995

ORGANIZATION (95-1485)

Original: English

UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974 Request to Join Consultations under Article 4.11 of the DSU

The following communication, dated 31 May 1995, from the Permanent Delegation of the European Commission to the Office of the United States Trade Representative and the Permanent Mission of Japan in Geneva, is circulated at the request of the Permanent Delegation of the European Commission. _______________

Pursuant to the procedures laid down in Article 4:11 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), the European Communities wish to be joined in the consultations under Article XXII:1 of GATT 1994 requested by Japan by a communication circulated to WTO Members on 22 May 1995 (WT/DS6/1) regarding trade measures affecting the import of certain Japanese cars into the United States which were announced on 16 May 1995 by the United States under Section 301 of the 1974 Omnibus Trade Act. The EC have a substantial trade interest in the strict observance of the rules concerning the strengthening of the multilateral system laid down in Article 23 of the DSU which have been invoked in the consultation request submitted by Japan. These rules are essential for the good functioning of the multilateral trading system and for the dispute settlement procedures under the WTO.

RESTRICTED

WORLD TRADE

WT/DS6/3 12 June 1995

ORGANIZATION (95-1554)

Original: English

UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974 Request to Join Consultations under Article 4.11 of the DSU Communication by Australia

The following communication, dated 1 June 1995, from the Permanent Mission of Australia to the Permanent Mission of Japan and the United States Trade Representative, is circulated at the request of the Permanent Mission of Australia. _______________

Pursuant to paragraph 11 of Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), the Government of Australia hereby notifies you that due to its substantial trade interest, it desires to be joined in the consultations under Article XXII:1 of GATT 1994 requested by Japan in a communication circulated to WTO members on 22 May 1995 (WT/DS6/1), entitled "United States - Imposition of Import Duties on Automobiles from Japan Under Sections 301 and 304 of the Trade Act of 1974". This notification of Australia's wish to be joined in the consultations is without prejudice to Australia's views on the legal basis for the WTO claims of either party. Australia has a substantial trade interest in relation to the products included in the U.S. Section 301 list. In the immediate and longer term, Australia has a substantial trade interest in relation to those auto parts of Australian origin which are sold to Japanese auto makers. Australia also has a substantial interest in relation to the proportion of our exports of coal, steel, iron ore and other minerals which are used in Japanese auto manufacture. Japan is a leading market for Australia's exports of all such products. Australia also exports leather and other components to the Japanese auto industry. Finally, Australia alsohas a substantial interest in the observance of the rules on the strengthening of the multilateral system in Article 23 of the DSU, which were invoked in Japan's request for consultations.

RESTRICTED

WORLD TRADE

WT/DS6/4 14 June 1995

ORGANIZATION (95-1582)

Original: English

UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974 Acceptance of the Request to Join Consultations Communication by the United States

The following communication dated 12 June 1995 from the Office of the United States Trade Representative in Geneva to the Dispute Settlement Body is circulated according to Article 4.11 of the DSU. _______________

The Office of the United States Trade Representative received a letter dated June 1, 1995, from the Australian Permanent Mission in which the Australian Government expressed its desire to be joined in consultations requested by the Japanese Government (WT/DS6/1). Based on the Australian Government's statement that, "[i]n the immediate and longer term, Australia has a substantial trade interest in relation to those auto parts of Australian origin which are sold to Japanese auto makers," the U.S. Government agrees that the Australian Government's claim of substantial trade interest is wellfounded, and has so informed the Australian Permanent Mission.

RESTRICTED

WORLD TRADE

WT/DS6/6 27 June 1995

ORGANIZATION (95-1726)

Original: English

UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974 Communication from Japan

The following communication dated 13 June 1995 from the Permanent Mission of Japan in Geneva to the WTO Secretariat is circulated at the request of the Permanent Mission of Japan. _______________ The Article XXII:1 consultations requested by Japan (WT/DS6/1) were held on 12 June 1995 in the WTO. During the consultations, the delegation of Japan presented the attached paper to the delegation of the United States.

_______________

WT/DS6/6 Page 2

Japan's Questions to the United States for the Consultations Pursuant to Article XXII:1 of GATT 1994 and Article 4 of DSU

I.

On the Proposed Tariff Increase

1.

(1)

Does the USG not have any intention to withdraw the determination made on May 10 and the announcement made on May 16?

(2)

How does the USG reconcile the eventual imposition of these measures with United States obligations under Article I of GATT 1994? Does any of the authorized exceptions to Article I of GATT 1994 apply to the proposed measures?

(3)

What are the criteria by which the 13 models of Japanese luxury cars were selected to be subjected to 100 per cent tariff?

2.

How does the USG reconcile the eventual imposition of these measures with United States obligations under Article II of GATT 1994? Does any of the authorized exceptions to Article II of GATT 1994 apply to the proposed measures?

II.

On the Withholding of Liquidation Combined with the Announcement of the 100 Per Cent Duties

1.

(1)

What does "withholding" of liquidation mean? What statutory or regulatory provisions of the U.S. laws and regulations provide the legal basis for this action and its application only to the 13 models of Japanese luxury cars?

(2)

Is this measure regarded as the actions to be taken in the context of Section 305 of the Trade Act of 1974, as amended?

(3)

Are there other examples of such retroactive implementation in the context of actions under Section 301?

(1)

How does the USG reconcile this measure with United States obligations under Article I of GATT 1994? Does any of the exceptions to Article I of the GATT 1994 apply to this measure?

(2)

Does this measure, targeted only at the listed Japanese luxury cars, restrict imports as stipulated in Article XI of the GATT 1994? If not, why? Does the USG intend to invoke any exceptions under Article XI:2 to justify this measure?

(3)

Does this measure, targeted only at the listed Japanese luxury cars, restrict imports as stipulated in Article XIII of the GATT 1994? If not, why?

2.

III.

On the Recourse to Unilateral Measures

1.

With regard to the determination made on May 10, 1995:

WT/DS6/6 Page 3

2.

(1)

Are the "Reasons for Determination" in the Federal Register notice dated May 18, 1995 (60 FR 26745) ascribed to an alleged "complex system"? Are the elements of such system mentioned there exhaustive? If not, please explain in detail all elements which constitute such system.

(2)

What are the specific reasons for the determination with regard to investigation on "critical parts", "alteration regulations" and the "certification system" for the garages and mechanics, which were mentioned in the Federal Register notice dated October 13, 1994 (59 FR 52034)?

(3)

Does the lack of mention of "critical parts" in the May 18, 1995 notice published in the Federal Register mean that the critical parts issue is not longer pending in the Section 301 proceedings? Why was this item not mentioned in the Federal Register notice?

(4)

The letter from Ambassador Kantor to the WTO Director General Ruggiero (WT/INF/1, 17 may 1995) noted that "In the auto parts aftermarket, excessive and complex regulations channel most repairs to garages tied closely to Japanese parts manufactures, which results in market discrimination". -

How do the facts and circumstances on which this statement is based differ from those on which the 301 determination is based?

-

Do "excessive and complex regulations" include the items mentioned in (2) above?

(5)

What is the specific reason for determining the acts, policies and practices of Japan to (a) "be unreasonable", (b) "be discriminatory", and (c) "burden or restrict U.S. commerce" respectively?

(6)

Is the determination made on May 10 the one within the scope of Article 23.2(a) of DSU? If not, why?

Does the ongoing Section 301 proceeding cover acts, policies and practices of Japan in the auto parts aftermarket? If so, what particular acts, policies and practices of Japan in that field does the Section 301 proceeding cover? (1)

Is the said Section 301 proceeding limited to governmental regulations regarding "critical parts", "alteration regulations" and the "certification system"for garages and mechanics, which were mentioned in the October 13, 1994 notice published in the Federal Register?

(2)

If the answer to the question in (1) above is yes, what specific acts, policies and practices in these three areas does the USG consider to be unreasonable and discriminatory and burden or restrict US commerce and how do they restrict or deny US auto parts supplier access to the market in Japan? Do they fall outside the scope of the WTO Agreement? Are they not covered by the WTO Agreem...