Canada - Import Restrictions on Ice Cream and Yoghurt
Canada Ice Cream and Yoghurt (Source: GATT Analytical Index)
|Products at issue||
Ice cream and yoghurt
|Type of product||
Key legal aspects
|Chairperson||Lars E.R. Anell (Sweden)|
|Other members||Carmen-Luz Guarda (Chile), Hugh W. Bartlett (United Kingdom)|
|Legal basis at issue||
|Claims at issue||
|Defences at issue||
|No of Pages (total / legal reasoning)||30|
|Request for consultations||
|Request for establishment|
|Adoption of report|
|Outcome of the proceedings||
|Additional Info||L/6568 (27/09/1989) Canada – Import Restrictions on Ice Cream and Yoghurt – Report of the Panel: The parties did not contest that quotas applied by Canada were prohibited by Article XI:1; at issue was whether these measures could be justified under Article XI:2(c)(i), and if so, whether the restrictions were administered in conformity with the provisions of Articles X and XIII. A further issue raised was whether the permit system per se operated as a restriction on imports in contravention of Article XI:1. The Panel was aware that the requirements of Article XI:2(c)(i) for invoking an exception to the general prohibition on quantitative restrictions made this provision extremely difficult to comply with in practice. However, any change in the burden of proof could have consequences equivalent to amending Article XI, seriously affecting the balance of tariff concessions negotiated among contracting parties, and was therefore outside the scope of the Panel's mandate. The Panel also noted that there existed dissatisfaction with Article XI:2(c)(i) and that its revision was under discussion. The focus of this provision was limited to a fresh product restricted by the domestic measures and the competition this product faced from imports. The provision was not designed to address the difficulties of a domestic processing industry that, as a consequence of the domestic restrictions on the fresh product, faced higher raw material costs, making it less competitive with imports. To the extent that Article XI:2(c)(i) could be applied to imports of processed products, it was solely on the basis of their relationship to the fresh product under domestic restriction. This was evident from the text of the provision and its interpretative notes. As the party invoking an exception, it was incumbent upon Canada to demonstrate that the measures applied to imports of ice cream and yoghurt met each of the conditions under Article XI:2(c)(i) and XI:2(c) last sub-paragraph, in order to qualify in terms of these provisions for exemption from Article XI:1. The Panel examined the criterion of Article XI:2(c)(i) as to whether the import restriction was on an "agricultural product". Although the term is not defined in the General Agreement, the long-standing practice of the GATT, as evident in past rounds of trade negotiations and previous panel reports, was to accept that products falling under Chapters 1 to 24 in the Customs Cooperation Council Nomenclature could in principle be regarded as agricultural products. The Panel further noted that ice cream and yoghurt were food products generally regarded by consumers and the industry to be agricultural products. The Panel thus found that ice cream and yoghurt were agricultural products within the meaning of Article XI:2(c). The Panel then proceeded to examine whether ice cream and yoghurt met all the conditions for "like" products "in any form": that they were in an "early stage of processing", "still perishable", "directly competitive" with raw milk and if freely imported would "make the restriction on the fresh product ineffective". The Panel considered that only limited competition existed between raw milk and ice cream and yoghurt. Their marketing was quite different, and as was implied in the Canadian arguments the competition which did exist was related to displacement of raw milk used in Canadian ice cream and yoghurt production. The Panel thus found that imports of ice cream and yoghurt did not compete directly with raw milk in terms of Article XI:2(c)(i). The Panel also did not find that the evidence submitted by Canada justified the conclusion that unrestricted imports of ice cream and yoghurt would presently render ineffective the Canadian domestic restrictions on raw milk production. The Panel, therefore, did not make a finding with regard to whether the Canadian dairy management scheme constituted a government measure which effectively restricted total raw milk production in Canada. Regarding the requirement of Article XI:2(c)(i) that the import restrictions be "necessary to the enforcement" of the supply-restricting governmental measures, the Panel found that the criterion could not be met. The Panel concluded that Canada's restrictions on the importation of ice cream and yoghurt are inconsistent with Article XI:1 and cannot be justified under the provisions of Article XI:2(c)(i). The Panel recommended that the contracting parties request Canada either to terminate these restrictions or to bring them into conformity with its obligations under the General Agreement.
L/6694 (29/06/1990) Communication from the US (27/06/1990) Continuing to seek agreement with Canada on the time-frame for compliance with the Panel Report, and "[i]f no mutually satisfactory solution can be reached, the United States will submit a detailed request for authorization to suspend concessions". (Not underlined in the original).
C/M/243 (06/07/1990) Minutes of Council Meeting (14/06/1990) US requested information on the implementation of the Panel report.
C/M/244 (31/07/1990) Minutes of Council Meeting (11/07/1990) Canada "intend[ed] to implement the Panel report in light of the outcome of the Uruguay Round."
C/M/245 (01/11/1990) Minutes of Council Meeting (03/10/1990) "Canada considered that, given the imminent conclusion of the Uruguay Round, it was perfectly justifiable to await its outcome, especially in view of the proposals being negotiated in the area of dispute settlement."
C/M/246 (23/11/1990) Minutes of Council Meeting (07/11/1990) "Canada intended to implement the Panel report in the light of the outcome of the Uruguay Round negotiations."
SR.46/1 (01/02/1991) Summary Record of the First Meeting of the Forty-Sixth Session of the CP (12/12/1990) US: "had completed a preliminary list of items for withdrawal of concessions in response to Canada's refusal to comply with the finding of the Panel (...)". Canada: "intend[ed] to await the outcome of the trade negotiations before implementation."
C/M/247 (05/03/1991) Minutes of Council Meeting (06/02/1991) United States: "increasingly concerned about Canada's refusal to comply with the findings of the Panel". Canada: "reiterated its intention to implement the Panel report in light of the outcome of the Uruguay Round negotiations." Argentina: "noted that for some time certain delegations had been making a link between adoption and implementation of panel reports and the outcome of the Uruguay Round."
C/180 (04/11/1991) Status of Work in Panels and Implementation of Panel Reports - Report by the Director-General to the Council (12/11/1992) Dispute reported the dispute under implementation of panel reports.