Canada - Measures Affecting the Sale of Gold Coins

Other titles

Canada Gold Coins (Source: GATT Analytical Index)


Third Parties

Products at Issue

Products at issue
Gold coins
Type of product
Product sub-type
Other metal products

Related disputes


Key legal aspects

Legal basis
  • GATT Article XXIII:1
Claims raised
  • GATT Article II
  • GATT Article III
  • GATT Article XXIV:12
Defences raised
  • GATT Article XXIV:12


Type Panel
Chairperson Pierre Luis Girard (Switzerland)
Other members M. Shaton (Israel), M. Ikeda (Japan)


Type Panel
Legal basis at issue
  • GATT Article XXIII:1
Claims at issue
  • GATT Article II
  • GATT Article III:2
  • GATT Article XXIV:12
Defences at issue
  • GATT Article XXIV:12
No of Pages (total / legal reasoning) 23
  • -
  • No inconsistency found
  • Inconsistency found
  • Inconsistency found
  • Defence found to be inapplicable


Request for consultations
Request for establishment


Outcome of the proceedings
Report issued
Additional Info L/5863 (17/09/1985) Canada - Measures Affecting the Sale of Gold Coins - Report of the Panel: South Africa requested the establishment of a panel to examine whether the levying of the retail sales tax on gold coins by the Province of Ontario accorded with the provisions of GATT Articles III and II; whether Canada carried out its obligations in terms of GATT Article XXIV:12; and whether any benefits accruing to South Africa under the General Agreement had been nullified or impaired. The agreement on the terms of reference for the Panel was reached on the basis of the understanding that the Panel would provide its views to the parties on the question of whether the Ontario provincial sales tax measure on gold coins accorded with the provisions of Articles III and II before proceeding to hear additional arguments relating to the remaining elements.

In the first stage, the Panel noted that the Ontario retail sales tax was levied at the time of retail sale of goods within the province, not at the time of importation into Canadian territory. Therefore, the tax was an "internal tax" to be considered under Article III and not an "import charge" to be considered under Article II. The Panel then found that: (i) both the Maple Leaf and the Krugerrand gold coins were legal tender in their respective countries of origin but were normally purchased as investment goods. Therefore, they were not only means of payment but also "products" within the meaning of Article III:2; (ii) the Maple Leaf and Krugerrand gold coins were produced to very similar standards, had the same weight in gold, and therefore competed directly with one another in international markets. They were therefore "like" products within the meaning of Article III:2, first sentence; (iii) Ontario had exempted the Maple Leaf gold coin from its retail sales tax but not the Krugerrand gold coin. The internal taxes to which Krugerrand gold coins imported into Canadian territory were subject in Ontario were thus in excess of those applied to a like domestic product. For these reasons, the Ontario retail sales tax measure did not accord with the provisions of Article III:2, first sentence.

In the second stage, the Pane l examined the drafting history of GATT Article XXIV:12 and found that the provision applied only to those measures taken at the regional or local level which the federal government could not control because they fell outside its jurisdiction under the constitutional distribution of competence. The Panel found that it was not certain whether the measure fell under the jurisdiction of Ontario (which had exclusive authority for direct taxation within the province in order to raise revenue for provincial purposes) or under that of the Canadian federal government (which had exclusive legislative authority for the regulation of trade and commerce). Therefore, Canada had to be given the benefit of the doubt and Article XXIV: 12 had to be deemed applicable to the Ontario measure.

The Panel considered that, as an exception to a general principle of law favouring certain contracting parties, Article XXIV:12 had to be interpreted in a way that met the constitutional difficulties which federal States may have in ensuring the observance of the provisions of the General Agreement by local governments, while minimizing the danger that such difficulties lead to imbalances in the rights and obligations of contracting parties. Only an interpretation according to which Article XXIV:12 did not limit the applicability of the provisions of the General Agreement but merely limited the obligations of federal States to secure their implementation would achieve this aim. For these reasons, the non-observance of the provisions of Article III:2 by Ontario constituted a prima facie case of nullification or impairment of benefits accruing to South Africa under the General Agreement. Canada's obligations to ensure the observance of the provisions of Article III:2 by Ontario were limited to those set out in Article XXIV:12 but, until its efforts in accordance with Article XXIV:12 had secured the withdrawal of the measure, Canada was obliged to compensate South Africa for the competitive opportunities lost as a result of the Ontario measure.

Finally, the Panel considered that in determining which measures to secure the observance of the provisions of the General Agreement were "reasonable" within the meaning of Article XXIV:12, the consequences of their non-observance by the local government for trade relations with other contracting parties were to be weighed against the domestic difficulties of securing observance. The evidence did not permit a definite assessment of the extent of the difficulties to which a reference of the Ontario measure to the Supreme Court by the federal government would give rise, and of whether such a reference was to be considered a "reasonable measure".

C/182 (23/10/1992) Status of Work in Panels and Implementation of Panel Reports - Report of the Director-General (04/11/1992): Dispute reported at the Panel Stage, requested adoption of the Panel Report, no adoption date.