United States - Taxes on Petroleum and Certain Imported Substances (Superfund)

Other titles

US Superfund (Source: GATT Analytical Index)


Third Parties

Products at Issue

Products at issue
Type of product
Product sub-type
Mineral products

Related disputes


Key legal aspects

Legal basis
  • GATT Article XXII:1
  • GATT Article XXIII:1
Claims raised
  • GATT Article III:1
  • GATT Article III:2
Defences raised
  • n.a.


Type Panel
Chairperson Michael D. Cartland (Hong Kong)
Other members Kyota Akasaka (Japan), Christer Manhusen (Sweden)


Type Panel
Legal basis at issue
  • GATT Article XXII:1
  • GATT Article XXIII:1
Claims at issue
  • GATT Article III:1
  • GATT Article III:2 first sentence
Defences at issue
  • n.a.
No of Pages (total / legal reasoning) 30
  • -
  • -
  • Not in report conclusions
  • Inconsistency found
  • -


Outcome of the proceedings
Report adopted
Additional Info L/6114 (27/01/1987) Request by Mexico for the Good Offices of the Director General (13/01/1987)

C/M/206 (23/02/1987) Minutes of Council Meeting (04/02/1987) "The Chairman suggested that the Council consider the three sub-items at the same time, stressing that each sub-item related to a separate complaint." "The Director General said that, as indicated in document L/6114, Mexico had requested his good offices under the 1966 Procedures (BISD 14S/18) in connection with its complaint against the United States related to the US tax on imported petroleum and petroleum products. As a result of his consultations on this matter with the interested delegations and taking into account that two requests for a panel in the same matter were before the Council, he could inform contracting parties that Mexico and the United States had agreed that this matter be pursued in a panel."

L/6175 (27/05/1987) United States - Taxes on Petroleum and Certain Imported Substances - Report by the Panel: With respect to the tax on petroleum, the Panel found that the imported and domestic products subject to the tax on petroleum were "like products" within the meaning of Article III:2 and that, since the rate of tax applied to the imported products was 3.5 cents per barrel higher than the rate applied to the like domestic products, the tax on petroleum was inconsistent with Article III:2, first sentence. The Panel further found that Article III:2, first sentence, could not be interpreted to protect expectations on export volumes but protected expectations on the competitive relationship between imported and domestic products. Consequently, a change in the competitive relationship contrary to that provision had to be regarded ipso facto as a nullification or impairment of benefits accruing under the General Agreement. A demonstration that a measure inconsistent with Article III:2, first sentence, had no or insignificant effects would therefore not be a sufficient demonstration that the benefits accruing under that provision had not been nullified or impaired even if such a rebuttal were in principle permitted.

With respect to the tax on certain imported substances, the Panel concluded that the tax on certain chemicals, being a tax directly imposed on products, was eligible for border tax adjustment independent of the purpose it served, and therefore did not examine whether the tax served environmental purposes and, if so, whether a border tax adjustment would be consistent with these purposes. The Panel further found that, to the extent that the tax on certain imported substances was equivalent to the tax borne by like domestic substances as a result of the tax on the chemicals used as materials in their manufacture, the tax met the national treatment requirement of Article III:2, first sentence. The penalty tax of 5 per cent of the appraised value of the imported substance, imposed if the importer failed to furnish sufficient information, would not conform with the national treatment requirement because the tax rate would in that case no longer be imposed in relation to the amount of taxable chemicals used in their production but the value of the imported substance. Nevertheless, the existence of the penalty rate provisions as such did not constitute an infringement of Article III:2, first sentence, since the tax authorities had regulatory power to eliminate the need for the imposition of the penalty rate.