GD/233

United States - Denial of Most-Favoured Nation Treatment as to Non-Rubber Footwear from Brazil

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Other titles

US MFN Footwear (Source: GATT Analytical Index)

Parties

Complainant
Brazil
Respondent
United States
Third Parties
India

Products at Issue

Products at issue
Non-rubber footwear
Type of product
Non-agricultural
Product sub-type
Leather and footwear

Related disputes

GATT
WTO

Key legal aspects

Legal basis
  • GATT Article XXIII:1
Claims raised
  • GATT Article I
  • GATT Article I:1
  • GATT Article VI:6(a)
  • GATT Article X
  • GATT Article XXIII:1(b)
  • GATT Article XXIII:1(c)
Defences raised
  • n.a.

Adjudicators

Type Panel
Chairperson Peter Stephen Lai (Malaysia)
Other members Meinhard Hilf (Germany, Fed. Rep.), János Nyerges (Hungary)

Report

Type Panel
Legal basis at issue
  • GATT Article XXIII:1
Claims at issue
  • GATT Article I:1
  • GATT Article VI:6(a)
  • GATT Article X
  • GATT Article XXIII:1(b)
  • GATT Article XXIII:1(c)
Defences at issue
  • n.a.
No of Pages (total / legal reasoning) 28
  • -
  • Inconsistency found
  • Inconsistency found
  • Found to fall outside of terms of reference
  • Found to fall outside of terms of reference
  • Found to fall outside of terms of reference
  • -

Timeline

Request for consultations
Request for establishment
Establishment
Composition
Report
Adoption of report

Outcome

Outcome of the proceedings
Report adopted
Additional Info C/M/249 (22/05/1991) Minutes of Council Meeting (24/04/1991) Brazil: request for establishment of a Panel "was not in any way an appeal of an earlier Subsidies Code [Agreement on Interpretation and Application of Articles VI, XVI and XXIII (BISD 26S/56)] panel report (SCM/94), and that the issue before the Council was a new and entirely different in that it referred exclusively to the MFN obligation of Article I, a matter that had not been adjudicated."

DS18/R (10/01/1992) United States - Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear from Brazil - Report of the Panel: The Panel recalled that the dispute involved the interrelationship of three different countervailing duty laws of the United States: (i) Section 303 of the Tariff Act of 1930 (providing for the imposition of a countervailing duty (CVD) order on subsidized imports of dutiable products without the benefit of an injury determination); (ii) Section 331 of the Trade Act of 1974 (introducing the injury requirement in respect of duty-free products from GATT contracting parties); and (iii) Sections 701 and 104 of the Trade Agreements Act of 1979 (introducing the injury requirement in respect of dutiable products from signatories of the Subsidies Agreement in Sections 701 and 104 of the Trade Agreements Act of 1979.).

In the view of the Panel, the automatic backdating of the effect of revocation of a pre-existing countervailing duty order under Section 331 of the Trade Act of 1974, without the necessity of the country subject to the order making a request for an injury review, was properly considered to be an advantage within the meaning of Article I:1. This advantage was not accorded, under Section 104(b) of the Trade Agreements Act of 1979, to contracting parties signatories to the Subsidies Agreement. Moreover, the products to which Section 331 accorded the advantage of automatic backdating were in principle the same products to which Section 104(b) denied the advantage of automatic backdating. The Panel further noted that the United States accorded duty-free status under a variety of laws only to products of a particular origin, the most important being the law establishing the General System of Preferences (GSP). Together with the grant of a tariff advantage to the designated beneficiary countries under that programme, Section 331 of the Trade Act of 1974 accorded a non-tariff advantage to the same beneficiary countries in the form of the automatic backdating of countervailing duty revocation orders. The Panel considered that the grant of the non-tariff advantage to duty-free products originating in a country beneficiary of the GSP programme, which advantage was denied to dutiable products originating in the territory of a Subsidies Agreement signatory, was inconsistent with the most-favoured-nation provision of Article I:1.

To the Panel, it was clear that the Enabling Clause expressly limited the preferential treatment accorded by developed contracting parties in favour of developing contracting parties under the Generalized System of Preferences to tariff preferences only. Therefore, the Panel found that there was no decision of the CONTRACTING PARTIES justifying the given inconsistency with Article I:1 of the non-tariff advantage accorded to duty-free products originating in countries beneficiaries of the United States GSP programme in the backdating of the effect of the revocation of countervailing duty orders.