GD/299

United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco

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Other titles

US Tobacco (Source: GATT Analytical Index)

Parties

Complainant
Zimbabwe
Thailand
Argentina
Brazil
Chile
Colombia
El Salvador
Guatemala
Canada
Respondent
United States
Third Parties
Australia
India
EEC
EEC-12
Turkey

Products at Issue

Products at issue
Cigarettes
Type of product
Agricultural
Product sub-type
Tobacco and tobacco products

Related disputes

GATT
WTO

Key legal aspects

Legal basis
  • GATT Article XXIII:1
Claims raised
  • GATT Article II
  • GATT Article III:1
  • GATT Article III:2
  • GATT Article III:4
  • GATT Article III:5
  • GATT Article VIII:1
  • GATT Article XI:1
Defences raised
  • n.a.

Adjudicators

Type Panel
Chairperson Joseph W. P. Wong (Hong Kong)
Other members Kim Luotonen (Finland), Abdelkader Lecheheb (Morocco)

Report

Type Panel
Legal basis at issue
  • GATT Article XXIII:1
Claims at issue
  • GATT Article II
  • GATT Article III:1
  • GATT Article III:2
  • GATT Article III:4
  • GATT Article III:5
  • GATT Article VIII:1(a)
  • GATT Article XI:1
Defences at issue
  • n.a.
No of Pages (total / legal reasoning) 39 (and 17 annex)
  • -
  • Not in report conclusions
  • Not in report conclusions
  • Inconsistency found
  • Judicial economy exercised
  • Inconsistency found
  • No inconsistency found
  • Not in report conclusions
  • -

Timeline

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

Outcome

Outcome of the proceedings
Report adopted
Additional Info DS44/1 (07/09/1993) Request for consultations (07/09/1993) by Argentina, Brazil, Colombia, El Salvador, Guatemala, Thailand, Venezuela and Zimbabwe.DS44/2 (08/09/1993) Request for consultations (07/09/1993) by Chile.

DS44/3 (06/10/1993) Request for consultations (30/09/1993) by the EEC.

DS44/4 (27/09/1993) Request for consultations (22/09/1993) by Canada. "*This document cancels and replaces document DS46/1, issued on 27 September 1993." (DS46/1 was then assigned to a different dispute.)

DS44/5 (07/12/1993) Request for establishment (03/12/1993) by Brazil, Chile, Colombia, El Salvador, Guatemala, Thailand and Zimbabwe.

DS44/6 (25/01/1994) Request for establishment (25/01/1994) by Canada.

DS44/7 (10/02/1994) Communication from Australia (07/02/1994) notifying its interest as a third party to the Panel.

DS44/8 (11/02/1994) Request for establishment by Argentina (09/02/1994)

C/M/270 (22/03/1994) Minutes of Council Meeting (22-23/02/1994) Council agreed that the matter referred by Argentina would be examined by the Panel established at its forty-ninth Session.

DS44/R (15/07/1994) United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco - Report of the Panel: First, with respect to the Domestic Marketing Assessment measure (DMA), the Panel concluded that the DMA was an internal quantitative regulation relating to the use of tobacco in specified amounts or proportions which required, directly or indirectly, that a minimum specified proportion of tobacco be supplied from domestic sources, inconsistently with Article III:5, first sentence. The Panel also considered that the evidence did not support the complainants' claim that the DMA's penalty provisions were separate taxes or charges within the meaning of Article III:2.

Second, with respect to the Budget Deficit Assessment measure (BDA), the Panel considered that the imposition of an internal tax on imported flue-cured tobacco at a higher rate than on domestic flue-cured tobacco, as well as the fact that some domestic tobacco was entirely exempt from such tax, each presented cases of less favourable tax treatment inconsistent with Article III:2, first sentence. The Panel considered that the system for calculation of the BDA on imported tobacco itself, not just the manner in which it was currently applied, was inconsistent with Article III:2 because it carried with it the risk of discriminatory treatment of imports in respect of internal taxes.

Third, with respect to the No Net Cost Assessment measure (NNCA), the Panel noted that the same rate of tax was imposed via the NNCA on both imported and domestic tobacco but producers of domestic tobacco subject to NNCAs benefitted from the US Government's tobacco price support programme. In the view of the Panel, this distinction did not transform the NNCA paid on domestic tobacco into a remission of a tax on a product. In view of the explicit language of Article III:8(b), which recognized that the product-related rules of Article III "shall not prevent the payment of subsidies exclusively to domestic producers", the Panel did not consider that the payment of a subsidy to tobacco producers out of the proceeds of the NNCA resulted in a form of tax remission inconsistent with Article III:2.

Fourth, with respect to the Fees for Inspecting Imported Tobacco, the Panel found that it was not demonstrated that Section 1106(c) could not be applied in a manner ensuring that the fees charged for inspecting imported tobacco were not in excess of the cost of services rendered.