1. International Economic Law Article III.4

2. Test of article III.4 Measure (law, regulation, requirement) Affecting internal sale, offer for sale… Domestic and foreign products are like Less favourable treatment is applied to imported products (Italian agricultural Machine, Korea Beef dual retailer system..)

3. Laws regulation.. Measure: wide interpretation (see Article XI and XXIII1.b GATT) Measure (law, regulation..) attributed to a government (GATT DOES NOT regulate private behaviour) BUT private parties actions assimilated to government actions are covered by the provision (incentives)?

4. Affecting – having an effect on – trade : potentially and not only actually, that is measures which MIGHT adversely modify the conditions of competition between imported and domestic products For example: limitation on point of sales for alcoholic imported beverages Ban on advertising on cigarettes Additional marking requirement naming the name of the producer, the formula

5. Likeness LIKE imported and domestic products Definition of like products in Article III.4 – combined scope of like and directly competitive or substitutable (article III.2)?* See Appellate Body – Asbestos par. 98 -100 Why does the AB conclude that like in Article III.4 is broader than like in Article III.2? What is the scope of like in article III.4?

6. *Border tax Adjustment Case Border Tax Adjustment test of likeness in Article III.4 – important case for the likeness criteria - four factors designed to evaluate the competitive relationships between and among products: the properties, nature, and qualities of the products; end uses of the products; consumers' perceptions and behavior; the tariff classification of the products.

7. Some Article III.4 cases and likeness Measure adopted by the EC no violation of Article III.4 because no like products (different kind of proteins) different duty rates and bindings – varying protein content – different origins. Us alcoholic and Malt beverages – high alcohol beer not LIKE low alcohol beer (different location where beer sold – different labelling requirement) – purpose and effect (here the tertium comparationis is purpose – human health, public morals) Canada alcohol (II) identical product – identical treatment in violation of Article III.4: minimum price (fixed in relation to process at which domestic beer was supplied – even if applied equally does not accord equal conditions of competition- imported beer cannot be supplied at a price below that of domestic beer

8. Asbestos Applicable GATT provisions Technically two measures: banning on imports of asbestos and asbestos– containing products Prohibition of use of asbestos-containing products in France Article III.4 or Article XI? Canada: French decree to be examined in the light of both Articles (the ban under Article I the prohibition of use under Article III.4) – EC: either the measures are internal regulation - covered by Article III.4

9. Panel: Article III.4 applicable – No identical measure but the two measures – they are part of one regulatory system. They lead to the same result: halting of spread of asbestos and asbestos-containing products on French territory

10. Panel - asbestos Panel: 8.88: The Panel draws attention to Note Ad Article III, which specifically covers a situation in which a law, regulation or requirement applies both to an imported product and to the like domestic product and is enforced in the case of the imported product at the time or point of importation. The latter is in fact the case. Consequently, the Panel considers it proper to commence its analysis by determining whether the Note Ad Article III applies to this case. As neither of the parties contests the fact that the measure applicable to the imported product is imposed at the time or point of importation, it is necessary to examine whether the Decree "applies to an imported product and to the like domestic product"

11. Panel - asbestos Omissis 8.91. The Panel notes in this connection that the fact that France no longer produces asbestos or asbestos-containing products does not suffice to make the Decree a measure falling under Article XI:1. It is in fact because the Decree prohibits the manufacture and processing of asbestos fibres that there is no longer any French production. The cessation of French production is the consequence of the Decree and not the reverse. Consequently, the Decree is a measure which "applies to an imported product and to the like domestic product" within the meaning of Note Ad Article III…. omissis

12. asbestos the regulations applicable to domestic products and foreign products lead to the same result: the halting of the spread of asbestos and asbestos-containing products on French territory. In practice, in one case (domestic products), they cannot be placed on the domestic market because they cannot be transferred under any title. In the other (imported products), the import ban also prevents their marketing

13. Panel - asbestos …. we also consider that the wording of Note Ad Article III and practice in the GATT 1947 in this respect do not support Canada's approach that an identical measure must be applied to the domestic product and the like imported product if the measure applicable to the imported product is to fall under Article III

14. Panel - asbestos..8.96 We consider that an internal charge applied to a domestic product must also be imposed on an imported product. Nevertheless, if it is deemed appropriate to impose the charge at the border rather than waiting until the imported product is actually marketed, the same logic applies in the case of a regulatory measure prescribing a ban on marketing. Is it not equally preferable from the administrative point of view and in the interests of the importers themselves to prevent the entry of the like product into the country applying the measure rather than waiting until it is placed in a warehouse before banning its sale?

15. Panel - asbestos For the foregoing reasons, we consider that Article III:4 of the GATT 1994 applies to the ban on importing asbestos and asbestos- containing products imposed by the Decree. On the basis of the grounds for this conclusion, we do not consider it necessary to examine further Canada's arguments on the exclusive application of Article XI:1 THUS what text shall be applied under III.4?

16. Asbestos -likeness Canada claims against measure adopted by France: -de facto discrimination on imported products – -less favourable treatment to like products -Asbestos containing chrysotile fibres and materials containing PCG fibres (asbestos free) are like products France defence: - sales ban on construction materials containing asbestos (chrysotile fibres) (reflect on the reason behind the French ban)

17. Panel: Chryslides and PCG fibres are like products ? What criteria did the Panel apply to determine likeness? Why did it consider health risk as irrelevant?

18. Consequently, the fact that chrysotile fibres do not have the same structure or chemical composition as PVA, cellulose or glass fibres cannot be decisive for the evaluation of the likeness of these products. 127 (particular attention paid by the Panel to the end use of the product) 125: In this case, even if the end-uses of chrysotile fibres on the one hand and PVA, cellulose and glass fibres on the other are only the same for a small number of their respective applications, in some cases the applications are similar. Their properties are then equivalent, if not identical. This is the juncture of interest to us, the moment when the products are used for the same purpose.

19. Health risk - Panel We note first of all that the risk of a product for human or animal health has never been used as a factor of comparison by panels entrusted with applying the concept of "likeness" within the meaning of Article III. In addition to the fact that no other panel has probably ever been called upon to examine a question similar to the one before us, in our view the reason is to be found in the economy of the GATT 1994. Its primordial role is to ensure that a certain number of disciplines are applied to domestic trade regulations. Article XX of the GATT, however, recognizes that certain interests may take precedence over the rules governing international trade and authorizes the adoption of trade measures aimed at preserving these interests while at the same time observing certain criteria. We consider that introducing a criterion on the risk of a product into the analysis of likeness within the meaning of Article III would largely nullify the effect of Article XX(b)

20. Asbestos Appeal Why did the EC made an appeal? Issues raised in the appeal: whether the Panel erred in its interpretation and application of the term "like products" in Article III:4 of the GATT 1994 in finding, in paragraph 8.144 of the Panel Report, that chrysotile asbestos fibres are "like" PVA, cellulose and glass fibres whether the Panel erred in finding that the measure at issue is "necessary to protect human... life or health" under ArticleXX(b) of the GATT1994,

21. Appellate Body Appellate body analysis: General approach to the interpretation of like products Finding of error of law by the panel Competing the analysis - application of Article III.4

22. Likeness – Appellate Body Likeness Textual meaning? Many interpretative questions remain open Strict reading of likeness in article III.2 should not be replicated in article III.4 Like in article III.4: products that are in competitive relationship – likeness is a question of nature and extent of competitive relationship 98 -100 definition of the scope of “like” in Article III.4

23. Likeness – Appellate Body we recognize that the relationship between these two provisions is important, because there is no sharp distinction between fiscal regulation, covered by Article III:2, and non-fiscal regulation, covered by Article III:4. Both forms of regulation can often be used to achieve the same ends. It would be incongruous if, due to a significant difference in the product scope of these two provisions, Members were prevented from using one form of regulation – for instance, fiscal – to protect domestic production of certain products, but were able to use another form of regulation – for instance, non- fiscal – to achieve those ends.

24. Likeness – Appellate Body This would frustrate a consistent application of the "general principle" in Article III:1. For these reasons, we conclude that the scope of "like" in Article III:4 is broader than the scope of "like" in Article III:2, first sentence. Nonetheless, we note, once more, that Article III:2 extends not only to "like products", but also to products which are "directly competitive or substitutable", and that Article III:4 extends only to "like products". In view of this different language, and although we need not rule, and do not rule, on the precise product scope of Article III:4, we do conclude that the product scope of Article III:4, although broader than the first sentence of Article III:2, is certainly not broader than the combined product scope of the two sentences of Article III:2 of the GATT 1994

25. Likeness – Appellate Body AB (99 – 124): the products are not like What criteria did the AB apply? Are chrysotile fibres like PCG fibres? Why not? (carcinogenic) See AB - Is the test applied by the AB convincing? What is the AB saying about consumers’ choice? Why the AB and the Panel arrived at different conclusion regarding likeness? (methodology or criteria?)

26. Likeness – Appellate Body The criteria to determine likeness (border Tax adjustment Report) 1) properties nature and quality of a product (health risk?) (carcinogenicity toxicity) 2) end-use 3)Consumers’ tastes and habits (health risk?) (non product related features? Like tuna dolphin? ) 4) tariff classification But it is important to verify to what extent the products involved are (even potentially) in a competitive relationship in the market place (114)

27. Likeness – Appellate Body (presumption) 122. In this case especially, we are also persuaded that evidence relating to consumers' tastes and habits would establish that the health risks associated with chrysotile asbestos fibres influence consumers' behavior with respect to the different fibres at issue. 166 We observe that, as regards chrysotile asbestos and PCG fibres, the consumer of the fibres is a manufacturer who incorporates the fibres into another product, such as cement-based products or brake linings. We do not wish to speculate on what the evidence regarding these consumers would have indicated; rather, we wish to highlight that consumers' tastes and habits regarding fibres, even in the case of commercial parties, such as manufacturers, are very likely to be shaped by the health risks associated with a product which is known to be highly carcinogenic.

28. Likeness – Appellate Body A manufacturer cannot, for instance, ignore the preferences of the ultimate consumer of its products. If the risks posed by a particular product are sufficiently great, the ultimate consumer may simply cease to buy that product. This would, undoubtedly, affect a manufacturer's decisions in the marketplace. Moreover, in the case of products posing risks to human health, we think it likely that manufacturers' decisions will be influenced by other factors, such as the potential civil liability that might flow from marketing products posing a health risk to the ultimate consumer, or the additional costs associated with safety procedures required to use such products in the manufacturing process

29. Some questions about the AB report Is the reasoning of the AB convincing? What is the main flaw of the reasoning? Why did France enacted the decree banning asbestos fibres?

30. If manufactured anticipated consumers’ reactions (not to buy C. fibres) why would they have produced asbestos containing products? Why did they stop producing A. fibres? Because of the consumer choice or as a result of the legislation? If it is because of the legislation, what are the considerations? (consideration of likeness - they do somehow consider the products like) Private behaviour would probably (absent the legislation) produce health externalities on the society

31. Health risk and Article XX Health risk in likeness and article XX See para. 111 Aim- and effect test is the perception of the regulator

32. Interpretation of less favourable treatment (par. 100) Is there an aim and effect test applied?