PRACTICAL ISSUES

INDUSTRY OF CELLULOSE, THE GOVERNMENT OF COUNTRY A ISSUES

CERTAIN MEASURES.
THESE CONSIST OF:
A PROGRAMME INVOLVING STOCKING OF DOMESTICALLY PRODUCED
LUMBER, SETTING A MAXIMUM PRICE AND GUARANTEEING SUPPLY OF
RAW MATERIAL; PRODUCTION TAXES IS MADE MORE EFFICIENT FOR
EXPORTERS. FOR CELLULOSE

ILLUSTRATIO

A SCHEME GRANTING CREDIT TO EXPORTERS OF FINISHED PAPER TO

BE OFFSET AGAINST THE PAYMENT OF CUSTOMS DUTIES ON
SUBSEQUENT IMPORTS;
THE REIMBURSEMENT MECHANISM FOR SE EXPORTERS, THE
MECHANISM PRESCRIBES THAT WHEN A COMPANY EXPORTS MORE THAT
60 PER CENT OF ITS PRODUCTION, THE TAX PAYABLE ON THE CELLULOSE
SOLD ON THE DOMESTIC MARKET IS MADE PAYABLE AT THE END OF THE
YEAR INSTEAD OF ON A MONTHLY BASIS;
TO 150 COMPANIES PRODUCING MAINLY CELLULOSE, CERTAIN
FINANCIAL CONTRIBUTIONS, AMOUNTING TO 0,9 PER CENT AD VALOREM,
ARE MADE. THE EXPRESSED PURPOSE OF THESE CONTRIBUTIONS IS
RESEARCH AND DEVELOPMENT, ALTHOUGH IT APPEARS THAT SOME OF
THE COMPANIESHAVE USED THE FINANCING FOR INCREASED
PRODUCTION.

COUNTRY B, AN INDUSTRIALIZED NEIGHBOURING

WTO MEMBER, HAS A SMALL DOMESTICALLY
ORIENTATED
CELLULOSE
INDUSTRY
WITH
INSIGNIFICANT EXPORTS, PRODUCING 60 PER
CENT OF THE COUNTRYS CONSUMPTION OF
CELLULOSE.
FOLLOWING
THE
INTRODUCTION OF COUNTRY AS MEASURES,
DOMESTIC
PRODUCERS
IN
COUNTRY
B
EXPERIENCE A LOSS OF MARKET-SHARE AND A
DECREASE IN PRICE OF BOTH CELLULOSE AND
FINISHED PAPER. SIMULTANEOUSLY, THE WORLD
MARKET SHARE OF COUNTRY A AND COUNTRY
AS IMPORTS OF CELLULOSE IN COUNTRY B
INCREASE
RAPIDLY

PRACTICAL ISSUES
CASE/COMPLAINT

Summary of the dispute

The summary below was up-to-date at 24 February 2010
Complaint by the United States.

On 23 May 2000, the US requested consultations with the Philippines in

respect of certain measures in the Philippines Motor Vehicle Development
Program (MVDP), including the Car Development Program, the Commercial
Vehicle Development Program, and the Motorcycle Development Program. The
United States asserted that:
the MVDP provided that motor vehicle manufacturers located in the
Philippines
who meet certain requirements are entitled to import parts,
components and
finished vehicles at a preferential tariff rate;
foreign manufacturers import licenses for parts, components and
finished
vehicles are conditioned on compliance with these
requirements. Among the
requirements referred to by the United
States are the requirement that
manufacturers use parts and
components produced in the Philippines and that they
earn a
percentage of the foreign exchange needed to import those parts and
components by exporting finished vehicles; and

The United States considered that these measures are inconsistent with the
obligations of the Philippines under Articles III:4, III:5 and XI:1 of the GATT
1994, Articles 2.1 and 2.2 of the TRIMS Agreement, and Article 3.1(b) of the
SCM Agreement.
On 12 October 2000, the US requested the establishment of a panel. At its

Panel and Appellate Body

proceedings
Further to a second request to establish a
panel by the US, the DSB established a panel
at its meeting of 17 November 2000. India and
Japan reserved their third party rights. This
panel has not yet been composed.

ART3 (4) The products of the territory of any contracting party imported
into the territory of any other contracting party shall be accorded
treatment no less favourable than that accorded to like products of
national origin in respect of all laws, regulations and requirements
affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent
the application of differential internal transportation charges which are
based exclusively on the economic operation of the means of transport
and not on the nationality of the product

ART3 (5) No contracting party shall establish or maintain any internal

quantitative regulation relating to the mixture, processing or use of
products in specified amounts or proportions which requires, directly
or indirectly, that any specified amount or proportion of any product
which is the subject of the regulation must be supplied from
domestic sources. Moreover, no contracting party shall otherwise
apply internal quantitative regulations in a manner contrary to the
principles set forth in paragraph 1.

ART11 (1) No prohibitions or restrictions other than duties, taxes or other

charges, whether made effective through quotas, import or export licences
or other measures, shall be instituted or maintained by any contracting
party on the importation of any product of the territory of any other
contracting party or on the exportation or sale for export of any product
destined for the territory of any other contracting party.
Article 2: National Treatment and Quantitative Restrictions
1.

Without prejudice to other rights and obligations under GATT 1994, no

Member shall apply any TRIM that is inconsistent with the provisions of
Article III or Article XI of GATT 1994.

2.

An illustrative list of TRIMs that are inconsistent with the obligation of

national treatment provided for in paragraph 4 of Article III of GATT 1994
and the obligation of general elimination of quantitative restrictions provided
for in paragraph 1 of Article XI of GATT 1994 is contained in the Annex to
this Agreement.

ART5 (2) Each Member shall eliminate all TRIMs which are notified
under paragraph 1 within two years of the date of entry into force of
the WTO Agreement in the case of a developed country Member,
within five years in the case of a developing country Member, and
within seven years in the case of a least-developed country
Member.

ART5 (5) Notwithstanding the provisions of Article 2, a Member, in

order not to disadvantage established enterprises which are subject
to a TRIM notified under paragraph 1, may apply during the
transition period the same TRIM to a new investment (i) where the
products of such investment are like products to those of the
established enterprises, and (ii ) where necessary to avoid distorting
the conditions of competition between the new investment and the
established enterprises. Any TRIM so applied to a new investment
shall be notified to the Council for Trade in Goods. The terms of
such a TRIM shall be equivalent in their competitive effect to those