Likeness in the Article III of GATT

The notion of ‘like product’ appears in several different GATT provisions and as well in other WTO Agreements, such as the Agreement on Subsidies and Countervailing Measures and the Agreement on Technical Barriers to Trade. Nevertheless, there is no general and universal definition for the term, and the meaning of the ‘like’, as in ‘similar,’ is ambiguous. The Working Party, which in 1970 occupied with the question of similarity in the context of Border Tax Adjustments, was unable to develop a standard definition and only proposed exemplary criteria of ‘likeness’.[1] Thus, the meaning of the ‘like product’ is not uniform and varies from one provision to another. The Appellate Body highlighted that: ‘the concept of ́ likeness is a relative one that evokes the image of an accordion. The accordion stretches and squeezes in different places as different provisions of the WTO-Agreement are applied.’[2]

The Article III of the GATT related to the principle of national treatment Article III is the central provision in the General Agreement regulating the application of domestic policies to imported products.  It constitutes a complement to the provision of the Most-Favoured-Nation Treatment and forbids Members of the WTO discrimination due to origin of the products. The construction of the Article is built by ten paragraphs, of which the first, second and fourth are the most significant and have been subject to countless contributions from trade scholars and jurisprudence.

Article III:1 states that: ‘the contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products … should not be applied to imported or domestic products so as to afford protection to domestic production.’

This rule covers a variety of measures, such as taxes and regulations that apply to imports after the imports have cleared customs and entered domestic commerce. In addition, the measures enforced at the border should still be considered domestic, if they are designed to regulate both domestic and imported goods.  The measures have non-fiscal and as well fiscal character and must treat imports no less favourably than like domestic products — an anti-discrimination rule known in GATT parlance as the national treatment principle[3].

In addition, the paragraph 1 of Article III includes leading interpretation’s reference towards whole article, which was confirmed by the Appellate Body in the follow way: „this general principle informs the rest of Article III as a guide to understanding and interpreting the specific obligations contained in Article III:2 and in the other paragraphs of Article III, while respecting, and not diminishing in any way, the meaning of the words actually used in the texts of those other paragraphs.’[4] However, the provision does not constitute a basis for an individual claim.

The ‘like products’ concept contained in Art III of GATT constitutes the primary and most comprehensive expression of the standard of national treatment of the GATT.

[1] Hudec R.E, GATT/WTO Constraints on National Regulation: Requiem for an‘Aim and Effects’ Test, p.2.

[2] Appellate Body Report, Japan – Alcoholic Beverages II, p.18.

[3] Report of the Working Party on Border Tax Adjustments, BISD 18S/97, Rn. 18

[4] Appellate Body Report, Japan – Taxes on Alcoholic Beverages, p.21.

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