The scope of the likeness in Art III:4 – determination of relevant criteria

As previously pointed, the ‘like product’ terms 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.

The EC-Asbestos case constitutes a guideline for the determination of the criteria of ‘like products’ within the meaning of Article III:4. First, the Appellate Body highlighted that the Report of the Working Party on Border Tax Adjustments outlined an approach for analysing ‘likeness’ standard under Art III:4. This traditional method has been developed ipso facto by several rapports of WTO Panels and the Appellate Bodies with regard to Art III:2. In analysing ‘likeness’ it should be taken into account the four general criteria such as:

‘(i) the properties, nature and quality of the products; (ii) the end- uses of the products; (iii) consumers’ tastes and habits – more comprehensively termed consumers’ perceptions and behaviour – in respect of the products; and (iv) the tariff classification of the products’[1]

Nevertheless, it should be noted that this list does not have an exhaustive character and the assessment of the criteria has to be made on a case- by-case basis. The purpose of these criteria is to be ‘simply tools to assist in the task of sorting and examining the relevant evidence’.[2] However, the determination on the ‘likeness’ of products cannot be made on the basis of a partial analysis of the evidence after examination of just one of the criteria. All factors should always be analyzed and not only these one related to any of the four criteria.

Thus, the Appellate Body disagreed with the Panel’s examination of the ‘likeness’ standard for not respecting all of the relevant criteria:

 ‘It is our view that having adopted an approach based on the four criteria set forth in Border Tax Adjustments, the Panel should have examined the evidence relating to each of those four criteria and then, weighed all of that evidence, along with any other relevant evidence, in making an overall determination of whether the products at issue could be characterized as ‘like’.[3]

Moreover, in the same case the Appellate Body disapproved with the Panel’s refusal to considering the health risks in its determination of ‘likeness’:

We are very much of the view that evidence relating to the health risks associated with a product may be pertinent in an examination of ‘likeness’ under Article III:4 of the GATT 1994. We do not, however, consider that the evidence relating to the health risks […] need be examined under a separate criterion, because we believe that this evidence can be evaluated under the existing criteria of physical properties, and of consumers’ tastes and habits[4]

In this regard, the Appellate Body argued that asbestos obviously poses a severe risk to human health, while PCG-fibres do not. The question which arose concerns, however, is just how the difference in health risk makes the products ‘unlike’ for purposes of Article III:4. The severe health risk could possibly explain why a Member would ban a product, even without any protectionist purpose. But the Border Tax list does not mention regulatory purpose, and this is not the answer that the Appellate Body gives.[5]

[1] Appellate Body Report, EC – Asbestos, para. 39

[2] Ibid, para. 102

[3] Ibid. para. 109

[4] Ibid. para. 113

[5] Regan, D. H., Regulatory Purpose and ‘Like Products’ in Article III:4 of the GATT (With Additional Remarks on Article III:2.), p. 465

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