Abstract
States which agree with other states the levels of duties which they each will levy on specific goods require a means of identifying exactly which goods will be subject to which duty rates. Customs classification rules assist in effecting this identification. The rules should specify which goods are eligible for particular treatment, which other goods should receive the same treatment on the ground that they are “like” the specified goods, and which characteristics are to be regarded as conclusive when in doubt. The rules should also be non-discriminatory and should not lend themselves to national favouritism. This may be illustrated by some hypothetical examples. Is orange juice made from blood oranges to be regarded as if it were orange juice made from ordinary oranges? Should butter with a lower incidence of certain fat solids (so-called spreadable butter) be treated in the same fashion as normal butter? Is a large photocopier producing ninety copies per minute “like” a smaller copier making fifty copies per minute, so that imports of the former may be subjected to anti-dumping duties designed to protect domestic producers of the latter?
Ian Forester, Q.C., is a partner with the Brussels office of the law firm White & Case.
Tashi Kaul is Director of WTO Affairs with the Washington, D.C., office of White & Case.
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References
Report of the GATT Panel (adopted), Canada/Japan: Tariff on Imports of Spruce, Pine, Fir (SPF) Dimension Lumber, L/6470, 36th Supp. BISD 167 (1990).
European Communities-Customs Classification of Certain Computer Equipment, WT/DS62, WT/DS67, and WT/DS68 (1998) (“EC—Customs Classification”).
Supra, note 6.
Report of the Appellate Body, European Communities—Customs Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R, and WT/DS68/AB/R (1998), ¶ 90 (footnotes omitted, emphasis in original).
This question was addressed in E.I. Du Pont de Nemours Inc. v. Commissioners of Customs & Excise, Case 234/81, 1982 ECR 3515.
European Communities—Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135 (“EC—Asbestos”).
For example, preserved fruit are classified in a different chapter of the HS than fresh fruit, while frozen fruit appear in the same chapter. It is not immediately obvious why preserving fruit would be enough to constitute “substantial transformation”, while freezing would not, yet this would be the result if a change of chapter were the test. See HS 0803 et seq., HS 0811, and HS 2008.
John H. Jackson, The world Trading System: Lawand Policy of International Economic Relations 151 (2000).
Japan—SPF Lumber, supra, note 5, ¶ 5.14.
Report of the Appellate Body, European Communities—Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (2001), (“EC—Asbestos”), ¶ 101.
The first three criteria were listed by the Working Party Report, Border Tax Adjustments, L/3464, BISD 18th Supp. 97 (1970). The last, international tariff classification, was not mentioned by the Working Party, but was included by subsequent panels (see for instance, Report of the GATT Panel (adopted), EEC Measures On Animal Feed Proteins, L/4599—25S/49 (1978), footnote 58, ¶ 5.6; Report of the WTO Panel, Japan—Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11//R, footnote 58, at 113 (1996).
The Appellate Body has noted that the term appears in Articles I:1, II:2, III:2, III:4, VI:1, IX:1, XI:2(c), XIII:1, XVI:4 and XIX:1 of the GATT 1994. EC—Asbestos, supra note 12, para. 88.
“The concept of “likeness” is a relative one that evokes the image of an accordion. The accordion of “likeness” stretches and squeezes in different places as different provisions of the WTO Agreement are applied. The width of the accordion in any one of those places must be determined by the particular provision in which the term “like” is encountered as well as by the context and the circumstances that prevail in any given case to which that provision may apply.” Report of the Appellate Body, Japan—Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, at 21 (1996).
Japan—SPF Lumber, supra note 5, ¶ 4.14.
The separate classification and duty treatment could of course be challenged under GATT Article 1 on the basis that the two types of butter were “like products”. An exporter of spreadable butter subject to the high tariff could complain that imports of regular butter—the “like product”—were being imported from a different country at a zero tariff, and that this violated the Article I MFN obligation. See Spain—Tariff Treatment of Unroasted Coffee, Report of the GATT Panel (adopted), L/5135-28S/102 (1981) (“Spain— Unroasted Coffee”), discussed below.
Supra, note 10, ¶ 38 (footnotes omitted).
In EC—Customs Classification, supra note 10, the Appellate Body also ruled that the classification practice in the European Communities during the Uruguay Round was part of the “circumstances of [the] conclusion” of the WTO Agreement and could therefore be used as a supplementary means of interpretation under Article 32 of the Vienna Convention. Id., ¶ 92. The Appellate Body, however, made this finding in the context of considering to what extent the United States was entitled to derive legitimate expectations from the classification practices of the EC.
Decision on GATT Concessions under the Harmonised Commodity Description and Coding System, 12 July 1983, L/5470/rev.1, 30th Supp. BISD 17, ¶. 1.2.
Id.
See, e.g., Report of the GATT Panel (adopted), European Economic Community—Restrictions on Imports of Dessert Apples-complaint by Chile, L/6491, 36th Supp. BISD 93, ¶ 12.29 (1989) (“EEC—Dessert Apples”).
EEC—Dessert Apples, supra note 27. See also, Gabrielle Marceau and Peter N. Pedersen, Is the WTO Transparent? A Discussion of the Relationship of the WTO with Non-governmental Organizations and Civil Society’s Claim for more Transparency and Public Participation, 33 (1) Journal of World Trade 5 (1999).
Supra, note 10.
Id., ¶ 84 (emphasis in original).
Spain—Unroasted Coffee, supra, note 22.
Supra, note 5.
Supra, note 6.
Report of the GATT Panel (adopted), Treatment by Germany of Imports of Sardines, 1st Supp. BISD 53 (1952), (“Germany—Sardines”).
Spain—Unroasted Coffee, supra note 22, ¶ 4.4.
Supra, note 22.
Supra, note 18.
Supra, note 5.
Supra, note 6.
Id., ¶ 8.31.
Id., ¶ 9.1. However, the Panel rejected the U.S. claim with respect to multimedia PCs.
Id., ¶ 84.
The WCO HS Committee at its eighteenth session in November 1986, ruling in favor of the United States, concluded that a PC with television and audio capabilities was properly classified as an automatic data processing machine in HS Chapter 84 at sub-heading 8471.49. Classification Opinion 8471.49, Amendments to the Compendium of classification opinions, 22nd Session (NN. 1998).
EC—Customs Classification, supra note 10, ¶ 90. See also, Joel P. Trachtman, European Communities-Customs Classification of Certain Computer Equipment, 9(3) European Journal of International Law 551 (1998).
Although the Appellate Body has in general applauded the exercise of judicial economy by panels, there have been several cases in which it has disagreed with the panel’s interpretation of a core issue and in order to complete the case has found it necessary to analyse other provisions or facts themselves. In the Australia—Salmon case (Report of the Appellate Body, Australia—Measures Affecting Importation of Salmon, WT/DS18/AB/R (1998), ¶ 279), for instance, the Body found that the panel wrongly exercised judicial economy, leaving a key issue unresolved. These issues form part of the current debate over “creative interpretation” by the Appellate Body. Although the Body is confined by DSU Article 17 to “law not facts”, it has been quite expansive in deciding what are issues of law.
Supra, note 35, ¶ 39.
Supra, note 35, ¶ 12.
Id., ¶ 13.
Frieder Roessler, The Legal Structure, Functions and Limits of the World Trade Order, 70 (2000).
Japan—SPF Lumber, supra, note 5, ¶ 5.8.
Id., ¶ 5.10.
Id., ¶ 3.28.
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Forrester, I.S., Kaul, T. (2005). Tariff Classification. In: Macrory, P.F.J., Appleton, A.E., Plummer, M.G. (eds) The World Trade Organization: Legal, Economic and Political Analysis. Springer, Boston, MA. https://doi.org/10.1007/0-387-22688-5_36
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