Japan wines and sparkling wines should also

Alcoholic Beverages Case

The Japan alcoholic beverages are case that happens between Japan (the
respondent) and Canada, United States and European communities (the one who
complaints) under the agreements of article III GATT. The issues was an
internal tax measures that classified alcoholic beverages into differences categories,
sub categories and grades, which based on alcohol content and other qualities,
and also set different tax rates on each category of alcoholic beverages. It
happens when European communities complained that Japanese liquor tax was
violated the first sentences of Article III:2, by taxing imports at higher rates than ‘like’ domestic products
and the second sentences of Article III:2 by
affording protection to directly competitive or substitutable domestic products.
Japan implement higher tax on vodka from Canada, United States and European
Union.  Where Japan manufactured shochu
was often charge at a lower tax rate which was thought to be unfair for others
countries to importing their goods to Japan. Then, Japan responded that each
contracting party to the GATT was free to classify products for tax purpose
that they choose and the Liquor Tax Law does not violated Article III:2 because
spirits, whisky or brandy and liqueurs are not ‘like products’ to Shochu nor
they are ‘directly competitive and substitutable products’.


The panel concluded that, the imported and Japanese made gin, vodka,
whisky, grape brandy, fruit brandy, certain classic liqueurs, unsweetened wines
and sparkling wines should also be considered as ‘like’ products under the
first sentences Article III:2 because the ‘likeness’ of these alcoholic
beverages were recognized by government and consumers. This is based on their
similar properties, end-uses and uniform classification in tariff
nomenclatures. While the minor differences in taste, colour and other
properties did not prevent to be qualified as ‘like product’. The appellate
body concluded that Japanese Shochu and vodka are like product and thus this  violate under the agreement of GATT.