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WTO disputes

Philippines - Taxes on Distilled Spirits

Third Participant Oral Statement of Australia

(AB-2011-6/DS396, DS403)

25 October 2011

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Philippines - Taxes on Distilled Spirits - Third Participant Oral Statement of Australia [PDF 50 KB]

A. Introduction

Members of the Division.

  1. Thank you for the opportunity to present Australia's views on this appeal.
    Australia has provided a written submission identifying some key issues of
    systemic and legal interest raised by the Philippines' appeal on the panel's
    findings in this dispute and the European Union's other appeal on the panel's
    approach to the European Union's claim under the second sentence of Article
    III:2 of General Agreement on Tariffs and Trade (GATT 1994). Australia
    would like to briefly address some of those key issues.

A. The Issues Under Appeal

(i) Article III:2 and Ad Article III of GATT 1994 - "like products"
and "directly competitive or substitutableproducts"

  1. In its written submission Australia briefly outlined the different
    criteria based on existing WTO jurisprudence which might be used by a panel
    to determine whether products are "like" for the purposes of the
    first sentence of GATT 1994 Article III:2, and whether products are "directly
    competitive or substitutable" for the purposes of the second sentence
    of that article.
  2. In Australia's view the evaluation of these factors will differ in relation
    to the first and second sentence of the Article III:2. Australia further notes
    that the Appellate Body has described "like" products as a narrower
    subset of the broader category of "directly competitive or substitutable
    products".1 Therefore, while the panel's
    finding in relation to the categorisation of products as "like"
    under the first sentence of Article II:2 might reasonably inform its conclusion
    as to whether the products are also "directly competitive or substitutable",
    Australia submits that the panel was correct to also give full consideration
    to the remaining elements of a claim under the second sentence of Article
    III:2 of GATT 1994.2
  3. Australia submits that panel has the responsibility to determine the weight
    to be placed on particular factors and criteria in the interpretation of GATT
    1994 Article III:2. In the current dispute, Australia considers that the comparison
    of the physical characteristics of the products under consideration is a key
    factor. However, Australia agrees with the reasoning of the panel, which is
    consistent with previous panels and the Appellate Body, that no one criterion,
    such as a difference in physical characteristics, should be considered determinative
    and the evidence as a whole must be examined to determine the characterisation
    of the products at issue.3 By way of example,
    Australia notes the panel finding in Japan-Alcoholic Beverages II that
    shochu and vodka were "like" products even though they contained
    similar but not identical raw materials.4 Further,
    in considering whether the shochu and imported spirits were "directly
    competitive or substitutable" under the second sentence of GATT 1994
    Article III:2 the panel in the same dispute found that the term '"directly
    competitive or substitutable" does not suggest at all that physical resemblance
    is required.. .the decisive criterion... is whether they have common end uses'.5
  4. In considering that panel's findings in relation to the second sentence
    of Article III:2 and the proximity of the relationship between the products
    in this dispute, Australia observed in its submission that previous panels
    have found that products with different net retail prices can be "directly
    competitive" even if the products are not purchased with the same frequency.6

(ii) Article 11 of the DSU

  1. In relation to the Philippines' claim under Article 11 of the
    DSU the Appellate Body is called upon to determine whether the panel has made
    an "objective assessment" of the evidence adduced by the parties.
    Australia considers that claims under Article 11 go to the heart of the WTO
    dispute panel's primary responsibility in the resolution of disputes and therefore
    such claims must be supported by strong evidence.
  2. In considering the Philippines appeal, Australia notes the repetition of
    allegations applied both to claims in relation to Article III:2 of GATT 1994
    and under Article 11 of the DSU.7 Australia therefore
    submits that the Appellate Body may wish to draw a distinction between allegations
    related to errors in the panel's appreciation of the facts and evidence, and
    those related to errors of law, in order to determine how such claims should
    appropriately be dealt with.

B. Conclusion

  1. Members of the Division, Australia would be pleased to provide
    answers to any questions on these or any other matters related to the appeal.
  • 1 Appellate Body Report, Korea-Alcoholic Beverages, para. 118.
  • 2 Appellate Body Report, Japan-Alcoholic Beverages II, p. 24. See also
    Ad Article III of GATT 1994.
  • 3 Appellate Body Report, EC-Asbestos, para. 109.
  • 4 Panel Report, Japan-Alcoholic Beverages II, para.
    6.23.
  • 5 Panel Report, Japan Alcoholic Beverages II, para.
    6.22.
  • 6 Panel Report, Korea - Alcoholic Beverages, para.
    10.74; Panel Report, Chile-Alcoholic Beverages, para. 7.37.
  • 7 See for example: European Union Appellee Submission, paras.
    163, 185. and 191; and United States Appellee Submission para. 99.

Last Updated: 9 January 2014
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