OROMIA STATE UNIVERSITY

COLLEGE OF LAW AND GOVERNANCE

SCHOOL OF LAW

LL.M PROGRAM IN COMMERCIAL AND INVESTMENT LAW

Assignment on International Economic Law (A/Y.2021 2nd Semester)

Case I

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Case study

Answer: To think whether Newland violated the national treatment rules, we need to consider
all products related to each other?

Special beer and wine

As there is no rule specifying what product is like, we will base on the Japan- Alcoholic
beverage case law to determine the “like product”:-

Physical characteristic: Alcoholic degree of special beer and wine is about 8-9%. They are
liquid, fruit flavors and have a similar process.

-End-use: drinking

-Habits and tastes of the consumer : Because they have the same physical and
chemical characteristics so drinkers can buy one of two above products (same flavor
and alcoholic degree) => the perfect substitutable products

-HS code (tariff classification): Wine and special beer are two perfect substitutable products
so we will base on the first sentence of Article III: 2 to classify. In addition to 21% of
VAT, special beer has to be imposed is 6N$ while 5N$ on wine. According to the first sentence of
Article III: 2, we will see the VAT of special beer higher than wine. In conclusion, Newland
violated the NT rules to special beer in the domestic market.

Ordinary beer and wine as mentioned in the case Japan Alcoholic, we consider the
following criteria for the relationship between them.

-Physical characteristics: wine and ordinary beer have different colors (while the wine is
usually white, red or pink, the ordinary beer has a typical dark yellow- brown) and they
have different fermentation processes as well. Finally, Cool Brew Inc.., a subsidiary of Super
brew Inc. has been informed that, under Newland’s regulated professions Act of 1997, only
engineers with a degree obtained in Newland or the United States are allowed to work in
Newland. Note that Newland’s schedule of specific commitments contains national treatment
commitments for wholesale trade services and maintenance and repair of equipment services
with respect to all modes of supply. For wholesale trade services, however commercial presence
is subject to the limitation that foreigners may never own more than 70 % of wholesale trade

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services however, commercial presence is subject to the limitation that foreigners may never own
more than 70% of wholesale trade companies established in Newland. Newlands Schedule does
not refer to retailing services. Finally Newland did not include any measures relating to
distribution or other business services in the Annex or Article II Exemptions. You are an
associate with the Brazilian law firm, Nogueira neto Avogados. Your firm has been hired by
Super brew Inc. to give legal advice on all the issues raised above. You have been instructed to
limit your legal brief to the question of whether there are violations of the non-discrimination
obligations under WTO law. At present you will not address the question of whether a possible
violation can be justified under the general or other exceptions provided for in the GATT 1994 or
the GATS.

From the above, it can be concluded that Newland has violated the NT provisions for
ordinary beer products on the domestic market. Thus, this case can be seen as the
protection of domestic wine production when Newland applies high taxes on these
products.

Grape juice and non-alcoholic beer

In addition, we should consider the difference between grape juice and non-alcoholic
beer
on the Newland market.

Products’ properties: alcohol strength is very low. Non-alcoholic beer is made

The products’ end-uses: not drunk

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According to Article III: 2, second sentence “.....a directly competitive or substitutable
product which was not similarly taxed.” Newland violated the regulations of national
treatment on non-alcoholic beer in the domestic market. It could be argued that Newland
set the high tariff on non-alcoholic beer to protect the grape juice industry
another problem we have to clarify is the priority of Newland between the domestic
product and the imported product in term of the like product. As we know a company of
Richland has imported the ‘special beers’, 1 ordinary beer and non-alcoholic beer to
Newland, and in this case, we mention the alcoholic beer. As according to Article III:4 :
“The products of the territory of any contracting party imported into the territory of any
other contracting party shall be accorded treatment no less favorable than that accorded to
like products of national origin in respect of all laws, regulations, and requirements
affecting their internal sale, offering for sale, purchase, transportation, distribution or
use”. Based on that, ” In support of the national wine industry, Newland’s National
Federation of Restaurateurs, a government-sponsored organization, has instructed its
10,000 members not to serve beer with traditional Newland dishes. Municipal authorities
in Newland’s main wine-producing region prohibit serving beer on weekends” is the de
facto to affect the profit of wine from Richland, which is also included in the excess of
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Article III: 4.

Next, we have to consider whether alcohol is a like product to wine. According to Article
III: 4, this "like product" will be wider than the "like product" of Article III:2 the first
sentence but smaller than Article III:2 the second sentence. According to the analysis
above, special beer to wine is the same product, and regular beer to wine is a direct
competitor, so it is possible to draw that alcohol (ordinary beers and special beers) are
similar to wine and are also subject to Article III: 4. It is clear that alcoholic beverages
must be licensed to be sold, and not only sold in restricted areas, but inaccessible to large
consumers, is a disadvantage for alcoholic beverages, while wine is not so strict. Because

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of that Newland is violating Article III: 4 on the discrimination of imported goods sold on
the domestic market. In addition, Newland’s National Federation of Restaurateurs has
instructed its 10,000 members not to serve beer with traditional Newland dishes.
Municipal authorities in Newland’s main wine-producing region prohibit serving beer on
weekends to support of the national wine industry. This is considered an anti-competitive
agreement and it is also subject to competition law in Newland. According to Article III:
4, the issue by a private subject of a regulation affecting the sale, purchase, and offers is
not governed by Article III: 4, except in the case of Newland and the private party. This
is considered to be an opening point for GATT to protect domestic production and it is
fully exploited by the nations.