Legal different articles which came under the general agreement

Legal issues in international trade (Final Take HomeExam)Synopsis on Canada-Import, Distribution and Sale ofCertain Alcoholic Drinks by Provincial Marketing AgenciesDescriptionof the forum and the applicable dispute resolution process.

 Description of the forum: In this case United states had adispute with Canada over the imported beer under article XXIII:1 and for thesettlement of this dispute firstly in July 1990, United States had arrangedconsulting group to discuss the matter with Canada but did not work to resolvethe issue and the for the settlement of this dispute United States hadrequested to set up GATT panel under XXIII:2 article for analysing the issuesand resolved it. This GATT panel consisted of Chairman: Mr. Ephraim F. Haranand members Mr. Alveus contestable and Mr. Jorge A. Vigano. These panel wassame for EEC and Canada dispute case related to some liquor board practices inCanada.

 (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.) Applicable Dispute Resolution Process: The established Panel had startedwith preliminary procedural issues under which the panel had heard arguments ofplaintiff (United States) and defendant(Canada) based on different articleswhich came under the general agreement between two countries. Then panel cameup factual analysis of the case. After the factual analysis by the panel, theycame up the conclusion that who was victim and who was guilty in this case withsome strong facts. Then at the end, made decision for this dispute settlement.Descriptionof the facts of the case – who did whatAsI mentioned above this case is all about the dispute between United states(Plaintiff) and Canada(Defendant).

Before going to the case details, lets havea look on some factual aspects of the Canadian liquor boards in all 10provinces. In the Canada liquor boards are established by provincial laws andtheir monopoly exist within the provinces borders to supply of alcoholic beverages.Every province in Canada needs license to manufacture, distribute and sell ofbeer from the directed provincial authority and there is an exception in caseof Prince Edward Island where manufacturing no provision for beer. In Canadamost of the provinces have access of privately owned and operated retailoutlets as well as brewery stores. While some situation is varied from provinceto province, like in Alberta, unlisted products (domestic and imported) aresold in licensed stores. Under vintage program in Ontario, listing is requiredfor all beer to sell in the province.

On the other hand, Quebec; liquor boarddoes not handle provincial beer and they need permit from provincial authorityto brew, warehouse and distribute the beer. The retail price in Canadianprovince consists of federal custom duties and taxes, provincial markups, tothe base price. It also varied from province to province.

As in BritishColumbia volume and percentage mark up are applied while on the other hand,Volume levy is applied in Ontario. Four provinces (New Brunswick, Newfoundland,Ontario and British Columbia) apply floor price and most provincial liquorboard charge cost of service which can be higher for import and domestic and itdepends on the condition.Dueto the dispute both countries had provided sufficient data related to importsand domestic sales of the beer, markup policies, cost of service policies andother things which could affect the sales of Beer in Canada. After getting thedata, at the initial stage, GATT panel looked into EEC complaint which was doneagainst Canadian provincial liquor board biased practicing related to listing,price marks up and availability of point of sale. After overlooking thiscomplaint Panel concluded that higher markups price for imported beer thandomestic beer can be justified under article II:4 and listing and delistingpractices concerns and availability of point of sale which was biased againstimported alcoholic beverages by state trading companies and opposite to articleXI:1.

Then after Panel suggested to the parties for requesting Canada fortaking reasonable measures under Article II and XI of general agreement.inDecember 1988, further an agreement made and which demonstrated that listingand delisting of alcoholic beverages would be done on non-discriminatory,transparent and normal commercial basis. Furthermore, under this agreement,Canada needed to make pricing decision under GATT obligations. After the ECCallegations over Canada, United States also argued with Canada that it failedobligations of general agreement’s Article II: 4 and XI: 1 because ofdiscriminatory exercises in listing and delisting, markups and point of sale.United States further had argued that Canada did not take reasonable measuresagainst these and in result USA gained impairment instead of any benefit.Inreply Canada (defendant) also argued that United States had no rights to complainCanada under 1988 panel report since it was not a complaining party.Sincethere was a close mutual relationship between practices and panel was unable tomake null and fair decision using these facts. Then panel asked both partyUnited States and Canada to give their claims on different grounds and so thatafter reviewing all of these panel could give a fair conclusion with specific reasons.

Now there are description of relevant issues and dispute are as follow anddecision which was made by panel is at the end.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)   Description of relevant IssuesAs United states argued about the10 provincial liquor boards of Canada which led to monopoly on the importation,distribution and sale of beer. Out of these some major issues which unitedstates faced were listing and delisting practices related to imported beer,restriction on access to point of sale and called these as discriminatory practicesand some other issues were restriction of private delivery of imported beer,special charges imposed on imported beer, failure of Canada to obligate articleXXIV:12 of general agreement, tax imposed on beer container in some provincesand minimum price requirement imposed on beer were unfair with article XI:1.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.) Whatis dispute about? A discussion of relevant rule of the lawAs United states had argued issueswhich were mentioned above and now will be explained in detailed as followed:1.      Listingand delisting Practices:United states argued that Canada was not following the general agreement’s XIarticle and hence listing and delisting practices of imported beer in theCanadian liquor stores of all provinces were unfair and imported beer underwenta lot of formalities and conditions than the domestic beer. United states felt thiswas a discriminatory practice by all province liquor boards in Canada. Another argumentwas done by united states against Ontario liquor board was about to limit thesize of imported beer to six-pack size while listing the different sizes todomestic beer and this practice was also not consistent under article III:4 ofGeneral agreement.

 (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)2.     Restriction on access to the pointof sale: Unitedstates also argued that there was a lot of restrictions on the access of saleof imported beer except Prince Edward Island and Saskatchewan. Reason behindthis was that domestic brewers had authority to set up private retail stores orhad accessibility of retail store where imported beer could not be sold. Forexample, in Quebec, domestic beer could be sold in 11,238 licensed grocerystores and on the other hand imported beer had access to the point of sale in337 liquor board stores. These restrictions were not consistent with Canada’sobligation under article XI:1.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.)3.     Restrictions on private delivery: As liquor board of Canadianprovinces had applied two systems for the beer delivery which were retailstores and other point of sale. United states argued that liquor board inCanada had biased system which means except Prince Edward Island andSaskatchewan private delivery not authorized to imported beer, but coulddomestic beer and united states have felt not consistent with the generalagreement’s article III:4.

 (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)4.     Differential Mark-ups: United states was disagreeing withthe higher markups for imported beer as compared to domestic beer. On the otherhand, Canada was arguing that under article III:2 transportation cost,marketing expenses and internal taxes imposed on imported products.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)5.

     Minimum Price: As Canada set prices for importedand domestic beer to be minimum in New Brunswick, Newfoundland and for importedand domestic draught beer in British Columbia. United states had issued withthis minimum price practices because it felt that they barred the importationof beer and called it unfair with general agreement’s article XI:1. On theother hand, Canada believed that minimum prices practices were applicableequally to imported and domestic beer and was consistent with article III:4 ofgeneral agreement.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.)6.     Taxes on beer containers: As Canada imposed charges on allimported and domestic beverage alcohol containers in Manitoba and Ontario andit was not part of deposit system and in Nova Scotia charge was imposed on non-refillablecontainers (domestic and imported). Here united states claimed that thesecharges on container were unfair with article III as these charges were imposedon imported beer which could not be delivered by brewers to the points of sale. (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)7.     Notification Procedures for newpractices: Unitedstates argued that British Columbia’s liquor board had shared information todomestic brewers related to pricing policy on prior basis as compared to unitedstates officials and Ontario liquor board did an announcement on pricing policyjust 5 days prior it entered existence.

Both these announcements made by Canadianprovinces were unfair with article X of general agreement.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)8.     Obligations under Article XXIV:12: As article XXIV:12 was applicableto all the provinces under which provincial liquor boards need to take reasonablemeasures for the imported beer. But united states blamed Canada that it failedto its obligations under this article of the general agreement.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.) Decision of the panel with analysisand reason behind the decisionAfterthe finding of the case and analysis the dispute among two Countries related toimportation of beer in the Canadian provinces. Panel concluded the case indifferent parameters of the case and gave the decision in favour of USA in mostof parameters as compared to Canada which are below:·        UnitedStates was not able to prove its claim regarding listing and delistingpractices by Canada in its provinces apart from Ontario which was unfair witharticle XI:1 of the general agreement. Because United states had requested topanel on 17th July 1991 not to respite its proceeding and then paneldid not schedule any meeting with other parties to allow united states otherproof related to this case and hence panel concluded this.  On the other hand, panel analysed that as suchsix-pack size was applicable as a listing requirement, but it was available incertain liquor board stores but not the domestic beer. Hence special provisionfor imported beer to be sold in the six-pack size was unfair with article III:4of the general agreement panel concluded above decision.

 (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)·        AsArticle III:4 was also applied to state trading companies when the monopoly ofimportation and monopoly of distribution combined in domestic markets and panelconcluded that restrictions on the access of point of sale for imported beerwere inconsistent with article III:4 or XI:1 of the general article exceptSaskatchewan and Prince Edward Island. More over, as the restrictions were madeon the private delivery of imported beer in Alberta, British Columbia, Manitoba,New Brunswick, Newfoundland, Nova Scotia, Ontario, and Quebec and panelanalysed that the monopoly market import and sales of beer needs to carry outproper  functions and it did not have aimto prohibit the imported beer private delivery without any conditions which showed discriminatory act by thegiven provinces and concluded that  thesewere not fair under article III:4 of the general agreement.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.)·        Inthis case related to differential markups issues which were raised by unitedstates and panel had analysis these issues as well and they found that in 7 outof 10 provinces of Canada, differential markups were being calculated on costof service basis and which did not meet the mentioned principles in generalagreement and liquor board had mentioned some additional costs which were notassociated with marketing charges of the imported beer. In the New Brunswickand Newfoundland, they introduce differential mark ups but in New Brunswickagain this differential added cost which was not related to the marketing tothe import of beer while in Newfoundland added markups’ details were notprovided. Therefore, panel came to thisdecision that except Prince Edward Island (where no differential markup wasadded due to no beer was brewed) all the differential markup on cost of servicecharged by liquor board were not consistent under the Article II:4 of thegeneral agreement.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.)·        Panelalso noticed that under Article III:2 internal tax which was applied toimported goods and duties which is already calculated on these importedproducts and hence panel decided that Canada could fair under the article III:2of general agreement and collected the provincial and federal sales taxes onthe behalf of the duty paid amount of the imported beer.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.)·        ThePanel analysed about the minimum pricing concern and found that maintenance byimport and sales monopoly of a minimum prices for import beer at a stage atwhich a direct competing and higher the domestic product price was supplied,and this exercise was not fair under the General Agreement Article III:4 to thelimit that they were constant in price at which domestic beer was distributed.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.

)·        Panelfurther concluded that taxes on beer containers which were imposed by Manitoba,Nova Scotia and Ontario were consistent with article III:2 of the Generalagreement because panel analysed that it was not the charge on the container asunited stated claimed about this.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.)·        Asthe panel noticed about the notification procedures for new practices theyfound that under the article X in general agreement, there was not necessity tomake information which affected trade to domestic and foreign goods supplier atthe same time and there was not required the parties to release trade’s normsand condition in advance of their entry into existence. Therefore, panelconclude that identified measures were not unfair with general agreement’sArticle X.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.

d.)·        Afterhearing from both sides panel then moved to analyse the obligations underArticle XXIV:12 that if only Canada had showed some seriousness and convincingeffort to maintain law by the provincial board under the general agreement. Inthe first review that panel found that Canada’s claim was exposed related toreasonable action to removes restrictions on the access to the point of salefor beer and concluded that Canada had disqualified to execute its obligationsof general agreement’s Article XXIV:12.  (Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies, n.d.) References Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies. (n.d.

). Retrieved from SICE: http://www.sice.

oas.org/dispute/gatt/91ALCOO4.asp Canada – import, distribution and sale of certain alcoholic drinks by provincial marketing agencies. (n.

d.). Retrieved from SICE: http://www.sice.oas.org/dispute/gatt/91alcoho.asp