Here's something from the EC - IT Products case that I'm still thinking through. The basic issue is this. The EC is imposing a duty that the Panel found is in excess of its bound rate. Thus, there is a violation of Article II:1(b), as the duty is in excess of that in the EC Schedule. That part is pretty simple.
However, this duty has been suspended for some products, and therefore there is no violation of Article II:1(b) for those products. Still not that complicated.
The Panel then turns to Article II:1(a) to see if there is less favorable treatment in situations where the duty has been suspended (and thus there was no violation of II:1(b)). It finds that there is, as follows:
7.756 The Appellate Body in Korea – Various Measures on Beef stated that whether or not imported products are treated "less favourably" should be assessed by examining whether a measure modifies the conditions of competition in the relevant market to the detriment of imported products.986
7.757 While Article III:4 focuses on less favourable treatment between domestic and imported like products and Article II focuses on less favourable treatment, vis-à-vis what is in a Schedule, we find the emphasis on competitive opportunities relevant for our analysis, particularly as negotiated tariff concessions and the certainty thereof are important market access guarantees. Therefore, if a measure adversely affects the conditions of competition for a product from that which it is entitled to enjoy under a Schedule, this would be less favourable treatment under Article II:1(a).
7.758 We have found in paragraph 7.744 that, but for the duty suspension, the European Communities' measures are inconsistent with its obligations under Article II:1(b). It follows, in light of the Appellate Body decision in Argentina – Textiles and Apparel referred to in paragraph 7.99 above, that the European Communities' measures are also inconsistent with Article II:1(a). The question arises whether the duty suspension eliminates the inconsistency with respect to Article II:1(a) in the same way as it did with respect to Article II:1(b). The current suspension regime of Council Regulation No. 179/2009 has been in place since 1 January 2009, but was applicable retroactively for the period January-March 2009. It will automatically expire on 31 December 2010. The duty suspension is limited to the particular products specified therein.987 Council Regulation No. 179/2009 is the third in a succession of measures that have applied a suspension of duties on imports of particular LCD displays. The first of these measures, Council Regulation No. 493/2005, was published 31 March 2005 with effect from 1 January 2005 through 31 December 2006. Second, Council Regulation No. 301/2007 was published in 19 March 2007 with effect from the 1 January of that year. This latter regulation extended the identical terms of the prior suspension under Council Regulation No. 493/2005 to 31 December 2008. Most recently, Council Regulation No. 179/2009 was published in March 2009 with retroactive effect to 1 January of 2009. This measure is currently in force and forms part of the Panel's terms of reference.988 This measure enlarged the scope of application of the duty suspensions that were previously applied to certain LCD imports.
7.759 These earlier applications of the duty suspension reveal that the duty suspension regime currently in place has been renewed biannually, is set to expire automatically and is not extended automatically. The duty suspension has only been extended or amended, subject to formal actions taken by the EC Council, i.e., following the passage of a new Council Regulation. It appears that these measures do not take effect prior to their publication in the EU Official Journal. The suspension under all three measures was applied retroactively for periods between January and March in 2005, 2007 and 2009, respectively.
7.760 Thus, while a suspension on imports of certain LCD displays has formally been in effect for five years or more, the suspension is not permanent in nature, and is subject to a formal extension or amendment. In addition, we note that the measure at issue (as well as prior measures) implementing the autonomous duty suspension does not set out specific conditions for its withdrawal or nonrenewal. Thus the duty suspension in force at a particular time may expire, be repealed, or be amended to increase or decrease coverage.
7.761 We recognize that no amount of autonomous duty-free coverage can be assured in an absolute sense. The European Communities, for instance, sets forth its tariff bindings in the EC Schedule pursuant to annual amendments to the autonomous duty rate in the CCT, published in October of each year prior to its entry into force the following January. Notwithstanding this fact, tariff bindings set forth in the CCT autonomous duty regime remain in place until formal repeal by the Commission. Thus, tariff treatment under the CCT is not contingent on renewal or extension, unlike under the current duty suspension regime. In our view, this distinction is significant, in particular, in the sense that continuous tariff treatment provides forseeability for traders operating in the marketplace. Moreover, the tariff treatment established under the CCT is prospective, unlike under the duty suspension regime, where the application of the suspension has been applied retroactively on a number of occasions.989 For the foregoing reasons, we are of the view that the duty suspension measure does not eliminate the inconsistency with Article II:1(a) because there remains the potential of deleterious effects on competition.
The whole thing has a mandatory/discretionary/Section 301 feel to it. Can you have a measure that imposes a duty above the bound rate, but then you suspend the excess amount of duty so that the actual applied duty does not exceed the amount in the Schedule? Does the possiblity of removing the suspension, and thus imposing the excess duty again, affect the conditions of competition for the product? Does it do so any more than would the possibility of simply imposing an additional duty above the bound rate through a new measure?
I see why the Panel said what it did, but I'll have to think about this one some more.
