RESTRICTED
WORLD TRADE WT/DSB/M/23
31October 1996
ORGANIZATION(96-4586)
DISPUTE SETTLEMENT BODY
3October 1996
MINUTES OFMEETING
Held intheCentre William Rappard
on3October 1996
Chairman: Mr.Celso Lafer (Brazil)
Subject discussed:
1. Japan -Measures affecting consumer photographic filmandpaper
- Request bytheUnited States fortheestablishment ofapanel (WT/DS44/2)
TheChairman drew attention tothecommunication from theUnited States contained in
WT/DS44/2.
Therepresentative oftheUnited States recalled thaton13June1996, theUnited States had
requested consultations withJapan withregard tothelatter'sspecific laws, regulations, andrequirements
affecting thedistribution, offering forsale,andinternal saleofimported consumer photographic film
andpaper. Japan hadestablished andmaintained aseries ofinterrelated measures overthepastthree
decades thathadthwarted imports ofphotographic filmandpaper. Through avariety ofmeasures,
ithadcarefully guided theestablishment ofadistribution system towhich noforeign manufacturer
could gainmeaningful access. Although ithadeffectively blocked foreign access toconsumers through
theprimary distribution channel, Japan hadtaken additional steps toensure thatforeign film
manufacturers could notgainaccess through alternative channels. These steps included imposing
cumbersome andnon-transparent restrictions onthegrowth oflarge retail stores, which were more
likely tocarry imported products. Ithadalsoimposed non-transparent restrictions ontheuseof
premiums andadvertising: toolstypically usedbyforeign firms tobreak intoanewmarket. TheUnited
States believed thatthese measures hadnullified orimpaired benefits accruing toitwithin themeaning
ofArticle XXIII:1(a) ofGATT 1994, asaresult offailure byJapan tocarry outitsobligations under
Articles IIIandXofGATT 1994. Inaddition, theapplication ofthesemeasures nullified orimpaired,
within themeaning ofArticle XXIII:1(b) ofGATT 1994, thetariff concessions thatJapan hadmade
onconsumer photographic filmandpaper insuccessive rounds oftariff negotiations.
On11July1996, theUnited States hadheldconsultations withJapan aimed atresolving this
dispute, buttheyhadnotproduced amutually agreed solution. Asaresult, theUnited States requested
theestablishment ofapanel. With thestrong evidence presented inthiscase, theUnited States was
confident thatthepanel would gainaclear understanding ofJapan'sextensive efforts tocircumvent
itsGATT obligations.
Therepresentative oftheUnited States further saidthatthiscasehadgenerated alotofinterest
andpublicity, andpossibly evensome misunderstandings about itsscope andcontent. From the
standpoint oftheUnited States, thisGATT caseconcerned themeasures taken bytheJapanese
Government.TheGATTcasepresentedtotheWTOwouldaddresstheJapaneseGovernment'smeasures
thatdiscriminatedagainstimportedfilmandpaper.TheUnitedStateswasseekingtoaddressthebarriersWT/DSB/M/23
Page2
toimported filmthatwereattributable toprivate anti-competitive practices through theconsultations
requested under the1960 Decision onRestrictive Business Practices1.Theissues raised bythiscase
should beofrealconcern toMembers notonlybecause theyrevealed discriminatory barriers faced
byforeign firms intheJapanese filmandphotographic paper market, butalsobecause theywere
indicative oftheexclusionary policies theJapanese Government hadimplemented.
Therepresentative ofJapan saidthathisGovernment waswilling toengage infurther
consultations withaviewtoreaching amutually agreed solution tothisdispute ifthecomplaining party
sowished. Japan believed thattheUnited States hadnotyetexhausted allpossibilities forasolution
through theconsultations. While theUnited States initsrequest hadlisted various laws, regulations
andmeasures inJapan, ithadnotclearly indicated neither intherequest forconsultations norinthe
course ofconsultations: (i)which specific measures violated which specific obligations under theGATT
1994; and(ii)onwhatgrounds theUnited States asserted suchviolation. Japan believed thatthiswas
contrary totherequirements under paragraphs 4and5ofArticle 4oftheDSU. Furthermore, Japan
didnotconsider thattheUnited States haddulyidentified the"specific measures atissue", asrequired
inparagraph 2ofArticle 6oftheDSU. Besides, mostofthemeasures which theUnited States had
cited were obsolete. Itwasnotclear what theUnited States wasseeking as"apositive solution to
adispute" pursuant toparagraph 7ofArticle 3oftheDSU. TheUnited States 'approach hadnotonly
posed problems interms ofthedispute settlement procedures inthisspecific case,buthadalsoserious
implications onthefuture functioning ofthedispute settlement mechanism. Therefore, Japan wasnot
inaposition toagree totheestablishment ofapanel atthepresent meeting.
Therepresentative oftheUnited States saidthathisdelegation regretted Japan'sdecision to
delay theestablishment ofapanel. TheUnited States wished toresolve thismatter asquickly aspossible
andtherefore considered Japan'sposition asunfortunate. Pursuant toArticle 6oftheDSU, theUnited
States noted thefactthatthepanel toexamine thisdispute would beestablished when itsrequest would
beincluded ontheagenda oftheDSBmeeting tobeheldon16October. Healsonoted thatprior
tothepresent meeting therepresentative ofJapan hadprovided awritten response, several weeks after
therequest forconsultations onrestrictive business practices hadbeenmade2.Inaddition, Japan had
made itsownrequest forconsultations under the1960 Decision onRestrictive Business Practices3.
Although Japan hadtherighttomake sucharequest, theUnited States wasconcerned whether this
wasauseofthedispute settlement mechanism fortactical reasons todeflate attention from serious
concerns raised bytheUnited States withregard tobusiness practices intheJapanese market. This
typeofatactical manoeuvre wasofparticular concern given thatJapan hadnotresponded totheUnited
States 'request forconsultations made under thesame Decision overthree andahalfmonths ago.
Therepresentative ofJapan saidthathisdelegation hadnointention todelay theprocedures.
Japan wasfullyprepared tocontinue consultations inaveryserious manner. TheUnited States 'reason
forraising thisquestion wasnotclearinthelightoftheprovisions oftheDSU. Japan'srequest for
consultations withregard torestrictive business practices wasnotatactical manoeuvre. There were
many similarities inbothmarkets. Therefore, iftheUnited States hadraised thismatter, Japan was
entitled toraiseitaswell. Hefurther saidthathisGovernment wasconvinced thatallthemeasures
raised bytheUnited States withregard toJapan'spractices werefullyconsistent withitsobligations
under theGATT 1994. TheUnited States claims were contrary tothefacts. HisGovernment had
never taken anyaction witheither theintention ortheeffect ofexcluding imports oftheconsumer
photographic filmandpaper. Japan'sphotographic filmandpaper markets werefullyopen. TheUnited
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States 'allegations oneachofJapan'smeasures hadbeenbased onmisrepresentation ofthefacts. For
example, oneofJapan'sGovernment measures, referred tobytheUnited States, hadstated thatthe
useofrebates should belimited totheminimum. TheUnited States considered thisasaproof that
Japan wasencouraging theuseofrebates. Ithadnotdemonstrated whatpositive solution wasbeing
sought neither during theconsultations process norinitsrequest forconsultations. Ithadasserted
thatseveral Japanese measures hadtogether contributed totheexisting market structure which had
resulted inthediscrimination against theimported products. Theclaims oftheUnited States were
bothvague andbroad. Toallow suchanissue tobebrought before theDSBinthismanner could
havebroad implications fordispute settlement inthefuture. Inaddition, thebasic problem raised by
theUnited States pertained toprivate business practices andtherefore should besettled under Japan's
anti-monopoly law. Initially, theUnited States hadtriedtotakeaction under Section 301oftheUS
Trade Actof1974andhadreferred tovarious governmental measures including those taken 20years
agowhich nolonger existed, inorder tomake itanissue intheWTO.
Therepresentative oftheEuropean Communities saidthathisdelegation hadnoted Japan's
statement anditsresponse totheUnited States 'request forconsultations onrestrictive business practices.
Herecalled thattheCommunities hadrequested tobejoined intheseconsultations4andtherefore looked
forward toreceiving aconfirmation byJapan thattheCommunities 'request would beaccommodated.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atitsnextmeeting.
4WT/L/158