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DISPUTE SETTLEMENT: DISPUTE DS31

Canada — Certain Measures Concerning Periodicals

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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Appellate Body and Panel Reports Adopted

Complaint by the United States.

On 11 March 1996, the United States requested consultations with Canada concerning certain measures prohibiting or restricting the importation into Canada of certain periodicals. The US claimed that the measures are in contravention of GATT Article XI. The US further alleged that the tax treatment of so-called “split-run” periodicals and the application of favourable postage rates to certain Canadian periodicals are inconsistent with GATT Article III.

On 24 May 1996, the US requested the establishment of a panel. At its meeting on 6 June 1996, the DSB deferred the establishment of a panel. Further to a second request to establish a panel by the US, the DSB established a panel on 19 June 1996. On 25 July 1996, the Panel was composed. The report of the Panel was circulated to Members on 14 March 1997. The Panel found the measures applied by Canada to be in violation of GATT rules.

On 29 April 1997, Canada notified its intention to appeal certain issues of law and legal interpretations developed by the Panel. The report of the Appellate Body was circulated to Members on 30 June 1997. The Appellate Body upheld the Panel’s findings and conclusions on the applicability of GATT 1994 to Part V.1 of Canada’s Excise Tax Act, but reversed the Panel’s finding that Part V.1 of the Excise Act is inconsistent with the first sentence of Article III:2 of GATT 1994. The Appellate Body further concluded that Part V.1 of the Excise Act is inconsistent with the second sentence of Article III:2 of GATT 1994. The Appellate Body also reversed the Panel’s conclusion that Canada’s “funded” postal rate scheme is justified by Article III:8(b) of GATT 1994.

At its meeting on 30 July 1997, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body.

Implementation Status of Adopted Reports

The implementation period was agreed by the parties to be 15 months from the date of adoption of the reports i.e. it expired on 30 October 1998. Canada has withdrawn the contested measure.

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