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Complaints by the European Communities, Canada
and the United States.
The EC requested consultations on 21 June 1995, and
Canada and the US on 7 July 1995. The complainants claimed that spirits
exported to Japan were discriminated against under the Japanese liquor tax
system which, in their view, levies a substantially lower tax on “shochu”
than on whisky, cognac and white spirits.
Panel and Appellate Body proceedings
A joint panel was established at the DSB meeting
on 27 September 1995. On 30 October 1995, the Panel was composed. The
report of the panel, which found the Japanese tax system to be
inconsistent with GATT Article III:2, was circulated to Members on 11 July
On 8 August 1996 Japan filed an appeal. The
report of the Appellate Body was circulated to Members on 4 October 1996.
The Appellate Body’s Report affirmed the Panel’s conclusion that the
Japanese Liquor Tax Law is inconsistent with GATT Article III:2, but
pointed out several areas where the Panel had erred in its legal
reasoning. The Appellate Report, together with the panel report as
modified by the Appellate Report, was adopted on 1 November 1996.
Implementation of adopted reports
On 24 December 1996, the US, pursuant to Article
21(3)(c) of the DSU applied for binding arbitration to determine the
reasonable period of time for implementation by Japan of the
recommendations of the Appellate Body.
The Arbitrator’s report was circulated to
members on 14 February 1997. The Arbitrator found the reasonable period
for implementation of the recommendations to be 15 months from the date of
adoption of the reports i.e. it expired on 1 February 1998. Japan
presented modalities for implementation which were accepted by the
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