DS: Japan — Tariff Quotas and Subsidies Affecting Leather

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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Summary of the dispute to date

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Complaint by the European Communities.

On 8 October 1998, the EC requested consultations with Japan concerning the management of the tariff quotas for leather and the subsidies allegedly benefiting the leather industry and “Dowa” regions in Japan. The EC stated that the management of the three tariff quotas is specified in a notice published every year by the Ministry of International Trade & Industry (MITI), which is based on Article 6 of the Ministerial Order on the tariff quota system for heavy oil, crude oil, etc. The EC contended that:

  • the complexity of the management of the tariff quota system, as well as the fact that applications for licenses may only be submitted on a single day, appears open to criticism;
  • many licenses are granted for quantities without real economic interest, and some have a very short validity period;
  • the system leads to a situation that deters foreign companies from establishing in Japan for purposes of importing leather directly;
  • subsidies were granted on the basis of the “Law concerning Special Fiscal Measures”, which extended the duration of 15 subsidy programmes; and
  • these subsidies are specific and that the total value of these different subsidy programmes is liable to cause serious prejudice to its interests.

The EC alleged violations of Articles 1(6), 3(5)(g), (h), (i) and (j) of the Import Licensing Agreement, and Article 6 of the Subsidies Agreement.


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