THE ISSUE: “LIKE” OR “COMPETITIVE/SUBSTITUTABLE” PRODUCTS
Two decades ago, in 1987, a GATT panel ruled in favour of the EEC, the complainant, that, among other issues, Japan’s traditional alcoholic beverage “shochu” was a “like product” (hereinafter referred to as LP in abbreviation) of vodka and a “directly competitive and substitutable product” (DCS for short) in relation to whisky, brandy, and other distilled spirits and that the higher taxes that Japan applied to vodka, whisky, brandy and other spirits in excess of those on shochu were contrary to Article III(2)1 of the General Agreement on Tariﬀs and Trade or the GATT. Japan
* Professor of International Law, Nagoya Keizai University, Japan. 1 The texts of Article III, paragraph 2, of the GATT and its interpretative note follow: I. GATT Article III, National Treatment on internal Taxation and Regulation: paras.1-5:
1. The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements aﬀecting the internal sale, oﬀering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in speciﬁc amounts or proportions, should not be applied to imported or domestic products so as to aﬀord protection to domestic production.