Like Product Review on Technology Products serving Multiple End Uses – Analysis on the Proper Sequence and Scope of Conducting Review
Date Issued
2011
Date
2011
Author(s)
Wu, Hsien
Abstract
Through GATT and WTO practice, the development of criteria and standards for the review of Like Product under Articles I:1, III:2 first sentence and III:4 of the GATT 1994 has sufficiently ensure the effective review of these provisions. The criteria subject to review, namely Physical Property and Nature, End Use, Consumer Tastes and Habits and Tariff Classification, have been heavily relied upon by Panels and the Appellate Body in determining whether the products at issue are Like Products. Also, recognition of the acceptability of Future Claims under the concept of potential competition and Hypothetical Like Product has further expanded the range of claims that a Member may pursue in support of their position. These established practices provide support in understanding the competition relationship between the products at issue, serving as basis for the later stage of review.
However, the effectiveness of the review of Like Product as a tool of determining competition relations may face challenges from technology products that have incorporated additional function. Through technology development, certain technology products may be able to perform additional functions by incorporating new technology into its overall structure, which may involve adding additional components into the technology product. Such an additional function may change the relevant market dynamics by making the technology product being able to compete with other products that were originally not a subject of competition. Furthermore, the speed of technology development further complicates the situation, as changes in the market will possibly occur more rapidly with every new product being developed. The complication of the review of Physical Property and Nature, End Use and Consumer Tastes and Habits due to the involvement of technology product may lead to the question on whether current practice may still be able to sufficiently identify competition relationships between the products.
This thesis is of the view that the Like Product review requires renovation in order to maintain its effectiveness under the special context of Technology Product. After all, technology product has not yet been raised as an issue under the review of Articles I and III of the GATT 1994; also, due to the complexity of technology products, the lack of a sequence of review will lead to arbitrary rulings that will misconceive the actual competition relations of the products at issue. What is required is the establishment of a sequence of review that will properly address the special situation of technology products, and a new approach to Future Claims.
For the actual review process, first, this thesis will address issues regarding Physical Property and Nature and End Use. In the past, the review of Physical Property involves only comparison of key characteristics coupled with detailed analysis on End Use. However, under the context of technology products, this thesis is of the view that such an approach is not appropriate, as the lack of proper review process may lead to misconduct of not allocating the proper weight to crucial facts. The conducting of review should allocate Physical Property and Nature and End Use as the first step of review, being utilized as a “group” that will serve as basis in evaluating Consumer Tastes and Habits, which will involve evaluation of how consumers perceive facts that fall within the scope of these two criteria. While the expansion of End Use is an important factor, similarities and differences in regards to Physical Property and Nature must also be taken into account, as it may also have an effect on consumers. At this stage, the Panel’s review should focus on identifying relevant facts, not making comparison between the claims in regards to Physical Property and Nature and End Use, because the significance of these characteristics may only be properly evaluated in light of Consumer Perception.
Then regarding the second issue of Consumer Tastes and Habits, this thesis is of the view that this criterion should serve as the second step of review, which involves a comparison of consumer perspective based on the Physical Property and Nature and End Use previously identified, as it may be a source of information that may affect the market. Also, for technology products, a Panel must consider the level of acceptance of the new technology at issue, and refrain from referring to the market situation of other Members as basis for its reasoning. Panels must also understand that a claim of “Major End Use” of the products is a claim under the scope of Consumer Tastes and Habits. Finally, if there is an additional consumer action of modification that may affect competition relations, Panels must also take this fact into account, serving as guidance in properly locating the Physical Property and Nature and End Use of the products at issue.
To the last issue regarding Future Claims, this thesis is of the view that the Korea – Alcoholic Beverages case is not applicable to technology products, as this case did not and cannot address uncertainties arising from technology development and the market development that is specific to technology products. This thesis finds guidance from rulings regarding Hypothetical Like Product, and provides further supplementation in order to address the issues of uncertainty under technology products.
Based on the above analysis, the review of technology product may still be effective and precise in determining the competition relationship between the products under the context of technology products. This further development proposed will ensure the effectiveness of Article I and III of the GATT 1994 in deterring discriminating measures which is indispensible to the functioning of the WTO.
Subjects
Consumer Tastes and Habits
End Use
Like Product
Most Favoured Nations Treatment
National Treatment
Physical Property and Nature
World Trade Organization (WTO)
Type
thesis
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