[WTO Case Review Series No.36] Russia – Tariff Treatment of Certain Agricultural and Manufacturing Products (DS485): Moving Targets and Measures with Systematic Application

Author Name SHIMIZU Mari (Ministry of Economy, Trade and Industry)
Creation Date/NO. July 2021 21-P-013
Research Project Comprehensive Research on the Current International Trade/Investment System (pt.V)
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The panel in this case found many tariff measures targeting agricultural and manufacturing goods by Russia to be inconsistent with GATT Article II:1(b) (adopted without appeal). While the measures at issue include a type of tariff that has combined duty for both bound duty and applied duty, which requires complicated comparisons between the two rates, the panel clarified that the break-even point of custom price at which the applied duty exceeds the bound duty (break-even price) can be identified without detailed mathematical explanations, but by demonstrating examples of inconsistency that indicate the structure or design of the measure. These findings by the panel are appropriate as they are in line with the findings in prior cases that have held that, in light of the nature of tariff concession that requires stability and predictability, the violation of concession can be established by demonstrating that applied duty rates can exceed the bound duty rates based on the structure and design of the measure.

Also, as the measures in this case include measures amended or terminated after the establishment of the panel and during the trial (so called "moving target(s)"), the identification of such measures and whether to make recommendations for them are included in the major issues in this case. The panel took an analytical and reasonable approach in identifying the measures to be reviewed taking into account the complainant's consent and the logical relationship among the relevant phases of measure, and making recommendations with a reservation of "to the extent that [the relevant measures] continue to be inconsistent." Whether the similar approach will be taken in future cases remains to be seen.

The panel further held that, to establish an independent compounded measure by which certain types of tariff treatments are systematically accorded, individual applications need to be underlined by a system, rather than just being repeated, while it also held that it may be possible to infer the existence of a system when the repetition is so substantial as to render it more likely than not that the underlying system exists (in conclusion, the panel did not find that the existence of a systematically applied measure had been established in the current case). However, it may be questioned whether establishing criteria that would allow for the easier inference of the existence (i.e., the shift of burden of proof) of such issues, solely on the basis of frequency of repetition, would be appropriate.