The World Trade Organization indicted Japan for what it described as a violation of the internal taxation and regulations as stipulated in the General Agreement on Tariff and Trade 1994. Japan had pledged to synchronize the Liquor Tax Law to comply with the World Trade Organization’s requirements. The World Trade Organization is a medium that regulates the codes of conduct of international trade among member states.
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Is the Japanese Tax Law that governs liquor in line with the General Agreement on Tariff and Trade 1994 or is it discriminatory?
In 1996, Japan sought to appeal a number of issues concerning the legal interpretation of the General Agreement on Tariff and Trade as stipulated by the dispute resolution panel. Japan felt that the panel overlooked some parts of the declaration that justifies their disputed Liquor Tax Law. In its defense, Japan argued that the panel had omitted the clauses that allowed actions aimed at protecting domestic production.
Japan was not contended with the legal interpretations of the Dispute Resolution Panel especially regarding the first three lines.
- With regard to the first sentence, Japan accused the panel of ignoring Article III section 2 that is important in interpreting the agreement. It maintains that interpretation of this particular article must hold and reflect on the aims and effects of the disputed actions.
- In light of the second sentence, Japan accused the panel of misinterpreting the language used and in particular the clause “so as to afford protection to domestic products.”
- Japan further indicated that the issues raised in disapproval to its actions on liquor taxation are uninformed and the parties involved lack sufficient knowledge of the Japans liquor tax system.