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Decisions of the Appellate Body of the World Trade Organization
Canada-Certain Measures Affecting the Automotive Industry
2. Facts
The Canadian measure at issue in this case was the duty-free treatment of certain automobiles and other motor vehicles, pursuant to the Canada-US Auto Pact.
Under the [relevant Canadian regulations], the import duty exemption is available to manufacturers of motor vehicles on imports `from any country entitled to the Most-Favoured-Nation Tariff', if the manufacturer meets the following three conditions: (1) it must have produced in Canada, during the designated `base year', motor vehicles of the class imported; (2) the ratio of the net sales value of the vehicles produced in Canada to the net sales value of all vehicles of that class sold for consumption in Canada in the period of importation must be `equal to or higher than' the ratio in the `base year', and the ratio shall not in any case be lower than 75:100 (the `ratio requirements'); and (3) the amount of Canadian value added in the manufacturer's local production of motor vehicles must be `equal to or greater than' the amount of Canadian value added in the local production of motor vehicles of that class during the `base year' (the `CVA requirements').1
Since 1989, the category of manufacturers that may qualify for duty-free treatment has been closed. According to the Panel,
...General Motors in Canada imports only GM motor vehicles and those of its affiliates; Ford in Canada imports only Ford motor vehicles and those of its affiliates; the same is true of Chrysler and of Volvo. These four companies all have qualified as beneficiaries of the import duty exemption. In contrast, other motor vehicle companies in Canada, such as Toyota, Nissan, Honda, Mazda, Subaru, Hyundai, Volkswagen and BMW, all of which also import motor vehicles only from related companies, do not benefit from the import duty exemption.2
Thus, Canada's import regime for automobiles and certain other motor vehicles has differential effects, depending on whether the relevant manufacturer produces in Canada, as well as on Canadian value added and exports from Canada. Interestingly, all of the US-origin vehicles could be imported duty-free under NAFTA.
1
Appellate Body Report, para. 9 (citations omitted) (emphasis in original).
2
Panel Report, WT/DS139/R; WT/DS/142/R, 11 February 2000, para. 10.43. The panelists were Ronald Saborio Soto, Timothy
Groser and Rudolph Ramsauer.
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Tuesday, June 26, 2001 11:48AM