Document G6a0RLJe0mDV2MMpaVvN6qmqV

Page 27 [FN69] (emphasis addecd) *28 98. As we have said, although this "general principle" is not explicitly invoked in Article 111:4, nevertheless, it "informs" that provision. [FN70] Therefore, the term "like product" in Article 111:4 must be interpreted to give proper scope and meaning to this principle. In short, there must be consonance between the objective pursued by Article III, as enunciated in the "general principle" articulated in Article lll:l, and the interpretat. ion of the specific expression of this principle in the text of Article 111:4. T*his interpretation must, therefore, reflect that, in endeavouring to ensure "equality- of competitive conditions", the "general principle" in Article III seeks to prevent Members from applying internal taxes and regulations in a manner which af fects the competitive relationship, in the marketplace, between the domestic and imported products involved, "so as to afford protection to domestic production.." 99. As products that are in a competitive relationship in the marketplace could be affected through treatment of imports "less favourable" than, the treatment accorded to domestic products, it follows that the word "like" in Art icle 111:4 is to be interpreted to apply to products that are in such a competit ive relationship. Thus, a determination of "likeness" under Article 111:4 is, fundamentally, a determination about the nature and extent of a competitive relationship between and among products. In saying tlnis, we are mindful that there is a spectrum of degrees of "competitiveness" or "substitutability" of products in the marketplace, and that it is difficult, if not impossible, in the abstract, to indicat. e precisely where on this spectrum the word "like" in Article III.-4 of the GATT 3. 994 falls. We are not saying that all products which are in some competitive relat. ionship are "like products" under Article 111:4. In ruling on the measure at issue, we also do not attempt to define the precise scope of the word "like" in Ar-ticle 111:4. Nor do we wish to decide if the scope of "like products" in Article IX 1:4 is co-extensive with the combined scope of "like" and "directly competitive or su-bstitutable" products in Article III:2. However, we recognize that the relationship t>etween these two provisions is important, because there is no sharp distincti on between fiscal regulation, covered by Article 111:2, and non-fiscal regulation, covered by Article III:4. Both forms of ^regulation can often be used to achieve: the same ends. It would be incongruous if, due to a significant difference in the pxroduct scope of these two provisions, Members were prevented from using one form of regulation - for instance, fiscal - to protect domestic production of certain products, but were able to use another form of regulation - for instance, non-fiscal - to a-chieve those ends. This would frustrate a consistent application of the "general pri_.nciple" in Article III: 1. For these reasons, we conclude that the scope of "li)ce" in Article III:4 is broader than the scope of "like" in Article 111:2, first ser_tence. Nonetheless, we note, once more, that Article 111:2 extends not only to "lifce products", but also to products which are "directly competitive or substitutable", and that Article 111:4 extends only to "like products". In view of this different Language, and although we need not rule, and do not rule, on the precise product scope of Article 111:4, we do conclude that the product scope of Article 111:4, although fcroader than the first sentence of Article I HI: 2, is certainly not broader than the combined product scope of the two sentences of Article III:2 of the GATT 1994. *29 100. We recognize that, by interpreting the term "likes products" in Article III:4 in this way, we give that provision a relatively broacL product scope although no broader tlnan the product scope of Article 111:2. In so doing, we observe that there is a second element that must be established before a measure can be held to be inconsistent with Article 111:4. Thus, even if two products are "like", that does not mean that a measure is inconsistent with Article 111:4. A complaining Member must still establish that the measure accords to the group of "like" imported products "less favourable treatment" than it accords to the group of "like" domestic products. The term "less favourable treatment" expresses the general principle, in Article III.-l, that internal regulations "should not be appL ied ... so as to afford