When is “alcohol” not alcohol? When is a “car” not a car?
Put another way, when is one apple not like another?
No this is not a Sesame Street song, this is actually a critical issue in world trade.
Let’s start on the ground floor. The WTO exists to promote more liberal trade (not so much free trade, as freer trade). One of its most basic rules is that you do not treat imported products that are “like” your domestic products differently from your domestic products.
So if I have an apple tax of 5% on local apples, I can’t slap an extra 10% tax on imported French apples.
(Note, you can still tax nasty foreign apples at the border with a tariff, we’re only talking about not cheating on your tariff promises by whacking on an extra charge on them behind your trading buddies backs once their apples are off the wharf.)
Still awake? Cool.
So, when am I allowed to treat apples differently? The answer is, if they’re different from each other – ie if they’re not actually “like” one another.
So when is an apple not like an apple?
Let’s try an easier one: insulation materials. Is asbestos sheeting “like” fibreglass batts for insulation? No, one is a major carcinogen and risk to health, the other is not. Is a heavily petrol consuming car not “like” a low fuel consuming car? Mmm … maybe not.
See what’s happening here? The test begins to slide from whether things are physically identical (a bit of a philosophical paradox anyway) to taking a peek at whether the government regulation is aimed at protectionism or some legitimate regulatory purpose: health in the case of asbestos, the environment (clean air and preserving fossil fuels) in the case of cars.
The conclusion in WTO law? The meaning of “like” and “like products” is a slippery beast that changes its colour and stripes according to the exact Article of the General Agreement on Tariffs and Trade 1994 in which you find it.
This lead in the “famous” Japan – Alcohol case to what I would argue is the worst literary image ever unleashed on an unsuspecting world in the course of legal reasoning. I give you the words of the World Trade Organisation Appellate Body:
”The concept of “likeness” is a relative one that evokes the image of an accordion. The accordion of “likeness” stretches and squeezes in different places as different provisions of the WTO agreement are applied. The width of the accordion in any one of those places must be determined by the particular … context … in any given case …”
I just have this vision of the Chair of the panel in the middle of submissions whipping out his accordion of likeness for a rousing chorus of the protectionist polka.
Maybe a nice bit of square dance calling: “Take your trade partner by the hand, now do-cee-do and ain’t it grand! Woo hoo!”
My WTO exam is on Monday. Excuse the madness.
PS this just in (via Aileen at wuyuetian) the latest in reality TV: "The Partner" - the legal profession just got scarier ...