International Trade Law and World Trade
Law
The paper 'International Trade Law and World Trade Law' is a great example of a Macro and
Microeconomics Assignment. The action by Australian authorities to introduce a higher tax rate
on Japanese car imports caused a negative impact on trade between the two states. However,
such actions by governments to impose a discriminatory tax with the intent of giving the local
manufacturers a competitive advantage in most cases hurt international trade. Misuse of
regulatory measures by local authorities for protectionism purpose is indispensable especially
where the commercial interests of the foreign state lack political support in the state enacting the
regulations.
Nonetheless, the authorities should maintain an acceptable balance between international trade
and legitimate regulatory measures that will not sour the trade relationship with other member
countries under the auspices of (General Agreement on Tariffs and Trade) GATT. GATT
provision to guard against protectionism is contained in Articles III and XX. Article 111 deals
with domestic taxation of imports and other domestic trade regulations imposed on imports. The
Article provides that internal regulations and taxes must not favor domestic products. This is an
anti-discriminatory rule commonly known in GATT principles as the “ national treatment”
principle.
However, in cases where the regulatory measures serve to discriminate against international
trade, violating Article III, the government imposing such regulations should justify its
discriminatory acts by providing concrete proof that such discrimination is necessary to achieve
the legitimate regulatory purpose. Article XX of GATT provides an exception to Article III. It
provides that, discriminatory regulatory measures may be justified if they are exclusively for the
achievement of legitimate social pursuits. The imposition of a 30% tax on, all vehicles worth
more than $ 30,000, as opposed to the 10% tax on locally manufactured cars is a clear sign of
explicit discrimination.
Regrettably, all cases of explicit discrimination constitute a wrong as it turns out to be more
burdensome on foreign products as compared to their local counterparts. Moreover, explicit
discrimination appears to be a deliberate policy thus likely to cause legal tussles between the
concerned parties. Article 30 of European Commission law gives a directive against such
restrictions. However, GATT still remains silent on explicit discriminatory measures.
The 30% tax is imposed on cars above a threshold of $30,000 and thus can be considered as a
luxury tax. However, the high rate imposed on Japanese cars made them more expensive and
thus rendering them less competitive to the Australian less expensive cars. Such imposition of
discriminatory tax rate goes against Article III, which prohibits the imposition of taxes on
imports that exceed the ones applied locally. Nonetheless, both categories of motor vehicles are
considered as “ like products” and therefore, the introduction of an artificial tax for vehicles
costing more than $ 30,000 meant imposition of punitive tax while at the same time exempting
Australian motor vehicles by subjecting them to lower tax rate.
By this, the Australian Authorities violated Article III. Despite cars imported from Japan being
deemed as a luxury product, the Australian authorities violated Article III, since the price
This study source was downloaded by 100000856941565 from CourseHero.com on 11-18-2022 03:17:18 GMT -06:00
https://www.coursehero.com/file/92768683/International-Trade-Law-and-World-Trade-Lawdocx/
Law
The paper 'International Trade Law and World Trade Law' is a great example of a Macro and
Microeconomics Assignment. The action by Australian authorities to introduce a higher tax rate
on Japanese car imports caused a negative impact on trade between the two states. However,
such actions by governments to impose a discriminatory tax with the intent of giving the local
manufacturers a competitive advantage in most cases hurt international trade. Misuse of
regulatory measures by local authorities for protectionism purpose is indispensable especially
where the commercial interests of the foreign state lack political support in the state enacting the
regulations.
Nonetheless, the authorities should maintain an acceptable balance between international trade
and legitimate regulatory measures that will not sour the trade relationship with other member
countries under the auspices of (General Agreement on Tariffs and Trade) GATT. GATT
provision to guard against protectionism is contained in Articles III and XX. Article 111 deals
with domestic taxation of imports and other domestic trade regulations imposed on imports. The
Article provides that internal regulations and taxes must not favor domestic products. This is an
anti-discriminatory rule commonly known in GATT principles as the “ national treatment”
principle.
However, in cases where the regulatory measures serve to discriminate against international
trade, violating Article III, the government imposing such regulations should justify its
discriminatory acts by providing concrete proof that such discrimination is necessary to achieve
the legitimate regulatory purpose. Article XX of GATT provides an exception to Article III. It
provides that, discriminatory regulatory measures may be justified if they are exclusively for the
achievement of legitimate social pursuits. The imposition of a 30% tax on, all vehicles worth
more than $ 30,000, as opposed to the 10% tax on locally manufactured cars is a clear sign of
explicit discrimination.
Regrettably, all cases of explicit discrimination constitute a wrong as it turns out to be more
burdensome on foreign products as compared to their local counterparts. Moreover, explicit
discrimination appears to be a deliberate policy thus likely to cause legal tussles between the
concerned parties. Article 30 of European Commission law gives a directive against such
restrictions. However, GATT still remains silent on explicit discriminatory measures.
The 30% tax is imposed on cars above a threshold of $30,000 and thus can be considered as a
luxury tax. However, the high rate imposed on Japanese cars made them more expensive and
thus rendering them less competitive to the Australian less expensive cars. Such imposition of
discriminatory tax rate goes against Article III, which prohibits the imposition of taxes on
imports that exceed the ones applied locally. Nonetheless, both categories of motor vehicles are
considered as “ like products” and therefore, the introduction of an artificial tax for vehicles
costing more than $ 30,000 meant imposition of punitive tax while at the same time exempting
Australian motor vehicles by subjecting them to lower tax rate.
By this, the Australian Authorities violated Article III. Despite cars imported from Japan being
deemed as a luxury product, the Australian authorities violated Article III, since the price
This study source was downloaded by 100000856941565 from CourseHero.com on 11-18-2022 03:17:18 GMT -06:00
https://www.coursehero.com/file/92768683/International-Trade-Law-and-World-Trade-Lawdocx/
