## Facts

- Belgium imposed a 7.5% levy funding family allowances, collected on certain purchases by public bodies.
- The levy applied only to foreign goods bought by public entities for their own use when the goods originated in countries whose family-allowance systems did not meet Belgian statutory requirements.
- The charge was collected when the public body paid the purchase price, not at the time of importation, and was not imposed on imports “as such.”
- Belgium exempted from the levy products originating in Luxembourg, the Netherlands, France, Italy, Sweden, and the United Kingdom.
- Denmark and Norway were not exempted and complained that the selective exemptions discriminated against their products.
- A GATT panel was established to consider the complaint; its report was adopted by the GATT Contracting Parties on November 7, 1952.

## Issues

1. Whether the levy was an “internal charge” under GATT Article III:2 or an import charge governed by Article II:2.
2. Whether exempting certain countries from an internal charge violated MFN obligations under Article I:1 as applied to matters covered by Article III:2.
3. Whether Article III:8(a) (government procurement) could justify a discriminatory internal charge connected to public purchasing.
4. Whether Belgium could maintain the measure under the Protocol of Provisional Application as “existing legislation,” limiting enforceability of Part II obligations.

## Decision

- The panel treated the 7.5% levy as an internal charge under Article III:2, not an import charge under Article II:2.
- The panel concluded that, if the Agreement were in definitive force, Belgium’s exemption would have to be extended “immediately and unconditionally” to all contracting parties, including Denmark and Norway.
- The panel considered the Belgian legislation discriminatory in principle because it conditioned exemption on the exporting country’s family-allowance system.
- The panel found Article III:8(a) inapplicable because it addresses “laws, regulations and requirements,” not internal taxes or charges.
- The panel did not reach a definitive conclusion that Belgium was presently in violation, given the asserted effect of the Protocol of Provisional Application and unresolved questions about “existing legislation.”

## Legal Principles

- A charge imposed on purchases within the territory, collected upon payment by the purchaser, may be characterized as an internal charge under GATT Article III:2 rather than a border charge under Article II:2.
- Under Article I:1, any advantage relating to matters covered by Article III:2, including exemptions from internal charges, must be accorded immediately and unconditionally to like products from all contracting parties.
- Conditioning internal-tax exemptions on the exporting country’s domestic social policy (such as the structure of its family-allowance system) is incompatible with MFN treatment absent a specific authorization in the Agreement.
- Article III:8(a) does not shield internal taxes or charges merely because they arise in connection with government purchasing.
- Under the Protocol of Provisional Application, a contracting party may claim limited permission to maintain inconsistent measures as “existing legislation,” potentially preventing a definitive inconsistency finding where applicability is not established.

## Conclusion

The panel classified Belgium’s levy as an internal charge and indicated that selective country exemptions would be impermissible under MFN rules in a fully operative GATT system, while declining to make a final inconsistency finding in light of provisional-application constraints and uncertainty over whether the measure qualified as protected existing legislation.


Denmark & Norway v. Belgium, GATT B.I.S.D. (1st Supp.) 59 (1952)