## Facts

- The United States challenged Japanese governmental actions allegedly restricting market access for imported consumer photographic film and paper in Japan.
- The dispute arose in a market where a Japanese producer held a dominant position, supported by a multi-layer wholesale and retail distribution system.
- The United States alleged a “structural web” of government measures that entrenched domestic distribution channels and impeded imports over time.
- Challenged categories included: (1) distribution-related governmental programs and “administrative guidance” allegedly encouraging single-brand distribution and common facilities; (2) restrictions on opening and expansion of large-scale retail stores under the Large-Scale Retail Store Law and related practices; (3) competition- and consumer-protection rules and guidance (e.g., Premiums Law, Antimonopoly Law, Japan Fair Trade Commission guidance) allegedly limiting promotion techniques; and (4) alleged failures to publish or make transparent certain rules and guidance.
- The United States brought (a) violation claims under GATT 1994 Articles III and X and (b) a non-violation nullification or impairment claim under GATT Article XXIII:1(b) based on tariff concessions for film and paper.
- A WTO panel was established after consultations failed; the panel report was adopted by the WTO Dispute Settlement Body on April 22, 1998.

## Issues

1. Whether the challenged governmental actions, including non-binding administrative guidance and related conduct, could constitute a “measure” for purposes of a non-violation claim under GATT Article XXIII:1(b).
2. What elements and evidentiary standard govern a non-violation nullification or impairment claim under GATT Article XXIII:1(b), including reasonable expectations from tariff concessions and causation.
3. Whether Japan’s alleged distribution, retail, and promotion-related measures violated GATT Article III:4 by according less favourable treatment to imported film and paper.
4. Whether Japan violated GATT Article X:1 by failing to publish laws, regulations, or administrative rulings of general application relevant to the challenged practices.

## Decision

- The panel rejected the United States’ non-violation nullification or impairment claim under GATT Article XXIII:1(b).
- The panel rejected the United States’ violation claims under GATT Articles III:1 and III:4, finding insufficient proof of protective application or less favourable treatment for imports.
- The panel rejected the United States’ claim under GATT Article X:1, finding no demonstrated failure to publish relevant rules of general application within the meaning of Article X.
- Overall, the panel found no GATT violation and no actionable non-violation nullification or impairment.

## Legal Principles

- Non-violation complaints under GATT Article XXIII:1(b) are an exceptional remedy and must be approached with caution to preserve security and predictability in negotiated concessions.
- A non-violation claim requires proof of: (1) a governmental “measure,” (2) a benefit accruing from the agreement (including legitimate expectations of market access from tariff concessions), and (3) a causal link between the measure and the nullification or impairment of that benefit.
- “Measure” for Article XXIII:1(b) is not limited to binding laws; it can include administrative guidance and, in limited circumstances, conduct sufficiently attributable to the government, but attribution and evidentiary support are required.
- Causation requires a clear and systematic link; the measure must contribute more than de minimis to the alleged impairment, and the complainant must show the impairment could not reasonably have been anticipated at the time of the concession.
- For GATT Article III:4, the complainant must show a law, regulation, or requirement affecting internal sale or distribution that results in less favourable competitive conditions for imports compared with like domestic products; generalized policies and unproven market-structure effects are insufficient.
- For GATT Article X:1, the obligation concerns publication of laws, regulations, judicial decisions, and administrative rulings of general application; not every instance of informal guidance or case-specific administration must be published absent proof it constitutes a rule of general application affecting traders.

## Conclusion

The panel held that the United States did not prove that Japan’s challenged distribution, retail, promotion, or transparency-related actions caused an unanticipated, more-than-de-minimis impairment of benefits from tariff concessions, nor did it establish discrimination or publication failures under GATT Articles III or X; accordingly, Japan prevailed on all claims.


Japan—Measures Affecting Consumer Photographic Film & Paper (U.S. v. Japan), WTO Panel Report, WT/DS44/R (Apr. 22, 1998)