## Facts

- Brazil, a major supplier of coffee to Spain, challenged Spain’s revised tariff treatment for imports of unroasted, non-decaffeinated coffee.
- Before the reform, Spain applied a single tariff heading to unroasted coffee without differentiating among raw coffee types.
- Spain adopted a tariff subdivision effective March 1, 1980, creating categories for unroasted, non-decaffeinated coffee: “Colombian mild” and “other mild” (duty free) and “unwashed Arabica,” “Robusta,” and “other” (7% ad valorem).
- Brazilian exports to Spain were predominantly “unwashed Arabica” and “Robusta,” which became subject to the 7% duty, while “mild” coffees entered duty free.
- Spain had not bound duties on raw coffee in its GATT schedule.
- Brazil sought consultations under GATT Article XXII:1; after no satisfactory resolution, it requested a panel under Article XXIII:2 alleging discriminatory tariff treatment inconsistent with GATT obligations.

## Issues

1. Whether the various categories of unroasted, non-decaffeinated coffee were “like products” under GATT Article I:1.
2. If they were like products, whether Spain’s duty-free treatment for “mild” coffee and 7% duty for other categories violated the MFN obligation to accord advantages “immediately and unconditionally” to like products from all contracting parties.
3. Whether Spain’s lack of tariff bindings on coffee altered or limited its Article I:1 obligations.

## Decision

- The panel found the different categories of unroasted, non-decaffeinated coffee were “like products” for purposes of Article I:1.
- The panel concluded Spain conferred an advantage on “mild” coffee through duty-free entry that was not extended immediately and unconditionally to other like unroasted coffees, contrary to Article I:1.
- The panel found the measure nullified or impaired benefits accruing to Brazil within the meaning of Article XXIII.
- The panel recommended that Spain bring its tariff treatment into conformity by removing the discriminatory element.

## Legal Principles

- “Like product” analysis under GATT Article I:1 may consider physical characteristics, end-uses, tariff classification, and competitive conditions in the marketplace, including substitutability and how the product is sold to consumers.
- MFN under Article I:1 prohibits both facial and effect-based discrimination; a tariff structure can breach Article I:1 even if it does not expressly distinguish by origin.
- A contracting party’s freedom to set unbound tariffs does not permit granting tariff advantages to some suppliers’ like products while withholding them from others; MFN obligations apply independently of tariff bindings.
- A violation of MFN treatment that worsens competitive conditions for a supplier can constitute nullification or impairment under Article XXIII even without breach of a specific tariff binding.

## Conclusion

The panel held that Spain’s differential tariff treatment for categories of unroasted coffee treated like products unequally and, in effect, disadvantaged Brazil’s predominant exports, violating GATT Article I:1 and warranting recommendations to eliminate the discriminatory tariff distinction.


Spain—Tariff Treatment of Unroasted Coffee, GATT B.I.S.D. (28th Supp.) 102 (1981)