## Facts

- The United States challenged Thailand’s restrictions on imported cigarettes and Thailand’s internal cigarette tax and regulatory regime under GATT 1947.
- Thailand maintained a near-total ban on commercial cigarette imports through its state tobacco monopoly, which controlled cigarette production and importation.
- Thailand also imposed internal taxes (including excise and related business/municipal taxes) and internal requirements affecting marketing and distribution of cigarettes.
- The United States alleged the import ban violated GATT Article XI and that Thailand’s taxes and internal measures treated imported cigarettes less favorably than domestic cigarettes in violation of Article III.
- Thailand argued the import ban was permitted by GATT exceptions (including Article XX(b) for protection of human health) and relied on its accession arrangements as to internal taxes.
- A GATT panel was established under Article XXIII:2; the panel report was adopted by the GATT Council.

## Issues

1. Whether Thailand’s cigarette import ban was a prohibited quantitative restriction under GATT Article XI:1 and, if so, whether it was justified under Article XX(b) (or other asserted exceptions).
2. Whether Thailand’s internal taxes and other internal measures affecting cigarettes violated GATT Article III:2 and/or Article III:4 by discriminating against imported cigarettes.
3. Whether Thailand’s accession arrangements and transitional periods excused continued inconsistency with GATT Article III.

## Decision

- The panel found Thailand’s cigarette import ban constituted a quantitative restriction inconsistent with Article XI:1.
- The panel held the import ban was not justified under Article XX(b) because it was not “necessary” in light of reasonably available, less trade-restrictive alternatives.
- The panel found Thailand’s internal tax structure discriminated against imported cigarettes and violated Article III:2.
- The panel found certain internal regulations affecting marketing and distribution accorded less favorable treatment to imported cigarettes and violated Article III:4.
- The panel rejected Thailand’s reliance on accession arrangements and transitional periods as a basis to maintain Article III-inconsistent taxes and measures beyond the applicable deadlines.
- The panel recommended that Thailand bring its measures into conformity with GATT obligations.

## Legal Principles

- A complete ban on commercial imports is a “prohibition or restriction” covered by GATT Article XI:1 and is presumptively inconsistent with the ban on quantitative restrictions.
- Article XX(b) permits health measures only if they are “necessary,” which requires considering whether reasonably available, less GATT-inconsistent alternatives can achieve the health objective.
- Protection of human health against the harms of smoking is a legitimate objective under Article XX(b), but it does not automatically justify import prohibitions.
- Under Article III:2, internal taxes must not be applied to imported like (or directly competitive or substitutable) products so as to afford protection to domestic production; facially neutral structures can still violate Article III:2 if protective in effect.
- Under Article III:4, internal laws and regulations affecting the sale, offering for sale, purchase, transportation, distribution, or use of products must accord imported products treatment no less favorable than that accorded to like domestic products.
- Transitional commitments in an accession protocol may allow temporary adjustment time but do not create a continuing exemption from Article III obligations after deadlines expire.

## Conclusion

The panel concluded that Thailand’s cigarette import ban violated GATT Article XI:1 and could not be defended under the health exception in Article XX(b) because less trade-restrictive, non-discriminatory health measures were reasonably available; it also found Thailand’s discriminatory internal taxes and certain internal regulations violated GATT national treatment rules in Article III and were not excused by accession-related transition periods.


Thailand—Restrictions on Importation of and Internal Taxes on Cigarettes, GATT B.I.S.D. (37th Supp.) 200 (1991)