WORLD TRADE WT/DS8/20

WT/DS10/20

ORGANIZATION WT/DS11/18

12 January 1998

(98-0139)

Original: English

JAPAN - TAXES ON ALCOHOLIC BEVERAGES

Mutually Acceptable Solution on Modalities for Implementation

The following communication, dated 9 January 1998, from the Permanent Mission of Japan and the Permanent Mission of Canada, together with enclosures, is circulated to Members at the request of both delegations.

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The Governments of Canada and Japan wish to notify the Dispute Settlement Body ("DSB") that they have reached a mutually satisfactory solution regarding the implementation by Japan of the conclusions and recommendations adopted by the DSB in the dispute "Japan - Taxes on Alcoholic Beverages". Accordingly, Canada and Japan consider that Article 21.6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes no longer requires that this item remain on the agenda of the DSB.

Please find attached the text of the exchange of letter of 16 and 19 December 1997 on this subject.

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Enclosure 1:Letter Ambassador Mr. Takashi Tajima to Deputy Minister Robert G. Wright of Canada

I refer to the consultations between the officials of our two governments on the liquor tax issue. I am pleased to inform you that the Government of Japan (GOJ) has decided to take the following measures, whose adoption will be in accordance with the necessary domestic legislative procedures, to implement the recommendations and rulings of the WTO Dispute Settlement Body pursuant to the panel and the Appellate Body reports on "Japan - Taxes on Alcoholic Beverages".

Based on the outcome of the consultations referred to above, and having carefully considered the WTO's arbitration award issued on 14 February 1997, the GOJ will revise the current liquor tax scheme and will carry out tariff reductions and eliminations on the applied rate basis as described in detail in Annex 1, titled "Elements of Settlement for Dispute on Japanese Liquor Taxation", attached to this letter.

As compensation for the longer implementation period in the amended Liquor Tax Law for the new taxation scheme, from 1 April 1998 onward, the GOJ will eliminate tariff rates on the items in Annex 1 in stages as specified therein. For this purpose, the GOJ will submit a draft law amending the Customs Tariff Law and Temporary Tariff Measures Law to the next ordinary session of the Diet to be convened in January 1998, and will do its utmost to obtain Diet approval of such an amendment. The GOJ will not raise tariff rates above those specified in Annex 1.

In addition, through the