Petroleum Case case brief

Petroleum Case (Violation Case)
 

i)        Holding - What counts for nullification and impairment is that the competitive relationships between the countries are changed, and trade volume does not matter.

ii)       US violates Article 3…Article 3 is national treatments (can’t treat domestic products better than imported products.

iii)     Facts →US charged a higher tax on foreign crude oil than US crude oil, and this discriminated against foreign imports in favor of domestic production.

iv)     US says yes there was a breach but no harm so no nullification and impairment. 

v)      GATT Panel disagrees…this is not about trade flows…instead about trade balance.  Expectations regarding competitive relationships

(1)    Art. III:2 – cannot be interpreted to protect expectations on export volumes; rather, it protects expectations on the competitive relationship between imported and domestic products.

vi)     RULE → A Change in the competitive relationship contrary to that provision must subsequently be regarded ipso facto as nullification or impairment of benefits accruing under GATT.

(1)    Why? → Looking for a fair fight; impact on relationship key