PROCEDURAL HISTORY

On 13 June 1996, the United States requested consultations with Japan pursuant to Article 4.4 of the Dispute Settlement Understanding (DSU) and Article XXIII:I of the General Agreement on Tariffs and Trade 1994 (GATT) regarding certain laws, regulations and requirements of Japan affecting the distribution, offering for sale and internal sale of imported consumer photographic film and paper. The United States considered that the Japanese measures specified in its consultation request violated the obligations of Japan under GATT, including Article 111 and Article X, and that those measures nullified or impaired benefits accruing to the United States directly or indirectly under GATT, within the meaning of Article XXlIl:l(a) and (b). The United States further stated that it reserved the right to raise additional factual claims and legal matters during the course of the consultations. The consultations were held on 11 July 1996, but failed to resolve the dispute.

On 20 September 1996, the United States requested the establishment of a Panel pursuant to Articles 4 and 6 of the DSU. In its request, the United States alleged that Japan has implemented and maintains certain laws, regulations, requirements and measures (hereinafter collectively “measures” or “'countermeasures'”) affecting the distribution, offering for sale, and internal sale of imported consumer photographic film and paper. The US considered that such measures nullify or impair benefits accruing to it, within the meaning of Article XXIII: 1 (a), as a result of the failure of Japan to carry out its obligations under Articles III and X of GATT. More specifically, the United States claimed that the Japanese Government measures: