International Trade Law

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Assume that both of the following facts are made up. Don’t assume any extra factual statements.

1. The planet Mars is a WTO member. Soft drink sales that contain black tea are subject to a 20% sales tax; soft drink sales that contain green tea are subject to a 10% sales tax. Both green tea and black tea-flavored soft drinks are made in the country by soft drink makers. Only soft drinks with additional caffeine are required by Mars’s law to list their caffeine amount on the label. Black and green tea soft drinks both include naturally occurring caffeine. Since caffeine is not added during the manufacturing process, domestic green tea soft drinks do not list their caffeine concentration on the labels. Because caffeine is added during the production process, domestic soft drinks prepared with black tea are labeled with their caffeine concentration. The caffeine concentration listed on soft drink labels has the effect of lowering overall soft drink consumption. Green tea and black tea each have their own HS codes, 090210 and 090230, respectively. Black tea and green tea are subject to MFN duty rates of 10% and 10%, respectively. Black tea cannot be grown on Mars due to climate. Green tea, however, is made on Mars. Farmers who live on the island of Pluto in the southern region of Mars are the ones who make green tea. Their primary source of revenue is from the production of green tea. Both local green teas from Pluto Island and imported green teas are used to make green tea soft drinks on Mars. In contrast, only imported black teas are used to make black tea soft drinks on Mars. Both green tea and black tea-based soft beverages fall under the same HS Code, 210120. DRI, a marketing research organization, previously revealed that as the price of black tea soft drinks climbs by 10%, the consumption of green tea soft drinks rises by as much as 9%. The applied MFN duty rate for both soft drinks is exactly 100%, resulting in minimal quantities of imports of both soft drinks.

The greatest exporter of black tea in the world is Indus, a WTO member. Regarding its treatment of black teas imported from Indus, Mars is alleged by Indus to be in violation of its WTO duties. Concerning WTO allegations against Mars, the Indus government is interested in your professional opinion. Write a brief document examining the truthfulness of any potential complaints against Mars.



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