Mar 13, 1984
JAPAN SHOULD REMOVE IMPORT RESTRICTIONS ON LEATHER.
GENEVA, MARCH 9 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Quantitative Restrictions maintained by Japan on imports of leather and some leather products was not justified in terms of its GATT obligations, and it should be asked to remove them.-In giving this finding, a GATT panel has noted that Japan has sought to justify them on "social" grounds, and the GATT Council might consider these factors in giving Japan "a certain amount of time to progressively eliminate the Quantitative Restrictions (QRs), and conform to its GATT obligations.- The dispute was initially raised by the United States, but a number of other parties – Australia, the EEC, India, New Zealand and Pakistan - also appeared before the panel assailing the Japanese restrictions.- Some of then further complained that the Japanese restrictions were also "discriminatory".- India and Pakistan noted that their efforts, through the special dispute settlement procedures for developing countries and the GATT Trade and Development Committee (where north/south trade issues are sought to be settled through special consultations) not fulfilled expectations, and their exports had actually declined.- The panel noted that these points were not within its terms of reference since the U.S.A. had not raised them in the dispute, but the GATT Council (in dealing with the panel ruling) should deal with them.- Under its import regime, Japan maintains an import quota system in respect of bovine and equine leather, sheep and lamb leather, and goat and kid leather. These restrictions apply to semi-finished and finished varieties, and come of the products like footwear.- After an earlier complaint by the U.S.A., and following bilateral consultations, Japan gave additional quotas to the U.S.A., which arrangement expire in March 1982. After further consultations that the U.S. did not find satisfactory, it raised the complaint before GATT in April 1983.- The additional quotas provided to the U.S.A. as assailed by other parties as violative of the MFN clause.- The U.S. noted that Japan’s defence of the QRs on the ground of "social policy" to protect the jobs of a minority population, could not be justified in GATT. It was not also in the interests of Japan, U.S.A. or the world trading system, if Japan’s example was followed by others.- The U.S. noted in this connection that the EEC’s argument of "social and economic conditions" to justify QRs against some imports from Hong Kong, had been found "unjustified" by GATT: irrespective of the duration of the restrictions.- Japan’s defence before the panel was that Doha community in Japan, which faced "discrimination" in the historical development of Japanese society, depended on leather product work for sustenance.- Though the "institutional discrimination" against the Doha people numbering some 1.120.000 and living in 4.4000 districts - had been formally removed, this "emancipation was only formal and in actual life these people continued to lead a destitute life, under miserable conditions not too different from those in feudal or pre-modern days", Japan argued.- (The conditions of the Dohas are often viewed as similar to that of the "untouchables" of India).- The restrictions on leather imports, Japan said, were necessary to provide these people sustenance and survival.- The United States viewed any panel finding supportive of Japan’s assertion that "import quotas were a necessary and acceptable means to protect minority workers would set a dangerous precedent, completely inconsistent with GATT".- India, in its arguments before the panel; complained that the maintenance of these illegal restrictions by Japan was all the more serious as they adversely affected the trade interests of the developing countries which had serious balance-of-payments problems.- The leather industry in these countries too was manned by backward and their social uplifet was a concern of the government.- Pakistan made the further point that the QRs prohibited producers and exporters from further expanding their activities. There was also a lack of information on how the QRs were operated, and what kind of licensing system was used.- "Generally, the impression was that some hidden elements of discrimination were involved in quota "allocation", Pakistan complained.- In its conclusions, the panel underlined that the U.S. arguments were based on legal grounds, while Japan’s only justification was the social problems of its Doha people.- The panel "appreciated" that leather and leather products were the only manufactured items subject to residual restrictions in Japan, and also the "difficult socio-economic situation" of the Japanese leather industry and the "sensitive" problem of the Doha population.- However, QRs could be justified in GATT only in terms of the relevant provisions of the general agreements the panel said.- And, since Japan had invoked no such provision, it was not for the panel to establish whether the QRs could be justified under any of the GATT provisions.- The Japanese restrictions, the panel ruled, contravened article XI: l of GATT.- Japan had also ceased to invoke the balance of payments considerations, which it used to do till l963, to justify the QRs.- The panel also rejected Japan’s contentions that the QRs had not actually impaired or nullified benefits to the U.S.A. under GATT.- On the basis of its findings, the panel suggested that the GATT Contracting Parties should recommend that Japan should eliminate the QRs and thus conform to the GATT obligations.- The panel noted Japan’s indication it would be unable to eliminate the QRs on leather "immediately".- While recognising these "difficulties", the panel underlined that the first objective of the Contracting Parties "usually is to secure the withdrawal of the (complained) measures if they are inconsistent with GATT".- However, it said, the GATT Council "might wish to consider whether or not Japan should be given a certain amount of time progressively to eliminate the import restrictions" taking into account the socio-economic circumstances raised by Japan.-