9:15 AM May 13, 1993

LATIN AMERICANS SEEK PANEL ON NEW EC BANANA REGIME

Geneva 12 May (Chakravarthi Raghavan) -- The Latin American banana exporting countries raised in the GATT Council Wednesday their dispute with the European Community over its new EC-wide banana regime to come into force 1 July and sought panel adjudication and for the with panel asked to report within three months.

However, the European Community did not agree to the establishment of the panel. The issue will come up at the next meeting of the Council when appointment would be automatic.

A dispute raised by the very same countries about the existing regime of national quotas is being looked into by a GATT panel whose report is due later this week.

Among other disputes, the Council was advised that the US had revoked the restraint it had imposed on imports of men and boys' wool suits from Brazil and the dispute was not being pursued.

The dispute raised by the European Community against the United States over its taxes on sales of cars, which the EC said in practice discriminated against the imports was referred to a GATT panel.

In the oilseeds dispute and the renegotiation of the EC's bound tariff (where the US and EC have reached an accord but yet to be accepted and implemented by the EC), others with renegotiating rights and who complained of EC's failure to negotiate seriously with them, were in effect advised by the EC to wait for the EC Council of Ministers taking a decision on the issue in June.

In seeking a GATT adjudication on the new regime, Costa Rica supported by the other Latin American producers (Colombia, Guatamala, Nicaragua and Venezuela) invoked the 1989 dispute settlement procedures for urgent actions where 'perishahble goods' are involved and which require the panel to report within three months, instead of the six months under the normal procedures.

Costa Rica which presented the request said several rounds of consultations with the EC (between 22 March and 19 April) had failed to achieve a mutually satisfactory solution and hence a panel should be set up to examine the matter.

Besides the four other complainants, the request was supported also by Mexico, El Salvador, Brazil, Chile, Argentina, Bolivia, Peru and Australia and the US which also supported use of the 'urgent' procedures.

Dominica, the newest GATT contracting party and a Caribbean ACP country, noted that 92 of its export earnings came out of bananas and 100 percent of its output was exported to the EC (Britain). In Dominica's view with the new regime and its details still being discussed in Brussels, and the measures not having come into force, no panel could be set up at this stage in anticipation.

Other ACP countries who spoke, and supported the Dominica position, were Cote d'Ivoire, Jamaica, Cameroon, Madagascar, Trinidad and Tobago.

Howeverm the EC declined to agree to the panel reference at this stage, arguing that the measures had not come into force and that the panel going into the previous issue had not yet finished and they should await its ruling.

Costa Rica did not see any relationship in the work of the panel over the old regime and the current request for adjucication for the new regime.

Earlier, the Council heard complaints from a number of countries with initial negotiating rights in exports of oilseeds to the EC market that nearly a year after the EC had got authorization of the GATT Council to renegotiate the EC's bound zero-tariff regime, the EC had not undertaken any serious negotiations with them.

The original bound-tariff was negotiated by the EC with the US, and after two panel rulings went against the EC on the effects of its domestic support policies on the bound tariff regime, the EC sought renegotiation and in June 1992 obtained sanction to do this under the authority of the GATT Council. After some prolonged and tough negotiations with the US which had threatened to impose trade sanctions, the two reached an accord with last November (as part of the Blair House accord). But the EC Council of Ministers is yet to accept the terms of the agreement to enable the EC implementation.

On Wednesday, a number of other contracting parties with initial negotiating rights said though one year had elapsed since the EC gave notice of renegotiation to compensate the countries with initial negotiating rights, and such renegotiations are expected to be concluded within 60 days, no acceptable offer had ever been made to

Canada, which raised the question, said that since last November its own farmers had been left in uncertainty unable to make decisions on planting oilseeds.

The Canadian complaint was echoed also by Argentina which charged the EC with adopting delaying tactics since June 1992, by Brazil which said the negotiations had been paralysed and by Uruguay which said there had no been successful outcome and the negotiations should be resumed immediately.

India also expressed its unhappiness at lack of a sucessful conclusion in the renegotiations and the fact that the Council (under whose authority these were being conducted) dealing with the subject one year later though the specified time-limit was 60 days. Pakistan and Hungary also expressed their concerns.

The EC took note of the 'message', and said that the EC Council of Ministers was examining the US-EC accord and a decision was expected in June. Once that decision had been taken, the EC would start the negotiations with other parties and try to conclude them speedily.

The EC complaint against the US over the taxes on cars said the levies -- the Corporate Average Fuel Efficiency (CAFE) payment, the socalled gas-guzzler tax, and the luxury tax as applied to cars -- had a "more than proportional incidence on the sale of imported cars" and thus violated the General Agreement.

The subject has now become a sore point among the US environment groups who want trade instruments to be used unilaterally by the US for environment protection.

The CAFE is to be paid by a car manufacturer or importer if the sales weighted average of all model type fuel economies produced by the manufactuer fell below a certain level (now 27.5 mpg). But since CAFE was calculated on the basis of full car production of a manufacturer, it favoured large, integrated,full-line car manufacturers and worked to disadvantage of limited-line producers concentrating on the top of the market.

The gas-guzzler tax is an excise tax levied on sale or use by manufacturer or importer of a model not meeting fuel economy standards set by the Environment Protection Agency (EPA), with a threhsold standard of 22.5 mpg. A tax of $1000 is levied on model types with a fuel economy of 21.5 and 22.5, then progressively going up to $7700 for models with a fuel ecoomy below 12.5 mpg.

The EC contended that the 22.5 mpg cutoff was not founded on any reasonable or objective criteria and led to discrimination against imports.

The luxury tax -- on retail sale of luxury items like boats, furs, jewelry and cars exceeding a certain price -- had a disproportionately higher incidence on imported cars than on US-produced ones. In 1990, when the tax was introduced, over 80 percent of automobiles subject to tax would have been imported and almost 50 percent of all cars imported from EC would have been hit. In 1991, an even higher percentage of the tax was paid on imported cars. The $30,000 cut-off point for imposition of the tax was also capricious, while "the distinction between luxury and non-luxury cars was irrelevant for the GATT", the EC contended. It was also on the negotiated price of a car, which already inclueded the CAFE and the gas-guzzler taxes.

Sweden supported the request, while Japan and Australia evinced an interest in the matter.

The EC request for panel ruling was accepted by the Council.

On the implementation of earlier panel rulings, on the ruling over taxes levied by the US States and local authorities on beer and other alcoholic beverages, where the panel found discrimination as between domestically produced and imported varieties, the US advised the Council that one of the States (New Mexico) had already legislated the changes and two others had introduced legislation, while others were considering the matter.

The Council again heard complaints from a number of countries exporting steel to the US market over the anti-dumping and countervailing duty investigations and provisional levies.

A report by the GATT secretariat before the Council showed some 48 ivnestigations were initiated in July 1992 (after the earlier voluntary export restraint agreements lapsed on 31 March 1992).

Most exporting countries have been hit by the US action and in their interventions a number of them including EC, Austria. Brazil, Finland and other Nordics, Korea and Canada complained of the procedures being adopted and the very costly processes for defending the cases which made it a non-tariff barrier. The procedures and the way the evidence of exporting producers were ignored and the complainant's views accepted as 'best available information' for levy of duties was also assailed by the various participants.

US delegate Andy Stohler said on 21 June the department of Commerce was due to make final determinations on dumping and subsidies and the International Trade Commission was due to make its determination on whether any material injury had been caused to domestic producers.