9:16 AM May 13, 1993
US S.301 THREATS RAISED IN GATT COUNCILGeneva 12 May (Chakravarthi Raghavan) -- The renewed US threats (on 30 April) of unilateral action under the socalled Special 301 of the US trade law -- among others against Brazil, India and Thailand -- over extent of socalled intellectual property rights in these countries was raised in the GATT Council Wednesday. Besides the three countries, who have now been named by the US Trade Representative Micky Kantor as "priority foreign country", the US action was also assailed by Australia, Japan, Hungary, Argentina, Korea and the European Community. The US though took the position, and did so in what seemed to others in a cocky way characteristic of the present administration, namely that the US was still to decide on the actions, decide to take action against trade in goods, and thus no cause for complaint. In any event since intellectual property was not covered by GATT, and the Uruguay Round had not been concluded, US had every right to defend its interests. The issue was raised in the GATT Council under 'any other business', calling for no action, but as Brazil put it serving as an 'early warning' of potential conflict. Brazil's Ambassador, Celso Amorim in raising the issue, noted that the US identification of Brazil, along with India and Thailand, as 'priority foreign country', was, according to the US authorities, a pre-requisite for decision, within 30 days of that announcement, whether to initiate an investigation of Brazil's "acts, policies and practices which have the greatest adverse impact (actual or potential) on the relevant US products". The information by the US also indicated that Brazil had been chosen because it "fails adequately and effectively protect patents, trademnarks, copyrights and trade secrets". Apart from the fact that the US dissatisfaction with Brazil's acts, policies and practices concerning intellectual property, should be addressed in the context of international conventions in which both countries had assumed obligations, "the US action represents another blow against the credibility of the multilateral trading system", Amorim told the Council. "By threatening to make use of unilateral trade measures, the US Government reinforces doubts the international communtiy has as to the sincerity of the US commitment to the multilateral trade rules, as embodied in the GATT, as well as to the negotiations in the Uruguay Round." In view of the possible adverse effects that this unilateral action of the US might cause to Brazil's trade interests, this issue was being brought to the attention of the Contracting Parties and Brazil reserved its rights to return to the matter should any unilateral measures adopted by US affect Brazil's rights under the GATT and its instruments, Amorim said. Associating itself with the Brazilian statement, Thailand (whose enforcement of copyright and the deficiencies of its recently enacted patent laws have been found fault with by Kantor) said its laws on intellectual property protection was consistent with the international obligations assumed by it. Thailand was also an active participant in the Uruguay Round Trips negotiations and "has prepared itself for eventual acceptance of the Uruguay Round package including the Trips agreement on the basis of the Draft Final Act." The US, the Thai delegate complained, had persistent made a linkage between its demand and a threat of trade retaliation and Thailand was gravely concerned by this. By its recent decision, the US had embarked upon a course which could lead to ossible trade actions inconsistent with the GATT and this could only be viewed as contravening the spirit and objectives of the GATT and the Uruguay Round. The US announcement had also caused uncertainty in the trading community and could lead to slowdown in trade between the two countries. The US announcement had also confirmed the possibility of a US trade retaliation in the near future and such unilateral action would raise a serious question about the US commitments to the strengthening of the multialteral system and to the conclusion of the Uruguay Round. India's Amb. Balkrishna Zutshi, in a low-key statement hoeing to the line of his government's statement in Parliament in New Delhi, regretted that once again the US had designated INdia as a priority foreign country. India's views on unilateral actions by governments "to determine another country's trade policies" were well known. Trips was the subject of negotiations under the Uruguay Round. "We wish to impress upon the US government that issues such as these must be resolved through the multilateral system and any unilateral action on their part is unwarranted." Stohler in reply said that IPRs were not yet covered by the GATT rules and thus not a matter for the GATT Council. He also challenged the view that the US was threatening any unilateral action inconsistent with the GATT. The US had not yet decided to institute any investigation of the actions or policies of the countries designated, leave aside taking unilateral trade actions. The US administration had to make a determination by 30 May whether to undertake an investigation and then determine whether the policies and actions violated US interests. So long as the Uruguay Round was not concluded, the US had no alternative but to take actions to defend its commercial interests, he added. In response, Zutshi said that India had not accused the US of taking unilateral trade action, but objection to unilateral actions by governments to determine trade policies of others. Amorim said that he agreed with the US that TRIPs was not covered by GATT. But Brazil in the past had already experienced US unilateral actions in contravenion of GATT and had raised the question now to provide early warning. Australia agreed with Brazil and India and said it was opposed to any unilateral measures against trade partners and called on the US to resist such actions as a means to imposing its solution in the trade area. Japan drew attention to an announcement by the US under S.306 of tis trade law to review procurement practices in Japan in super-computers and said the Japanese procurement was in accordancew with GATT obligations and non-discriminatory and provided no legitimate ground for a review by the US. Hungary also complained of pressures on it over the IPRs, while Argentina expressed concerns over the US unilateralims. The European Community said it remained convinced on the need for a multilateral approach and said the solution to all these was a rapid conclusion of the Uruguay Round including the TRIPs accord. Among other issues raised was one by Brazil over the new import licensing requirements introduced in the EC over imports of orange juice which had enormous trade implications for Brazil. The new regulations for import licensing, purportedly for surveillance, required deposits to be made for obtaining a license. The EC had argued that it had no trade restrictie effect (since the deposits were returned when the imports were effected) and it was a surveilance measure. At the same time the EC, in issuing the regulations, had drawn attention to the competition to its domestic producers as a result of 'low cost suppliers'. The problem for the EC's orange juice producers, Brazil suggested, was in fact due to the excess production inside the EC of apple juice. Brazil'c complaint was supported by Chile, Colombia and Argentina, while the EC dismissed the complaint by insisting that it was a trade surveillance measure and fully in accord with the GATT rules on import licensing. The US said the licensing was also of concern to it and said such surveillance measures should not trade restrictive -- a view with which Australia agreed noting that the EC used arbitrary measures in the area of agriculture. Hungary, supported by other east Europeans, complained of the 'safeguards' action under Art. XIX of the General Agreement taken by Austria in respect of imports of cement and fertilizers from their countries. The Austrian notification had exempted imports from the European Community and the EFTA countries. This was not justfiable under the terms of Art XIX which required non-discrminatory action against all sources of imports. While Austria insisted that it was justified in terms of Art XXIV of the GATT (relating to customs unions and free trade areas), a number of other cps including Japan, Korea, Hungary and India challenged this view. Mexico also raised the issue of Venezuelan actions against imports of cement from Mexico. Earlier, the Council adopted a decision to put to a vote of the Contracting Parties an EC request for extension of the waiver (granted in 1991 and which expired at end of 1992) on imports from traditional sources into former east Germany. A number of countries expressed their criticism of the EC delay in seeking an extension, even as the imports into the EC and Germany have continued as before, without the protection of the waiver.