May 17, 1984

GATT COUNCIL ADOPTS PANEL RULINGS AGAINST U.S.A. AND JAPAN.

GENEVA, MAY 15 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The Council of the General Agreement on Tariffs and Trade Tuesday adopted two panel rulings against United States and Japan.

The ruling against the U.S.A. over a complaint by the EEC related to the U.S. "manufacturing clause" in its copyright law, under which imports or public distribution of "non-dramatic literary material in English language" by persons domiciled in the U.S.A. was prohibited, unless such material had been "manufactured" in the U.S.A. or Canada.

The U.S. law was held to be a violation of U.S. obligations under article XI (see Suns No. 965 of March 10).

The ruling against Japan, over a complaint by the U.S.A., related to imports of leather and leather products. Japanese policies were found by the panel to be contrary to its obligations under article XI of GATT, relating to quantitative restrictions (see Suns No. 966 of March 13).

On the "manufacturing clause", the U.S. while accepting the report of the panel, underlined the 93-year history of the law and said "its elimination will be very difficult for U.S., particularly since it will require legislative action by Congress" and hence would take time.

However, the U.S. administration would make every effort to bring its practices in conformity with GATT provisions.

The EEC welcomed U.S. 'acceptance' of the panel report and hoped the U.S. congress would make its implementation possible.

On the Japanese leather restrictions, the panel had ruled that Japanese restrictions on a number of semi-processed and processed leather and leather products, in the form of import, licensing and quotas, was violative of article XI.

The panel had recognised the "sensitive" nature of the problem in view of the large numbers of the "Doha" people - underprivileged groups of Japanese involved in this sector - and had suggested that the GATT Council itself might wish to give Japan "a certain amount of time to progressively eliminate the import restrictions in question".

Japan, in announcing its acceptance of the panel’s ruling, underlined these two aspects of the panel's report and the fact that this was the only restriction on manufactured imports into Japan, and said the Japanese government would make efforts "progressively" to liberalise imports in the direction of conforming with GATT.

This process, the Japanese delegate said, would take "a certain amount of time" (which he did not spell out), and said as a first step Japan was taking a number of measures to liberalise this trade.

The measures he announced themselves related only to one of the many leather products under restriction in Japan, namely, "wet blue" or "semi-processed chrome-tanned leather, shipped wet and purchased by tanners for further processing".

In respect of this Japanese tanners and end-users would be able to import "as much as they need" and quota allocations would be made at any time from the beginning of the second half of 1984, and thus there would be "automatic licensing". Also, the overall size of the quota would be publicly announced. The import tariff on this product would also be reduced to zero, from the present 15 percent, from April 1, 1985.

Japan would also periodically review its restrictions and notify GATT.

The U.S. itself welcomed Japanese acceptance of the panel report and supported the view that "reasonable time" should be given to Japan. But while welcoming the "initial steps", the U.S. called for quicker actions to eliminate non-GATT practices, and viewed the first step itself as "inadequate" to restore GATT benefits that had been nullified and impaired by Japan.

A number of Third World countries who spoke objected to the panel's recommendation that Japan should be given "a certain amount of time" to progressively eliminate its restrictions.

These countries "questioned" the legality of the panel's suggestion that "special arrangements" should be offered to a GATT Contracting Party, whose policies were in violation of GATT, to conform to GATT.

The only "legal status" of the panel's conclusion, they said, was that Japanese measures were contrary to article XI.