Nov 13, 1984

CONCERN OVER NEW U.S. TRADE LAW.

GENEVA, NOVEMBER 9 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Concern was expressed Thursday by several countries in the GATT Council over the new U.S. trade law, particularly its provisions relating to imports on wine and steel.-

The Council, which has been meeting this week preparatory to the meeting of the GATT Contracting Parties (CPs) on November 26-29, had a heavy agenda of 25 items, besides the GATT work programme, that kept the Council in session till late Thursday night.-

Other issues dealt with by the Council included non-compliance of Japan over the rulings on imports of leather and leather goods and U.S. non-compliance over Nicaragua’s sugar quota, the continuance of the GATT waiver favouring the U.S. in agriculture, the U.S. Foreign Sales Corporations Act (FSCA), EEC import restrictions on Canadian newsprint, market access problems in Industrial country markets for Third World countries facing Balance Of Payments (BOP) difficulties, and a new Brazilian law relating to data processing and informatics.-

The European Community, which raised the new U.S., trade law complained about the wine and steel provisions.-

The wine clause expands the definition of the "wine industry" to enable producers of grapes, apart from wine brewers and trade, to move for remedies against subsidised imports of wine.-

The steel provisions envisage countries of origin having to etch on iron and steel pipes and tubes the country of origin of the goods.-

The Community noted that the wine law provision was already before the Subsidies Code Committee of GATT, where the EEC has sought a special meeting to discuss it.-

On the steel clauses the Community has sought consultations with the U.S. and has reserved its rights. It hoped the provisions, which would have far-reaching implications, would be implemented "sensibly".-

Canada, Brazil and Spain who are exporters of steel to the U.S. joined the EEC in voicing their apprehensions.-

Canada said the provision was contrary to the commitments against new protectionist measures. The new requirements may not be technically feasible, might result in failure to meet standards required by customers, and could increase the costs of production and thus seriously disrupt trade.-

Brazil said the regulations also violated the standards code and, amounted to a technical barrier to trade.-

Australia expressed its concern both over the wine clause and other aspects of the U.S. law.-

The U.S. said it was aware of the problems on steel and was looking into it and would consult with the countries affected.-

On the Japanese leather imports, where a GATT panel had ruled against Japan, the U.S. asked for a statement by Japan about how it was implementing the panel’s recommendations.-

Japan would appear to have merely repeated its earlier statement, at the Council adopted the panel report, about automatic licensing of imports of "wet blue chrome leather", publicising the actual quotas allowed, and the reduction of tariff duty from fifteen to zero percent.-

A number of countries including Australia, Brazil, India, New Zealand, the EEC and Uruguay however complained about Japan’s "slow implementation" of the Council's recommendations.-

On the Nicaraguan sugar quota, where the new U.S. quotas for 1985 had not complied with the panel ruling for restoration of Nicaragua’s quota, the U.S. reiterated its "candid" conditions for changes in Nicaragua’s policies in the region before the quota could be restored.-

Nicaragua, the U.S. said, could exercise its right of retaliation under article XXIII of GATT. Nicaragua reserved its right to raise the issue at the annual Contracting Parties meeting.-

On the U.S. agricultural waiver, the report of the working party had expressed the "disquiet" of a number of countries that 30 years after obtaining the waiver the u s. still found it difficult to comply with GATT obligations.-

Australia and New Zealand noted in the Council the U.S. position that the U.S. agricultural act was on the table for negotiations along with the general issues relating to the agricultural sector, and insisted that the continuance of the U.S. waiver had to be justified on its own merits.-

"We are not prepared to pay a price for the removal of the U.S. waiver and compliance with GATT obligations", New Zealand added.-

On the review of BOP difficulties of Third World countries, apart from the individual cases reviewed, the BOP Committee had also reported on its efforts to consult with industrialised countries over restrictions on their markets to imports from countries facing BOP problems.-

Brazil, Colombia and a number of other Latin American countries expressed "unhappiness" at the strict conditions imposed on them in the GATT Committee when they sought to justify restrictions on BOP considerations.-

But Industrial countries maintaining restrictions, not justified on BOP considerations, were not subjected to similar examination or subject to the same conditions in GATT, they said.-

The report of the Committee brought out also the disappointment of Brazil in its efforts to persuade the European Community to undertake trade policy measures on an MFN basis to alleviate the BOP problems of Brazil.-

On the new U.S. FSCA, replacing the DISC (Domestic International Sales Corporations) law which a GATT panel had ruled as violative of U.S. obligation not to subsidise manufactured exports, the European Community has sought plurilateral consultations over the provisions of the new U.S. law.-

The Community contended that the new law was still in violation of the GATT ruling. Also, it had made no provision in respect of the ten billion dollars of tax benefits that the U.S. enterprises had got under DISC since 1971 and which the panel had said was a subsidy.-

The EEC, which had raised the dispute over DISC several years ago, has been seeking compensation from the U.S.-

The EEC demand for consultations was also supported by Australia, Austria, Switzerland, Canada, India, Hungary, Japan, Argentina, Jamaica and South Korea.-

The U.S. insisted that FSCA no longer violated the GATT ruling and conformed with its GATT obligations.-

And if its fiscal legislation was to be subject to detailed scrutiny in GATT on this, the U.S. would insist on simultaneous examination of Belgian, Dutch and French laws.-

The U.S. had filed a counter-complaint to DISC against the three countries, but the panel had ruled against the U.S.-

The Council is to revert to the issue of consultations at its next meeting.-

On EEC imports of Canadian newsprint, the panel has ruled against the EEC partially.-

The complaint related to EEC’s duty-free imports of up to 1.5 million tonnes a year. As a result of its agreement with the European Free Trade Association (EFTA) countries, the EEC had reduced the duty-free quota to 500.000 tonnes, while imports of EFTA origin would be duty-free without quota limitations.-

While agreeing those EEC actions had violated Canadian rights, the panel found that the EEC action had increased the value of the duty-free concession for all non-EFTA suppliers. It asked Canada and the EEC to "renegotiate" the concession without the EEC having to give any compensation for Canada.-

The council is expected to accept the panel's ruling formally at its next meeting on November 19.-

Poland raised the issue of the U.S. depriving Poland of the benefits of the MFN treatment on non-economic considerations.-

The U.S. had suspended Poland’s MFN treatment after the polish actions against the solidarity trade union, but had justified it inside GATT on the ground that Poland had not complied with its protocol of accession to GATT requiring it to ensure a minimum annual growth in imports from market economy countries.-

In raising the issue again, Poland noted that in 1983 growth in Poland’s imports was 9.8 percent, more than what it was committed to under its protocol, and so far in 1984 the growth in constant prices was ten percent.-

The U.S. agreed to refer the issue to Washington. Poland is planning to raise it before the meeting of the CPs.-

On the Brazilian law over data processing and informatics, Sweden, on behalf of the Nordic countries complained that it would have considerable trade effects, and was incompatible with Brazil’s GATT obligations.-

The Brazilian law, Sweden said, provided for import protection for domestic products and services, and also for subsidising of exports, and would be in force for eight years.-

Brazil expressed surprise at the complaint, and said the law related to industrial policy in one sector, but would provide information bilaterally to interested countries.-