9:49 AM Jan 23, 1997

PANEL REQUESTS AGAINST HUNGARY, TURKEY, ARGENTINA

Geneva 22 Jan (Chakravarthi Raghavan) -- The WTO's Dispute Settlement Body put off Wednesday establishment of panels sought in a number of complaints, with the countries concerned withholding consensus for the establishment of a panel.

The cases involved Hungarian agricultural export subsidies, Turkish municipal taxes on foreign film receipts and Argentinean specific duties and a statistical tax on imports.

In the complaint against Hungary, four countries - Australia, New Zealand, the USA and Argentina -- sought establishment of a panel over Hungary its export subsidies in agriculture in excess of its Uruguay Round schedules and commitments.

Hungary has blamed the problem on use of wrong data in calculating its past expenditures on subsidies and establishing its schedule in the Uruguay Round Marrakesh agreement.

Australia said that lengthy consultations with Hungary, formal and informal, had failed to resolve the issue. The complainants had suggested a plan to Hungary to resolve the issue -- involving a temporary waiver to Hungary, but requiring it ultimately to bring its subsidies into line with its commitments.

Hungary blocked the reference at this time, saying that solutions could still be found through talks and that it had not received a response to its own proposals.

While no clarification was available on who was responsible for the wrong data and schedule, reports out of Budapest said that the government there blames the previous communist government for providing wrong export subsidy figures -- listing the amount of Hungarian subsidised exports at a much lower figure of 22 billion Hungarian forints (about $130 million) instead of the actual 58 billion ($343 million).

The issue has figured before the WTO Committee on Agriculture several times last year and even before. In September 1995, the US had said that according to the Hungarian schedule, only 16 products were eligible for subsidy, while Hungarian programme provided subsidies for some 300 products.

Hungary has been trying to get its schedule revised, taking its 1995 data as the base year, instead of the 1986-1990 data (under the Agriculture Agreement).

But if Hungary is able to revise the schedule it established in signing and joining the Marrakesh agreement (on whatever grounds), it is clear that some other countries who feel that their own schedules have been put in (by them) on basis of wrong data or calculations would also seek similar rights.

New Zealand told the DSB that this was a test case of Agriculture Agreement and its disciplines. The US said the market distortions caused by the Hungarian subsidies were of concern to all WTO members, and not just the complainants. Argentina said the commitment on export subsidies was the most important progress achieved in the Uruguay Round, and it was necessary to find a solution to the problem.

Hungary said the problem was a unique one, arising from an "erroneous" establishment of its schedule. Hungary had put forward proposals for a mutual settlement and further talks could result in agreement.

The US complaint against Turkey was over a 25% municipal tax levied in Turkey on the receipts from foreign films, while domestic films had no such tax.

Turkey said the authorities in Turkey were considering the steps to be taken in the light of the US views in consultations.

In the case against Argentina, the US has complained against a 3% statistical tax levied by Argentina, and on specific duties on a number of import items in excess of Argentina's tariff schedules.

Canada, in a statement, raised the issue of Brazilian export financing programmes for aircraft and said that discussions had been held last September and October. Canada had recently received a communication from Brazil on this. While it would respond on this later, Canada found no positive outcome of its lengthy consultations. The Canadian statement however did not seek a panel.

Brazil, in its response at the DSB, maintained however that its programme was fully consistent with its WTO obligations, but hoped a solution could be found through mutual consultations. The Brazilian statement however noted that Canada itself was providing subsidies to its industry. A sum of C$ 87 million had been provided in October 96, C$57 million in December 1996 and a C$ 147 million this month.

But Canada, in response, insisted its own subsidies were consistent with the WTO.

Under any other business, the US raised its concerns over the EC's margin of preferences on grain imports.

The US complaint relates to the EC's "reference price" for grain imports.

The US referred to the US complaint and a panel request in October 1995. The EC had blocked it. Later that year, in bilateral consultations, an agreement was reached in an exchange of letters. This provided for the EC carrying out a number of undertakings and for the US to withdraw its request for a panel. The US complained that there had been no effective implementation by the EC.

Last year, the US had said it would be seeking a panel at a December meeting of the DSB. But the US did not do so, for what was described as "technical problems".

The US said Wednesday that it would be renewing its request for a panel. But the EC seemed to challenge the US right to "renew" the request.

Consultations are expected to be held among WTO officials, the US and the EC to resolve this, and depending on this the US may request a panel at the February meeting of the DSB.