6:36 AM Feb 24, 1994

US ASSAILED OVER SUBSIDISED SOYBEAN OIL EXPORTS

Geneva 23 Feb (Chakravarthi Raghavan) -- Brazil complained in the GATT Council Wednesday over the US moves to subsidise sales of soybean oil to China, a traditional Brazilian market, through its Export Enhancement Programme (EEP) fashioned to counter the European Community subsidised exports.

The Brazilian complaint came under 'any other business' in the GATT Council.

Other questions that came up similarly under any other business included US complaint against the European Community over its 'temporary' restrictions on imports of 'white fish' at prices below reference levels and Australian grouse over Canadian safeguard actions restricting imports of boneless beef.

The EC fish import restrictions, which came in the wake of the earlier protests and blocking of imports by French fishermen, was raised in the GATT Council under 'any other business' and thus involved no action.

The EC restrictions on 'white' fish (cod, haddock, coal fish, monk fish, alaskan polak) imposed from 5 February till 15 March, was notified to the GATT on 17 February as a restriction under Art XI (2).

This article, enables imposing of quantitative restrictions on imports of agricultural or fisheries products, but in combination with domestic supply management measures on same or like substitutable products.

The US complained that the EC restrictions, coming in the wake of the earlier French fishermen's actions, were quite illegal in GATT and affected the trade interests of partners. Canada and Peru joined the US and said the EC action would have serious impact on their own exports.

The European Union however explained that it was a temporary measure to deal with an acute crisis and would last only till 15 March.

On the proposed US subsidy to soybean oil exports to China, Brazil said that the US was planning to export 25,000 tons through its EEP. Brazil, along with Argentina, was one of the traditional supplier of soybean oil to China and was directly and adversely affected by the EEP sales to that market. Despite the successful conclusion of the Uruguay Round and its drive to a more market-oriented trade in agricultural products that guided the negotiations, Brazil continued to be faced with operations under EEP which depressed international prices and displaced competitive exporters from traditional markets, the Brazilian delegate complained.

The US argument that the EEP aimed at countering export subsidies of the EU, Brazil's Jose Grace Lima stressed, did not even apply here since Brazil's exports to China of soybean oil over 1990-1992 was 501.1 thousand tons while the EC exports was only 30.9 thousand tons. There was thus no justification for the US proposed subsidy under EEP and it ran counter to the objectives of the Uruguay Round agreement.

The US however said that the department of agriculture had only this week invited exporters to bid for the export of 25000 tons of vegetable oil to China, whose imports in 1993-94 was 1.6 million tons. The proposed US exports was less than two percent.

Argentina, Australia and Uruguay were among those who joined Brazil in expressing their concern over the US EEP move. Australia suggested also that the US might be attempting to use the EEP more aggressively to use up its stocks before the Uruguay Round agreements comes into effect.

On the Canadian restrictions on imports of boneless beef, Australia, supported by New Zealand said that it was an unjustified use of Art XIX (safeguard provisions) and aimed at reducing the Australian and New Zealand exports to Canada.

Earlier, under its regular business, the Council accepted the report of the working party on the accession of Honduras and the question is to go to a vote (by postal ballot) of the Contracting Parties where the proposed protocol of accession has to obtain a twothirds majority vote of the CPs. Honduras has time till 31 March to sign the protocol and the accession will be effective 30 days after Honduras accepts it in accordance with its constitutional procedures.

GATT sources said that, if as expected the CPs vote to accept it, Honduras expects to complete both the signature and acceptance at the same time.

The Council again took no action on the report of its panel that went into the old banana regime of EC member-States. The Council Chair, Dr. Mounir Zahran of Egypt, noted that the report had been discussed at the Council on five or six earlier occasions, and at the annual session of the CPs and the views of the two sides had been clearly set out. It was clear that no conclusion on the report could be reached at this meeting of the Council either, and the issue should be referred to a future meeting.

In a review and monitoring of implementation of panel reports that had been accepted, the US said that it was continuing its efforts to get the various states and local authorities to implement the panel ruling, accepted by the US, on discriminatory restrictions on sales of imported beer and other alcoholic beverages. Five of the US states had enacted legislation, eight had pending bills, the US reported.

Canada, the complainant in the issue, suggested that the willingness of the US to provide information did not make up for lack of progress in implementation. Australia joined in expressing concern over the slowness of implementation.

The US also reported that it was still working towards implementation of another ruling against it -- relating to imports of non-rubber footwear from Brazil.

The GATT Council was also informed by the Director-General that the differences between the GATT and the UN Secretary-General over the appointment of an executive head for the International Trade Centre had been resolved and the two were now in the process of selecting a suitable candidate from applicants.

The dispute arose originally when UN Secretary-General Boutros Boutros-Ghali acted unilaterally to downgrade the status of the head of the ITC, jointly run by UNCTAD and the GATT -- with administrative expenses shared by the two and much of the ITC's technical assistance programmes to promote exports of developing countries funded by extra-budgetary voluntary contributions of some developed countries.

The GATT CPs and the Group of 77 in UNCTAD and the UN General Assembly disagreed with the Secretary-General and, over a year ago, got a resolution through the Assembly asking Boutros-Ghali to fill the post at the level of an Assistant Secretary-General. But even this did not resolve the dispute, and the appointment of a new head was delayed on further procedural disputes.

These arose out of the view of Boutros-Ghali that he should be provided with a short list of three names (to be selected by the GATT/UNCTAD heads) out of which Boutros-Ghali would appoint one. While this is the procedure that the UN head follows in filling up posts within the UN bodies, it was unacceptable to GATT Director-General Peter Sutherland who is claiming a status equal to IMF and World Bank heads.

As a result the post has remained vacant for now over two years, and many of the countries funding the work have been threatening not to contribute more funds until the problem is resolved. This would have forced the ITC to disband some of its staff and consultants and cut back on on-going programmes.

A candidate is now expected to be jointly chosen by the GATT Deputy Director-General Warren Lavorel (a US national) and UNCTAD head Kenneth Dadzie, from out of the list of applicants that have been made.

An Irish candidate who was originally chosen, before Boutros-Ghali became Secretary-General and decided to downgrade the post (as part of his secretariat restructuring) is also reported to have applied again. But the GATT head, Sutherland, is an Irish national and this may complicate the selection.