12:24 PM Jun 25, 1997

BRAZIL RAISES POULTRY DISPUTE WITH EC

Geneva, 25 June (Chakravarthi Raghavan) -- Brazil sought Wednesday the establishment of a dispute settlement panel against the EC over its failure to implement a compensatory tariff rate quota (TRQ) for import of poultry meat from Brazil and for lack of transparency in the administration of the quota regime. With the EC exercising its right to withhold consensus over the request at the first time it comes before the DSB, no action was taken. But Brazil is expected to bring it up again at the next meeting of the DSB, set for 30 July, when the establishment of the panel will be automatic under the rules.

In other matters that came up before the DSB, the United States sought the establishment of a panel against Indonesia over the national car policy, but Indonesia did not agree. This issue too, unless settled in further consultations, can be brought up at the next meeting.

The complaints of the EC and Japan on the same issue have already been referred to a panel. And at the EC instance, a process has been started under the Subsidies and Countervailing Agreement for securing information from Indonesia. The US has sought to initiate the same process, and make the EC-US request and process a single one.

The Brazilian complaint relates to the old ruling against the EC over oilseeds imports (US, Argentina, Canada, Uruguay, Pakistan, India, Hungary and Poland were the other interested parties in that dispute and ruling) and the subsequent EC action to renegotiate under Art. XXVIII its bound tariff concessions.

The US and EC reached an accord, as part of the Uruguay Round negotiations in their Blair House accord on agriculture. Subsequently, the EC reached an agreement with Brazil, partly reflecting the US-EC accord, but with the EC making some concessions specific to Brazil as compensation for unbinding the oilseeds tariff.

Under that accord (according to the Brazilian complaint and a note about the 'political background' circulated by Brazil, the EC agreed to provide TRQ on poultry meat to Brazil. The EC agreements with Argentina and Poland also provided for a chicken TRQ.

It was also agreed among the parties that these TRQs should be incorporated as part of the EC's Uruguay Round tariff schedules.

Brazil has complained now that there was no agreement between them for making this TRQ into an MFN-TRQ.

While opened the TRQ on the basis of the Art XXVIII renegotiations, without waiting for the Uruguay Round schedule to become effective, the EC allocated only a part of the chicken TRQ to Brazil, allocating the reminder to Thailand, which was not a party to the Art XXVIII renegotiations, and another part of the TRQ to China which is not a WTO member, Brazil has complained.

The EC, Brazil has further complained, has also put in place special safeguard provisions which do not meet the requirements of Art. 4 and 5 of the Agriculture Agreement (provisions on market access and special safeguards). The EC has not also administered its TRQ and price safeguard provisions in a transparent manner.

The chicken TRQs, Brazil said, were not normal quotas under the agriculture accord, but rather compensatory quotas arising from the oilseeds dispute and the panel ruling against the EC.

The EC did not agree to the panel being set up at this meeting.

Earlier, in reporting on its implementation of the ruling against it over imports of reformulated and conventional gasoline, the US said that the US Environment Protection Agency had received a large number of comments on its proposed rules and was considering them.

The panel rulings, modified by the appellate body, were adopted as of 20 May 1996 - but are yet to be implemented. The DSU envisages a maximum of 15 months from the date of adoption for implementation of a ruling.

Venezuela said it had already written to the US Trade Representative that the proposed rules would still be maintaining the discriminatory provisions against imports. The EC asked how the US would reconcile its proposals with the recommendations of the panel ruling - since only imported gasoline and not domestic products, would be subject now to quality benchmarks and monitoring mechanism. Also, how does the US justify that the surveillance requirements under the proposals apply only to imports and not domestic products, the EC asked.

Brazil said there were some questions of systemic relevance and sought US explanations.

Firstly, said Brazil, the US proposed rule changes envisaged requiring the exporters to provide bonds. The stated reason of the US is that this would be required to ensure the payment of any fines or penalties on the foreign refineries for possible future violations of EPA rules. This was a serious trade restrictive measure and would bring into question market access.

Secondly, the proposed rule changes also require that foreign refineries owned by governments should provide a waiver of sovereign immunity by the concerned government over any transgressions of US civil or criminal laws. No member of the WTO could be required to waive its rights under international law as a condition for grant of national treatment or any other WTO benefit, Brazil contended.

The US representative merely responded that he was noting the views and conveying them to his authorities, and that the EPA was considering all the views expressed in response to its draft.

The DSB was also advised that three of the seven appellate body members, whose terms end in December under a rotation system (chosen by lot) were being reappointed for a final four year term. Reappointment of retiring members is provided for under Rule 17 (2) of the DSU. The three who will have a new term from December are: Prof. Claus-Dieter Ehlermann of Germany, Justice Florentino Feliciano of the Philippines and Julio Lacarte Muro of Uruguay.