US TO RENEGOTIATE TOBACCO TARIFFS

9:03 AM Jul 29, 1994

US TO RENEGOTIATE TOBACCO TARIFFS
Geneva 28 Jul (TWN) -- The United States, which has lost a dispute before a GATT panel over discriminatory levies on imported and domestic tobacco, is now expected to seek renegotiation, under Art XXVIII of the GATT, on its tariffs on imported tobacco.

The dispute was raised by a group of countries exporting tobacco to the United States: Brazil, Chile, Colombia, El Salvador, Guatemala, Thailand, Zimbabwe and Canada.

Their complaint was that the US legislation, by assessments and legislations on the cigarette manufacturing companies, to favour use of US produced tobacco in cigarettes over imported tobacco, had violated their GATT rights (and US obligations) over the national treatment provisions.

The panel ruling is yet to be finalised and circulated to the GATT Contracting Parties. But in accordance with customary GATT practice, it was made available in mid-July to the parties in the dispute.

While there are instances of such communications finding their way into media reports, with the winning side normally 'leaking it', the office of the US Trade Representative appears to have made the outcome public in Washington on 19 July.

This is the second time that the USTR's office has done so. The same was done earlier this year over the second tuna panel ruling.

After the outcome of the tobacco panel was made known in Washington, along with USTR's comments, sources among complainants confirmed the substance of the ruling.

One of them said: "we have won the case before the panel, but are still losing it because the US is now going to seek renegotiations".

One of the provisions to favour domestic content in US-manufactured cigarettes was a non-refundable assessment to be paid to the US Department of Agriculture's Commodity Credit Corporation by cigarette manufacturers who used more than 25 percent imported tobacco.

The panel found this to be contrary to US obligations under Art III.

Another US levy, a socalled budget deficit assessment, exempt some US varieties of tobacco, and levied higher rates on imported flue-cured tobacco than on domestic flue-cured tobacco.

The spokeswoman for the USTR's office has been quoted by the Washington publication, International Trade Report, as saying that the budget deficit assessment issue would be addressed as part of the Uruguay Round implementation legislation (to bring it in line with the GATT).

Sources among the tobacco exporting countries that raised the complaint said that in relation to the non-refundable assessment to the US Commodity Corporation, they expect the US now to seek to renegotiate and levy a higher tariff on the imported tobacco.

"You win and you still lose visavis the United States," a source said.