TOBACCO EXPORTERS TO CHALLENGE US IN GATT

6:36 AM Sep 14, 1993

TOBACCO EXPORTERS TO CHALLENGE US IN GATT
Geneva 14 Sep (Chakravarthi Raghavan) -- Brazil and several other Latin American countries, as well as Zimbabwe and several others, exporting tobacco to the United States, are moving the General Agreement on Tariffs and Trade and challenging a new US law requiring US cigarette manufacturers to use fifty percent of domestically growing tobacco.

The countries have asked the US for consultations under Art. XXII, a formal preliminary step towards seeking a GATT panel for adjudicating the dispute under Art. XXIII.

The complaining countries are also expected to raise the issue at the GATT Council meeting on 22 September and, in parallel, bring the matter up before the Uruguay Round surveillance body.

By raising the issue at the Council meeting on 22nd, the complainants can hope to get a panel named atleast at the next meeting if, by then, the formal consultations with the US lead to no solutions.

The US Congress, as part of the budget legislation, has put in a provision requiring domestic manufacturers of tobacco products, to use atleast fifty percent of US-grown tobacco.

This violates Art. II of the General Agreement, relating to the tariff concessions and schedules of the US as well as Art. III providing for national treatment which prohibits such local content requirements.

The Washington envoys of the tobacco producing-exporting countries (both GATT contracting parties and others like Panama) had earlier made some direct representations in Washington and presented a joint memorandum to the US authorities.

But nothing came of it.

As a result, some of the countries, particularly those with sizeable exports to the US to justify a GATT complaint, have decided to challenge the legislation and the US actions.

According to current GATT practice, the complainants can get as a matter of right a panel to adjudicate the dispute, though it is a long-drawn process and a panel ruling could be atleast a year off.

Apart from Brazil, Zimbabwe and other complainants, from the developing world, the US action is also affecting Greece (in the EC).

Several others, though they have no significant exports to justify a complaint, are expected to support the complaint and seek have the right to express their views to the panel in due course, since the US action goes to the fundamentals of the GATT law relating to non-discrimination between domestic products and imports after they cross the customs frontier.