Jan 30, 1985

U.S. COMPLAINS OVER BRAZILIAN INFORMATICS POLICY.

GENEVA, JANUARY 29 (IFDA/CHAKRAVARTHI RAGHAVAN) – The United States sought in the General Agreement on Tariffs and Trade Tuesday, consultations with Brazil on its new policy relating to informatics.

The Brazilian policy aims at giving protection to its domestic computer industry and associated services.

At the GATT Council the U.S. said that the Brazilian policy could be contrary to GATT and would have negative effects on U.S. trade with Brazil.

Amb. Paulo Nogueira Batista of Brazil said that the U.S. request for consultations had been conveyed to Brasilia, and the government was considering whether there was any basis under GATT for such a request.

On another issue, India on behalf of the informal group of Third world countries complained over a new Zealand legislation in respect of Generalised System of Preferences (GSP), denying GSP benefits to countries which had a per capita income of 70 percent of that of New Zealand.

This, India’s Ambassador S. P. Shukla complained, was a measure allowing for "graduation" and inconsistent with the basic objectives of the GSP system.

Apart from countries not parties to the general agreement, the New Zealand decision would deny GSP benefits to Singapore and Trinidad and Tobago, both of whom are Contracting Parties to GATT.

While defending the New Zealand decision as one made to reflect changes both in New Zealand’s own economic situation and of its GSP beneficiaries, the New Zealand delegate said the views expressed in the Council were being conveyed to his government.

Earlier, the Council considered the U.S. annual report on its general waiver in respect of the U.S. agricultural adjustment act.

The waiver from GATT obligations was granted 30 years ago, and under it the U.S. files and annual report.

Before the Council referred the U.S. report to a working party, Canada complained that not only were restrictive measures being continued for 30 years now, but recently the U.S. had imposed new restrictions, which affected Canadian trading interests.

The new U.S. restrictions, Canada complained, imposed new restrictions on imports of sweetened cocoa, pancake flour and preparations with less than five percent butter.

Australia was disappointed that after 30 years, the waiver granted to the U.S. remained a fundamental factor affecting world trade in agriculture.

New Zealand described the continuance of the waiver as an anachronism in international trade.

The spokesman for the EEC suggested that rather than setting up another working party, whose report would be similar to that of earlier 27 working parties, it was time the GATT addressed more directly the issue of the waiver itself.

In other matters considered by the Council, the U.S. agreed to a EEC request for "consultations" over its Foreign International Sales Corporations (FISC) legislation, which replaced an earlier Domestic International Sales Corporations (DISC) law, which a GATT panel had ruled was violative of U.S. obligations under GATT.

The EEC had sought consultations to look at the consistency of the new FISC law with the general agreement, and specially its provisions forgiving U.S. corporations the tax deferrals on profits under DISC, which GATT had ruled was violative of U.S. obligations.

The EEC has been seeking "compensation" for the hundreds of millions of dollars, which it says it has lost as a result of the U.S. DISC law and the unfair subsidising of U.S. exports under it.

While agreeing to the consultations, the U.S. however questioned the EEC claims for back damages.

On the U.S.-EEC dispute over steel pipes and tubes, both the EEC and U.S. had notified GATT about their mutual agreement ending the dispute.

However Singapore emphasised that merely by notifying the GATT of the bilateral agreement, no legitimacy or legality was conferred on this "grey area" measure violative of GATT obligations of the two parties.