PENDING PROTECTIONIST MOVES IN U.S. AND EEC ASSAILED.

Mar 7, 1987

PENDING PROTECTIONIST MOVES IN U.S. AND EEC ASSAILED.

GENEVA MARCH 5 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Several impending protectionist moves and discriminatory levies in the U.S. and EEC against imports from the third world were raised at the meeting of the GATT Council Wednesday.

The complaints related to the pending legislation in Congress over new restrictions on textiles and clothing imports, the EEC moves for an import on certain vegetable oils, and an Italian move to levy a local consumption tax on bananas imported from non-ACP sources.

Such protectionist measures, harmful to third world capacity to augment export revenues for imports and debt servicing, could impair the Uruguay Round negotiating processes, several third world delegations are reported to have warned.

On other issues that figured on the Council's Agenda wednesday evening, a panel was established over the U.S. complaints against Canada for banning exports of some unprocessed fish like herring and some varieties of salmon, and thus denying U.S. processors access to Canadian herring and salmon.

In the EEC dispute over U.S.-Japan agreement on semiconductor exports, Japan, "abetted by the U.S." as the EEC put it, blocked the EEC request for a panel.

The pending bill in U.S. congress, "textiles and apparel act, 1947", was raised by Hong Kong during the Council's normally routine consideration of the reports of the textiles committee and the textile surveillance body.

The new bill, Hong Kong said, sought to import new restrictions on imports of textiles, clothing and footwear, and while purporting to act under GATT article XIX was in violation of all GATT rules, as well as of the standstill commitments of the Uruguay Round.

In 1986, there had been considerable increase in U.S. production of textiles and clothing, as well as in the profits of the industry, and preliminary data showed a 20 percent increase in profits and domestic shipments for 1987.

The new law seeks to give a finding that imports of textiles and clothing and some non-rubber footwear were causing "serious injury" to domestic producers, and on this "blanket assessment", quotas were to be imposed on imports from all sources and for each and every category of products, and for an indefinite duration.

While "more moderate" than the vetoed Jenkins bill (that actually sought to cut back existing quotas), nevertheless the new bill would violate the GATT and the MFA, and would have serious implications for the Uruguay Round, since it would violate the standstill and forestall the negotiations for liberalisation of the MFA trade and its return to GATT rules.

Hong Kong's remarks were supported by a number of other members - India, Turkey, Uruguay, Pakistan, Brazil, and Yugoslavia.

Indonesia, speaking for the third world members of the MFA, warned that if enacted the bill would effectively end the MFA, and would also inconsistent with article XIX of GATT, which permitted emergency protective actions for individual products, not for an entire industry for an indefinite period.

U.S. delegate Samuels agreed that the pending bill was protectionist, but had originated in the congress and was inconsistent with the administration's views.

Colombia's Felipe Jaramillo complained of a pending new law in the Italian Parliament for levy of a consumer tax on bananas other than from ACP states, and complained this was discriminatory.

The EEC agreed to Colombia's request for urgent "consultations" on the proposed bill.

The Indonesian delegate, Amb. Poedji Koentarso, complained on behalf on the Asian states over the proposal, mooted by the EEC Commission, for levy of an internal tax on certain fats and oils.

Such a tax would be extremely damaging to the third world countries who had significant exports of these products.

Coming on top of a discriminatory EEC external tariff regime on agricultural imports, the proposed levy would affect exports to the EEC of palm oil, palm kernel and coconut oil, he complained.

It would affect, for example, 18 percent of Malaysia's total exports, and would further depress prices and exports in an already depressed market.

The EEC already had a highly protective regime in agriculture, and through its policies of subsidised exports had been causing considerably harm already to third world exporters.

The move was also retrogressive in the context of the Uruguay round and violated the standstill commitments.

The Asian complaint was supported by Iceland, Norway, Australia, Hungary, U.S. and Argentina.

The EEC noted that at this stage it was only a proposal by the community, and the views expressed in the council would be communicated to Brussels and taken into account before any action was taken.

In other complaints, Chile and New Zealand referred to some EEC restraints on imports of apples, while Japan drew attention to some of the anti-dumping investigations and moves by the EEC against products manufactured by Japanese enterprises within EEC, but with component from Japan.

Earlier, the Council acceded to the U.S. request for a panel to adjudicate its complaint against Canada for its restricting exports of certain unprocessed fish, and thus "denying U.S. processors of access to Canadian herring and salmon".

The U.S. contended that this was contrary to article XI of GATT, which has a General prohibition against restrictions on imports or exports (through quotas, import or export licences or other measures), other than duties, taxes or other charges.

The Canadian and EEC complaints over the U.S. levy of customs user fee was also referred to another panel.

In the complaint of EEC over the agreement between Japan and U.S. over semiconduct exports, and Japanese agreement to monitor the Japanese export prices to third markets, Japan with U.S. support refused to agree to a panel, claiming that EEC had made out no case.

The EEC had complained that the "two giants", accounting for 80 percent of production in the industry, had "organised themselves" in deciding on the prices at which the products could be available to third markets, and thus impair the capacity of manufacturers in other countries using imported semiconductors.

Japan however claimed that the agreement was purely an effort to prevent "dumping".

On the EEC complaint about discrimination in access to Japanese markets for non-U.S. exporters, the U.S. claimed that the EEC's ability to capture Japanese markets depended on the efforts expended by EEC enterprises.

The EEC complaint had been strongly supported by Hong Kong, Canada, Sweden, Singapore, Switzerland, Malaysia and Nigeria.

The EEC argued that it was for the panel to decide on the merits of the complaint, and not for the Council, and if the EEC's panel request was going to be blocked, the EEC too could block other panel requests, and "even block the whole GATT system".