Feb 22, 1990

COLOMBIA CHARGES U.S. WITH TRADE HARASSMENT OVER CUTFLOWERS.

GENEVA, FEBRUARY 20 (BY CHAKRAVARTHI RAGHAVAN) Colombia charged the United States Tuesday with a campaign of trade harassment and "carefully, systematically, subtly and shrewdly orchestrated" actions to complete trade encirclement and finish off the Colombian cutflower export industry at a single stroke.

The Colombian complaint, over the latest instance of anti-dumping investigations aimed at doubling the present "dumping margin" levied on imports from Colombia, was voiced in the GATT Council by Amb. Felipe Jaramillo who underscored the violation of the Punta del Este standstill commitments in the U.S. actions and hoped the U.S. would make a "fair determination" which would hence be favourable to Colombian interests.

Though Colombia made no reference to it, the U.S. actions and threats to a legitimate export industry comes in the context of the Colombian government's war against its perhaps largest export industry of sorts, production and exports of cocaine and other drugs to the U.S. market, and complaints of Colombia (as other Latins) of lack of U.S. support, through trade and aid, in the war against drugs.

Raising the issue under any other business, Jaramillo reserved his country's GATT rights and the right to have recourse to the GATT dispute settlement mechanism.

The Colombian cutflower industry, Jaramillo said, was a case history established under the golden rule of competition and comparative advantage as the basic pillar of international trade.

In a matter of 20 years, an entirely export-oriented industry had arisen and had created directly and indirectly 600,000 jobs, and was Colombia's fifth largest export item.

The Colombian flowers had the advantage of suitable soil and climate, a high average life span per unit, but a very perishable product in a production process in which decision-making was based on medium to long-term needs because of the time lag between cultivation and marketing.

The industry flourished under perfect competition and prices were set by the seasonal market in the U.S. to which 80 percent of the exports went.

The campaign against Colombia, on ground of subsidisation of the exports of roses and other cut flowers began in 1982, and ended in Colombia's abandonment of the tax/refund certificate through a suspension agreement signed in January 1983.

The "encirclement" of Colombia's export programme was completed in January 1987, when a new suspension agreement affected miniature carnations and ultimately roses and other cut flowers, by preventing them from benefiting from other support programmes, leaving the cut flower industry virtually with no state support.

Then began the anti-dumping investigations by the U.S. Commerce department, attacking this time the producers, and ending in a final determination in February 1987 of an anti-dumping duty of 4.4 percent, Jaramillo said.

But on 10 August 1989, the U.S. initiated an "administrative review", ending in a "preliminary determination" which doubled the dumping margin from 4.4 percent to 8.51 percent.

This was trade harassment, the Colombian delegate charged, noting that the actions were initiated in September 1986, in breach of the Punta del Este standstill commitments on status quo and prohibiting such actions.

The U.S. actions were all the more serious because of the mistaken methodology used by the U.S. for determination of the existence of dumping.

The U.S. anti-dumping legislation opened the way for investigations into perishable products, such as flowers, in a market with perfect competition and where prices were determined by the markets and were highly volatile, so that anyone could be "in a dumping position" at some point of time.

In judging the fact of dumping, the administration had taken no account of the long preparation and production periods. Also, to assess the existence of dumping, the U.S. compared the export price with prices to a third country, in this case Europe, without taking account of the specific features of the European market, Jaramillo complained.

All this was also compounded by a "flawed statistical sample" which was not representative of the real population of flower producers under investigation: as against 204 producers, the sample accounted for only 15. This met neither the requirements of representativeness, certainty or reliability, which would have required a sample of 50-60 percent of exporters, at least 100 enterprises, the Colombian delegate added.

Reserving Colombia's right to raise the issue as a dispute, Jaramillo expressed the hope that the U.S. would be inspired by the spirit of the Uruguay Round and the Punta del Este declaration in its "final determination" in this case and that it would be "fair, and therefore favourable to our interests".

U.S. delegate, Rufus Yerxa said the complaint about the doubling of the anti-dumping duty was a preliminary one on an administrative review required by the U.S. law. Yerxa said the Colombian authorities should encourage their parties to participate fully in the inquiry. Until the completion of the review process, was expected in April, and the final determination in the case there would be no change in the collection of estimated antidumping margin on Colombian exports, he added.

An IPS report from Washington adds:

"White House spokesman Marlin Fitzwater told reporters not to expect any "immediate" action with respect to pleas by Colombian President Virgilio Barco at last week's "drug summit" with Bush, for trade relief covering colombia's legal exports of coffee, flowers, and sugar.

Fitzwater said "there is nothing that we can do in any of these three areas on an immediate basis, but there may be things that can be done in all of those areas over a period of time".

Constraining the administration, he said, are international agreements governing the coffee trade, congressional requirements on sugar quota allocations, and Commerce Department rules regarding imports of cut flowers.

As a result of last year's collapse of the International Coffee Organisation (ICO), a collapse for which the United States is widely seen as partly responsible, export earnings from colombia's number one legal export have fallen by hundreds of millions of dollars.

Punitive duties levelled by the Commerce Department against imports of colombian cut flowers under Washington's anti-dumping legislation also threaten the health of that industry.