9:44 AM May 2, 1997


Geneva, 30 Apr (TWN) -- The United States notified the WTO Dispute Settlement Body Wednesday that it was withdrawing its complaint, and request for panel, over its dispute with the European Commission on tariffs on grain imports arising out of the EC's reference prices.

This dispute has been running for more than a year now, and was brought up before the DSB last year for a panel, then not pressed while bilateral talks continued, and then resumed again this year, with withdrawal of an old complaint and a simultaneous new one.

Last month, the EC approved changes to its tariff system -- agreeing to bring in a new rice import system and a new tariff quota for malt barley -- to meet US concerns. But the EC has indicated that the US should withdraw its processes at the WTO before its changes become effective.

In notifying the DSB that it was taking the item requesting the establishment of a panel off the agenda, the US also said it was also withdrawing other related pending complaints.

But Washington has said it would be carefully monitoring the implementation of the revised tariff system.

Another dispute before the DSB related to Japan's complaint against Indonesia over its national car project.

Japan contends a violation of the GATT and the TRIMs accord in that the Indonesian measures provide the national car project with "pioneer status" with ability to import without customs tariffs for one-year, on condition that the overseas producer purchases, within the framework of a counter-purchase accord, a certain value of Indonesia-made automotive parts, and exempting the imported components from customs tariff after commencement of domestic assembly/production while complying with local content requirements.

While claiming to be sympathetic to Indonesia's desire to have its national car, Japan said that any Indonesian measures must be strictly in line with the WTO rules, and since bilateral consultations have failed, a panel should be established.

The Japanese request was supported by the EU, but Indonesia blocked it, and insisted that its measures were fully in compliance with the WTO rules. Reference to a panel would be automatic next time this comes up before the DSB at its next meeting.

The DSB also heard under any other business, Hong Kong complaint over Brazilian measures affecting imports of textiles from Hong Kong -- product category 618 (woven artificial filament fabric), and category 838 (mens and boy's shirts, knitted or crocheted, of other textile material).

The Hong Kong complaint relates to a restriction, as a transitionary safeguard measure, imposed by Brazil in June 1996 under Art.6.11 of the Agreement on Textiles and Clothing (ATC). This was examined by the Textiles Monitoring Body (TMB) which, in November 1996, reported that serious damage to Brazilian domestic industry, attributable to imports from Hong Kong, was demonstrable, but did not endorse the Brazilian action, which was in the nature of provisional measures. The TMB asked Brazil to rescind the measures effective 31 December -- i.e. 19 months after imposition, rather than the 3-year period under ATC -- on category 638, and rescind the measures against 838 category.

Brazil advised the TMB that it would endeavour to implement it, but kept open its options under Art. 6.12 of the ATC to keep the measure in force for the three-year period.

Hong Kong advised the TMB that it could not accept the TMB recommendation, whereupon the TMB considered the issue further (under Art. 8.10 of the ATC).

Hong Kong's position is that the Brazilian data to justify the measure related to a broad industry sector, and not the particular producing the product competing with Hong Kong's.

As a result, the TMB in Feb-March agreed with Hong Kong's contention about the data, but did not conduct any fresh examination, nor did it consider it appropriate to revise the earlier recommendation.

The TMB however said that the Brazilian industry was undertaking important restructuring and adjustment, noting its earlier recommendation that Brazil rescind its restrictions effective 31 December.

Hong Kong argued at the DSB that its understanding of spirit of the TMB report was that Brazil is expected to rescind its measure earlier than the 31 December date. While it was waiting for a response, Hong Kong reserved its right to revert to the matter at a future meeting and, hopefully, to notify a settlement.

Brazil in its response said that it had already rescinded the transitional safeguard measures on product category 838, and that it was carefully following developments in the industry relating to category 618 fabrics.