Jan 30, 1987
U.S. TAX ON IMPORTED PETROLEUM FOR ADJUDICATION.
GENEVA, JANUARY 28 (IFDA/CHAKRAVARTHI RAGHAVAN) – The Mexican complaint against the U.S. over the imposition of discriminatory tax on imported petroleum and petroleum products in expected to be referred to a GATT panel for adjudication, according to GATT sources. The issue has been the subject of the special conciliation procedures conducted by the GATT Director-General, who is expected to report on the outcome to the GATT council at its next meeting on February 4. While no agreement has been reached between Mexico and U.S. in these conciliation procedures, both sides have apparently agreed to the establishment of a panel to look into the dispute, and as required by the special GATT procedures in disputes involving third world contracting parties, the Council is mandatorily obliged to set up a panel to look into the complaint and make recommendations. Similar complaints on the same issue from Canada and the European Economic Community (EEC) are also expected consequently to be referred for adjudication by two separate panels, though with the same membership. The U.S. Congress adopted in September 1986 legislation to finance a "superfund" to clean the environment. Under this law the U.S. imposes as a levy to finance the superfund a tax of 8.2 U.S. cents a barrel on domestic petroleum and 11.7 U.S. cents a barrel on imported petroleum and its derivatives. This discrimination against imported petroleum and petroleum derivates of 3.5 U.S. cents a barrel is a violation of article III of the General Agreement, which requires non-discrimination between domestic and imported products. On October 27, Mexico complained about this in the context of the Uruguay round and its Group of Negotiations on Goods (GNG), as a violation of the Punta del Este commitment on standstill. On November 6, Canada had raised the issue in the GATT Council, and the complaint was joined by among others Mexico and the EEC. Subsequently, in January this year, Mexico invoked the special conciliation procedures in GATT applicable to disputes between a third world contracting party and an industrialised contracting party, and sought the good offices at the GATT Director-General in promoting a settlement. Under these procedures established since April 1966, in any such dispute, and where bilateral consultations between the parties has not resulted in a solution, the GATT Director-General has to use his good offices to facilitate a solution. If no mutually satisfactory solution is reached within two months of the commencement of the consultations, at the request of one of the parties involved, the Director-General, at the request of one of the contracting parties concerned, "shall bring" the issue to the attention of the GATT contracting parties or the GATT Council and give a report of his conciliation efforts. Thereupon, the agreed procedures require that the Council "shall forthwith appoint" a panel of exports to examine the complaint and recommend appropriate solutions, and the panel itself has to make such recommendations within sixty days. In consultations conducted by the GATT Director-General, both Mexico and the United States are reported to have agreed to the establishment of a panel to go into the complaint, and the GATT Director-general is expected at the next meeting of the GATT Council on February 4, to advise the Council. With Canada and EEC having initiated similar complaints before the GATT Council, these two complaints already on the GATT Council agenda are also expected to be referred to the panels, with the same membership. The Council is also seized of Canadian and EEC complaints over the U.S. levy of a so-called "customs user fee". This fee is levied on all U.S. imports for processing of the import documents by the customs. Canada and EEC have complained the user-fees are violative of GATT provisions in this regard, since the fee levied is out of proportion to the services rendered and is really a revenue-raising measure. The EEC has noted that the fee would raise about 800 million dollars a year. This complaint too is expected to be referred to another panel for adjudication.