Jul 22, 1988
U.S. SUGAR IMPORT REGIME CHALLENGED.
GENEVA, JULY 20 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The sugar quota import regime maintained by the United States for well over three decades was sharply criticised Wednesday at the GATT Council, when Australia sought the establishment of a panel to adjudicate this issue. Since Australia had raised the question under "any other business" when normally no decisions are taken, a point underscored by the United States, the Council took no action. The subject will come up at the next council meeting in September. The Australian complaint was supported by Argentina, Brazil, Canada, Colombia, Nicaragua and Thailand. The European Community, which is raising the much wider issue of agricultural import restrictions by the U.S. under the GATT waiver of the 1950’s, also supported Australia. The U.S. has been maintaining a quota regime for sugar, restricting imports and allocating quotas to various countries. This regime has been in force for well over three decades, and has been operated under a permanent waiver from GATT obligations in agriculture obtained by the U.S. in the 1950’s. For a time the U.S. quota regime suited countries that got quotas, since it assured them of a higher price for sale of their sugar in the U.S. market, as compared to the international prices. In the 1950’s and 1960’s, and well into the 70’s too, countries retained lobbyists in Washington to canvass and secure quotas annually. But gradually, the U.S. domestic support prices have been rising and with it the production of sugar-substitutes – both artificial sweeteners as well as new ones like corn syrup. Under the restrictive import regime and high prices maintained to support domestic sugar production, the sugar substitutes have not only been taking a higher and higher share of the domestic market, but have joined hands with the domestic sugar producers to maintain the restrictive import regime. Australia had held consultations with the U.S. on this issue several weeks ago, but the U.S. told Australia that what it was doing was perfectly legal in GATT under the waiver. In raising the issue Wednesday in the GATT Council, and seeking a panel, the Australian delegate, Alan Oxley complained that since 1982 the quota regime had become increasingly restrictive. The U.S. sugar imports in 1988, he said, was the lowest since the formation of GATT in 1948. U.S. imports of sugar just ten years ago were six million (short) tons, while in 1987 it had come down to 1.3 million. Australian quotas had declined from 232.000 tons. In 1982-83 to 58.000 in 1988. U.S. domestic production had grown behind the import quota regime, while the imports had taken the adjustment burden at considerable cost to the suppliers. The position had become intolerable and needed international scrutiny, Oxley argued. Bilateral consultations with the U.S. had yielded no results, since the U.S. considered the quota restrictions as consistent with its GATT obligations. U.S. delegate, Amb. Michael Samuels did not respond to the substance of the Australian complaint, but pointed out that it was not the practice of the Council to set up panels under any other business. EEC spokesman, Amb. Tran Van Thinh said the Community had its own difficulties with the U.S. over import restrictions on agricultural products, and among them sugar. The Community was holding formal consultations under GATT article XXIII (1), the preliminary formal step before raising a dispute and seeking a panel. The dispute, Tran noted, was of much greater dimensions, namely bringing into question the U.S. waiver, which appeared to have become "a permanent, almost acquired right of the U.S.". The Community, Tran said, supported the Australian request from a political point view, even when agreeing with the U.S. view that it was not normal to take decisions under any other business. Earlier, the Council heard complaints from New Zealand about its difficulties in getting formal consultations going with South Korea over its beef imports. The Council in May has already referred separate disputes on the South Korea been import regime (banning such imports since 1985) to GATT panels for adjudication. New Zealand at that time indicated it too had the same problem, and would seek a panel, and as a preliminary formal step sought consultations with South Korea. The New Zealand delegate, Amb. G.C. Fortune complained to the Council that though three months had elapsed, New Zealand had been unable to set up the consultations. Expressing his concern at the failure of South Korea to hold consultations, Amb. Fortune said it was time for the Council to proceed to the next step and set up the panel, and treat New Zealand on an equal footing with Australia and U.S. New Zealand, before South Korea banned imports, was the second largest supplier of beef. In 1983 it exported 3900 tons. and this was 2.5 percent of New Zealand’s total export earnings from beef. The South Korea delegate, Amb. Sang Okk Lee is reported to have advised the Council that New Zealand had now been invited to hold consultations in the week of July 25 at Seoul or Geneva. He is reported to have explained the delay as due to the desire of his government to consult with the national assembly, in view of the political sensitiveness of the issue, and in the light of such consultations come up with concrete proposals for a successful consultation. The GATT spokesman said that the explanation did not seem to satisfy a number of delegates – U.S., Australia, Canada, the EEC, Uruguay and Hungary – who expressed concern at the delay. These delegates were of the view that any Contracting Party receiving a request for consultation should respond promptly. In the light of the consultations now agreed, the issue is expected to come up at the next meeting of the Council in September. Australia and the United States, both of whom have got panels set up to hear their won complaints against Korea, complained in the council of delays in settling the modalities for the panel to begin functioning. The U.S. charged Korea with failing to show any degree of cooperation in settling the problems.