U.S. SUGAR REGIME FOR GATT PANEL.

Sep 26, 1988

U.S. SUGAR REGIME FOR GATT PANEL.

GENEVA, SEPTEMBER 22 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The GATT Council agreed Thursday to establish a panel to go into the sugar import regime maintained by the United States under the waiver granted to it in 1955 and a head-note to the U.S. schedule of tariff concessions filed with the general agreement.

The request for a panel had been sought by Australia and was agreed to by the United States.

However, the Council was unable to act on a EEC request for a panel that would have gone into the sugar issue and also the wider issues of the 1955 waiver granted to the U.S. from its obligations under the general agreement in respect of section 22 of the U.S. agricultural adjustment act.

The U.S. blocked the reference to a panel, arguing that the EEC request was not precise, and that the issue of the waiver itself was best discussed and negotiated in the Uruguay round.

The GATT waiver was granted to the United States in March 1955.

The U.S. agricultural adjustment act has been in force since 1935, but has been amended from time to time.

The act requires the U.S. president to impose restrictions on imports of commodities that would adversely affect the U.S. domestic farm support programmes. The law also authorises levy of additional import fees.

These provisions are contrary to the U.S. obligations, and particularly article XI in regard to Quantitative Restrictions (QRS), and article two in respect of tariffs and customs duties.

At the U.S. request, the GATT Contracting Parties agreed to waive the U.S. from the GATT obligations in respect of the agricultural adjustment act in 1955, subject to the U.S. providing an annual report on the products affected.

Since 1955, the U.S. has been regularly making these reports, which in turn are referred to a working partly, where an increasing number of countries are critical of the continuance of the waiver and arguing that the conditions under which it was granted no longer applied, have been pressing for the termination of the waiver.

However, using the consensus rule, the U.S. has consistently blocked the working party form making any recommendation, or the GATT Council to act in a similar way when the report comes up before it.

Currently, the U.S. restricts imports of cotton and certain cotton products, peanuts, certain dairy products, sugar and syrups and certain products containing sugar.

Whit the U.S., in the context of the Uruguay round, mounting a campaign against the community’s common agricultural policy, the community recently decided to take the offensive and challenge the U.S. waiver and seek a GATT panel to look into it.

In raising the issue Thursday, the Community Representative, Amb. Tran Van-Thin, noted that every year the council went through the motion of setting up a panel over the operation of the waiver, but the Council had been unable to reach a conclusion despite the views of a (...) number of participants in the working party that the measures taken by the U.S. under the waiver were inconsistent with original intentions in granting the waiver.

"Waiver, by definition", Tran told the Council, "had to be temporary. Otherwise it would become an exception and part of the overall rules of the game".

If a waiver continued in perpetuity it would become breach of the principles under which it was granted, and thus a source of serious tension and weakness in the system.

There had been a lack of respect by the U.S. for the assurances given at the time of the grant of the waiver, and over time its cumulative effects had contributed to the distortions of international agricultural trade.

Tran said the panel sought by the community should look initially at the sugar import restrictions and then go into the whole waiver issue itself.

U.S. delegate, Amb. Michael Samuels thought it was ironic that the Community was attacking agricultural policies of others, particularly when the issue of waiver had been put on the Uruguay round negotiating table by the United States in the negotiating group on agriculture.

While the U.S. respected the right of any Contracting Party to seek a panel to look into a dispute, neitll Community’s original request nor now in the Council had the Community given a precise indication of what the panel would look into. It was hence premature to agree to the panel.

In other interventions, Japan’s Yoshio Hatano noted that the waiver had been in existence for such a long time and covered U.S. QRS, identical to other restrictions (such as those of Japan) that had been held to be contrary to GATT.

In 1955, the U.S. had promised to remove the restrictions when it was no longer necessary, but regrettably the waiver had been in place now for 33 years.

But this only showed the difficulties in handling agriculture in GATT and the need to deal with it in the Uruguay round.

Australia, Brazil, Nicaragua, and Argentina supported the Community request for panel.

A number of other countries, including Canada, Uruguay, New Zealand, and Jamaica, supported the request for a panel in principle but sympathised with the U.S. position about the lack of precision in the Community’s request.

(...) definition had to be temporary, could be a matter for negotiations in the Uruguay round and why other countries should be expected to make concessions to the U.S. in order for the waiver to be removed?

The Council is expected to revert to the issue at its next meeting.

Earlier, Australia in seeking the establishment of a panel over U.S. sugar imports, noted that the restrictions were being operated since 1982, and the import quotas increasingly operated in an restrictive fashion.

U.S. imports of sugar had been as high as six million short tons. Then years ago, but totalled only 1.3 million short tons in 1987.

The U.S. regime had affected world prices, and led to a significant fall in sugar consumption in the U.S.

Australia’s own quotas in the U.S. sugar market had declined from 232.000 short tons in 1982/83 to 58.000 in 1988.

The Council agreed to establish a panel.

A number of countries (Brazil, Canada, the EEC, Nicaragua, Argentina, Colombia, and Thailand among others) expressed interest in the dispute, and reserved their rights to make presentations to the panel when it starts its work.

On other disputes that came up before the Council, South Korea agreed to a New Zealand request for a panel to look into South Korean imports of beef from New Zealand.

Panels have already been named in similar disputes raised by United States and others.

The Community agreed to an U.S. request for a panel to look into the EEC restrictions on imports of apples from the Southern Hemisphere.

The U.S. had argued that the EEC restrictions had damaged the interest of its own traders, and the abrupt imposition of the EEC measures had led to diversion of trade.

While agreeing to a panel, the Community expressed surprise that the U.S. request came four weeks after the measures had been lifted (at the end of the European summer), and 4-1/2 months after the Chilean request had been referred to a panel.