Apr 10, 1985

WIDER U.S. PROTECTION ISSUES RAISED IN CANADA-U.S. DISPUTE.

GENEVA, MAR (IFDA/CHAKRAVARTHI RAGHAVAN) – Some wider issues of U.S. protectionism have been raised in a dispute between the United States and Canada, now before the General Agreement on Tariffs and Trade (GATT), over U.S. restrictions on Canadian imports containing sugar.-

A GATT panel to adjudicate the Canadian complaint against U.S. restrictions on imports of certain sugar-containing products is expected to be named in the next couple of weeks.-

Under GATT rules, the panel has to be named within 30 days of the decision to refer the issue to a panel, and this would mean by April 12.-

The GATT Council, at its meeting on March 12, agreed to refer the dispute to a panel, and consultations are now going on over the panel membership and its terms of reference.-

Several countries have shown an interest in the case, in view of some of its wider ramifications.-

The dispute has also helped focus attention on a major area of U.S. agricultural protectionism which has been practised for over three decades, as a result of a waiver from its GATT obligations which Washington obtained in the 1950's in respect of its "U.S. agricultural adjustment act".-

At the time the waiver was granted, few Third World countries were members of GATT, and agricultural trade and exports were not a major factor in international exchanges among industrial nations.-

Australia and New Zealand were then beneficiaries of the British Commonwealth preferences, which ended with Britain’s entry into the European Economic Community.-

The U.S. waiver was without a time-limit, but subject to periodic reviews by the GATT Council. But the intention was that the United States would in due course give up the waiver.-

In recent years, however, there has been growing concern that after more than three decades, the united states has been unable to give up its waiver and conform to GATT obligations, which in the area of agriculture are less rigorous than those that apply to industrial goods.-

Under the waiver, the United States has been able to impose quota and other restrictions on imports of several agricultural products, including sugar.-

But on January 28, the U.S. administration issued a presidential proclamation, imposing quota restrictions on imports from Canada of certain sugar containing products.-

These include sweetened cocoa, pancake flour and other flour mixes, and other edible preparations such as unbaked frozen pastries, croissants, and other individually packaged prepared meals.-

U.S. sugar prices are much higher than international market prices, and this is maintained through a quota regime for sugar imports.-

The high U.S. sugar prices have also enabled the production of artificial sweeteners, whose costs now are much higher than international sugar prices.-

Some GATT delegations say the logic of the U.S. stand - that its right to restrict sugar imports extends to products containing sugar would mean that in future, the United States could use its agricultural waiver to restrict imports of any manufactured products containing agricultural raw materials whose imports ape protected.-

In raising the complaint before GATT, Canada has underlined that apart from the issues of the waiver, the united states had not even complied with the conditions of waiver - namely the need for prior consultation with interested parties before taking restrictive actions.-

In initiating the complaint, at one stage Canada apparently had intended to move for a "suspension" of the U.S. waiver itself, but initially did not do so.-

But at the GATT Council, when the United States sought to block the Canadian complaint by citing the waiver, Canada told the Council of its original intention to seek "a suspension" of the waiver.-

The discussions in the Council showed a large number of countries supporting the Canadian position, and criticising the U.S. action and its continued use of the waiver.-

According to the Canadian complaint, the U.S. import restrictions have threatened severe hardships for individual Canadian producers, and would jeopardise long-established trade relationships in the products, and would also result in plant closure and loss of jobs.-

In seeking a settlement through a panel, Canada has also sought authorisation to withdraw or suspend or Canadian tariff or other trade concessions to the United States to compensate for the damages.-