Mar 14, 1986


GENEVE, MARCH 12 (IFDA/CHAKRAVARTHI RAGHAVAN) Ė The GATT Council agreed Wednesday on the terms of reference of a panel to go into the dispute between Nicaragua and the U.S.A. over the latterís imposition of economic sanctions against Nicaragua, and in particular the restrictions on imports from that country.

The restrictions, imposed on may 7, 1985, were brought before the Council by Nicaragua and it was agreed in October, 1985, to refer the issue to adjudication, on the understanding that the panel would not go into the validity or motivations behind the U.S. use of the "security clauses" of GATT to justify the restrictions.

But an agreement on the terms of reference had proved difficult.

As now agreed, the panel would go into the measures taken by the U.S. and their trade effects "to establish to what extent benefits accruing to Nicaragua under the general agreement have been nullified or impaired", and to make recommendations to the Contracting Parties on further actions to be taken.

The two sides are yet to agree on the members of the panel, before it can begin to work.

But a GATT spokesman said Wednesday that an agreement on this was expected fairly quickly.

In other actions, the Council agreed to give observer status to the Gulf Co-operation Council (which consists of United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait).

Iran, itself an observer, however told the Council that the GCC was only a military alliance and did not qualify to be an observer.

Kuwait, a GATT member and a constituent of the GCC, earlier had welcomed the councilís decision.

The grant of observer status had been held up when it came up before the council in February because of EEC and U.S. objections over the wider issue of agreement on conditions to be attached to grant of observer status.

Consultations on this issue has been going on, but has not yielded any understanding.

India and some other countries have said that the problem could only be tackled on a case by case basis.

The U.S. and EEC made clear Wednesday that pending consultations on the general question; they would not be willing to consider hereafter any individual applications.

According to some GATT participants, the stance of the EEC and U.S. is related to the reported moves on the Soviet Union to seek observer status in GATT.

The Soviet Union has not made any formal moves in GATT, though there have been some talk of it. The soviets, within the UNís Economic Commission for Europe, have made statements, indicating their desire to seek observer status in GATT and even request to participate in any new round of GATT negotiations if launched.

The European Community warned against moves in the U.S. Congress for legislation to extend the life of the so-called "manufacturing clause" in their U.S. copyrights act, which in effect prohibits import of certain non-dramatic literary material printed abroad. In effect this ensures that books by U.S. authors could only be printed in the U.S.

A GATT panel had ruled against the U.S. on this in the past. Despite this the U.S. Congress went ahead and enacted a law, which was vetoed by President Reagan but became effective when Congress overrode the veto.

The EEC complained that moves were again afoot in the U.S. Congress, to extend the life of the measure, due to expire in June 1986, and with more restrictions.

The U.S. delegate viewed the EEC request for authorisation to take retaliatory actions as "premature" and pointed to the record of President Reagan in opposing protectionist measures.

India announced at the council that it would no longer be seeking waivers for the auxiliary customs duties imposed since 1973.

Over the last two or three years India has been steadily reducing these duties, and announced Wednesday that it was removing such duties on the few items still subject to these levies, including on electrical and mechanical measuring instruments, as part of its contribution to re-establishing confidence in the GATT trading system.

While the trade involved was little, a GATT spokesman noted that a third world country facing various payments problems was taking this step unilaterally, and this was a matter that GATT members noted with satisfaction.

Japan complained about the continuance and intensification of discriminatory Quantitative Restrictions (QRS) against imports from Japan into Spain and Portugal, which have now become parts of the EEC.

Items like calculators, motor-cycles, paper and steel products, numerically controlled machine tools, are among some 44 products subject to QRS in Spain, while in Portugal some 47 products, including steel, clothing, glassware and electrical products, are subject to QRS.

The Japanese delegate complained that with the accession of the two countries to the EEC, the European Commission had now not only approved and continued these QRS, but had intensified and increased them, and this was a matter of concern to Japan.