Jun 10, 1989

INDIA TO BRING SUPER 301 ISSUE BEFORE GATT COUNCIL.

GENEVA JUNE 8 (BY CHAKRAVARTHI RAGHAVAN) India has now joined Brazil in seeking to arraign the United States before GATT for its demand for negotiations under duress under so-called "super 30l" of the U.S. trade and competitiveness act.

India formally notified the GATT secretariat on Thursday asking the secretariat to inscribe as a separate item on the agenda of the GATT council meeting on June 21/22, the U.S. action categorising India as a priority country under section 301 of the U.S. trade and competitiveness act.

On June 2, Brazil has separately made a similar request in respect of a similar U.S. threat against it. Brazil has asked for inscription of an item "U.S.: identification of trade liberalisation priorities for Brazil under section 301 of the U.S. trade and competitiveness act".

Neither country's communication has said what action they seek in GATT. But at this stage, neither of them are obliged to do so. This has to be done by them at the council or on the eve of the meeting in presenting any particular motion or request.

On May 25, the U.S. trade representative, Mrs Carla Hills, had named Brazil, India and Japan under "super 301" as priority countries with unfair trading practices and demanding bilateral negotiations with each of them for changing their laws and practices to remove these practices.

As of Thursday afternoon Japan had not apparently asked itself for inscription of a separate item, but has had circulated as a GATT document to all contracting parties and the council, the statement of the Japanese Foreign Minister in Tokyo soon after the U.S. action.

At the time of the biannual quadrilateral trade meeting (of Canada, Japan, EEC and the U.S.) at The Hague last week, Japan had indicated that it might seek the establishment of a working party in GATT over this issue.

Technically, the U.S. could contend now that since it has taken no trade restrictive action, no GATT obligations have been violated, and no injury has been caused to any trading partner, and thus there is no dispute that could be adjudicated.

This is to ignore the general uncertainty created in the three countries to private business and industry because of the unspelt threat of retaliations.

But presumably to get over this, Japan is thinking of a working party.

However sending the issue to a working party has its own pitfalls, since the U.S. could lock up the issue in the working party without any outcome for months, until the Uruguay round is concluded and it extracts concessions from others under threat of retaliation.

If anyone tried to raise the issue in Uruguay round bodies or threaten to block the negotiations, the U.S. could turn around and argue that a working party is dealing with the issue, and so no action was called for elsewhere.

Meanwhile, the Indian commerce minister has also been quoted in the press as having said in India that India would be willing to dialogue with other countries on matters of mutual interest, "but it cannot be under duress, under threat of retaliation", and that if the U.S. formally sought bilateral discussions on the priority issues with India under section 301, India would refuse to negotiate.

Separately, Brazil is also reported to have asked consideration by the council of the U.S.-created stalemate in the adjudication of the Brazilian complaint against U.S. over the imposition of 100 percent discriminatory tariffs on about 50 million dollars worth of imports from Brazil over drug patents issue.

The U.S. had reluctantly agreed in the GATT council to the adjudication of this issue earlier this year, but has so far not agreed to the terms of reference of the panel.

Since the issue in this dispute is the question of GATT legality of U.S. actions under its section 301, and violation of U.S. obligations to GATT, the U.S. wants to avoid the adjudication of this issue or prolonging the process.

Both U.S. trade representative Carla hills, and the U.S. delegate to GATT, immediately after the dispute was referred to a panel, had made clear that the U.S. would not abandon its section 301 efforts, even if GATT should hold it illegal.

Carla Hills is on record as having repeatedly said that she will use this provision as a "crowbar" to pry open foreign markets for U.S. exports of goods and services and investments.

The impact of the U.S. measures on the Uruguay round itself seems to be slowly unfolding.

There are many third world GATT delegates who privately say the entire Uruguay round process had now become irrelevant, in the light of the U.S. demands for bilateral negotiations under threat of trade actions, and that their capitals would have to soon consider walking out of the Uruguay round negotiating processes themselves.

While only Japan, Brazil and India have been named under the "super 301", eight countries have been put on the "priority watch list" over their intellectual property regime and given 150 days to resolve outstanding issues with them (for change of their domestic laws and regulations). The U.S. has also put 17 other countries on the watch list, to see how they behave in the Uruguay round negotiations on this issue and threaten further similar actions against them next year.