Jun 24, 1989


GENEVA, JUNE 22 (BY CHAKRAVARTHI RAGHAVAN)— The United States blocked on Thursday the adoption by the GATT council of a panel ruling against the U.S., involving the GATT-inconsistency of s. 337 of its trade and tariff law.

The panel, in a dispute raised by the EEC, had ruled that the U.S. law providing for different and discriminatory procedures in disputes involving patent and other rights of foreigners and imported products was a violation of GATT’s "national treatment" principles, and that the U.S. should be asked to bring its law into conformity with GATT.

This is the fifth time the report has come up before the council for adoption, with the U.S. every time blocking adoption.

The U.S. this time said the report raised substantive concerns, and created political difficulties blocking adoption. There was no existing means in the U.S. of reconciling the adoption of the report with political and commercial interests of the U.S.

It would be hypocritical for the U.S. to a low adoption of the report, if the administration was in no position to implement it, U.S. delegate Rufus Yerxa.

At the U.S. request however the report itself was "derestricted" so that the administration could officially show it to the U.S. Congress.

Japan expressed concern over the delay in adopting a panel report.

The EEC while appreciating the honesty of the U.S. (in making clear it would not implement it), said the panel report was now in some sort of limbo despite the strong support for its adoption from a large number of CPS. It was contradictory for the U.S. to ask others to follow GATT dispute settlement procedures when it was not prepared to do so itself. The case would not go away, and the council would have to take some decision.

The chairman of the council took note of the discussion and said the council would revert to the matter at the next meeting.

In other decisions, the council adopted a panel report in a complaint by Chile against the European community over restrictions on imports of apples from Chile under the common agricultural policy. The panel had ruled in favour of Chile.

In allowing the adoption of the report, and a similar report in a case brought by U.S. on the same issue, the EEC made clear that it would not allow this to be used as a precedent in the Uruguay round agriculture negotiations.

Another panel report adopted was in a ruling against Norway on imports of apples and pears, where the authority vested in the king to regulate imports was held by the panel not to be covered by the GATT "grandfather clause" privileges (under which trade restrictions and policies in force at time of joining GATT are saved), and the Norwegian restrictions were held to be contrary to GATT.

In reluctantly agreeing to allow the report to be adopted, Norway’s Martin Huslid pointed out that eighty percent of the Norwegian market was covered by imports, and only about 20 percent was protected. He noted that this was an issue involving non-economic factors and relating to rural development, environment and social aspects in an area of Norway where there was little scope for alternative employment.

More than 200,000 signatures, he noted, had been collected in Norway against the adoption of the report. At present, he added, Norway was unable to say how it would be implemented.

In the case of panel ruling against Canada in a case brought by it against Japan over tariff rates on certain types of timber, the Canadians again blocked adoption of the report, arguing that the panel's legal arguments were doubtful and damaging.

Canada found support for its stand from a number of others, including New Zealand and Australia, while the U.S. supported Japan.

A GATT spokesman said it looked as if the report might not go through the council in view of the significant objections to the argumentation in the panel report.

Earlier, the council again found itself unable to act on a two-year old panel ruling against the U.S. in a case brought by Nicaragua over the economic sanctions imposed by the U.S. against the sandinista regime.

While the terms of reference had precluded the panel from going into the security exceptions cited by the U.S. to justify its actions, the panel had raised a number of questions on this issue. Nicaragua in addition had sought decisions from the council that would enable other GATT contracting parties to provide relief to Nicaragua through concessions favouring Nicaragua.

Nicaragua’s case was supported by Chile, Mexico, Argentina, India, Uruguay, Romania and Peru among others.

But the council could take no action, and the U.S. did not even care to respond.

The council also adopted the report of a panel, in a case brought by Australia against the U.S., which had ruled that the sugar quota regime maintained by the U.S. currently was a violation of the GATT provisions.

The U.S. has been maintaining a regime, on the basis of a head note entry in its tariff schedules bound in GATT, under which it reserved the right to introduce or maintain quotas when there was no U.S. law for this in force.

The panel had ruled against the U.S., noting that the GATT provisions allowed such import restrictions on agricultural products only to the extent it was necessary to maintain or continue restrictions on producting and marketing of like domestic products, and there were none in the U.S.

Under the sugar quota regime, the U.S. market has become highly protected, resulting in expansion of domestic production and of sugar substitutes, and their exports, destabilising the world market for sugar further.

The U.S. in indicating its willingness to allow the report to be adopted, announced that a review was being conducted by the administration in consultations with the congress and the U.S. sugar industry and other interests on ways and means of implementing the report.

In adopting the report, the council took note of comments by Jamaica, which is concerned over the implications vis-à-vis the special quotas for Jamaica and other Caribbean countries covered by the U.S. Caribbean basin initiative.

While the panel refrained from going into this issue, that had also been sought to be agitated by Australia, had nevertheless noted that its ruling had held the entire quota regime illegal.