May 6, 1988

GATT COUNCIL NAMES PANELS IN SEVERAL DISPUTES

GENEVA MAY 4 (IFDA/CHAKRAVARTHI RAGHAVAN)ó The GATT Council was seized Wednesday of a number of disputes relating to imports of one or other agricultural products and their subsidisation.

In five cases involving imports of beef, citrus products, and dessert apples, panels were established, with names of panelists and terms of reference to be. agreed upon in consultations.

The disputes involving beef were between the U.S. and Australia against Japan, and U.S. and Australia against South Korea. The dispute over dessert apples was between Chile and the European communities.

But in a dispute between the U.S. and EEC over the community policies on oilseeds and animal protein substitutes, the EEC blocked' the establishment of a panel.

The council's long agenda was either on fresh disputes to be referred to panels or over panel rulings and/or their implementation.

The U.S. complaint against Japan related to restrictions on imports of beef and citrus products, governed till recently by bilateral agreements that have expired. Consultations between the two to solve the dispute have failed, and the U.S. pressed for a panel.

The U.S. complained that the restrictions resulted in immediate and substantial harm to U.S. exports, apart from their violation of article XI, which prohibits quantitative restrictions (QRS). The U.S. estimated damage to its exports as of the order one billion dollars.

Japan contended that beef and citrus played a very important role in agricultural development of several local regions of Japan, and it was not possible to bring about total liberalisation of trade as sought by the U.S.. Japan regretted U.S. attitude in this regard, but did not resist a panel.

A number of countries - Australia, Israel, Argentina, New Zealand, Brazil, Uruguay, Canada and the EEC all expressed interest in the panel's work in view of their own 'market interest'.

Separately, Australia too sought a panel to go into its dispute with Japan over beef imports. The regime, Australia contended, was extremely restrictive and unreasonable constrained imports.

In what was seen as a reference to the U.S.-Japan bilateral accord (that has just expired, and enabled greater imports from the U.S.), Australia complained that its share in the Japanese market of beef products under quotas had fallen from 81 percent in 1976 to 55 percent.

Australiaís share of total Japanese imports of beef and veal, including products outside the quota, had also fallen from 74 percent in 1976 to 41 percent in 1987. During the same period, the U.S. share of the market had risen from 13 percent in 1976 to 39 percent in 1987.

Japan said it would not oppose panels, though consultations were still continuing with a number of countries to find satisfactory solutions, and hoped it could be found outside the panels.

New Zealand, the third largest supplier to the Japanese market, also complained about its own exports and reserved its rights to demand a panel.

A GATT spokesman said it was not clear whether there would be a single group of panelists, sitting as separate panels, to go into these various disputes over Japanese beef (and citrus) imports, or whether there would be separate panels with different panelists.

He agreed that with such a large number of countries involved, it would probably take time even to find panelists from countries not involved and agreeable to all the sides.

As usual, he said, the terms of reference of the panels and their composition would be settled by the GATT council chairman. Amb. Amir Jamal of Tanzania, in consultations with the parties involved.

A third set of complaints related to import restrictions by South Korea, with the United States and Australia as complainants.

The original U.S. complaint was that South Korea had introduced a non-automatic licensing system, and since 1984 no import licences had been granted an beef imports, except for certain types for tourist hotels, and even that was no longer operative.

In the U.S. view this was a violation of article XI, and also nullified the tariff bindings negotiated by the U.S. with South Korea during the Tokyo round.

Australia in its complaint noted that before 1983 (when the restrictions came into effect), Australia had exported 64,000 tons to the South Korean market. This was Australiaís third largest export market, worth 107 million Australian dollars (82 million US$).

South Korea agreed to the disputes going to adjudication, but asked for two separate panels.

In the Chile-EEC dispute, Chile complained about the EECís import licensing procedures for dessert apples and the latest import quota system for such apples from Southern Hemisphere sources.

On February 3, the EEC had introduced a system of licensing, but had described it as intended for monitoring purposes. On April l2, the community introduced new regulations suspending issuance of licences for imports from Chile, and on April 20 it introduced a new system of quotas for all southern hemisphere suppliers.

The community has since notified its quota system regime to GATT.

Under the system a total of just over 500,000 tans of dessert apples are allowed to be imparted, of which Chileís share is 142,000. Chile has already exhausted its quota.

Other suppliers with quotas are South Africa with 166,000 tons and New Zealand with 155,000.

The community has explained the problem in terms of the large stocks carried over from the previous year, and as a result of which the community was intervening to buy large quantities to keep supplies off the market.

Chile however viewed the system as violative of practically every article in the general agreement, and cited in particular articles one, two, eleven, thirteen, and the entire part IV (relating to special provisions and treatment for Third World countries).

Independently, the Chilean finance minister is also reported to have addressed the GATT Director-General about the adverse consequences to Chile and its export earnings, and hence to its' capacity-to service its debts.

While explaining its position, the community agreed to the reference of the dispute to the panel.

A number of other countries however also expressed interest New Zealand, South Africa, U.S., Argentina. Canada, Brazil, Hungary, Uruguay, Australia, Romania, Poland, Thailand.

Chile also raised before the council new regulations fixing standards for imparts of grapes that will come into force under the proposed U.S. trade bill.

Chile is one of suppliers to the U.S. market, and sought GATT consultations on the issue.

The U.S. however noted that the bill was yet to became law, but when it did, the U.S. would be willing to consult with all interested parties.

The U.S. complaint against Sweden, over import restrictions on apples and pears, was removed from the council's agenda, since consultations were still continuing between the parties.

The U.S. complaint against the EEC over prohibition of imparts of almonds by Greece was also removed from the agenda - the community having announced that the prohibitions had been since lifted.

The council was unable to take a decision on the U.S. request for a panel to look into its complaint against EECís soybean import regime.

The U.S. has complained that under the EEC regime relating to oilseeds and animal protein substitutes, community processors of oil seed enjoyed subsidies from the community for use of domestic production, but this was not available to imported products.

This was contrary to article III, which called for national treatment for domestic and imparted products.

Secondly, the U.S. contended, the community subsidised production of oil-seeds.

In 1954, during the negotiations for formation of the EEC, the single largest concessions made by the EEC to secure U.S. agreement was to agree to zero tariff on soybean imports and to bind it in GATT. The EEC practices had nullified the benefit of these concessions

Thirdly, the U.S. complained, there had been also commercial damage.

The community spokesman rejected the U.S. view, noting that the regime being complained about had been in vague for 22 years.

While the EEC favoured right of contracting parties to have panels to settle disputes, this right should be used discerningly and carefully, and GATT contracting parties (and the council) should have the right to reject panel requests lacking substance.

The EEC also argued that the U.S. was raising all these disputes about agricultural imports and subsidies in order to strengthen its own hand in the Uruguay round negotiations.

Such tactics, the EEC spokesman warned, would have the dangerous effect of paralysing the negotiations on agriculture and subsidies in the Uruguay round.

Other trading partners of the EEC had been able to increase their imports to the community. If the U.S. had not been able to do so, the community argued, it was perhaps due to lack of productivity and competitivity of its products.

The U.S. however insisted that a CP affected did not lose its right to secure a panel to inquire into an GATT illegal regime, whether or not it was of recent or earlier origin.

Canada, which expressed an interest in the dispute, pointed out that in a recent case involving Canada (the EEC complaint over Canadian liquor board practices on imports); the practice ruled against was 40 years told.

Apart from Canada, New Zealand, Australia, Malaysia, Uruguay, Argentina, Indonesia and Brazil also said they had an interest in the dispute.