Jun 19, 1987
DISPUTES AND TENSIONS AMONG MAJORS REFLECTED IN COUNCIL.GENEVA JUNE 17 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The trade disputes and tensions among the three major trading nations (U.S., EEC and Japan) figured at the Council under any other business. Japan referred to the U.S. action in levying a 100 percent duty on imports into the U.S. of Japanese products, as a retaliation against its purported failure to live up to its bilateral deal with the U.S. over pricing of semi-conductors. Japan complained of delays in holding the consultations sought by it under GATT article XXIII (1) - the preliminary procedure before raising a dispute. The U.S. explained that the difficulties lay essentially in finding a convenient date for its senior officials. GATT sources noted that having taken a unilateral action against Japan, the U.S. was in no hurry to set up consultations, since every day of postponement meant pressure on Japan. In the same area, Japan referred to the cession of the EEC Council of Ministers, requesting the EEC Commission, to put forward proposals for a regulation to impose 100 percent duty on Japanese products that might be diverted from the U.S. market into the EEC, and cause serious injury to U.S. producers. In this decision, the EEC Council had however noted that the U.S. action was inconsistent with GATT, and any action that the community would take should comply with GATT rules. Japanese delegate, Amb. Yoshio Hatano, refereed to this and hoped that the community would not take any action inconsistent with GATT. On another matter, the U.S. and the EEC had, what a GATT spokesman described as "mutual recriminations" on the implementation of the harmonised system (HS) of customs classifications. Currently, countries follow the four-digit Customs Cooperation Council Nomenclature (CCCN) in listing import products and applicable tariffs. The new, more disaggregated, HS six-digit classification has been agreed, and countries are in the process of transposing entries in their tariff schedules from the CCCN to HS system. The EEC complained that in doing so, the U.S. was transposing some items in such a manner as to result in real high tariff increases on some products. The U.S. in turn made a similar complaint about EEC transpositions. No conclusions were reached, but the dispute could become significant in future, GATT sources suggested. Earlier, the Council accepted the report of a group of experts who went into EEC complaints over Japanese practices said to be affecting world market for copper ores and concentrates. Japan welcomed the report which amounted to a case of "experts agreeing to disagree", as the GATT spokesman termed it. A third world source later said the entire exercise showed the imperviousness of the international economic system to the basic problems of third world countries dependent on the copper economy, and the extent to which industrial countries are trying to maintain for themselves higher levels of raw material processing by disguised protection, and struggling to secure access to raw materials. The world market for refined copper has been affected by a number of structural and other factors, and world consumption, after reaching a peak in 1980, has been stagnating or falling. In recent years a number of copper mine-producing countries have been trying to increase domestic processing of copper ores and concentrates. Most of copper trade is now in the form of refined copper, which in 1985 accounted for 55 percent of exports of the market-economy countries. Copper ores and concentrates in the same year accounted for 21 percent, and blister and anode copper for about 14 percent. About two-thirds of market-economy exports of copper ores and concentrates originate in third world countries - Chile, Malaysia, Mexico, Papua New Guinea, Indonesia, Philippines, Peru and Zaire. Most of these are destined to industrialised countries that refine them into metal for their own use or trade. Japan and West Germany are the main destinations for exports of ores and concentrates. other important importers are South Korea, Finland and Sweden. Japan has very little domestic mine production, and relies on foreign supplies of copper ores and concentrates, and its imports account for two-thirds of imports of the market economy countries. Though there has been some slight improvement in copper concentrates markets over the last two years, the custom concentrates market has been generally under pressure due to shortage of supplies. But trade in refined copper has been stagnating, with exports from industrial countries (notable Canada and Japan) declining, and that from the third world countries increasing. The EEC and Japanese dispute in effect is one over securing access to the limited supplies of concentrates. The EEC had complained that japanese practices and tariff rates favoured imports of copper ores and concentrates, to be refined and sold in domestic markets, compared to refined cooper itself. The japanese practices of tariff protection of domestic refined copper production, the EEC had complained, enabled japanese smelters to offer higher prices for copper concentrates, and these in effect distorted the world market for copper ores and concentrates. The report showed that japanese experts contended that the tariffs maintained was legitimate in GATT, that the conditions of purchasing contracts were outside GATT competence since they were based on purely commercial considerations, and there was no government intervention in prices, and no restrictions on refined copper imports. The EEC however argued that the high internal prices for copper metal and the low refining costs in Japan could not be possible except on the basis of concealed import restrictions. The report showed the group was unable to agree on whether the pricing and trading practices constituted a distortion in supply and demand situation of copper concentrates, and whether it had an aggravating impact on world trade conditions. They however agreed that world trade in copper had been negatively affected by various factors relating to production policies, structural changes, decline and changing patterns of consumption, and trade policy measures maintained by some countries. "A strengthened free trade system and improved market access", the group agreed, were the basic foundations for development of the world copper market, and expressed the hope that further liberalisation in this trade could be achieved through the Uruguay Round of trade negotiations.