6:26 AM Jun 16, 1994

US URUGUAY ROUND IMPLEMENTATION FACING DELAYS

Geneva 15 Jun (Chakravarthi Raghavan) -- The United States legislative processes for approving the Uruguay Round package of agreements, drafting of an implementation bill and its presentation to the Congress for an 'yes' or 'no' vote is now running behind schedules and seems likely to slip further, according to reports received here.

The Administration had originally suggested that it would like the process to be completed before the Congress recesses in July, but is now reported to have been advising its supporters that no vote can be expected in the US House of Representatives before September.

This will inject into the process the dynamics of the November Congressional elections.

Part of the administration's problems would appear to relate to the indictment of House Ways and Means Committee Chairman Dan Rostenkowski on various corruption charges, thus forcing him to step down with the ranking Democrat, Sam Gibbons from Florida taking over the chairmanship.

However, there are also problems relating to the differing views of US trade and industry on the provisions of the implementing bill to give effect to the Uruguay Round agreement on anti-dumping, subsidies and countervailing duties.

Industries with a large domestic market want to ensure that the present provisions which they have been using to hit competitive imports should remain unimpeded.

Other segments of industry which depend upon imports for their own production want to ensure continued availability of cheap imports, while those with significant exports are worried that other countries are now following the US example and using the anti-dumping measures.

The Uruguay Round anti-dumping agreement, and particularly the provisions ensuring that domestic processes (investigations and decisions by authorities) cannot be easily challenged or domestic judgements easily substituted by those of WTO panels, even as they are give a lot of leeway to the importing countries for use of anti-dumping as a protectionist instrument targeted at countries and particular enterprises that become competitive.

But the demands of US enterprises with predominant domestic market-orientation is for continued free-wheeling leeway as in the past.

Meanwhile, a study by the Congressional Budget office (commissioned by the Republican members of the House and Means committee) has concluded that US enterprises have been making use of these provisions to get permanent protection from competitive imports which they cannot get under trade law safeguard provisions where the administering authorities would have to make a judgement between benefits and losses of import curbs.

A study that the US Trade Representative of the Bush Administration, Carla Hills had called for (on the eve of laying down office), was more or less killed by the Clinton administration and its Trade Representative Mickey Kantor and Commerce Secretary Ron Brown who have been more aggressive in protecting domestic industry.

As so far administered by the administration, the International Trade Commission etc, the US anti-dumping and countervailing (ad/cv) measures have been used to get long-term, if not permanent protection, and to harass imports in order to force importers to raise prices.

The Congressional study has found that the current use of the ad/cv law is contrary to the intent of the law -- namely to hit predatory pricing -- and the law has not changed substantively since its introduction in the early part of the century.

The law survived the GATT and its disciplines, under the provisional protocol and its 'grand father clause'. The limited discipline under the Tokyo Round code (and benefits for signatories) has been very much lessened by the way the US has been administering this law -- and blocking panel rulings against it.

Some of the areas on anti-dumping implementing legislation, to give effect to the Uruguay Round agreements relate to:

* how the cost of production in the originating market of the product (for calculating or finding dumping) would be made -- particularly on profits and the general start-up costs of a newly established enterprise,

* the profit margin to be set (US law now requires a minimum 8 percent profit and 10 percent general selling and administrative expenses, even though many US industries operate on lesser margins),

* averaging of prices for comparison (average home market prices with average US prices) rather than the current US practice of average home market price visavis individual US prices,

* de minimis two percent or less for investigation and termination as required in the WTO agreement or 0.5 percent in the US law,

* whether administration reviews should be covered by the de minimis provisions -- with the administration apparently feeling that the de minimis requirement is not specific and need not be provided in these cases,

* determination of injury by dumping and thresholds to be taken into account (the WTO agreement provides for a three percent individually or a seven percent cumulatively of those with below three percent penetration).

While on these, the administration has presented its views to the Congress, there are other areas where it is silent or plans to use its administrative powers without any implementing legislation -- how the duty levied in an ad order is shared between importer and exporters, and how this is to be reflected in duties levied retrospectively.

The issue would appear to be over US domestic producers who are aggrieved that the exporters pick up the additional duty, without raising the US selling price, thus retaining or gaining market share.

There are also questions relating to the sunset review in the WTO agreement, requiring review of the orders after a stipulated period, dealing with third country actions -- cases where a third country 'A' asks the US to undertake anti-dumping investigations in respect of products originating from country 'B'.

The WTO agreement obliges the US to entertain such cases. The US itself has favoured such actions by third countries in relation to US products priced out of a market by dumped exports from another country. But in the US market it could also cut US producers using dumped intermediates from abroad to produce for their own or foreign markets.

The current US law has some anti-circumvention provisions, but the WTO agreement does not have it. The US failed to get a provision written into the anti-dumping agreement. But there is a Ministerial decision in the WTO that the issue was negotiated, no text could be agreed upon and the issue should be pursued in the WTO's anti-dumping committee.

The issue for Congress is whether or not to retain its current anti-circumvention provision which, without a change in the WTO agreement, could become GATT/WTO illegal.

While the controversies now turn around the ad/cv provisions, the Uruguay Round implementation bill, according to the administration, would need changes in US laws.

The administration is also seeking to implement two panel decisions against it -- preferential excise duties for small producers of beer and wine, and the S.337 provisions enabling Customs authorities to more easily enforce claims of US corporations about intellectual property violation by imports than normal processes to adjudicate claims of outsiders of US corporations violating IPRs. The US accepted these rulings but said the implementation would have to be part of the Uruguay Round package.

Some of the other changes are procedural or less controversial -- such as for substituting Contracting Parties to the General Agreement with Contracting Parties to the WTO and changing the time-limits in S.301 proceedings to relate to the WTO's time-limitations in dispute settlement processes.

But others are substantial.

Changes would be needed in the US agricultural adjustment act to reflect the agreement on comprehensive tarrification, domestic support reduction commitments and on export subsidy disciplines (including the dairy export incentives scheme and the Export Enhancement Programme), amendments to the Trade Act to give effect to the Uruguay Round Sanitary and Phytosanitary Agreement.

Other laws needing changes include those to give effect to the Technical Barriers to Trade agreement, anti-dumping and subsidies and countervailing measures agreements, the safeguards agreement.

Some of the agreements like the textiles and clothing and the services agreement are seen as needing no domestic law changes.

The TRIPs accord would need some, though relatively minor (compared to the major changes that developing countries would need to make) to deal with geographical appellations to prohibit their use for wines and spirits when the names used do not correspond to the place of origin, treating inventive activity on the territory of a WTO member as in the same category as activity in the US for acquiring patents or enjoying patent rights.