Sep 26, 1988

U.S. SUGGESTS COMPENSATION OVER SUPERFUND LEVY.

GENEVA, SEPTEMBER 22 (IFDA) -- The United States formally offered Thursday to negotiate compensation with the countries mainly affected by the U.S. superfund levy on imported petroleum products at a rate higher than on domestic products.

A GATT panel last year had ruled the U.S. levy was contrary to GATT, and recommended that the U.S. should withdraw the levy.

The U.S. accepted the panelís findings, but has so far been unable to persuade the U.S. Congress to adopt the amending legislation.

Meanwhile the Community has sought the permission of the GATT Council to withdraw concessions for the U.S. equivalent to the 7-1/2 million dollars worth of damage that the Community estimates it has incurred because of the levy.

When the issue had become up before the council previously, the council had asked the GATT secretariat to look into the EECís estimation of its losses and report how far it was correct.

The Council has now been told by the secretariat that the EEC calculations were correct on the assumptions behind it, but that there were other basis for making a calculation.

Mexico, Nigeria and Kuwait, who are also involved in the dispute, pointed out that as small trading nations they were in no position to retaliate against a major trading partner like the U.S., and felt that the Council should secure U.S. compliance with the panel ruling by amending its legislation.

The U.S. said the administration had been diligently promoting the idea of Congress of amending the law, but Congress so far had not acted. Any retaliation authorised by the Council could worsen the situation.

The best course was hence to negotiate compensation with the main parties to the dispute, and negotiate a package that could be presented to Congress.

The Community said this merely took the situation back to a year ago. The Community at that time had invited the U.S. to make "offers" on compensation, but none had been forthcoming.

Nigeria, supported by Kuwait, said solutions other than retaliation would have to be found for their losses.

A number of delegations said the whole situation underscored the need for improvement in GATT dispute settlement procedures and mechanisms in the Uruguay round.

This is one of the subjects on the Uruguay round GATT MTNS.

However in the negotiating group dealing with it, the U.S. has said it could never contemplate its domestic legislation being amended to secure compliance with GATT obligations and rulings.