3:30 PM Mar 30, 1995

SINGAPORE OVER MALAYSIA'S RESTRICTIONS ON IMPORTS OF TWO PETROLEUM

referred to a panel for adjudication on 10 April, at a special meeting of the Dispute Settlement Body (DSB) of the World Trade Organization (WTO).

At a meeting of the DSB Wednesday, Singapore pressed for the establishment of a panel on the dispute which it raised in the WTO on 10 January, and Malaysia indicated it would have no objection.

The dispute between the two neighbours and members of the Asean, with public exchanges of their trade ministers via the media, has attracted wide attention. But it has also implications in the "new trade order" for all developing countries seeking to engage in down-stream industrialization and seeking to apply "infant industry protection" arguments and the developed countries who are suppliers in these markets with the processed products of imported raw materials.

In the Asean context, Singapore, where a large number of TNCs have for decades set up processing industries using raw materials from the other Asean countries and supplying the Asean markets, finds itself in a situation akin to that of the developed countries visavis its Asean members who are now enticing foreign investors to set up industries - based on local raw materials and labour -- for exports.

The trade dispute, the first one in the WTO since it was launched on 1 January, has become complicated after Malaysia notified the WTO on 30 January this year that it was invoking the provisions of Art. XVIII:C of GATT 1994 to justify the actions.

Singapore at the first meeting of the DSB in February had complained of the procedural defects, affecting Singapore's substantial trade rights, in Malaysia invoking Art XVIII:C. The United States also raised the question whether Malaysia and other such countries are countries with a "low standard of living" and be able to invoke the provision.

Informal consultations on the latter has shown some difference of opinion on a yardstick for 'low standard of living' and classification of countries who could or could not invoke XVIII:C.

When the consultations between Malaysia and Singapore at the WTO (13-14 Feb and 8-9 March) produced no solution within the 60-day time limit of the Dispute Settlement Understanding, Singapore has sought to move to the next stage of dispute settlement -- setting up a panel.

Meanwhile, Malaysia has announced a change, and advised Singapore that it would no longer restrict the imports, but place them under an automatic licensing procedure (which is yet to be notified to the WTO), but turned down a Singapore request for consultations before the 29 March DSB meeting.

Under the WTO/GATT provisions, automatic licensing is permitted, provided any one applying to import can get a license and the scheme does not operate to restrain imports. Countries normally use this procedure to monitor imports (and enable themselves to act in the event of surge of imports endangering local industries and production).

The Singapore envoy, Amb. K.Kesavapani, told the DSB Wednesday that Singapore was still seeking information from Malaysia on whether the GATT-inconsistent import restrictions (against which Singapore had complained) had been terminated, when the new measures will enter into force, and whether they would comply with the WTO/GATT rules on automatic licensing procedures.

Until, the GATT-illegal measures have been actually abolished and full details of the new measures are available, Singapore has to proceed on the assumption that the original measures have not been revoked and get a panel to settle the dispute, Kesavapani said, and wanted the issue to be brought up at the 10 April special meeting that has been convened by Venezuela to get a panel in its dispute with the US over the latter's standards, purportedly for environment protection, for reformulated and conventional gasoline, which applied less favourable regulations on imports.