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WTO NEWS: 1998 NEWS ITEMS

29 October 1998
Panel established in government procurement dispute, DSB considers 3 new panel requests

The Dispute Settlement Body (DSB), on 21 October, established a panel to examine complaints by the European Communities and Japan that a Massachusetts law had violated provisions of the plurilateral Agreement on Government Procurement. It decided to revert to three new panel requests at its next regular meeting (scheduled for 25 November): the United States' complaint against Mexico's anti-dumping investigation of US high-fructose corn syrup; Canada's complaint against EC's measures affecting asbestos; and Hungary's complaint against the Slovak Republic's import duty on Hungarian wheat. Canada and the EC gave status reports on the implementation of DSB recommendations with respect to the periodicals and the banana cases, respectively.

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US measure affecting government procurement

The EC and Japan reiterated their respective requests for a panel, first made at the previous DSB meeting (22 September), to examine their complaints against a Massachusetts law disallowing the granting of government procurement contracts to companies doing business in or with Myanmar. They claimed this law violated provisions of the Agreement on Government Procurement.

The United States expressed regret over the panel requests in view of what it said was the common interest of the three parties to improve the human rights situation in Myanmar. It cited a recent resolution by the European Parliament for the imposition of economic sanctions on Myanmar, and the recent call by the International Federation of Chemical, Energy, Mine and General Workers Unions on the European Commission to sever trading links with that country. The United States said that it would continue to pursue, with the help of Massachusetts, a mutually acceptable solution with the EC and Japan.

The DSB established a single panel to examine the complaints by the EC and Japan.

Mexico's anti-dumping investigation of HFCS from the US

The United States complained that Mexico's levying of anti-dumping duties last January on high-fructose corn syrup (HFCS) from the United States and the investigation that preceded this action did not meet standards set out in the Anti-Dumping Agreement. It claimed that Mexico's Secretariat of Commerce and Industrial Development, which had conducted the investigation, did not provide adequate information to US exporters thereby failing to give them the full opportunity to defend their interests. The United States said that consultations with Mexico on this matter had not resolved the dispute, hence it was seeking the establishment of a panel to examine its complaint.

Mexico maintained that its anti-dumping investigation conformed with the Anti-Dumping Agreement. It added that it was still studying the US complaint, and thus was not in a position to agree to a panel at that meeting.

HFCS is used primarily as a sweetener, especially in the softdrinks industry.

EC measures affecting asbestos products

Canada said that last May, it had requested consultations with the EC concerning certain measures applied by France prohibiting importation and sale of asbestos and products containing asbestos, and concerning the general asbestos regulations in France. It said these measures severely damaged Canadian trade interests. Canada said that in consultations that took place in July 1998 in Geneva it had tried to convince the EC that the French ban was unjustifiable. It said that there was agreement for the two parties to meet again but that it had not been possible to agree on a mutually acceptable date. As the consultations had failed to produce a solution, Canada was now seeking the establishment of a panel to examine its complaint.

In its formal complaint, Canada claimed that the French measures contravened provisions of the Agreements on Sanitary and Phytosanitary Measures and on Technical Barriers to Trade, and the GATT 1994.

The EC said that at the end of 1996, France banned the use and importation of asbestos and asbestos products, and that subsequently, certain other EC member states had followed suit. It said the reason is that asbestos fibres had been found to be carcinogenic, and that some 2,000 persons in France died each year due to cancer caused by asbestos. The EC said that substitute materials had been developed in place of asbestos, which are safer to human health. It stressed that the French measures were not discriminatory, and were fully justified for public health reasons. The EC said that in the July consultations, it had tried to convince Canada that the measures were justified, and that just as Canada broke off consultations, it was in the process of submitting substantial scientific data in favour of the asbestos ban. The EC said it could not agree to Canada's panel request at this stage.

Slovak Republic's import duty on wheat from Hungary

Hungary complained that the Slovak Republic had imposed additional duties on Hungarian wheat in violation of the most-favoured-nation principle and of its pledged bound rates in its GATT tariff schedule. It said that the action amounted to a de facto prohibition on Hungarian wheat. Hungary said that it had received recently a communication from the Slovak Republic regarding the withdrawal of the measure, but would seek an official confirmation before withdrawing its panel request.

The Slovak Republic said that an upsurge of wheat imports from Hungary had led it to take a safeguard action on this product, pursuant to the Central European Free Trade Agreement. On 13 October, it had decided to withdraw this measure. However, it maintained that the situation with respect to wheat imports from Hungary still existed, hence it was considering possible WTO remedies.

Hungary expressed concern that the Slovak Republic would be invoking the WTO Safeguards Agreement to “legitimize” the measure in question. It said that based on trade statistics, the measure could not be justified under that Agreement. Hungary requested the establishment of a panel to examine its complaint, and called for an accelerated process in view of the seasonal character of the product.

The Slovak Republic said it was not in a position to accept Hungary's panel request.

Status of implementation

Canada presented its sixth report on its implementation of the DSB recommendations on its dispute with the United States on certain measures concerning periodicals. It said that it was in the process of preparing all legislative and administrative measures to comply with the recommendations by 30 October. Canada added that foreign periodicals had been informed about what it said were substantially lower postal rates they would enjoy as from that date. With respect to new legislative proposals, it emphasized that these measures concerned advertising services, and that Canada had not accepted any obligation in this area under the General Agreement on Trade in Services.

The United States criticized a bill introduced in the Canadian parliament on 8 October as protectionist and discriminatory. It said that the bill would forbid foreign magazines from accepting advertisements targeted at Canadian consumers, which it said would leave the discrimination found by the panel and the Appellate Body in place. The United States urged Canada to withdraw this bill, and warned of swift US action should it be enacted into law.

The EC presented its third status report on the implementation of the DSB recommendations on the dispute concerning its regime for the importation, sale and distribution of bananas. It said that the Council of the European Union, after consulting the European Parliament, adopted in July a new regulation that would partially implement the recommendations, to be followed by other regulations that would concluded the implementation process. The EC said that it had undertaken negotiations with banana exporting countries to seek agreement on the allocation of shares in the EC banana tariff rate quotas. It added that to its regret, these negotiations had not resulted in an agreement.

The EC welcomed the US Administration's efforts that had led to the withdrawal of a legislative proposal in the US Congress calling for retaliation in the banana case. However, it expressed serious concern about the US Administration's letter to the US Congress that promised retaliation should the EC implementing measures proved to be WTO-inconsistent and not acceptable to the United States. The EC invited the United States to refrain from taking any unilateral action and recalled that according to the DSU suspension of concessions should be authorized by the DSB.

Ecuador, also speaking on behalf of Guatemala, Honduras, Mexico, Panama and the United States, said that it considered the new EC measures on the distribution of tariff quota shares and import licenses that would be implemented at the beginning of next year to be inconsistent with the GATT and the GATS. It called on the EC to agree to urgent talks that would establish a banana regime consistent with the WTO.

The United States criticized the EC for taking what it said was a unilateral approach to compliance with DSB recommendations. It continued to hope that talks with the EC would result in a WTO-consistent solution, and viewed a US withdrawal of concessions from the EC in this case as a last resort.

Ecuador, Guatemala, Honduras and Panama underlined the importance of banana exports in their respective economies.

Jamaica expressed hope that the new EC banana regime would satisfy the needs of the developing country members of the LomÚ Convention. Cuba said that the small economies in the Caribbean deserved better treatment considering the difficulties they faced.

India said it intended to implement the DSB recommendations concerning its patent protection for pharmaceutical and agricultural chemical products, and that it would be consulting with the EC regarding the reasonable period of time for completing its obligations.

“Other business”

After the conclusion of the regular agenda, the European Communities announced that it had agreed with Brazil that the EC would complete its implementation of the DSB recommendations regarding the poultry dispute by 31 March 1999. Brazil confirmed this agreement.

Hungary said that the Czech Republic, on 9 October, introduced measures on Hungarian wheat identical to those imposed by the Slovak Republic. It said that consultations on these measures began the previous day, and expressed hope that a solution would be found soon.

The Czech Republic said it had exercised a right provided for in a bilateral agreement with Hungary, adding that it saw no linkage between this action and the Slovak measure. It said that there seemed to be good prospects for a resolution of the matter in the ongoing consultations.