From iatp@igc.apc.org Fri Jul 12 18:53:32 1996 Date: Fri, 12 Jul 1996 14:43:35 -0700 (PDT) From: IATP To: Recipients of conference Subject: TRADE NEWS 7-12-96 TRADE NEWS Produced by the Institute for Agriculture and Trade Policy July 12, 1996 Volume 5, Number 12 _________________________________________ Headlines: - U.S. TO COMPLY WITH WTO RULING ON GAS - CAIRNS GROUP CALLS FOR AG TRADE TALKS - U.S. BLOCKS EU CALL FOR BEEF PANEL - EU SEEKS PASTA PANEL - MEXICO, U.S. DISAGREE ON TOMATOES - U.S. FILES BANANA COMPLAINT - U.S., EU DISAGREE ON WHEAT GLUTEN _________________________________________ WTO NEW SUMMARY _________________________________________ U.S. TO COMPLY WITH WTO RULING ON GAS Last month, the United States said it would comply with a ruling by a World Trade Organization (WTO) dispute settlement panel which found U.S. gasoline standards for imports from Venezuela and Brazil violated international trade rules. The announcement, which had been widely expected in a case seen by some envoys as a test of Washington's commitment to WTO rules, was made by U.S. ambassador Booth Gardner. U.S. trade officials said discussions will now be held with Venezuela -- which initiated the complaint to the WTO in January 1995 -- and with Brazil on the timing of the change. Venezuelan trade diplomats said they were pleased that the United States had agreed to accept the WTO ruling, but would have liked more precision on the timing for the change. "U.S. to Conform with WTO Ruling on Gasoline Imports," ENVIRONMENTAL NEWS NETWORK, June 19, 1996. CAIRNS GROUP CALLS FOR AG TRADE TALKS Last month, the trade ministers of fourteen major agricultural exporting nations called on members of the World Trade Organization (WTO) to set up a work program to prepare for the next round of negotiations on agricultural trade liberalization when they meet in Singapore in December 1996 for the WTO's first ministerial. The program would study agricultural trade liberalization issues in order to prepare the way for the next round of negotiations, which must begin in 1999 in accordance with the Uruguay Round Agreement on Agriculture. The Cairns Group proposed that the program "cover all the key areas that are expected to be the focus of further negotiations on agriculture -- including, in particular, issues relating to domestic support, market access and export subsidies -- so that further negotiations when resumed can be completed speedily and successfully." The Cairns proposal immediately drew a critical response from the European Union (EU), Japan, and Switzerland. These countries emphasized that Article 20 of the Uruguay Round Agreement on Agriculture states only that further negotiations should start one year before the end of the implementation period in 1999, not that any preparatory work should be undertaken. The Cairns Group responded that the same could be said about investment and competition policy, two areas which the EU has argued should be addressed by ministers in Singapore. The Cairns Group, which was established in 1986 to push for liberalization of world agricultural trade, is chaired by Australia. Members include Argentina, Brazil, Canada, Chile, Colombia, Fiji, Hungary, Indonesia, Malaysia, New Zealand, the Philippines, Thailand and Uruguay. "Cairns Ministers Call for WTO Group to Prepare New Ag Trade Talks," INSIDE U.S. TRADE, June 21, 1996. U.S. BLOCKS EU CALL FOR BEEF PANEL On July 5, the United States blocked a European Union (EU) request for a World Trade Organization (WTO) dispute settlement panel to rule on sanctions Washington placed on EU imports in the wake of an EU ban on U.S. hormone-treated beef. U.S. ambassador Booth Gardner told the WTO's Dispute Settlement Body that it would be "premature" for the organization to set up a panel to rule on whether the U.S. sanctions were fair, since the WTO had not yet ruled on the legality of the EU beef ban. In 1985, the EU banned the import of beef treated with growth-enhancing hormones, citing health and consumer protection concerns. The United States, which says the EU's beef ban has cost its livestock industry about $100 million annually, responded by increasing import charges on processed tomatoes, low-alcohol beverages and other products from the EU in 1988. "U.S. Blocks EU Request for WTO Panel," JOURNAL OF COMMERCE, July 8, 1996. EU SEEKS PASTA PANEL On July 5, the European Union (EU) called on the World Trade Organization (WTO) to settle an eight-year dispute with the United States over pasta exports. The United States unilaterally imposed restrictions on imports of EU pasta, tomato paste and citrus fruit back in 1988 in retaliation for an EU ban on American hormone-treated beef. The European Union contends the restrictions are costing it $90 million a year in lost sales to the United States. At a meeting of the WTO's Dispute Settlement Body, the EU requested that a panel be set up to rule on the matter. While U.S. ambassador Booth Gardner blocked the establishment of the panel, the EU is expected to repeat its panel request at the next meeting of the Dispute Settlement Body. According to WTO rules, a three-member panel is automatically established after a second request by a member nation. It then has six months to give its ruling. "Europe Seeks to Settle Pasta Rift with U.S.," NEW YORK TIMES, July 6, 1996. MEXICO, U.S. DISAGREE ON TOMATOES On July 1, Mexico initiated a potential challenge at the World Trade Organization (WTO) against a pending U.S. Department of Commerce dumping probe against its tomato exports. In its brief, Mexico said that the Department of Commerce chose a period of investigation designed to find dumping. According to Mexico, the period selected by Commerce was "gerrymandered" so as to stretch across two growing seasons in order to select the portions of those two seasons "when prices were lowest and to exclude the portions of those seasons when the prices were higher." Mexico is seeking to consult with the United States under the WTO's Understanding on Rules and Procedures governing the settlement of disputes. This section of the WTO charter allows WTO members, in cases involving perishable goods, to enter into consultations within 10 days after the date of receipt of the request. If no solution is found, the complaining party can request a formal dispute settlement panel as early as 20 days after the receipt of the request. "Mexico Seeks WTO Consultations on U.S. Tomato Dumping Case," INSIDE U.S. TRADE, July 5, 1996. U.S. FILES BANANA COMPLAINT On July 9, the United States submitted a complaint to a World Trade Organization (WTO) dispute settlement panel that will decide whether the European Union's (EU) banana import regime violates international trade rules. The EU has until July 30 to table its rebuttal. The first formal meeting of the panel is scheduled for early September. The EU's banana import regime favors Europe's traditional suppliers in the African, Caribbean and Pacific group (Caricom), with which the EU has a trade treaty, and imposes quotas on imports of bananas from Latin American countries. U.S. banana companies operating in Latin America claim that the EU regime is discriminatory. The U.S. decision to file a complaint with the WTO has been supported by Mexico, Honduras and Guatemala. For their part, Caricom nations claim that the dismantling of the EU regime and an opening of the EU market would destroy their banana industry because they would be unable to compete with cheaper Latin American fruit. Canute James, "Caribbean Growers Seek Truce in Banana Battle," FINANCIAL TIMES, July 2, 1996. _________________________________________ REGIONAL AGREEMENTS/BILATERAL RELATIONS _________________________________________ U.S., EU DISAGREE ON WHEAT GLUTEN The United States and the European Union (EU) are mired in a dispute on how to deal with increasing EU exports of wheat gluten to the U.S. market. The U.S. charges that the EU share of the U.S. wheat gluten market expanded enough in 1995 to trigger formal consultations aimed at curbing EU exports. The EU is disputing the charge. Under a bilateral agreement, formal consultations are required if the EU exceeds its average market share from 1990 to 1992, which the United States calculates at 17 percent. U.S. data show an EU market share of about 23.5 percent in 1995. EU officials acknowledge that EU shipments have increased, but claim that because the U.S. market has grown, the EU's percentage of the market has not changed. As a result, the EU rejects U.S. statements that the two sides are in formal consultations and insists that the trading powers are merely holding "discussions." The next meeting in the wheat gluten dispute is scheduled to take place on July 22. "U.S., EU Mired In Dispute Over Expanding Wheat Gluten Exports," INSIDE U.S. TRADE, July 5, 1996. __________________________________________ Trade News is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Orin Kirshner. E-mail versions of Trade News are available free of charge for Econet/IATP Net subscribers. 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