[Federal Register Volume 64, Number 74 (Monday, April 19, 1999)]
[Notices]
[Pages 19209-19211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9703]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket No. 301-100a]
Implementation of WTO Recommendations Concerning the European
Communities' Regime for the Importation, Sale and Distribution of
Bananas
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of United States suspension of tariff concessions.
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SUMMARY: The United States Trade Representative (USTR) has decided to
suspend the application of tariff concessions and to impose a 100% ad
valorem rate of duty on the articles described in the Annex to this
notice that are the products of certain member States of the European
Communities (EC) as a result of the EC's failure to implement the
recommendations and rulings of the World Trade Organization (WTO)
Dispute Settlement Body (DSB) concerning the EC's regime for the
importation, sale and distribution of bananas (banana regime). This
action constitutes the exercise of U.S. rights under Article 22.6 of
the WTO Understanding on Rules and Procedures Governing the Settlement
of Disputes (DSU) and is taken pursuant to the authority granted to the
USTR under section 301 of the Trade Act of 1974, as amended.
EFFECTIVE DATE: The USTR has determined that, effective April 19, 1999,
a 100% ad valorem rate of duty shall be applied to the articles
described in the Annex to this notice that are the products of Austria,
Belgium, Finland, France, the Federal Republic of Germany, Greece,
Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, or the United
Kingdom and that are entered, or withdrawn from warehouse, for
consumption on or after March 3, 1999. Any merchandise subject to this
determination that is admitted to U.S. foreign-trade zones on or after
April 19, 1999 must be admitted as ``privileged foreign status'' as
defined in 19 CFR 146.41.
ADDRESSES: 600 17th Street, NW, Washington, DC 20508.
FOR FURTHER INFORMATION CONTACT: Sybia Harrison, Staff Assistant to the
Section 301 Committee, (202) 395-3419, for questions concerning
documents and USTR procedures; William Busis, Associate General
Counsel, (202) 395-3150 or Ralph Ives, Deputy Assistant U.S. Trade
Representative, (202) 395-3320, for questions concerning WTO
developments regarding the banana regime; John Valentine, Acting
Director, International Agreements Staff, U.S. Customs Service, (202)
927-1219, for questions concerning classification; and Yvonne Tomenga,
Program Officer, Office of Trade Compliance, U.S. Customs Service,
(202) 927-0133, for questions concerning entries.
SUPPLEMENTARY INFORMATION: On September 27, 1995, the Office of the
U.S. Trade Representative initiated an investigation pursuant to
section 302(b)(1) of the Trade Act with respect to the EC banana regime
and, in accordance with section 303(a) of the Trade Act, promptly
requested consultations with the EC pursuant to the DSU and relevant
provisions of several WTO agreements. [60 FR 52026]. The EC regime was
designed, among other things, to take away a major part of the banana
distribution business of U.S. companies. Subsequently the United
States, Ecuador, Guatemala, Honduras, and Mexico jointly requested the
establishment of a WTO dispute settlement panel to examine the regime.
Both the panel and the WTO Appellate Body found the EC banana regime in
violation of the General Agreement on Tariffs and Trade 1994 (GATT) and
the General Agreement on Trade in Services (GATS). On September 25,
1997, the DSB adopted the report of the panel, as modified by the
Appellate Body. The resulting DSB recommendations and rulings include,
inter alia, the recommendation that the EC bring the measures found to
be inconsistent with the GATT and the GATS into conformity with its
obligations under those agreements. A WTO-appointed arbitrator
subsequently determined that the ``reasonable period of time'' for the
EC to implement the DSB recommendations and rulings would expire by
January 1, 1999.
Based on the results of the WTO dispute settlement proceedings, the
USTR on February 10, 1998, determined pursuant to section 304 of the
Trade Act that the EC banana regime violates trade agreements. [63 FR
8248]. The USTR further determined that the EC's undertaking to
implement all of the recommendations and rulings of the WTO reports by
January 1, 1999 constituted for the purposes of section 301(a)(2)(B)(i)
the taking of satisfactory measures to grant the rights of the United
States under the those trade agreements. Therefore, pursuant to section
301(a)(2), the USTR terminated the investigation without taking action
under section 301 of the Trade Act. The USTR stated in the termination
notice that it would monitor the EC's implementation of the DSB
recommendations and rulings under section 306 of the Trade Act.
On January 1, 1999, modifications to the EC banana regime became
effective (EC Regulations 1637/98 and 2362/98), and the EC claimed that
these modifications brought its banana regime into conformity with its
WTO obligations. However, these regulations perpetuate discriminatory
aspects of the EC banana regime that were identified in the DSB's
recommendations and rulings as inconsistent with WTO agreements.
Therefore, on January 14, 1999, in accordance with U.S. rights under
Article 22 of the DSU, the United States requested authorization from
the DSB to suspend the application to the EC, and member States
thereof, of tariff concessions and related obligations under the GATT
covering trade in an amount of US $520 million. [www.ustr.org, Press
Release 99-01]. On January 29, the EC objected to the level of
suspension proposed by the United States and the matter was referred to
arbitration pursuant to Article 22.6 of the DSU. Under DSU procedures,
the arbitration should have been completed by March 2, 1999. However,
on March 2 the arbitrators issued only an initial decision and
requested further information from the parties. On March 3, USTR
announced that the U.S. Customs Service would begin withholding
liquidation and reviewing the sufficiency of bonds on imports of
selected European products. The purpose of this announcement was to
ensure that, upon issuance of the arbitrators' final decision, the
United States would be in the same position to take action as it would
have been had the arbitrators issued their decision by the March 2
deadline.
On April 6, the arbitrators issued their final decision determining
that the level of nullification or impairment suffered by the United
States as a result of the EC's WTO-inconsistent banana regime is $191.4
million per year and that the United States is entitled to suspend the
application to the European Communities and its member States of tariff
concessions and related obligations under the GATT covering trade up to
that amount. A meeting of the DSB was then scheduled for April 19,
1999, at which the DSB, pursuant to Article 22.7 of the DSU, shall
grant
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authorization for such suspension of concessions.
Prior Notice and Comment
On October 22, 1998, the USTR announced preparations for exercising
its right to request authorization to suspend tariff concessions on
European products if the EC failed to implement the DSB's
recommendations and rulings concerning the banana regime by January 1,
1999. [63 FR 56687]. On November 10, the USTR sought public comment on
a preliminary list of European products on which the United States was
considering suspending tariff concessions. [63 FR 63099]. On December
9, USTR conducted a public hearing to receive testimony on the
preliminary list. On December 21, the USTR announced a revised list of
European products for which the United States intended to request
authorization from the DSB to suspend tariff concessions.
[www.ustr.org, Press Release 98-113]. On December 29, the USTR sought
public comment on the possible addition of two products to the list.
[63 FR 71665; www.ustr.org, Press Release 99-01].
Both the November 10 and December 21 Federal Register notices
explained that the proposed imposition of a 100% ad valorem rate of
duty would take effect on February 1, 1999, unless the EC requested
arbitration on the proposed suspension of tariff concessions, in which
case the proposed rate of duty would take effect on March 3. [63 FR at
63099; 63 FR at 7166].
Determination and Action
As a result of the EC's failure to implement the recommendations
and rulings of the DSB concerning the EC's banana regime and following
the WTO arbitrators' decisions of March 2 and April 6, the USTR has
decided to suspend tariff concessions and related obligations under the
General Agreement on Tariffs and Trade 1994 and to impose a 100% ad
valorem rate of duty on the articles described in the Annex to this
notice that are the products of certain EC member States. This action
exercises the rights of the United States under Article 22 of the DSU
and is taken pursuant to the authority granted to the USTR under
section 301 of the Trade Act. The articles affected by this
determination were selected in light of the comments submitted to the
Section 301 Committee in response to the October 22, November 10, and
December 23 notices, and the testimony presented at the public hearing
held on December 9, 1998.
Accordingly, effective April 19, 1999, with respect to articles
that are the products of Austria, Belgium, Finland, France, the Federal
Republic of Germany, Greece, Ireland, Italy, Luxembourg, Portugal,
Spain, Sweden, or the United Kingdom and that are entered, or withdrawn
from warehouse, for consumption on or after March 3, 1999, the
Harmonized Tariff Schedule of the United States (HTS) is hereby
modified by inserting the provisions listed in the Annex to this notice
in numerical sequence in subchapter III of chapter 99, with the content
of the new subheadings and superior text set forth in the HTS columns
designated ``Heading/Subheading,'' ``Article Description,'' and ``Rate
of Duty General,'' respectively. Any merchandise subject to this
determination that is admitted to U.S. foreign-trade zones on or after
April 19, 1999 must be admitted as ``privileged foreign status'' as
defined in 19 CFR 146.41. The amount of trade affected by this action,
as measured by 1998 import values, is equivalent to the level of
nullification or impairment determined by the WTO arbitrators in their
decision of April 6, 1999.
Joanna K. McIntosh,
Chairman, Section 301 Committee.
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[FR Doc. 99-9703 Filed 4-16-99; 8:45 am]
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