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VI. TRADE DISPUTES AND CONSULTATIONS
(1) Dispute Settlement under theGeneral Agreement
1. Between January 1993andMarch 1995, theEUwasinvolved inseven dispute settlement cases
under Article XXIII:2 oftheGeneral Agreement (Table VI.1). Four cases related tothepolicies of
theEUoritsmember States, concerning bananas (twocases), apples andsubsidies tooilseed producers.
Thethree cases initiated bytheEUconcerned actions bytheUnited States related torestrictions on
tunaimports, taxes onautomobiles, andtheuseofimported tobacco. EUpolicies were indirectly
involved inadispute between India andPoland about Poland 'sdutyexemptions forautomobiles
originating intheEU.1
2. Infiveinstances, EUpolicies prompted trading partners torequest consultations (bovine semen,
scallops, lemons, canned tunaandpelts). Conversely, theEUrequested consultations withJapan
concerning measures affecting telecommunications equipment, andChile regarding taxes ondistilled
spirits.
(i) Disputes concerning EUpolicies
(a) Panel cases
3. ThebananaimportrégimesofindividualECmemberStateswereexaminedbyapanelestablished
inFebruary 1993ontherequest ofColombia, Costa Rica, Guatemala, Nicaragua andVenezuela after
consultations andtheuseoftheGATT Director-General 'sgood offices hadproved unsuccessful.2
ThePanel concluded thatthequantitative restrictions maintained byFrance, Italy, Portugal, Spain and
theUnitedKingdomonimportsofbananaswereinconsistentwithArticleXI:1(eliminationofquantitative
restrictions) andnotjustified byArticle XI:2(c)(i) (government restrictions onmarketing ofdomestic
products), Article XXIV (free-trade areas), orgrandfather clauses inthemember States 'protocols of
accession toGATT. ThePanel further concluded thatthetariff preference accorded bytheEUto
imports ofbananas originating inACP countries wasinconsistent withArticle I(m.f.n. treatment)
andthatalegal justification could notemerge from anapplication ofArticle XXIV, butonlyfrom
anaction (waiver) oftheCONTRACTING PARTIES under Article XXV.3
1InMay1993, India requested consultations withPoland under Article XXII:1 concerning Poland 'sduty
exemptions forautomobiles originating intheEC.India questioned asdiscriminatory increases inPoland 'sm.f.n.
tariffs onautomobiles justbefore theentry intoforce ofaduty-free quota forEUproducts. Astheconsultations
were unsatisfactory, apanel wasestablished inNovember 1994 atIndia'srequest. TheEUreserved itsright
toparticipate inthepanel deliberations.
2SeeWTO (1995b) forfurther details.
3GATT Focus, June 1994.European Union WT/TPR/S/3
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Table VI.1
Cases under Article XXII andXXIII oftheGeneral Agreement, January 1993-March 1995
Description ofcase Raised
by/againstActions taken
Panel cases
Subsidies tooilseed producers and
processorUS/EU Renegotiation ofconcessions (Feb-Jun/93).
EUimport régime forbananas Colombia, Costa
Rica, Guatemala,
Nicaragua and
Venezuela/
EUIndividual import régimes:
report totheCouncil bytheDirector-General (Feb/93),
request forapanel (Feb/93),
report ofthePanel (Jun/93, notyetadopted).
---------------------------------------------------------------------------
ECCommon Organization oftheMarket inBananas:
request forconsultations (Feb/93),
request forapanel (Apr/93),
report ofthePanel (Feb/94, remains unadopted),
withdrawal from thedispute ofsome complainants
(Feb-Mar/94).
EUrestrictions onimports ofapples Chile/EU Request forconsultations (Mar/93),
request forapanel (Jul/93),
settlement reached (Jun/94).
U.S. restrictions onimports oftuna EU/United States Report ofthePanel
(Jun/94, notyetadopted).
U.S. Taxes onautomobiles EU/United States Request forapanel (Mar/93),
report ofthePanel (Oct/94, notyetadopted).
U.S. legislation concerning theuseof
imported tobaccoEUandnine
others/
United StatesRequest forconsultations (Sep/93),
report ofthePanel (Aug/94),
report adopted (Oct/94).
Consultation stage
Italian regulations affecting thesaleof
imported bovine semenCanada/EU Request forconsultations (Jul/93).
French regulations concerning trade
description ofscallopsCanada/EU Request forconsultations (Aug/93).
EUcountervailing charges onlemons Argentina/EU Request forconsultations (Aug/93)
EUrestrictions onimports ofcanned tuna
andsardinesThailand/EU Request forconsultations byThailand (Feb94),
request joined bytheUnited States andPhilippines
(Mar,Apr/94),
conclusion ofconsultations (Jul/94).
EUprohibition onimports ofpeltand
manufactured goods ofwildanimalsCanada/EU Request forconsultations (Mar/94).
Japan 'smeasures affecting imports of
certain telecommunications equipmentEU/Japan Request forconsultations (Oct/94),
Finland andSweden participate intheconsultations (Dec/94).
Chile'staxes ondistilled spirits EU/Chile Request forconsultations (Nov/94).
Source: WTO Secretariat.
4. ThePanel recommended thattheimport restrictions bebrought intoconformity withtheEU's
obligations under theGeneral Agreement. Thesame should apply tothetariff preferences forACP
countries unless authorization wasgiven bytheCONTRACTING PARTIES tomaintain thescheme.
Thereport wasconsidered atvarious Council meetings, starting inAugust 1993, buthasnotyetbeen
adopted.4
4InDecember 1994, theCONTRACTING PARTIES granted thewaiver requested bytheEUandACP
parties tothedispute concerning theprovisions ofArticle I:1(m.f.n. treatment) forthepreferential treatment
theEUoffered toACP products. Thisfollowed thefailure ofaworking party toreach aconsensus ontheGATT
(continued...)WT/TPR/S/3 Trade Policy Review
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5. TheECimport régime forbananas introduced inJuly1993, wasexamined byanewpanel
established inJune1993ontherequest ofColombia, Costa Rica, Guatemala, Nicaragua andVenezuela.
ThePanelconcludedthat,interalia,thespecificdutiesleviedonEUimportsofbananaswereinconsistent
withArticle II(tariff reductions), thepreferential tariff ratesonbananas accorded toACP countries
were inconsistent withArticle I(m.f.n. treatment) andcould notbejustified under Articles XXIV
(free-trade areas) orXX(general exemptions). Theallocation ofimport licences under thetariffquota
wasfound inconsistent withArticles III(national treatment) andIandcould notbejustified by
Articles XXIV orXX. ThePanel thusrecommended thattheECbring itstariffs andtheallocation
oftariff quota licences intoconformity withitsGATT obligations.5
6. InFebruary 1994, Colombia andVenezuela notified theirintention toaccept anamended offer
onbananas contained intheCommunities 'Uruguay Round Schedule andtowithdraw theircomplaints.
InMarch 1994, theECconcluded aFramework Agreement onBananas withfourcomplainants, which
included preferential tariff quotas.
7. InMarch 1993, Chile requested consultations under Article XXII:1 concerning ECrestrictions
onimports ofapples. Theissue revolved around special surveillance ofapple imports introduced by
theEUinFebruary 1993. InJune1993, Chile requested consultations under Article XXIII:1 toaddress
ECregulations introducing acountervailing charge onChilean apples. AttheGATT Council meeting
inJuly1993, theEUindicated thattheconclusion oftheUruguay Round would resolve theproblem
andstressed theimportance ofreaching anegotiated solution. Although apanel wasestablished in
September 1993, further negotiations resulted inthesuspension ofthePanel proceedings. InJune1994,
thePanel wasinformed thatChile andtheEUhadreached amutually satisfactory settlement.
8. TheEC-United States oilseeds dispute, examined ina1992Panel Report, wassettled bilaterally
in1993 under the"Blair House Agreement" (Chapter V(1)(i)).
(b) Consultations
9. InJuly1993, Canada requested consultations under Article XXIII:1 onregulations affecting
thesaleofbovine semen inItalythatwereconsider todisadvantage imported semen. AttheGATT
Council meeting inOctober 1993, theEUreferred todraftlegislation establishing auniform import
regime forbovine semen which would solve theissue. Consultations ensued and,following further
Canadian complaints, theEUindicated inNovember 1994 itswillingness toraisethematter withthe
Italian authorities.
10. InAugust 1993, Canada requested consultations withtheEUunder Article XXII:1 concerning
Frenchregulationsonthedescriptionofscallopsthatrestrictedtheuseofthedescription"noixdecoquille
Saint-Jacques ".
11. ECcountervailingchargesonlemonswerethesubjectofconsultationsrequestedinAugust1993
byArgentinaunderArticleXXII:1,followedbyarequestforArticleXXIII:1consultationsunderurgency
procedures. InOctober 1994, Argentina informed theCouncil thataconstructive consultation process
wasunder way.
4(...continued)
consistencyorotherwiseofthefourthACP-EECConventionofLomé.ThewaiverwillexpirewiththeConvention
inFebruary 2000.
5GATT Focus, June 1994.European Union WT/TPR/S/3
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12. InFebruary 1994, Thailand requested consultations under Article XXII:1 concerning theEC
quota régime onimports ofcanned tunaandsardines. TheUnited States andPhilippines subsequently
requested theright toparticipate intheconsultations; having haditsrequest turned down, the
United States sought consultations under Article XXIII:1 inApril 1994. InJuly1994, theEU,
Philippines andThailand informed theCONTRACTING PARTIES ofasatisfactory conclusion. The
quota system inquestion isduetobeterminated on31December 1996.
13. InMarch 1994, Canada requested bilateral consultations withtheEUunder Article XXII:1
withrespect toprohibitions onimports ofpeltsandmanufactured goods ofwildanimals. Canada was
concerned about newinterpretations ofEUregulations, which appeared tobarCanadian exports of
those products.
(ii) Initiatives bytheEU
(a) Panel cases
14. Work resumed inFebruary 1993onapanel requested bytheECandtheNetherlands (onbehalf
oftheNetherlands Antilles) toexamine theU.S.restrictions onimports oftuna. ThePanel concluded
thattheUnited States import prohibitions ontunaandtunaproducts under theU.S.Marine Mammal
Protection Actdidnotmeettherequirements oftheNoteadArticle III(national treatment), contravened
Article XI:1(elimination ofquantitative restrictions), andwerenotcovered byanyoftheexceptions
listed inArticle XX(general exemptions). Discussions onthereport were heldatseveral Council
meetings in1994, butthePanel Report hasnotyetbeenadopted.
15. InMarch 1993, theEUrequested theestablishment ofapanel toexamine U.S. taxes on
automobiles,inparticular"gas-guzzler"andluxurytaxesandCorporateAverageFuelEfficiency(CAFE)
payments. Apanel established inMay1993examined, among other things, whether theincidence of
those schemes onimported cars,inparticular carsimported fromtheEU,wascontrary totheprinciple
ofnational treatment. ThePanel concluded thattheluxury taxandthegas-guzzler taxonautomobiles
werenotinconsistent withArticle III(national treatment) butthattheCAFE regulation wasinconsistent
withArticle IIIandcould notbejustified under Article XX(general exemptions). Adoption bythe
GATT Council isstillpending.
16. U.S.legislation concerning theuseofimported tobacco wasaddressed inconsultations under
Article XXIII:1 requested inSeptember 1993 bytheEUandother Council members. Atissue were
minimum national requirements forU.S.manufacturers andfeesimposed oncertain tobacco imports.
Astheconsultations remained inconclusive, apanel wasestablished inJanuary 1994. Itfound that
various aspects oftheU.S. legislation were inconsistent withnational treatment obligations under
Article IIIoftheGATT. TheCouncil adopted thePanel Report inOctober 1994. TheUnited States
undertook tomodify itsconcessions ontobacco under Article XXVIII.
(b) Consultations
17. InOctober 1994, theEUrequested consultations under Article XXII:1 withrespect toJapan's
measuresaffectingimportsofcertaintelecommunicationsequipment,inparticulartheagreementreached
between theUnited States andJapan inMarch 1994(theIDO-Monitoring Agreement). InNovember
1994, theEUrequested consultations under Article XXII:1 withrespect toChile'staxes ondistilled
spirits, which itconsidered tocontain discriminatory elements.WT/TPR/S/3 Trade Policy Review
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(2) Issues Raised under Tokyo Round Agreements
18. Between January 1993andMarch 1995, theEUparticipated inseveral consultations andeight
cases involving panels andrequests forconciliation under theTokyo Round Agreements. Ofthese,
fiveconcerned theSubsidies Code andthree theAnti-Dumping Code.
(i) Subsidies code
19. TheEUraised twocases leading topanel reports, concerning Brazil 'scountervailing duties
onmilkpowder andonU.S.countervailing duties onsteelproducts. Consultations were heldwith
Australia (onglacé cherries) andwiththeUnited States (onsteelproducts), while theUnited States
requested conciliation regarding ECsubsidies tothyristors. TheEUalsoheldconsultations under the
Subsidies Code onanumber ofcountervailing cases initiated bythirdcountries against EUproducts
(Table VI.2).
Table VI.2
Agreement onInterpretation andApplication ofArticles VI,XVIandXXIII oftheGeneral Agreement
(Subsidies Code), January 1993-March 1995
Description ofcase Raised
by/againstActions taken since 1993
Cases leading toconciliation orpanels
Provisional anddefinitive countervailing duties on
milkpowder andcertain types ofmilkEU/Brazil Request forapanel (Dec/92),
report ofthePanel (Jan/94),
report adopted (Apr/94).
Definitive andpreliminary affirmative
countervailing dutydeterminations concerning
certain steelproductsEU/United States Lead andbismuth carbon steelproducts:
request forconsultations (Feb/93),
request forconciliation (Apr/93),
request forapanel (Jun/93),
report ofthePanel (Nov/94).
---------------------------------------------------------------
Carbon steelandcorrosion-resistant steelproducts:
request forconsultations (Jul/93),
request forconciliation (Oct, Nov/93),
request forapanel (Apr/94).
Countervailing duties onimports ofglacé cherries
from France andItalyEU/Australia Panel established (Nov/92),
proceedings suspended (Jun/93),
complaint withdrawn (Oct/93).
Subsidies usedinconnection withtheproduction of
thyristorsUnited States/EU Request forconsultations (Apr/93),
request forconciliation (Oct/93).
Consultations
Olive oilfrom theEU EU/Argentina Consultations (January 1994).
Wheat from Germany EU/Brazil Consultations (July 1994).
Canned tomatoes from Italy EU/Australia Consultations (July 1994 andFebruary 1995).
Bulkbrandy from France EU/Australia Consultations (September 1994).
Wheat from Germany andDenmark EU/Bolivia Consultations (November 1994).
Beeffrom theEU EU/Mexico Consultations (September 1994 andJanuary 1995).
Sugar from theEU EU/Canada Consultations (March 1995).
Source: WTO Secretariat.European Union WT/TPR/S/3
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20. Brazil 'sprovisional anddefinitive countervailing duties onmilkpowder andcertain types of
milkwereexamined byapanel setupinJanuary 1993. ThePanel concluded thatBrazil 'simposition
ofduties wasinconsistent withtheCode andrecommended thatBrazil berequested tobring itsmeasures
intoconformity withitsobligations under theAgreement; thereport wasadopted inApril 1994.
21. InFebruary 1993, theEUrequested consultations withtheUnited States concerning U.S.
definitiveandpreliminaryaffirmativecountervailingdutydeterminationsconcerningseveralsteelproducts
originating inseveral EUmember States.6After consultations andconciliation failed toproduce a
mutually acceptable solution, apanel wasestablished inJune1993 attherequest oftheEUtodeal
withthedefinitive determinations intheleadandbismuth carbon steelcase. ThePanel concluded
thattheUnited States hadinvarious aspects acted inconsistently withtheCode andrecommended that
theCommittee request theUnited States tobring themeasures intoconformity withtheAgreement.
Thereport hasnotyetbeenadopted.
22. InJuly1993theEUrequested consultations, andinOctober andNovember 1993itasked for
conciliation withtheUnited States toobtain detailed information concerning countervailing duties on
certain steelproducts. AtissueweretheU.S.definitive countervailing dutydetermination oncertain
steelproducts andmaterial injury findings regarding several ofthese products.7Asconsultations and
conciliation didnotproduce asolution, theEUrequested theestablishment ofapanel inApril 1994.
ThePanel proceedings were suspended inearly 1995.
23. InJune1993, theEUrequested thatthePanel examining Australia 'scountervailing duties on
importsofglacécherriesfromFranceandItaly,establishedinNovember1992,suspenditsproceedings.8
InOctober 1993, theEUwithdrew itscomplaint.
24. ECsubsidies related totheproduction ofthyristors werethesubject ofconsultations requested
inApril 1993 bytheUnited States, arguing thatsubsidies provided toSGS-Thompson inconnection
withtheproduction ofthyristors werecausing injury totheU.S.industry. Asnomutually satisfactory
solution wasachieved, theUnited States requested inOctober 1993 conciliation under PartVIofthe
Code. Nofurther action hasfollowed.
(ii) Anti-dumping code
25. Since January 1993, EUanti-dumping actions haveledtotheestablishment oftwopanels,
concerning audio tapes from Japan andcotton yarnfrom Brazil, while EUrefunds ofanti-dumping
6Thedefinitive affirmative determinations were against exports from France, Germany andtheUnited
Kingdomandconcernedcertainhot-rolledleadandbismuthcarbonsteelproducts;thepreliminarydeterminations
affected supplies from Belgium, France, Germany, Italy, Spain andtheUnited Kingdom andconcerned certain
cut-to-length carbon steelplate products, certain hot-rolled carbon steelflatproducts, certain cold-rolled carbon
steel flatproducts, andcertain corrosion-resistant carbon steel flatproducts.
7Countervailing dutydeterminations were made against producers inBelgium, France, Germany, Italy,
Spain andtheUnited Kingdom concerning certain cut-to-length carbon steelplate products, certain hot-rolled
carbon steelflatproducts, certain cold-rolled carbon steel flatproducts andcertain corrosion-resistant carbon
steelflatproducts. TheECrequested thatconsultations ontheInternational Trade Commission (ITC) findings
ofmaterial injury were considered asconsultations under theSubsidies andAnti-Dumping Codes, astheITC
made onecombined injury determination forboththedumping andthesubsidy cases.
8GATT (1993), Chapter VI(2)(i).WT/TPR/S/3 Trade Policy Review
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duties havebeenaddressed inconsultations withSingapore under Article 15:2oftheCode (Table VI.3).
TheEUraised fourcases inconsultations: twowiththeUnited States, oneconcerning steelandthe
other photographic paper, onewithCanada regarding steelproducts andonewithBrazil inrelation
topeaches.
Table VI.3
Agreement onImplementation ofArticle VIoftheGeneral Agreement
(Anti-Dumping Code), January 1993-March 1995
Description ofcase Raised by/against Actions taken since 1993
Audio tapes incassettes from Japan Japan/EU Clarifications toestablish Panel (Apr/93).
Steel plate andflatproducts from EUmember
StatesEU/United States Request forconsultations (Mar/93),
request forconciliation (Oct/93).
Cotton yarnfrom Brazil Brazil/EU Request forconsultations (Sep/93),
conciliation meeting (Dec/93),
request forapanel (Apr/94).
Various steelproducts from EUmember States EU/Canada Request forconsultations (Oct, Nov/93).
Refund ofanti-dumping duties collected onball
bearingsSingapore/EU Request forconsultations (Jan/94).
Peaches originating inGreece EU/Brazil Request forconsultations (Feb/94).
Photographic paper from theNetherlands EU/United States Request forconsultations (Jun/94).
Source: WTO Secretariat.
(a) Disputes concerning EUpolicies
26. TheCommittee onAnti-Dumping Practices approved inSeptember 1993theterms ofreference
forapanel toexamine ECanti-dumping duties onaudio tapes andcassettes fromJapan. Thedispute
related totheimposition ofdefinitive anti-dumping duties onJapanese andKorean exports ofthese
products inMay1991. While thePanel wasestablished inOctober 1992, EUreservations about its
mandate required further bilateral consultations, which resulted in"clarifications" transmitted tothe
Panel'sChairman inApril 1993. Various contracting parties expressed concern about thenature of
these clarifications andthetimetaken toagree ontheterms ofreference. Atthetimeofwriting, the
Panel Report wasunder preparation.
27. ECanti-dumpingdutiesagainstcottonyarnfromBrazilwereaddressedinconsultationsrequested
byBrazil inSeptember 1993. Atissue wasthewaytheEUhadarrived atdumping andinjury
determinations anditsapparent failure totakeaccount ofBrazil 'sstatus asadeveloping country.
Consultations wereheldinOctober 1993, followed byconciliation, butnomutually satisfactory solution
wasreached.9Apanel requested byBrazil wasestablished inApril 1994, andwascontinuing itswork
in1995.
28. ECrefunds ofanti-dumping duties collected onballbearings fromSingapore werethesubject
ofconsultations requested bySingapore inJanuary 1994 They concerned theEU'spartial rejection
ofapplications fordutyrefunds. Nonewdevelopments hadoccurred asofMarch 1995.
9TheEUreviewed theregulation used toimposed theduties, butinBrazil 'sopinion thisdidnotsolve
theproblem.European Union WT/TPR/S/3
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(b) Initiatives bytheEU
29. InMarch 1993, theEUrequested consultations withtheUnited States onU.S.anti-dumping
determinations concerning carbon steelproducts fromseveral ECmember States, followed byarequest
forconsultations toobtain detailed information onacase-by-case basis.10InOctober 1993, theEU
requested conciliation under Article 15:3oftheCode, raising questions inrelation totheinformation
andmethods usedintheU.S. enquiry. TheGATT Committee onAnti-Dumping Practices held
conciliation meetings inOctober andNovember 1993.11
30. TheEUmadetworequestsforconsultationsin1993inrelationtoCanada'santi-dumpingactions
concerning steelproducts. Arequest made inOctober concerned definitive dumping andinjury
determination affecting exports fromvarious EUmember States;12andarequest inNovember 1993
wasintended toobtain information ontheinitiation ofananti-dumping investigation ofimports from,
interalia,ItalyandSpain.13Nofurther developments havetaken place since.
31. TheEUrequested consultations inFebruary 1994 regarding Brazil 'santi-dumping duties on
certain peaches fromGreece, considering thatBrazil hadfailed tocarry outapreliminary investigation
andgiveproper notification oftheaction. InJune1994 theEUrequested consultations inrelation
toU.S.anti-dumping determinations against photographic products manufactured intheNetherlands
byaJapanese-owned plant.14Atissuewasthecomputation ofthedumping margin based onJapanese
market data, although most oftheproduction oftheDutch plant wassoldontheEuropean market.
(iii) Government procurement code
32. Discussions continued in1993and1994onadispute involving theprocurement ofamultibeam
sonar mapping system bytheU.S.National Science Foundation, thesubject ofa1992Panel Report.15
(3) Dispute Settlement intheContext ofPreferential Trade Agreements
33. Although dispute settlement provisions areintegral totheUnion 'strade andco-operation
agreements, theEUtends toemphasize, andrelyon,political dialogue rather thanlegalproceedings
toaddress bilateral frictions. Competent bodies aretheJointCommittees under theEurope Agreements
10Theproducts involved were hot-rolled leadandbismuth carbon steel products from France, Germany
andtheUnited Kingdom, andcertain cut-to-length carbon steelplate products, certain hot-rolled carbon steel
flatproducts,certaincold-rolledcarbonsteelflatproductsandcertaincorrosion-resistantcarbonsteelflatproducts
from Belgium, France, Germany, Netherlands, Italy, Spain andtheUnited Kingdom.
11Seealsothetwocases concerning steel products under theSubsidies Code, Chapter VI(2)(i).
12Thecases involved certain cold-rolled steel sheet andflathot-rolled carbon steel sheet products from
Germany, France, ItalyandtheUnited Kingdom andcertain hot-rolled carbon andalloy steelplatefromBelgium,
Denmark, Germany andtheUnited Kingdom.
13Theproducts involved were certain hot-rolled carbon steel plate andhigh-strength low-alloy plate.
14Theproducts concerned werecolour negative photographic paper andchemical components thereof from
theNetherlands.
15GATT (1993), Chapter VI(2)(iii).WT/TPR/S/3 Trade Policy Review
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ortheEEAAgreement.16Given theEEAparticipants 'acceptance ofthe"acquis communitaire "across
awiderange oftrade-related policies, thescope forexternal (multilateral) dispute settlement mechanisms
would inanycasebeverylimited. Pointing tothepolitical nature ofanybilateral settlements under
trade andco-operation agreements, andtheabsence ofwide external ramifications, theEuropean
CommissionfeelsthatconflictsareinconceivablebetweensuchsettlementsandWTOpanelproceedings.
34. Recent consultations under theEEAAgreement revolved around theadoption bytheEuropean
Commission ofminimum import prices forcertain fishspecies, andtheintroduction ofveterinary and
hygiene controls onimports offishintoFrance. Thecases werereferred totheEEAJointCommittee
andsuccessfully concluded inmid-1994. AnEUcountervailing dutyaction ongearboxes produced
byGeneral Motors Austria, imposed inDecember 1993, hasbeenreferred bythefirmtotheEuropean
Court ofJustice.
(4) Other Initiatives toAddress Trade Frictions
(i) Initiatives affecting theEU
35. ThenewECimport régime forbananas wassubject toarecent enquiry under Section 301
oftheU.S.Trade Act.TheUnited States announced inJanuary 1995apreliminary decision maintaining
thattherégime discriminated against U.S.marketing anddistribution companies. Bilateral discussions
were heldinearly 1995.
36. ClaimingprovisionalcompensationforthecommercialeffectscausedbytheaccessionofAustria,
Finland andSweden, Canada indicated inFebruary 1995itsintention toraiseimport duties oncertain
EUproducts. Negotiations were taking place inearly 1995.
(ii) EUactions under the"New Commercial Policy Instrument"
37. The"New Commercial Policy Instrument" (NCPI) hasbeenusedsparingly since itsinception
in1984.17Cases under consideration during theperiod since January 1993concerned alleged pirating
ofCommunity sound recordings inThailand, andTurkey 'simposition ofanimport levyandhigher
customsdutiesonEUexportsofpolyesterfibres.Anexaminationconcerningillicitcommercialpractices
inconnectionwithJapan'sHarbourManagementFundwasterminatedinJune1993(ChapterV(3)(v)(d)).
38. TheNCPIwasreplacedin1January1995bythe"TradeBarriersInstrument"(TBI).18Mirroring
provisions oftheNCPI, theTBIcanbeapplied onlyinconformity withtheEuropean Union 's
international obligations, particularly those under theWTO. However, unlike under theNCPI,
complaints maynotonlybelodged byanindustry asawhole orbymember States butalsobyindividual
enterprises.19Todecide whether anexamination isjustified, complaints aretobeconsidered byan
Advisory Committee consisting ofrepresentatives ofeachmember State andtheCommission. If
accepted, examinations areannounced, withanotification given tothecountry affected. Where
16GATT (1993), Chapter VI(3).
17Fordetails ontheNCPI seeGATT (1993), Chapter VI(4)(ii).
18Council Regulation 3286/94.
19"Industry" includes producers, providers, processors orconsumers ofproducts andthose services for
which theEUhascompetence toconclude international agreements onthebasis ofArticle 113oftheEECTreaty.European Union WT/TPR/S/3
Page 177
necessary, investigations arecarried outintheterritory ofthirdcountries, provided theirGovernments
donotobject within areasonable period. Areport should normally bepresented within fivemonths
oftheinitial announcement.
39. Possible measures under theTBIinclude thesuspension orwithdrawal ofconcessions, the
increase orintroduction ofimport charges andtheintroduction ofquantitative restrictions. Theywould
havetobedecided byaqualified majority oftheCouncil. Thedecision could betaken onlyafterthe
discharging ofprocedures forconsultation ordispute settlement under theEU'sinternational obligations
andtaking account oftheresults.
40. TheTBIispartofaseries ofmodifications made totheCommunities 'commercial policy
instruments following theUruguay Round. They areintended "tosetthestageforfairtradetohappen
-alevel playing field-enabling realcomparative advantage toplayitscourse" andtoensure that
"European firms canprofit from better trading opportunities, inthesame wayastheircompetitors
abroad benefit from theopenness oftheUnion 'smarket".20
(iii) Dialogue withm.f.n. trading partners
41. TheEUandtheUnited States agreed inFebruary 1994 tosetupan"early warning system"
toidentify andaddress potential Trans-Atlantic trade disputes. Over recent years, efforts havealso
beenmade toenhance traderelations between theEUandJapan, notably byintensifying andbroadening
thedialogue between thetwopartners. TheCommission highlights itslow-key approach tobilateral
trade disputes, which itcontrasts withtactics pursued byother trading partners (Box VI.1).
20SpeechbySirLeonBrittanbeforetheannualConferenceofToyManufacturers(Europe,29October1994).WT/TPR/S/3 Trade Policy Review
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BoxVI.1 EU-Japan dialogue
Regular contacts between theEUandJapan takeplace within theframework ofanEU-Japan Industrial
Policy andIndustrial Cooperation Dialogue established inJanuary 1993. Itincludes annual high-level
meetings atDirector-General andDirector levels. Thefirst"dialogue" tookplace inMay1993. InJune
1994, itwasagreed toextend EU-Japan industrial co-operation toautoparts andoffice equipment, create
anewWorking Group onInformation Policy, andestablish aregular Industrialists 'Round Table (whose
firstmeeting tookplace inFebruary 1995).
Intheareaofcompetition policy, annual high-level consultations areheldbetween theJapanese Fair
Trade Commission andtheEuropean Commission, Directorate General IV. Contacts were also
established in1991 between theCommission andJapan 'sMinistry ofFinance onmacroeconomic issues
andfinancial services; onlyonemeeting hastaken place, inJuly1994. According totheCommission,
these contacts should, inprinciple, allow bothsides to"better understand theeconomic situation inthe
respective areas" andprovide anopportunity tosolve market access problems, particularly inthefield of
financial services.
Lower level (Head ofUnit) meetings arealsoanimportant aspect oftheEU-Japan relationship, including
meetings inthecontext ofa"trade assessment mechanism". Itischarged with monitoring trade flows
andanalysing theunderlying factors. Sectors areidentified where EUexports areunderperforming, even
though theyareconsidered tohave acomparative advantage intheJapanese market. Theapproach is
based onacomprehensive examination, atthefourandsix-digit HSlevels, oftrade flows andmarket
developments. Theresults arediscussed within theframework oftheEU-Japan Industrial Policy and
Industrial Cooperation Dialogue.
TheCommission believes thatthelow-profile environment inwhich thetrade assessment mechanism
takes place hasenhanced effectiveness andproduced better results thanmore aggressive tactics. This
reflects theUnion 'soverall approach totrade policy concerning Japan which, according tothe
Commission, isaimed atobtaining concessions through constructive dialogue, andpersistent and
consistent pressure forchange. ACommission Communication totheCouncil, dated March 1995,
presents various options tostrengthen andwiden bilateral relations inaframework embracing both
political andeconomic aspects. Thepaper setsoutaseries ofmeasures andguidelines aimed, inter alia,
toinstitute apermanent political dialogue, improve theclimate forforeign investment, strengthen
competition policy andopen markets (including thepossibility ofEuropean companies joining "Keiretsu"
associations).European Union WT/TPR/S/3
Page 179
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