Brussels/Geneva, 02/08/2000 (Agence Europe) - The EU is threatening to suspend its tariff concessions on American maize gluten is the United States maintains its safeguard measures against wheat gluten imports, despite the condemnation of these restrictions by a World Trade Organisation panel (see yesterday's EUROPE, p.5). Unless it appeals against the Geneva ruling, Washington has five days to conform as of the adoption of the expert report by the institutional dispute settlement body, underlines Brussels.
The European Commission welcomes the condemnation of these "unjust and illegal" measures by the panel responsible for examining complaints it had made, on behalf of the EU, 3 June 1999, after fruitless bilateral consultations. The report published last Monday establishes a triple infringement to the Multilateral safeguard measures agreement (MSA): i) The United States have followed a globally incorrect procedure to prove the link of causality between the increase in imports and the serious prejudice invoked by the industry; ii) the fact of excluding, under the NAFTA, the imports of Canadian origin from the scope of implementation of the safeguard measures was unjustified since these imports where covered by the analysis that lead to the adoption of the quotas; iii) the WTO procedural requirements over notifications, consultations and trade compensations have not been respected. The measures were imposed, in the form of quotas, to imports of wheat gluten from various origins, including European, in June 1998.The Union, which was the main supplier of these types of products used in the flour-milling and baking sectors to increase the protein content of food (bread, pasta, animal feed), has since then seen its exports fall by 40% and the situation of its industry seriously degrade. In addition, although the WTO stipulates that such quotas, if justified, must be applied equitably to all third countries, the quantities allocated to Australia were so generous that the second exporter of wheat gluten had to increase its deliveries to be able to meet its quota. The Commission also draws the panel's attention to the fact that the exclusion of Canada as United States partner within NAFTA was unjustified. In addition, the quota, that was then reduced, had not been correctly managed, for which the EU had had to foot the bill. Then came the presidential decision to replace the annual quota, on the eve of its opening although the European cargo had already left, with a quarterly quota.
The Union, whose arguments have been credited by the panel except for some points of procedure, now expects the United States to abolish these restrictions without delay. Otherwise, due to the MSA, it may withdraw tariff concessions from the Americans. A regulation is moreover ready to introduce, as a corrective measure, a tariff quota on American exports of cattle fodder based on corn gluten and thus counter the adverse effects of the American quota on the European industry. Finally, the Commission further stresses if this safeguard measures is maintained for more than three years, the EU may also, under the MSA (Article 8), take unilateral sanctions, even in the unlikely event of the United states winning on appeal.