From dwiehoff@igc.apc.orgFri Feb 2 14:10:06 1996 Date: 02 Feb 1996 08:06:06 From: dwiehoff@igc.apc.org To: Recipients of conference Subject: Trade News 2-1-96 From: dwiehoff@iatp.org (Dale Wiehoff) TRADE NEWS Produced by the Institute for Agriculture and Trade Policy FEBRUARY 1, 1996 VOL. 5 NO. 3 --------------------------------------------------- Headlines: - WTO PANEL RULES AGAINST U.S. IN GAS DISPUTE - U.S. THREATENS JAPAN OVER MU.S.IC RIGHTS - U.S. TO MONITOR KOREAN SHELF-LIFE AGREEMENT - ISRAEL, CANADA REACH TRADE ACCORD - WEST AFRICAN TARIFF CUTS - INDONESIA LIBERALIZES TRADE - JAPAN'S TRADE SURPLU.S. DECLINES --------------------------------------------------- WTO NEWS WTO PANEL RULES AGAINST U.S. IN GAS DISPUTE On January 18, a World Trade Organization (WTO) dispute settlement panel determined that U.S. regulations governing imported gasoline and reformulated gasoline violate international trade rules. The panel ordered the United States to develop a plan to change its rules or face unspecified sanctions. The panel's decision upholds complaints by Venezuela and Brazil against a key section of the U.S. Clean Air Act which sets different standards for imported gasoline than for the domestically-refined version. The WTO panel said that while the United States had every right to set its own environmental standards it was in breach of fair trade rules by discriminating against imports. U.S. trade representative Mickey Kantor said the United States would appeal the ruling. The ruling, the first by a WTO dispute settlement panel, is seen as an important test of the WTO's ability to enforce international trade rules. Under its strengthened procedures for dispute settlement, countries can no longer block rulings against them or resist implementation as they could in the General Agreement on Tariffs and Trade (GATT), the WTO's predecessor. David E. Sanger, "World Trade Group Orders U.S. to Alter Clean Air Act," NEW YORK TIMES, January 18, 1996; Francis Williams, "U.S. May Appeal Against WTO Ruling," FINANCIAL TIMES, January 19, 1996; "Kantor Says U.S. Will Appeal WTO Ruling," ENVIRONMENTAL NEWS NETWORK, January 24, 1996. U.S. THREATENS JAPAN OVER MUSIC RIGHTS The United States has threatened to takes its first action against Japan in the World Trade Organization (WTO) over a dispute involving intellectual property rights in the music recording industry. U.S. trade representative Mickey Kantor said he was unhappy with Japanese regulations concerning the protection of recordings. Japan extends agreed retroactive rights to 1971, while the United States insists such rights should go back to 1946. Kantor said Japan's failure to change its rules "would give the U.S. no recourse other than to pursue its rights under the WTO." He also said Japan would remain on the U.S. government's priority watch list of countries with allegedly inadequate protection against intellectual property violations. The dispute centers on the intellectual property rights of recording companies and musicians on recordings made in the distant past and involves potentially huge sums in royalties for companies and musicians in the U.S. and other countries. The intellectual property rights of music composers and lyric writers are protected for 50 years after their death. But the rights of recording companies and musicians -- known as neighboring rights -- were only agreed by countries in 1993 under the Trade Related Aspects of Intellectual Property Rights (TRIPs) agreement of the Uruguay Round. Under this agreement, which came into effect on January 1, 1996, signatories are obliged to protect those rights retrospectively. According to an official at Japan's agency for cultural affairs, it is not clear how far such retroactive protection extend. Under Japanese law, neighboring rights are retroactive only to 1971, when Japan's intellectual property law was revised. In contrast, in the United States and many European countries, retroactive protection extends back to 1946, 50 years from when the TRIPs agreement came into effect. Michiyo Nakamoto, "U.S. Threatens Japan Over Music Industry Rights," FINANCIAL TIMES, January 26, 1996. REGIONAL/BILATERAL AGREEMENTS U.S. TO MONITOR KOREAN SHELF-LIFE AGREEMENT On January 22, U.S. trade representative Mickey Kantor announced that U.S. and Korean negotiators successfully concluded talks to ensure the implementation of the U.S.-Korea Agreement on Shelf Life. On the basis of the agreement, Korea has committed to notify the WTO of certain revisions to the Korean Food Code. As a result, the United States will not at this time seek a disputes settlement panel under the WTO. Last July, Korea agreed to phase out its current government-mandated shelf-life system and allow manufacturers to set their own "sell-by" dates, similar to most other countries. For all dried, packaged, canned or bottled products, the manufacturer's sell-by system went into effect on October 1, 1995. Technical talks were held to ensure that all shelf-stable products falling under this provision of the agreement are notified to the WTO. Based on these discussions, Korea will remove the shelf-life requirement for five additional product categories by March 31. For chilled, vacuum packed pork and beef and all frozen food, Korea's new system will come into effect on July 1, 1996. "U.S.TR Monitors Korean Shelf-Life Agreement," OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE PRESS RELEASE, January 22, 1996. ISRAEL, CANADA REACH TRADE ACCORD Israeli and Canadian negotiators have reached a tentative agreement on a free trade accord which features full tariff elimination on all manufactured goods and trade liberalizing provisions for agriculture and fisheries. The agreement is still in draft form and must be approved by both governments. If approved, the accord would take effect July 1, 1996. The United States and the European Union (EU) already have free trade agreements with Israel. "Israel, Canada Reach Tentative Accord on Trade," REUTER, January 15, 1996. WEST AFRICAN TARIFF CUTS On January 16, finance ministers from seven West African countries agreed to an interim system of preferential customs tariffs in preparation for free trade within the West African Economic and Monetary Union (UEMOA). The system will lead to a 30 percent cut in tariffs for approved goods originating from member states. It also will give a five percent reduction for some items originating outside UEMOA. The ministers agreed the measures would last for one year, after which tariffs would be abolished completely on all goods originating in UEMOA countries. The UEMOA treaty was signed in Dakar in January 1994, when heads of state of west and central Africa and the Comoros Islands agreed to devalue their common currency, the CFA franc. The union aims to speed up regional economic integration to create a single market of 60 million consumers. "West Africans to Cut Tariffs," FINANCIAL TIMES, January 17, 1996. WORLD TRADE ROUND-UP INDONESIA LIBERALIZES TRADE On January 26, Indonesia unveiled an anxiously awaited trade liberalization package that cuts import tariffs on 428 items and allows foreign firms to venture into previously restricted sectors. Industry and trade minister Tungky Ariwibowo said that the package was aimed at creating a business climate conducive to boosting exports. The package will reduce tariffs on capital goods and raw materials used directly or indirectly for exports by five percent. These items include tractors, forklifts, computers, timber for furniture making, crude palm oil and equipment used in the agriculture and forestry sectors. In addition, 100 percent foreign owned companies are allowed, for the first time, to set up export-oriented firms in the commodities, forestry, fishing and mining sectors. The package also removes tariffs and surcharges on equipment and machines used by the automobile sector and reduces the number of items that can only be imported by state or government-backed agencies. Maklis Ali, "Indonesia Cuts Tariffs as Part of Economic Package," REUTER, January 26, 1996. JAPAN'S TRADE SURPLU.S. DECLINES A surge in imports and an increase in offshore production caused Japan's trade surplus to fall by 11.4 percent to $107.1 billion in 1995, the first drop in five years. Finance ministry officials said they expect the trade gap to shrink further this year, helped by a reduction in import barriers. Imports to Japan rose by 23.3 percent to $335.9 billion in 1995, by outstripping the growth in exports, which were up by 12 percent to $443 billion. Weaker U.S. demand curbed foreign sales as did the continued shift of Japanese production to cheaper locations in Asia, suggesting that part of the decline in the surplus. may be permanent. Imports also were helped by the yen's strength in the first eight months of the year and by a change in the structure of Japan's foreign purchases from materials to finished goods. Japan's surplus with the United States declined faster than the total, by 17 percent to $45.6 billion, also the first drop in five years. But this was eclipsed by Japan's trade surplus with the rest of Asia, which expanded nearly 15 percent to $70.8 billion, reinforcing Tokyo officials' fears that trade tensions with their Asian trading partners may arise just as a relative lull may emerge in trade relations with the United States. William Dawkins, "Japan's Trade Surplus Declines By 11.4%," FINANCIAL TIMES, January 25, 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 more information about fax or mail subscriptions, contact: Institute for Agriculture and Trade Policy, 1313 Fifth Street S.E., Suite 303, Minneapolis, MN, 55414 Phone 612-379-5980. To learn more about IATP's contract research services, please contact Dale Wiehoff at dwiehoff@iatp.org. Dale Wiehoff Communications Director Institute for Agriculture and Trade Policy (IATP) 1313 5th Street SE, Suite 303 Minneapolis, MN 55414-1546 USA Tel: (612) 379-5980 Fax: (612) 379-5982 Email: dwiehoff@iatp.org URL: http://www.iatp.org/iatp