By Chris Rugaber | August 17, 2001
Australia and New Zealand agreed Aug. 15 to continue negotiations with the United States for approximately two more weeks over a 1999 lamb import safeguard instituted by the United States that has been found to violate World Trade Organization rules. The agreement was announced a day after the deadline for Australia and New Zealand to request arbitration over the time frame for U.S. compliance with the WTO decision. The United States has indicated it will comply with the WTO ruling, according to an official at the Office of the U.S. Trade Representative. What remains in dispute is when the United States will do so.
Australia and New Zealand now have until Aug. 31 to request arbitration. Previously, the deadline was Aug. 14.
However, the clock has started ticking on the arbitration process. The United States has agreed with Australia and New Zealand that if they request arbitration on Aug. 31, it will be completed by Sept. 30, the same deadline that would have existed had arbitration been requested Aug. 14.
Next Steps
Once a dispute has been decided at the WTO and all parties have stated their intention to comply with the ruling, the parties then negotiate a time frame for compliance, according to the official at USTR. If agreement cannot be reached, then arbitration may be requested by the winners of the dispute, in this case Australia and New Zealand. Currently, the U.S. government is working with representatives of the domestic lamb industry on ways the United States can come into compliance, including alternative remedies to the safeguards, the USTR official said.
The safeguards can be removed by the president, and do not require an act of Congress, he added.
Roots of the Disagreement
The dispute stems from a July 1999 U.S. safeguard measure, ordered by former President Clinton, against lamb imports from Australia and New Zealand, pursuant to Section 201 of the 1974 Trade Act. The safeguard consisted of a three-year tariff quota, with imports of lamb from the two countries subject to a 9 percent tariff in the first year, and 6 percent and 3 percent tariffs in the second and third years, respectively. In addition, shipments above a 31.85 million kilogram quota were subject to a 40 percent tariff in the first year, dropping to 32 percent and 24 percent in the second and third years.
The move was in response to a petition from the American Sheep Industry Association, which said that lamb imports, primarily from Australia and New Zealand, jumped 50 percent from 1993 to 1997.
The safeguard has been strongly criticized by Australia and New Zealand. Australia's ambassador told the U.S. International Trade Commission in November 2000 that the provision was doing little for the U.S. lamb industry, and asked that it be dropped.
WTO Strikes Down Safeguard
The United States was forced to reconsider the safeguard when a WTO Appellate Body May 1 upheld an earlier WTO panel ruling that struck down the measure, setting the stage for the current negotiations on compliance. The Appellate Body found that the United States had violated four different rules with its safeguard. First, it had failed to show that the measure was in response to "unforeseen developments," as required under Article XIX 1(a) of the General Agreement on Tariffs and Trade; in addition, the ITC's "causation analysis" failed to demonstrate that other factors were not responsible for the injury to the U.S. lamb industry, as required by Article 4.2(b) of the WTO's Safeguards Agreement; further, the ITC wrongly included growers and feeders of live lambs in its definition of the U.S. lamb industry, in violation of Article 4.1(c) of the Safeguards Agreement; and finally, that the data used to demonstrate a "threat" to the U.S. lamb industry did not come from a sufficiently representative group of producers, as required by Article 4.1(c) of the Safeguards Agreement.
The United States strongly criticized the Appellate Body's findings May 16. The then-U.S. ambassador to the WTO in Geneva, Rita Hayes, argued that they "verge on an interpretation of a WTO agreement, even though such interpretations can be made only by the members of the WTO."
Copyright c 2001 by The Bureau of National Affairs, Inc., Washington D.C.By Chris Rugaber:
