[Federal Register Volume 60, Number 208 (Friday, October 27, 1995)]
[Notices]
[Pages 55076-55084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26734]



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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-101]


Denial of Benefits Under Trade Agreement by the European Union: 
Initiation of Investigation; Proposed Determination; Request for Public 
Comment; and Public Hearing

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of initiation of investigation, proposed determination, 

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request for public comment and a public hearing.

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SUMMARY: Under Articles XXIV:6 and XXVIII of the General Agreement on 
Tariffs and Trade 1994 (GATT 1994) attached to the Agreement 
Establishing the World Trade Organization (WTO Agreement), whenever two 
or more Members of the World Trade Organization (WTO) form a customs 
union and thereby withdraw or modify tariff concessions, they must 
provide full and permanent compensation to relevant affected trading 
partners; if such compensation is not provided, then those other 
trading partners may withdraw concessions and increase tariffs. The 
United States is continuing to negotiate with the European Union (EU) 
regarding the EU's provision of full and permanent compensation to the 
United States for withdrawing concessions and increasing tariffs on 
trade into the territories of Austria, Finland and Sweden upon their 
accession to the EU on January 1, 1995. However, in order to preserve 
U.S. rights under a trade agreement, the United States Trade 
Representative (USTR) initiated on October 24,1995, an investigation 
under section 302(b) of the Trade Act of 1974 (Trade Act) (19 U.S.C. 
2412(b)). The USTR proposes, if necessary, to determine that U.S. 
benefits under a trade agreement are being denied and that the 
appropriate action in response is to suspend concessions on selected 
products for which the EU is the principal supplier and, if necessary 
thereafter, to impose tariffs of up to 100 percent ad valorem on those 
products. The increased duties, if imposed, will be applicable to 
imports from all countries that are subject to the rates of duty set 
forth in the Column 1 General rate of duty column of the Harmonized 
Tariff Schedule of the United States (HTSUS). The USTR seeks public 
comment and will hold a public hearing on November 20 and 21, 1995, 
concerning the proposed actions.

DATES: Written comments from interested persons are due on or before 
noon on Friday, November 24, 1995; requests to testify at the public 
hearing are due on or before noon on Wednesday, November 8, 1995; 
written testimony is due on or before noon on Wednesday, November 15, 
1995; the public hearing will be held on November 20 and 21, 1995; and 
post-hearing submissions are due on or before noon on Friday, November 
24, 1995.

FOR FURTHER INFORMATION CONTACT:
Edward Kaska, Director, European Services and Agriculture (202) 395-
4620; Elena Bryan, Director, Non-Tariff Measures (202) 395-5097, Amelia 
Porges, Associate General Counsel, (202) 395-7305, Office of the United 
States Trade Representative.

SUPPLEMENTARY INFORMATION: With the accession of Austria, Finland and 
Sweden to the EU, the EU withdrew the entire WTO tariff schedules of 
these three countries and of the EU of twelve members, and applied the 
common external tariff of the EU of twelve to imports into the 
territory of Austria, Finland and Sweden. The EU then began 
negotiations pursuant to Article XXIV:6 and Article XXVIII of the GATT 
1994 on compensation to its trading partners for the concessions 
thereby withdrawn. As an interim and partial measure, the EU 
established a series of tariff-rate quotas for the first half of 1995 
preserving limited import access for certain products at the pre-
accession tariff rates, and these tariff-rate quotas have been extended 
through the end of 1995.
    When a WTO Member withdraws a tariff concession in the expansion of 
a customs union, Articles XXIV:6 and XXVIII of the GATT entitle 
relevant affected Members to receive negotiated compensation or, in the 
absence of a successful negotiation, to invoke Article XXVIII:3 to 
modify or withdraw ``substantially equivalent concessions.'' Article 
XXVIII:3 rights are time-limited; the WTO General Council has extended 
these rights through December 31, 1995, but these rights could be 
construed to expire then unless exercised by the United States or 
extended by the Council. WTO Members invoking Article XXVIII:3 must 
also provide notice of their intent to modify or withdraw substantially 
equivalent concessions at least thirty days prior to the effective date 
of such action. Accordingly, the USTR intends to notify the WTO on or 
before December 1, 1995, that the Untied States will suspend tariff 
concessions for specified products in the HTSUS, by the close of 
December 31, 1995, unless by that time agreement has been reached 
between the EU and the United States on permanent and adequate 
compensation for tariff concessions modified or withdrawn as a result 
of the accession of Austria, Finland and Sweden to the EU. The 
suspension of concessions will be substantially equivalent to the 
withdrawal modification by the EU of concessions affecting U.S. 
exports.

Investigation and Proposed Determination and Action

    In these circumstances and in order to exercise U.S. rights under a 
trade agreement, the USTR on October 24, 1995, following consultations 
with the appropriate private sector advisory committees, initiated an 
investigation pursuant to section 302(b)(1) of the Trade Act with 
respect to the EU's policies and practices in this matter. The USTR 
proposes that, unless the United States and EU are able to negotiate a 
mutually acceptable solution that compensates the United States in 
accordance with its rights under the WTO, the USTR will determine that 
the EU's policies and practices deny the United States trade agreement 
benefits and are actionable under section 301(a) and that the 
appropriate action in response is to suspend by the end of 1995 
concessions on selected products for which the EU is the principal 
supplier. If necessary, the USTR may thereafter determine to increase 
the duties previously applied under the tariff lines with respect to 
which concessions have been suspended. The new applied tariff rates 
will not exceed 100 percent ad valorem. The duty increase will affect 
goods of the EU in an amount that is equivalent in value to the burden 
or restriction imposed upon United States commerce by the increase in 
duties consequent upon EU enlargement. The increased duties, if 
imposed, will be applicable to imports from all countries that are 
subject to the rates of duty set forth in the Column 1 General rate of 
duty column on the HTSUS.
    The products to be affected by the possible suspension of 
concessions and duty increase will be drawn from the list of products 
set forth in the Annex to this notice. In selecting products the USTR 
will consider all comments and testimony by interested persons 
submitted to the Section 301 Committee in accordance with the 
procedures described below.

Public Comment on Proposed Determination; Hearing Participation

    Section 304(b)(2) of the Trade Act provides that, unless 
expeditious action is required, the USTR shall allow an opportunity, 
following 30 days notice, for the presentation of views by interested 
persons prior to the issuance of a determination pursuant to section 
301(a). The USTR has refrained from initiating this investigation and 
announcing proposed actions for the maximum time possible to allow the 
EU an adequate opportunity to negotiate full and permanent 
compensation. However, as adequate compensation has not yet been agreed 
upon, the USTR has determined that it is appropriate to initiate this 
investigation and to notify interested persons of the possibility that 
determinations may be made under 

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section 304 of the Trade Act, that tariff concessions may be suspended 
by the close of December 31, 1995, and that tariffs may be increased 
thereafter.
    In accordance with section 304(b) of the Trade Act, the USTR 
invites all interested persons to provide written comments on the 
proposed determination. Comments may address: (1) The appropriateness 
of imposing increased duties upon the products listed in the Annex to 
this notice; (2) the levels at which U.S. customs duties should be set 
for particular items; and (3) the degree to which increased duties 
might have an adverse effect upon U.S. consumers of the products listed 
in the Annex. Written comments are due by noon, Friday, November 24, 
1995.
    The USTR also will consider the written, oral, and rebuttal 
comments submitted in the context of public hearings held pursuant to 
section 304(b) of the Trade Act and in accordance with 15 CFR 2006.7 
through 2006.9. The hearings will begin at 1:00 p.m. on Monday, 
November 20, 1995, and continue on Tuesday, November 21, if necessary. 
The hearings will be held in Room 100 at the U.S. International Trade 
Commission, 500 E Street, SW, Washington, DC 20436.

Request To Testify

    Interested persons wishing to testify orally at the hearings must 
provide a written request to do so by noon, Wednesday, November 8, 
1995, to Sybia Harrison, Staff Assistant to the Section 301 Committee, 
Office of the U.S. Trade Representative, 600 17th Street NW, 
Washington, DC 20508. Requests to testify must include the following 
information: (1) Name, address, telephone number, fax number, and firm 
or affiliation of the person wishing to testify; and (2) a brief 
summary of the comments to be presented. Requests to testify must 
conform to the requirements of 15 CFR 2006.8(a). After the Chairman of 
the Section 301 Committee considers the request to present oral 
testimony, Ms. Harrison will notify the applicant of the time of his or 
her testimony. Testimony, both written and oral, shall be limited to: 
(1) The Appropriateness of imposing increased duties upon the products 
listed in the Annex to this notice; (2) the levels at which U.S. 
customs duties should be set for particular items; and (3) the degree 
to which increased duties might have an adverse effect upon U.S. 
consumers of the products listed in the Annex. Remarks at the hearing 
will be limited to five minutes.

Written Testimony and Rebuttal Briefs

    In addition, persons presenting oral testimony must submit their 
complete written testimony by noon, Wednesday, November 15, 1995. In 
order to assure each party an opportunity to contest the information 
provided by other parties, USTR will entertain rebuttal briefs filed by 
any party by noon, Friday, November 24, 1995. In accordance with 15 CFR 
2006.8(c) rebuttal briefs should be strictly limited to demonstrating 
errors of fact or analysis not pointed out in the briefs or hearing and 
should be as concise as possible.

Requirements for Submissions

    Written comments on the proposed determination, written testimony, 
and rebuttal briefs must be filed in accordance with the requirements 
set forth in 15 CFR 2006.8(b). Comments must state clearly the position 
taken, describe with particularity the supporting rationale, be in 
English, and be provided in twenty copies to: Chairman, Section 301 
Committee, Attn.: EU Enlargement Investigation, Room 223, USTR, 600 
17th St., NW., Washington, DC 20508.
    Written comments, testimony, and briefs will be placed in a file 
(Docket 301-101) open to public inspection pursuant to 15 CFR 2006.13, 
except for confidential business information exempt from public 
inspection in accordance with 15 CFR 2006.15. Persons wishing to submit 
confidential business information must certify in writing that such 
information is confidential in accordance with 15 CFR 2006.15(b), and 
such information must be clearly marked ``Business Confidential'' in a 
contrasting color ink at the top of each page on each of the twenty 
copies and must be accompanied by a nonconfidential summary of the 
confidential information. The nonconfidential summary will be placed in 
the Docket open to public inspection. An appointment to review the 
docket may be made by calling Brenda Webb at (202) 395-6186. The USTR 
Reading Room is open to the public from 10:00 a.m. to 12 noon and 1:00 
p.m. to 4:00 p.m., Monday through Friday, and is located in Room 101, 
Office of the United States Trade Representative, 600 17th Street, 
N.W., Washington, D.C. 20508.
Irving A. Williamson,
Chairman, Section 301 Committee.

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[FR Doc. 95-26734 Filed 10-24-95; 2:45 pm]
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