[Federal Register Volume 64, Number 143 (Tuesday, July 27, 1999)]
[Notices]
[Pages 40638-40641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19174]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-62a]


Implementation of WTO Recommendations Concerning EC-Measures 
Concerning Meat and Meat Products (Hormones)

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of the imposition of 100 percent ad valorem duties on 
certain articles.

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SUMMARY: The United States Trade Representative (USTR) has decided to 
suspend the application of tariff concessions and related obligations 
by imposing a 100% ad valorem rate of duty on three articles described 
in the Annex to this notice that are the products of certain member 
States of the European Communities (EC) as a result of the EC's failure 
to implement the recommendations and rulings of the World Trade 
Organization (WTO) Dispute Settlement Body (DSB) concerning the EC's 
ban on imports of U.S. meat from animals treated with certain hormones. 
This action constitutes the exercise of U.S. rights under Article 22 of 
the WTO Understanding on Rules and Procedures Governing the Settlement 
of Disputes (DSU) and is taken pursuant to the authority granted to the 
USTR under section 301 of the Trade Act of 1974, as amended..

EFFECTIVE DATE: In accordance with U.S. rights under the DSU, effective 
July 29, 1999, a 100% ad valorem  rate of duty shall be applied to the 
articles described in the Annex to this notice that are the products of 
one or more of the following EC member States--Austria, Belgium, 
Denmark, Finland, France, the Federal Republic of Germany, Greece, 
Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, or 
Sweden--and that are entered, or withdrawn from warehouse, for 
consumption on or after July 29, 1999. Any merchandise subject to this 
determination that is admitted to U.S. foreign-trade zones on or after 
July 29, 1999 must be admitted as ``privileged foreign status'' as 
defined in 19 CFR 146.41. This action will follow authorization on July 
26, 1999, by the DSB to suspend the application to the EC, and member 
States thereof, of concessions and related obligations under the 
General Agreement on Tariffs and Trade 1994 (GATT 1994).

ADDRESSES: 600 17th Street, NW., Washington, D.C. 20508.

FOR FURTHER INFORMATION CONTACT: Sybia Harrison, Staff Assistant to the 
Section 301 Committee, (202) 395-3419, for questions concerning 
documents and USTR procedures; William Busis, Associate General 
Counsel, (202) 395-3150 or Ralph Ives, Deputy Assistant U.S. Trade 
Representative, (202) 395-3320, for questions concerning WTO 
developments regarding the EC's hormone ban; John Valentine, Attorney, 
International Agreements Staff, U.S. Customs Service, (202) 927-1219, 
for questions concerning classification; and Yvonne Tomenga, Program 
Officer, Office of Trade Compliance, U.S. Customs Service, (202) 927-
0133, for questions concerning entries.

SUPPLEMENTARY INFORMATION: In December 1985, the EC adopted a directive 
on livestock production restricting the use of natural hormones to 
therapeutic purposes, banning the use of synthetic hormones, and 
prohibiting imports of animals, and meat from animals, to which 
hormones had been administered. That directive was later declared 
invalid by the European Court of Justice on procedural grounds and

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had to be re-adopted by the Council, unchanged, in 1988 (``the Hormone 
Director''). These measures, including the ban on the import of meat 
and meat products produced from animals to which certain hormones had 
been administered (the ``hormone ban''), because effective January 1, 
1989.
    Following entry into force on January 1, 1995, of the WTO Agreement 
on the Application of Sanitary and Phytosanitary Measures (``SPS 
Agreement''), the United States and, later, Canada, invoked formal WTO 
dispute settlement proceedings against the hormone ban. Prior to the 
establishment of the WTO panel, the EC replaced the Hormone Directive 
with another directive that re-codified and expanded the hormone ban. 
On May 20, 1996, the DSB established a dispute settlement panel (``the 
WTO panel'') to examine the consistency of the hormone ban with the 
EC's WTO obligations.
    On August 18, 1997, the WTO panel issued its report finding that 
the hormone ban is not based on scientific evidence, a risk assessment, 
or relevant international standards, in contravention in of the EC's 
obligations under the SPS Agreement. Upon an appeal to the WTO 
Appellate Body, on January 16, 1998, the Appellate Body affirmed that 
the hormone ban is not consistent with the EC's obligations under the 
SPS Agreement. At a meeting held on February 13, 1998, the DSB adopted 
the Panel and Appellate Body reports regarding the EC's hormone ban.
    The EC subsequently requested four years to implement the DSB 
recommendations. The United States could not agree to this proposed 
implementation period, and the matter was referred to a WTO arbitrator. 
The arbitrator determined that the reasonable period of time for 
implementation was fifteen months, and would expire on May 13, 1999.
    The EC did not implement the DSB recommendations and rulings 
regarding its hormone ban by May 13, 1999. Accordingly, on May 17, 
1999, and in accordance with U.S. rights under Article 22 of the DSU, 
the United States requested authorization from the DSB to suspend the 
application to the EC, and member States thereof, of tariff concessions 
and related obligations under the GATT covering trade in an amount of 
$202 million. The EC objected to the level of suspension proposed by 
the United States, and claimed that the trade damage suffered by the 
United States was only $53 million. Pursuant to Article 22.6 of the 
DSU, the matter was referred to arbitration. The DSU provides that such 
arbitrations must be completed within 60 days of the end of the 
reasonable period of time for implementation, or in this case, by July 
12, 1999.
    The arbitrators issued their final decision on July 12, 1999, and 
determined that the level of nullification or impairment suffered by 
the United States as a result of the EC's WTO-inconsistent hormone ban 
was $116.8 million per year. Accordingly, upon DSB authorization, the 
United States is entitled under the DSU to suspend the application to 
the European Communities and its member States of tariff concessions 
and related obligations under the GATT covering trade up to that 
amount. A meeting of the DSB is scheduled for July 26, 1999, at which 
time the DSB, pursuant to Article 22.7 of the DSU, will grant 
authorization for such suspension of concessions.

Prior Notice and Comment

    On March 25, 1999, the USTR announced preparations for exercising 
its right to request authorization to suspend tariff concessions on EC 
products if the EC failed to implement the DSB's recommendations and 
rulings concerning the EC's hormone ban by May 13, 1999. (64 FR 
14,486). The March 25 notice sought public comment on a preliminary 
list of EC products with respect to which the United States was 
considering the suspension of tariff concessions. On April 19, 1999, 
USTR conducted a public hearing to receive testimony on the preliminary 
list.

Determination and Action

    As a result of the EC's failure to implement the recommendations 
and rulings of the DSB concerning the EC's hormone ban, and pursuant to 
the WTO arbitrators' decision of July 12, 1999 and the authorization of 
the DSB on July 26, 1999, the USTR will suspend tariff concessions and 
related obligations under the GATT 1994 by imposing a 100% ad valorem 
rate of duty on the articles described in the Annex to this notice that 
are the products of certain EC member States. The amount of trade 
affected by this action, as measured by an average of 1996-1998 import 
values, is equivalent to the level of nullification or impairment 
($116.8 million) determined by the WTO arbitrators in their decision of 
July 12, 1999.
    This action exercises the rights of the United States under Article 
22 of the DSU and is taken pursuant to the authority granted to the 
USTR under section 301 of the Trade Act. The articles affected by this 
determination were selected in light of the comments submitted to the 
Section 301 Committee in response to the March 25, 1999 notice and the 
testimony presented at the public hearing held on April 19, 1999.
    Accordingly, effective July 29, 1999, with respect to articles that 
are the products of one or more of the following EC member States--
Austria, Belgium, Denmark, Finland, France, the Federal Republic of 
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, 
Spain, or Sweden--and that are entered, or withdrawn from warehouse, 
for consumption on or after July 29, 1999, the Harmonized Tariff 
Schedule of the United States is hereby modified in accordance with the 
Annex to this notice. Any merchandise subject to this determination 
that is admitted to U.S. foreign-trade zones on or after July 29, 1999 
must be admitted as ``privileged foreign status'' as defined in 19 CFR 
146.41.
William L. Busis,
Chairman, Section 301 Committee.

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[FR Doc. 99-19174 Filed 6-26-99; 8:45 am]
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