. /.RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q2/USA/10
8 November 2000
(00-4721)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.5 OF THE AGREEMENT
ON SAFEGUARDS OF THE RESULTS OF A MID-TERM
REVIEW REFERRED TO IN ARTICLE 7.4
Replies to Questions posed by the EUROPEAN COMMUNITIES1
Regarding the Notification of the UNITED STATES2
The following communication, dated 7 November 2000, has been received from the
Permanent Mission of the United States.
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Q1. Do the United States agree that any “extensi on” of the scope of the existing safeguard
measures on wheat gluten to cover the “pre- mix” product is not in accordance with the
provisions of the WTO Agreement on Safeguards since it has not been included in the original
investigation and there is therefore no evidence th at the conditions laid down in Articles 2 and 4
of the said Agreement are met with respect to im ports including this product?  If not, on what
grounds would the US maintain that such an extension of the quota would be in conformity with
the WTO Agreement on Safeguards?
Reply
The United States has taken no action with regard to the inclusion or exclusion of “pre-mix”
product in the scope of the existing safeguard, and is not currently planning to take such action.
Therefore, the hypothetical “‘extension’ of the scope” posited by the EC is too speculative to be
addressed at this time.
Q2(a). Do the United States  confirm that shipments en route on the date of which public notice
is given of the new quota will be admitted under existing arrangements, i.e. the quota regime as
notified in G/SG/N/10/USA/2-G/SG/N/11/USA/2, G/SG/N/10/USA/2/Suppl.1-
G/SG/N/11/USA/2/Suppl.1 as  required by Article XIII 3.b of GATT 1944?  If not, please explain
how this provision is being complied with?
Reply
The modification to the safeguard measure pursuant to Presidential Proclamation 7314 of
26 May 2000 affected only the quota for the third year of the quota, which began on 1 June 2000.
Any shipments that arrived prior to that date were covered by the system notified in the notifications
referenced in the question.  Any wheat gluten from a source whose quota for the second year of the
measure was filled could be reexported or held over for the opening of the quota for the next period.
                                                     
1 G/SG/Q2/USA/8
2 G/L/347-G/SG/N/13/USA/1G/SG/Q2/USA/10
Page 2
Shipments that entered on or after 1 June 2000 were subject to the modifications to the
measure that were implemented under Proclamation 7314.  The United States believes that these
modifications are fully consistent with Article XIII:3(b) of GATT 1994 because it was not practicable
to count such imports against the quantity of imports permitted to be imported during the period inquestion, or subsequent periods.
Q2(b). Can the US confirm that, in the event product in excess of the 1st quarter’s quota is
presented in the first period, the allocations of the excess product for the 2nd quarter’s quota
will be determined during the first period for release at the later date, enabling traders to plan
their business with a degree of predictability?  If  not, how does the US intend to implement this
new quota in a matter which will not provoke a quota race for each quarter, causing maximumdisruption to trade, in particular in view of the obligation contained in Article 5.1 of the WTO
Agreement on Safeguards, that “a member shall apply safeguard measures only to the extent
necessary to remedy serious injury and to facilitate adjustment"?
Reply
Under US Customs regulations, all imported merchandise presented for entry within the
24-hour period preceding the opening of a quota is treated as simultaneously presented, and is equally
eligible for entry within the quota.  If the total vo lume of imports so presented is greater than the
volume of the available quota, each importer receives a share of the open quota equivalent to thatimporter’s share of the total volume of imports presented.  The same process will determine the entry
of merchandise in each of the four quota periods established by Proclamation 7314.
Under this system, distribution of the quota in each quarter is independent of the distribution
of quota in preceding quarters.  However, the pr eceding quota distributions will give importers an
indication of the total amount of EC wheat gluten in the United States as of the date of distribution.
This information should allow them to estimate the amount of the quota that will be distributed to
them in subsequent quarters and to plan their business accordingly.
The premise of the second sentence of this question – that the division of the EC quota
allotment into four stages causes the “maximum disruption to trade” – is incorrect.  The previous
situation, under which the entire EC allotment for the second quota year was filled within two weeks
of opening, occasioned a severe distortion in trad e in wheat gluten, as is shown by the USITC’s
interim report on the wheat gluten safeguard measure.  Wheat Gluten , Inv. No. TA-204-2, USITC
Pub. 3258 at II-6, II-9, V-21 (Dec. 1999).  By spreading the entry of shipments from the EC over the
entire third year, the modification to the safeguard is designed to reduce the overall disruption to
trade.
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