[Federal Register Volume 62, Number 187 (Friday, September 26, 1997)]
[Notices]
[Pages 50651-50652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25586]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-102]


Determinations Under Section 304 of the Trade Act of 1974 With 
Respect to Certain Canadian Practices Affecting Periodicals

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of determinations, termination and monitoring.

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SUMMARY: The United States Trade Representative (USTR) has determined 
pursuant to section 304(a)(1)(A)(ii) of the Trade Act of 1974 (19 
U.S.C. 2414(a)(1)(A)(ii)) (``the Trade Act'') that certain acts, 
policies and practices of the Government of Canada that restrict or 
prohibit imports of certain periodicals into Canada and apply 
discriminatory treatment to certain imported periodicals violates, or 
otherwise denies benefits to which the United States is entitled to 
under, the General Agreement on Tariffs and Trade (GATT) 1994. This 
determination is based on the report of a dispute settlement panel 
convened under the World Trade Organization (WTO), at the request of 
the United States, to examine the Canadian measures at issue. That 
report, as modified by a report of the WTO Appellate Body, and adopted 
by the WTO Dispute Settlement Body (DSB), found four Canadian measures 
affecting periodicals to be inconsistent with Canada's obligations 
under GATT 1994.
    Following the adopting of this report by the DSB, Canada submitted 
a letter to the DSB announcing its commitment to meet its obligations 
under the WTO with regard to this matter and comply with the panel and 
Appellate Body reports within a reasonable period of time. Thus, 
pursuant to section 304(a)(1)(B) of the Trade Act, the USTR has 
determined that, by making this commitment, Canada is taking 
satisfactory measures to grant the rights of the United States under 
the GATT. Therefore, the USTR will not take action under section 301 of 
the Trade Act at this time and has terminated this investigation, but 
will monitor under section 306 of the Trade Act Canada's implementation 
of this commitment.

EFFECTIVE DATE: September 11, 1997.

ADDRESSES: 600 17th Street, NW., Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT:
William Kane, Associate General Counsel, (202) 395-6800; or Megan 
Waters, Director for Canadian Affairs, (202) 395-3412.

SUPPLEMENTARY INFORMATION: On March 11, 1996, the United States Trade 
Representative initiated an investigation under section 302(b)(1) of 
the Trade Act of 1974 (``the Trade Act'') regarding certain measures 
adopted by the Government of Canada affecting periodicals and requested 
public comment on the issues raised in the investigation and the 
determinations to be made under section 304 of the Trade Act. 61 FR 
11067 (March 18, 1996).

[[Page 50652]]

These measures included, but were not limited to, the following: (1) 
Tariff Code 9958, which prohibits the importation into Canada of 
certain periodicals; (2) Part V.1 of the Excise Tax Act, as enacted by 
Bill C-103 of December 15, 1995, which imposed an excise tax on certain 
so-called ``split-run'' periodicals, and (3) application of two types 
of discriminatory postal rates in favor of certain Canadian 
periodicals. As required under section 303(a) of the Trade Act, the 
USTR requested consultations with the Government of Canada under the 
procedures of the WTO Understanding on Rules and Procedures Governing 
the Settlement of Disputes (DSU).
    Pursuant to Section 304(a)(1)(A) of the Trade Act, the USTR must 
determine in this case whether any act, policy or practice of the 
Government of Canada violates, or otherwise denies benefits to which 
the United States is entitled to under, any trade agreement. If that 
determination is affirmative, the USTR must take action under section 
301 of the Trade Act, subject to the specific direction of the 
President, if any, unless, inter alia, the United States finds that the 
foreign country is taking satisfactory measures to grant the rights of 
the United States under the trade agreement.

Reasons for Determinations

(1) Canada's Acts, Policies and Practices

    The WTO panel in this case circulated its report on March 14, 1997. 
The panel found that the following three Canadian measures violated 
Canada's obligations under the GATT: (1) Canada's import ban on certain 
periodicals; (2) Canada's 80 percent excise tax on so-called ``split-
run'' periodicals, and (3) Canada's discriminatory ``commercial'' 
postal rates. Canada appealed the WTO panel's finding regarding the 80 
percent excise tax, and the United States cross-appealed the panel's 
conclusion that a fourth Canadian measure--Canada's discriminatory 
``funded'' postal rates--were a subsidy exempt from GATT national 
treatment requirements. The Appellate Body upheld the WTO panel's 
findings on the excise tax, but reversed the panel's finding (agreeing 
with the United States) regarding Canada's ``funded'' postal rates. The 
DSB adopted the WTO panel and Appellate Body reports on July 30, 1997. 
Thus, based on the results of the WTO dispute settlement proceedings, 
the public comments received and appropriate consultations, the USTR 
has determined pursuant to section 304(a)(1)(A)(ii) of the Trade Act 
that certain acts, policies and practices of the Government of Canada 
violate, or otherwise deny benefits to which the United States is 
entitled to under, GATT 1994.

(2) U.S. Action

    Upon affirmative determination of the denial of rights under a 
trade agreement, the USTR must decide pursuant to section 304(a)(1)(B) 
of the Trade Act to take action unless, inter alia, the USTR finds that 
the foreign country is taking satisfactory measures to grant the rights 
of the United States under the trade agreement. On August 29, 1997, 
Canada submitted a letter to the DSB stating that it will meet its WTO 
obligations and will comply with the WTO panel and Appellate Body 
reports within a reasonable period of time. The USTR has determined 
that, in light of Canada's letter of intention, Canada is taking 
satisfactory measures to grant the rights of the United States under 
GATT. Thus, the USTR will not take action under section 301 of the 
Trade Act at this time and has determined this investigation. Pursuant 
to section 306 of the Trade Act, the USTR will monitor Canada's 
compliance with the WTO panel and Appellate Body report and will take 
action under section 304(a) of the Trade Act if Canada does not come 
into compliance.
Irving A. Williamson,
Chairman, Section 301 Committee.
[FR Doc. 97-25586 Filed 9-25-97; 8:45 am]
BILLING CODE 3190-01-M