I

105TH CONGRESS

2D SESSION H. R. 4761

To require the United States Trade Representative to take certain actions

in response to the failure of the European Union to comply with the

rulings of the World Trade Organization.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 9, 1998

Mr. CRANE (for himself, Mr. SMITH of Oregon, Mr. THOMAS, Mr. STENHOLM,

Mrs. JOHNSON of Connecticut, Mr. WATKINS, Mr. COMBEST, Mr. KOLBE,

Mr. HERGER, Mr. HOUGHTON, Mr. TANNER, Mr. BARRETT of Nebraska,

Mr. CAMP, Mr. EWING, Mr. SAM JOHNSON of Texas, Mr. NUSSLE, Mr.

RAMSTAD, Mr. COLLINS, Ms. DUNN, Mr. LEWIS of Kentucky, Mr.

POMBO, Mr. PORTMAN, Mr. CHRISTENSEN, Mr. ENGLISH of Pennsylvania, Mr. WELLER, and Mr. BERRY) introduced the following bill; which

was referred to the Committee on Ways and Means

A BILL

To require the United States Trade Representative to take

certain actions in response to the failure of the European

Union to comply with the rulings of the World Trade

Organization.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Uruguay Round Agree5 ments Compliance Act of 1998’’.
2

•HR 4761 IH

1 SEC. 2. FINDINGS.

2 The Congress makes the following findings:

3 (1) The European Union unfairly restricts the

4 importation of billions of dollars of agricultural

5 products from the United States and other exporting

6 nations.

7 (2) Opportunities for increased United States

8 agricultural exports are undermined by unfair sub9 sidies provided by the European Union to benefit its

10 own production and by vexing tariff and nontariff

11 trade barriers imposed on highly competitive United

12 States agricultural exports.

13 (3) It is essential to the health of United States

14 agriculture that the United States seek the contin15 ued elimination of restrictions imposed on United

16 States agricultural exports by the European Union.

17 (4) The United States must insist on competi18 tive opportunities for United States exports of agri19 cultural products in European markets substantially

20 equivalent to the competitive opportunities afforded

21 to European exports in United States markets, and

22 on achieving progressively fairer and more open con23 ditions of trade.

24 (5) The Uruguay Round Agreements, as imple25 mented by the Uruguay Round Agreements Act,

26 strengthened the multilateral rules for trade in agri-
3

•HR 4761 IH

1 cultural products and services. Reflecting a principal

2 negotiating objective established by the Congress in

3 the Omnibus Trade and Competitiveness Act of

4 1988, the Uruguay Round Agreements obligate

5 WTO member countries to reduce and eliminate pro6 tection against imports, including discriminatory

7 practices, and to observe the rules provided in the

8 Agreements that are designed to prevent damaging

9 and unacceptable delays in the implementation of

10 dispute settlement panel reports.

11 (6) On May 22, 1997, a final report of a dis12 pute settlement panel under the World Trade Orga13 nization found that the banana import regime of the

14 European Union, as well as its licensing procedures

15 for the importation of bananas, are in violation of

16 GATT 1994, the Agreement on Import Licensing

17 Procedures, and the General Agreement on Trade in

18 Services. On September 9, 1997, the Appellate Body

19 affirmed these findings. The Appellate Body report

20 and the panel report, as modified by the Appellate

21 Body, were adopted by the WTO on September 25,

22 1997.

23 (7) On January 7, 1998, the WTO determined

24 through binding arbitration procedures that the

25 compliance period for the European Union to bring
4

•HR 4761 IH

1 its banana regime into conformity with the Uruguay

2 Round Agreements is 15 months from September

3 25, 1997, a period which will end on January 1,

4 1999.

5 (8) Instead of taking steps to implement

6 promptly and completely its obligations, the Euro7 pean Union has pursued a number of dilatory tactics

8 and has announced a new series of measures to take

9 effect on January 1, 1999, which will not bring the

10 European Union into conformity with its obligations

11 under the WTO but will make only cosmetic changes

12 to its WTO-illegal scheme. Such measures under13 mine the WTO dispute settlement process because

14 they delay implementation, forcing the United States

15 to pursue its rights under dispute settlement once

16 again. This abuse of the dispute settlement process

17 cannot be tolerated.

18 (9) A ban by the European Union on the use

19 of hormones in livestock production, which took ef20 fect on January 1, 1988, has eliminated about

21 $97,000,000 of United States red meat and meat

22 product exports to the European Union annually.

23 The United States has pursued its concerns regard24 ing the hormone directive in the GATT and the

25 WTO since January of 1987.
5

•HR 4761 IH

1 (10) On August 18, 1997, a final report of a

2 dispute settlement panel under the WTO, upholding

3 claims of the United States, found that the ban by

4 the European Union on the use of hormones in live5 stock production is in violation of the obligations of

6 the European Union under the Agreement on the

7 Application of Sanitary and Phytosanitary Measures.

8 The panel affirmed that the ban is not based on

9 science, risk assessment, or relevant international

10 standards. This panel report and a report by the Ap11 pellate Body affirming the finding was adopted by

12 the WTO on February 13, 1998.

13 (11) On May 29, 1998, the WTO determined

14 through binding arbitration procedures that the

15 compliance period for the European Union to imple16 ment the rulings and recommendations of the WTO

17 on the beef hormone ban will end on May 13, 1999.

18 (12) As in the case of bananas, the European

19 Union seeks to abuse the system of dispute settle20 ment with endless delay, showing no signs of ever

21 coming into compliance.

22 (13) Together, these two WTO dispute settle23 ment cases represent important precedents for agri24 cultural trade in the areas of tariffs, quotas, import

25 licensing, services, and the use of sound science as
6

•HR 4761 IH

1 a basis for the application of sanitary and

2 phytosanitary standards.

3 (14) Successful resolution of these cases will

4 serve to indicate whether the new Uruguay Round

5 Agreements that went into effect in 1995 will oper6 ate as an effective means for the United States to

7 resolve trade disputes.

8 (15) Serious consequences are necessary to

9 counteract the European Union’s deplorable tactics

10 and threat to the dispute settlement system.

11 (16) Retaliation is a remedy of last resort. Nev12 ertheless, because the European Union has delib13 erately flaunted the internationally agreed rules of

14 dispute settlement, thereby jeopardizing United

15 States companies, workers, farmers, and ranchers,

16 serious and immediate action is necessary.

17 SEC. 3. ACTIONS IN RESPONSE TO EU BANANA REGIME.

18 (a) IN GENERAL.—Notwithstanding the provisions of

19 section 6, the Trade Representative shall, in accordance

20 with this section, take action under section 301(c)(1)(A)

21 and (B) of the Trade Act of 1974, as if a determination

22 had been made under section 304(a)(1) of that Act that

23 the practices of the European Union regarding the impor24 tation of bananas violate, or are inconsistent with, or oth25 erwise deny benefits to the United States under the Uru-
7

•HR 4761 IH

1 guay Round Agreements. Any such action to eliminate

2 such practices shall be devised so as to affect goods or

3 services of the European Union in an amount that is

4 equivalent in value to the burden or restriction being im5 posed by the European Union on United States commerce.

6 (b) PRELIMINARY LIST OF ARTICLES FOR IN7 CREASED TARIFFS.—By not later than November 10,

8 1998, the Trade Representative shall publish, and provide

9 an opportunity for public comment on, a proposed list of

10 actions to be taken under subsection (a).

11 (c) FINAL LIST.—By not later than December 15,

12 1998, the Trade Representative, after taking into account

13 comments submitted by the public on the proposed list,

14 shall publish a final list of actions to be taken under sub15 section (a). Prior to publishing the final list, the Trade

16 Representative shall also consult with the Committee on

17 Ways and Means and the Committee on Agriculture of the

18 House of Representatives and the Committee on Finance

19 and the Committee on Agriculture, Nutrition, and For20 estry of the Senate with respect to the composition of the

21 final list.

22 (d) IMPLEMENTATION OF FINAL ACTIONS.—The

23 Trade Representative shall endeavor to take all action au24 thorized under Article 22.2 of the Understanding on Rules

25 and Procedures Governing the Settlement of Disputes,
8

•HR 4761 IH

1 and the Trade Representative shall proclaim the measures

2 included on the list published under subsection (c) to go

3 into effect on February 1, 1999, unless the Trade Rep4 resentative determines and certifies to the Congress

5 that—

6 (1) the Dispute Settlement Body has adopted a

7 report that—

8 (A) the rights of the United States under

9 the Uruguay Round Agreements are not being

10 denied by the practices of the European Union

11 regarding the importation of bananas; or

12 (B) the practices of the European Union

13 regarding the importation of bananas—

14 (i) are not a violation of, or inconsist15 ent with, the rights of the United States;

16 or

17 (ii) do not deny, nullify, or impair

18 benefits to the United States under the

19 Uruguay Round Agreements; or

20 (2) the European Union is taking satisfactory

21 measures to grant the rights of the United States

22 under the Uruguay Round Agreements;

23 (3) the European Union has—

24 (A) agreed to eliminate or phase out the

25 practices referred to in subsection (a); or
9

•HR 4761 IH

1 (B) agreed to an imminent solution to the

2 burden or restriction on United States com3 merce that is satisfactory to the Trade Rep4 resentative;

5 (4) it is impossible for the European Union to

6 achieve the results described in paragraph (2) or (3),

7 as appropriate, but the European Union agrees to

8 provide to the United States compensatory trade

9 benefits that are satisfactory to the Trade Rep10 resentative;

11 (5) in extraordinary cases, where the taking of

12 action under this section would have an adverse im13 pact on the United States economy substantially out

14 of proportion to the benefits of such action, taking

15 into account the impact of not taking such action on

16 the credibility of title III of the Trade Act of 1974

17 and the findings and provisions of this Act; or

18 (6) the taking of action under this section

19 would cause serious harm to the national security of

20 the United States.

21 (e) ARBITRATION.—In the event that the European

22 Union seeks arbitration under Article 22.6 of the Under23 standing on Rules and Procedures Governing the Settle24 ment of Disputes, the Trade Representative shall, notwith25 standing the requirements of subsection (d), proclaim the
10

•HR 4761 IH

1 measures included on the list published under subsection

2 (c) to go into effect on the date that the arbitration is

3 concluded, but in no event later than March 3, 1999. If,

4 as a result of such arbitration, the arbitrator concludes

5 that the measures are not consistent with Articles 22.3

6 or 22.4, the measures shall be adjusted to be in compli7 ance with Articles 22.3 and 22.4.

8 (f) SUSPENSION OF LIQUIDATION.—In applying sub9 section (d), the Trade Representative shall order the sus10 pension of liquidation of all entries of merchandise in11 cluded on the list published under subsection (c) which

12 are entered, or withdrawn from warehouse for consump13 tion, on or after January 2, 1999, through January 31,

14 1999, or, in the case of arbitration under subsection (e),

15 until the date that the arbitration is concluded but in no

16 event later than March 2, 1999. On the date that the

17 Trade Representative proclaims the measures included on

18 the list published under subsection (c), the Trade Rep19 resentative shall also proclaim the measures to apply to

20 merchandise for which liquidation had been suspended and

21 shall order terminated the suspension.

22 (g) CONSULTATION WITH CONGRESS AND DOMESTIC

23 INDUSTRY.—In determining whether any of the conditions

24 described in paragraphs (1) through (6) of subsection (d)

25 exist, the Trade Representative shall consult with the
11

•HR 4761 IH

1 Committee on Ways and Means of the House of Rep2 resentatives and the Committee on Finance of the Senate,

3 and with representatives of the domestic industry con4 cerned, and shall provide an opportunity for the presen5 tation of views by other interested persons affected by the

6 proposed determination concerning the effects of the de7 termination and whether such a determination is appro8 priate.

9 (h) NOTICE; REPORT TO CONGRESS.—The Trade

10 Representative shall promptly publish in the Federal Reg11 ister notice of, and report in writing to the Congress with

12 respect to, any determination made under paragraphs (1)

13 through (6) of subsection (d), together with the reasons

14 therefor.

15 SEC. 4. ACTIONS IN RESPONSE TO EU BEEF HORMONE BAN.

16 (a) IN GENERAL.—Notwithstanding the provisions of

17 section 6, the Trade Representative shall, in accordance

18 with this section, take action under section 301(c)(1)(A)

19 and (B) of the Trade Act of 1974, as if a determination

20 had been made under section 304(a)(1) of that Act that

21 the practices of the European Union regarding the use

22 of hormones in livestock production violate, or are incon23 sistent with, or otherwise deny benefits to the United

24 States under the Uruguay Round Agreements. Any such

25 action to eliminate such practices shall be devised so as
12

•HR 4761 IH

1 to affect goods or services of the European Union in an

2 amount that is equivalent in value to the burden or restric3 tion being imposed by the European Union on United

4 States commerce.

5 (b) PRELIMINARY LIST OF ARTICLES FOR IN6 CREASED TARIFFS.—By not later than April 1, 1999, the

7 Trade Representative shall publish, and provide an oppor8 tunity for public comment on, a proposed list of actions

9 to be taken under subsection (a).

10 (c) FINAL LIST.—By not later than May 3, 1999,

11 the Trade Representative, after taking into account com12 ments submitted by the public on the proposed list, shall

13 publish a final list of actions to be taken under subsection

14 (a). Prior to publishing the final list, the Trade Represent15 ative shall also consult with the Committee on Ways and

16 Means and the Committee on Agriculture of the House

17 of Representatives and the Committee on Finance and the

18 Committee on Agriculture, Nutrition, and Forestry of the

19 Senate with respect to the composition of the final list.

20 (d) IMPLEMENTATION OF FINAL ACTIONS.—The

21 Trade Representative shall endeavor to take all action au22 thorized under Article 22.2 of the Understanding on Rules

23 and Procedures Governing the Settlement of Disputes,

24 and the Trade Representative shall proclaim the measures

25 included on the list published under subsection (c) to go
13

•HR 4761 IH

1 into effect on June 13, 1999, unless the Trade Represent2 ative determines and certifies to the Congress that—

3 (1) the Dispute Settlement Body has adopted a

4 report that—

5 (A) the rights of the United States under

6 the Uruguay Round Agreements are not being

7 denied by the practices of the European Union

8 regarding the use of hormones in livestock pro9 duction; or

10 (B) the practices of the European Union

11 regarding the use of hormones in livestock pro12 duction—

13 (i) are not a violation of, or inconsist14 ent with, the rights of the United States;

15 or

16 (ii) do not deny, nullify, or impair

17 benefits to the United States under the

18 Uruguay Round Agreements; or

19 (2) the European Union is taking satisfactory

20 measures to grant the rights of the United States

21 under the Uruguay Round Agreements;

22 (3) the European Union has—

23 (A) agreed to eliminate or phase out the

24 practices referred to in subsection (a); or
14

•HR 4761 IH

1 (B) agreed to an imminent solution to the

2 burden or restriction on United States com3 merce that is satisfactory to the Trade Rep4 resentative;

5 (4) it is impossible for the European Union to

6 achieve the results described in paragraph (2) or (3),

7 as appropriate, but the European Union agrees to

8 provide to the United States compensatory trade

9 benefits that are satisfactory to the Trade Rep10 resentative;

11 (5) in extraordinary cases, where the taking of

12 action under this section would have an adverse im13 pact on the United States economy substantially out

14 of proportion to the benefits of such action, taking

15 into account the impact of not taking such action on

16 the credibility of title III of the Trade Act of 1974

17 and the findings and provisions of this Act; or

18 (6) the taking of action under this section

19 would cause serious harm to the national security of

20 the United States.

21 (e) ARBITRATION.—In the event that the European

22 Union seeks arbitration under Article 22.6 of the Under23 standing on Rules and Procedures Governing the Settle24 ment of Disputes, the Trade Representative shall, notwith25 standing the requirements of subsection (d), proclaim the
15

•HR 4761 IH

1 measures included on the list published under subsection

2 (c) to go into effect on the date that the arbitration is

3 concluded, but in no event later than July 13, 1999. If,

4 as a result of such arbitration, the arbitrator concludes

5 that the measures are not consistent with Articles 22.3

6 or 22.4, the measures shall be adjusted to be in compli7 ance with Articles 22.3 and 22.4.

8 (f) SUSPENSION OF LIQUIDATION.—In applying sub9 section (d), the Trade Representative shall order the sus10 pension of liquidation of all entries of merchandise in11 cluded on the list published under subsection (c) which

12 are entered, or withdrawn from warehouse for consump13 tion, on or after May 14, 1999, through June 12, 1999,

14 or, in the case of arbitration under subsection (e), until

15 the date that the arbitration is concluded but in no event

16 later than July 12, 1999. On the date that the Trade Rep17 resentative proclaims the measures included on the list

18 published under subsection (c), the Trade Representative

19 shall also proclaim the measures to apply to merchandise

20 for which liquidation had been suspended and shall order

21 terminated the suspension.

22 (g) CONSULTATION WITH CONGRESS AND DOMESTIC

23 INDUSTRY.—In determining whether any of the conditions

24 described in paragraphs (1) through (6) of subsection (d)

25 exist, the Trade Representative shall consult with the
16

•HR 4761 IH

1 Committee on Ways and Means of the House of Rep2 resentatives and the Committee on Finance of the Senate,

3 and with representatives of the domestic industry con4 cerned, and shall provide an opportunity for the presen5 tation of views by other interested persons affected by the

6 proposed determination concerning the effects of the de7 termination and whether such a determination is appro8 priate.

9 (h) NOTICE; REPORT TO CONGRESS.—The Trade

10 Representative shall promptly publish in the Federal Reg11 ister notice of, and report in writing to the Congress with

12 respect to, any determination made under paragraphs (1)

13 through (6) of subsection (d), together with the reasons

14 therefor.

15 SEC. 5. MODIFICATION AND TERMINATION OF ACTIONS.

16 (a) IN GENERAL.—The Trade Representative may

17 modify or terminate any action, subject to the specific di18 rection, if any, of the President with respect to such ac19 tion, that is being taken under section 4 or section 5 if—

20 (1) any of the conditions described in para21 graphs (1) through (6) of section 4(d) (in the case

22 of an action under section 4), or any of the condi23 tions described in paragraphs (1) through (6) of sec24 tion 5(d) (in the case of an action under section 5),

25 exist; or
17

•HR 4761 IH

1 (2) the burden or restriction on United States

2 commerce of the denial of rights, or of the practices,

3 that are the subject of such action has increased or

4 decreased.

5 (b) CONSULTATION WITH DOMESTIC INDUSTRY.—

6 Before taking any action under subsection (a) to modify

7 or terminate any action taken under section 4 or section

8 5, the Trade Representative shall consult with representa9 tives of the domestic industry concerned, and shall provide

10 an opportunity for the presentation of views by other in11 terested persons affected by the proposed modification or

12 termination concerning the effects of the modification or

13 termination and whether any modification or termination

14 of the action is appropriate.

15 (c) NOTICE; REPORT TO CONGRESS.—The Trade

16 Representative shall promptly publish in the Federal Reg17 ister notice of, and report in writing to the Congress with

18 respect to, any modification or termination of any action

19 taken under section 4 or section 5 and the reasons there20 for.

21 SEC. 6. ACTION WITH WTO.

22 The United States Trade Representative shall con23 tinue to make efforts to preserve the rights of the United

24 States under Article 21.5 of the Understanding on Rules

25 and Procedures Governing the Settlement of Disputes con-
18

•HR 4761 IH

1 cerning the measures of the European Union on the im2 portation of bananas and concerning the ban by the Euro3 pean Union on the use of hormones in livestock produc4 tion.

5 SEC. 7. DEFINITIONS

6 As used in this Act:

7 (1) the term ‘‘Trade Representative’’ means the

8 United States Trade Representative;

9 (2) the term ‘‘HTS’’ means the Harmonized

10 Tariff Schedule of the United States;

11 (3) the terms ‘‘GATT 1994’’, ‘‘Uruguay Round

12 Agreements’’, ‘‘WTO’’, ‘‘World Trade Organiza13 tion’’, and ‘‘WTO member country’’ have the mean14 ing given those terms in section 2 of the Uruguay

15 Round Agreements Act (19 U.S.C. 3501);

16 (4) the terms ‘‘Agreement on the Application of

17 Sanitary and Phytosanitary Measures’’, ‘‘Agreement

18 on Import Licensing Procedures’’, ‘‘General Agree19 ment on Trade in Services’’, and ‘‘Understanding on

20 Rules and Procedures Governing the Settlement of

21 Disputes’’ refer to the agreements with those names

22 referred to in section 101(d) of the Uruguay Round

23 Agreements Act (19 U.S.C. 3511(d)); and

24 (4) the terms ‘‘Appellate Body’’, ‘‘dispute set25 tlement panel’’, ‘‘Dispute Settlement Body’’, and
19

•HR 4761 IH

1 ‘‘General Council’’ have the meanings given those

2 terms in section 121 of the Uruguay Round Agree3 ments Act (19 U.S.C. 3531).

Æ