Date: 1991-10-22
Speaker: EDWARD MADIGAN (republican)
Chamber: S

Secretary of Agriculture. Washington. DC. DEAR CARLA "D EE Thank you for your letter of September 7 and the message sent to us on September 24 concerning the implementation of the conclusions of the GATT oilseeds panel. . We are glad to read that you acknowledge that the Commission has taken the right initiative to resolve the violation of GATT Article 111.4 by proposing to the Council to support farmers incomes by a system of direct payments. Unfortunately. you do not seem to accept that the other main issue addressed by the Soya Panel. the impairment of the tariff concession. will be removed as well upon adoption by the Council of the Commission proposal. You will recall that the panel conclusions of December 1989 state that the support arrangements for oilseeds should not "protect Community producers completely from the movement of prices of imports and thereby prevent the tariff concession from having any impact on the competitive relationship between the domestic and imported oilseeds". It is our view that the Commission proposal meets this point and we disagree with your assessment to the contrary. We believe that the requirements laid down by the panels conclusions will be met by the combined effects of the following elements of the Commissions proposal if they are adopted by the Council: The producer will sell his product at the world market price and will. consequently. be subject to the risks related to such a situation. The aid will be calculated once a year. will include a franchise and will be paid for an average production. The aid will. therefore. not compensate for price fluctuation on the world market. The producer will not be shielded by an intervention system. It is in particular for these reasons. that we cannot agree with your conclusion that. under the new system. the GATT binding will continue to be prevented from having any impact on the competitive relationship between domestic and imported oilseeds. As regards your proposal to apply paragrph kA of the Uruguay Round draft text on dispute settlement which allows. Inter alia. for a resort to the original panel in case of disagreement as to measures taken to comply with recommendations and rulings under GATT Article XXIII:2. we are of the opinion that this provision. even though its inclusion In the Lacarte text was supported by the EC. only creates obligations after it has been accepted as part of an overall agreement on the outcome of the Uruguay Round. Until such time. we do not wish to anticipate on the entry into force of the new text on dispute settlement. For the time being. the GATT Council remains. therefore. the sole body to be addressed for monitoring the implementation of recommendations or rulings adopted under Article XXIII land In particular paragraph 1 of the April 1989 Decision. 1 180 365/611. As we indicated in our letter of June 27. the EC Concil has agreed to adopt. by October 31 of this year. a new oilseeds regime which will bring EC legislation into conformity with the panel conclusions. The Commission proposal which was sent to the Council in July is only a step in the decisionmaking process of the Community. In view of this and of the Councils pledge to decide on the proposal before the end of October. your complaint is. to say the least. premature. We would like to point out that the Commissions proposal. while complying with the GATT panel conclusions. lays down a transitional scheme which will apply until the definitive one is adopted as part of the CAP reform under discussion in the CounciL We hope that you will be convinced that we are fulfilling the obligations we undertook on the adoption of the panel report and we are. as always. ready to continue to explore with you the ways to control this issue. Yours sincerely. FRANK ANDRIEssN.