Panel on Vitamins
US Vitamin B12
Products at Issue
|Products at issue||
|Type of product||
Pharmaceutical and chemical products
Key legal aspects
|Chairperson||E. Nettel (Austria)|
|Other members||M. Pullinen (Finland), Dr. J. Yeabsley (New Zealand)|
|Legal basis at issue||
|Claims at issue||
|Defences at issue||
|No of Pages (total / legal reasoning)||7 (and 1 annex)|
|Request for consultations|
|Request for establishment|
|Adoption of report|
|Outcome of the proceedings||
|Additional Info||L/5331 (18/06/1982) Panel on Vitamins – Report of the Panel:
(a) The Panel was not able to determine with certainty whether the United States had made it clear to the Community negotiators that the United States was not prepared to continue the negotiations on Vitamin B12, and therefore believed that the Community could not reasonably have been expected to make a reservation concerning Vitamin B12 with respect to the United States Tokyo Round Schedule.
(b) By entering into the bilateral Understanding with the United States concerning ASP Chemical Products, the Community accepted that the base rates for the tariff cuts to be negotiated in the Tokyo Round for Vitamin B12, as for other "competitive" ASP products, would be the converted rates offered by the United States without a need for renegotiations under Article XXVIII in respect of such products.
(c) In the ASP Chemical Products Understanding the United States undertook to examine, on a case by case basis, with a view to finding a mutually acceptable solution any specific cases raised by the Community on the ground that the Community in such case contested the method of conversion. The Panel noted that the only case concerning a "competitive" product raised by the Community related to Vitamin B12.
(d) It is clear in the opinion of the Panel that the ASP Chemical Products Understanding, while requiring the United States delegation to examine cases raised by the Community with a view to finding a mutually acceptable solution, did not create an obligation for the United States to meet the requests of the Community in each case it could raise.
(e) The Panel considered that the United States did not have an obligation to maintain the de facto tariff rate differentiation between feedgrade and pharmaceutical quality vitamins, provided that the method used for the conversion of the previous common bound rate was neutral and did not involve any arbitrary increase. The Panel believed the method used by the United States for the calculation of the level of the base rate - the weighted average of actual duties collected for feedgrade and pharmaceutical quality vitamins - to be in conformity with that proviso.
(f) The Panel noted that Community exports of feedgrade Vitamin B12 to the United States virtually ceased in the second half of 1980, after the abolition of the ASP valuation system on 1 July 1980, but that they recommenced in 1981, although at a lower level than in 1978 and 1979.
(g) Although the Panel, as indicated above, considered that the method used by the United States for the calculation of the base rate for Vitamin B12 was in principle fair and equitable, it felt that in this particular case, the result in respect of feedgrade quality vitamins had excessively negative effects for the suppliers of this product. The European Economic Community could reasonably have foreseen that the abolition of the ASP valuation system in some cases would lead to a less favourable tariff treatment for certain products, but it had in the opinion of the Panel no reason to assume that the tariff treatment of feedgrade quality vitamins would be modified in such a way that imports into the United States would decrease to the extent experienced. The Panel considered that the United States had not infringed its commitment under the General Agreement or under the ASP Chemical Products Understanding of 2 March 1979. Nevertheless, the Panel felt that in the light of the particular circumstances, the Council could invite the United States to advance the implementation of the Tokyo Round concession rate on feedgrade Vitamin B12 to such an extent that imported vitamins could again attain their traditional competitive position in the United States market.