European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins
EEC Oilseeds I (Source: GATT Analytical Index)
|Products at issue
Oilseeds and related animal-feed proteins
|Type of product
Vegetable fats and oils
Key legal aspects
|Michael D. Cartland (Hong Kong)
|Jànos Nyerges (Hungary), Pierre Pescatore (Luxembourg)
|Legal basis at issue
|Claims at issue
|Defences at issue
|No of Pages (total / legal reasoning)
|49 (and 18 annex)
|Request for consultations
|Request for establishment
|Adoption of report
|Outcome of the proceedings
|C/M/220 (08/06/1988) Minutes of Council Meeting (04/05/1988) The EEC was not ready to agree with the establishment of a Panel.
C/M/222 (11/07/1988) Minutes of Council Meeting (16/06/1988) The EEC agreed to establish a Panel. France spoke as a Contracting Party and requested a note that it did not agree with the establishment of a Panel, and therefore there was no consensus. The EEC recalled that France was still a Contracting Party but no longer had competence on trade policy. A discussion took place on the lack of consensus. The Director-General said that practice was that the representative of the Community had the authority to commit the Community to a Council decision. France noted that was a practice, not a contractual right.
L/6627 (30/11/1989) European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins - Report of the Panel: The Panel noted that EC Regulation 136/66 provided for subsidies to be paid on rapeseed and sunflower seed harvested and processed within the Community, to make up for the difference between the target price and the world market price whenever the target price is higher than the world market price. For the Panel, Article III:8(b) would not be applicable because the payments were not made exclusively to domestic producers but to processors as well. The Panel also found that subsidy payments made to processors could be greater than the difference between the price processors actually paid to producers and the price that processors would have to pay for imported oilseeds. Whether such over-compensation created an incentive to purchase domestic rather than imported products depended on the circumstances of the individual purchase. The Panel considered that the exposure of a particular imported product to a risk of discrimination constituted, by itself, a form of discrimination. Therefore, the payments to processors of Community oilseeds were inconsistent with Article III:4.
Turning to the complaint by the United States that the grant of subsidies to Community producers of oilseeds had nullified or impaired benefits accruing to the United States under the Community's tariff concessions for oilseeds, the Panel noted that the Community could comply with its finding on Article III and still make available in the Community market oilseeds produced with the benefit of producer prices maintained at levels exceeding the price of competing imports. The Panel therefore decided that it had to examine that complaint as well. The partners of the Community in the successive renegotiations under Article XXIV:6 could legitimately assume, in the absence of any indications to the contrary, that the offer to continue a tariff commitment by the Community was an offer not to change the balance of concessions previously attained. The balance of concessions negotiated in 1962 in respect of oilseeds was thus not altered in the successive Article XXIV:6 negotiations. The Panel therefore found that the benefits accruing to the United States under the oilseed tariff concessions resulting from the Article XXIV:6 negotiations of 1986/87 included the protection of reasonable expectations the United States had when these concessions were initially negotiated in 1962.
Ultimately, the Panel found that benefits accruing to the United States under Article II of the General Agreement in respect of the zero tariff bindings for oilseeds in the Community Schedule of Concessions were impaired as a result of subsidy schemes which operated to protect Community producers of oilseeds completely from the movement of prices of imports and thereby prevented the oilseeds tariff concessions from having any impact on the competitive relationship between domestic and imported oilseeds.
L/6636 (25/01/1990) Communication from the EEC (22/01/1990) Comments on paragraphs of the Panel Report
L/6638 (26/01/1990) Communication from the US (25/01/1990) Comments on paragraphs of the Panel Report