./.RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q2/USA/9
15 June 2000
(00-2397)
Committee on Safeguards Original:  English
NOTIFICATION PURSUANT TO ARTICLE 12.1(C)
OF THE AGREEMENT ON SAFEGUARDS
NOTIFICATION PURSUANT TO ARTICLE 12.1(C) AND ARTICLE 9,
FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS
Replies from the UNITED STATES
to Questions posed by the EUROPEAN COMMUNITIES1
1. Could the US give detailed information and data on, and provide a copy of the published
report, on the basis of which the above-mention ed Presidential Proclamation [dated 28 May
1999], which proceeds to a reduction in the European Community’s 1999/2000 wheat gluten
quota allotment, was adopted?
Reply
Presidential Proclamation 7103, issued on 30 May 1998, imposes a three-year quantitative
limitation on wheat gluten imports, with specific quota allocations for the EC, Australia, and certain
other countries.  The proclamation establishes an overall quota of 57,521 kilograms for the year
beginning 1 June 1998, and provides that the quota will increase by six percent in each following
year, until it terminates on 1 June 2001.  The proclamation also requires that importers declare at the
time of importation whether wheat gluten is subject to the quota.
The US Customs Service (“US Customs”) uses the information that importers supply  to
administer the quota, subtracting the declared am ount of wheat gluten imports from the quota allotted
to the country of origin.  Before the end of the first quota year, US Customs received information
indicating that some importers had failed to comply with the requirement to declare wheat glutenimports covered by the quota.  Enquiries by US Customs revealed that this was the case and, thus, that
some wheat gluten imports from countries subject to the quota had not been deducted from the quota
allotments for those countries.
At the time that these discrepancies were discovered, the quota allotments for wheat gluten
imports from Australia and certain other countries had not been filled.  US Customs corrected the
improper designations and subtracted the imports from the quota allotments remaining for those
countries.  However, properly declared imports had al ready filled the entire EC allotment for the first
quota year.  Because of the importers’ failure to comply with the requirements established by
Proclamation 7103, imports of wheat gluten from the EC during the quota year exceeded the EC’s24,513,000 kg quota allotment by 5,402,000 kg, or 22 per cent.  As an alternative to harsher
enforcement measures, Proclamation 7202 of 28 May 1999, referenced in the EC’s question, treats the
overfill amount as if it had been imported under the EC’s allotment for the second quota year.
                                                     
1 G/SG/Q2/USA/7G/SG/Q2/USA/9
Page 2
US Customs derived the information it relied on from its import database and from records at
ports of entry.  Presidential Proclamation 7202 wa s based on a compilation of this data performed by
US Customs.  Summaries of the relevant data ar e available through the US Bureau of the Census.
2. Could the US provide full information on the circumstances leading to this alleged
“overfill” of the quota?
Reply
See response to question 1.
For purposes of identifying imports subject to the quota, Proclamation 7103 established
special tariff numbers and instructed importers to classify, and thus declare, all wheat gluten imports
subject to the quota under the tariff number applicable to that year.  During the first quota year,
certain importers failed to follow this instruction, with the results described in the answer to the first
question.
3. Could the US indicate on the basis of which provision of the WTO Agreement on
Safeguards it based the decision to reduce the EC’s 1999/2000 quota allotment, in particular in
light of the obligation contained in Article 7.4 of  the Agreement on Safeguards to “progressively
liberalise [the measure] at regular intervals during the period of application”?
Reply
Proclamation 7103 provides the EC with three annual quota allotments, increasing by 6 per
cent in years two and three.  Proclamation 7202 make s an accounting change necessary to enforce the
EC’s first-year allotment by assigning the overfill during that year to the second quota year.  Since theimports in question entered the United States in contravention of US law, the alternative would have
been to require the return of any excess imports that had already been entered or to impose heavy
penalties or liquidated damages.  Returned imports or imports still held by US Customs would have
been exported, destroyed, or held until the opening of the next quota period.  Any of these
enforcement mechanisms would have been more comm ercially disruptive than the procedure that the
United States applied.
The application of the excess imports to the second year quota allotment does not alter the
total amount of EC wheat gluten that may be imported during the three years the quota is in effect.
The change reflected in Proclamation 7202 “grandfathered” the excess EC wheat gluten imports that
entered the United States during the first year of the quota by, in effect, opening the second-year quota
earlier than called for under Proclamation 7103.  In this sense, the change represents a liberalizationof the original safeguard measure that the United States applied.
4. Could the US clarify why the quota allocation for the EC was cut by 5,402,000 kg for the
1999/2000 quota year, if the amount of wheat gluten  originating in the EC  entering in excess of
the allocation for the first quota year has been confirmed by the US to be 4,402,000 kg?
Reply
The document referenced by the EC contains a typographical error.  It should have stated that
the amount of EC wheat gluten entering the United States in excess of the EC quota was 5,402,000
kg.  As stated above, the information supplied by US Customs establishes that this is the correct
figure.  Therefore, the second year quota was adjusted by the correct amount.
__________