Pasta
Pasta: launched by the United States against the European Economic Community (EEC) in 1982 on the grounds that EEC export subsidies on pasta products (macaroni, spaghetti and similar products) manufactured from durum wheat were inconsistent with Article 9 of the Tokyo Round Subsidies Code. This article states that signatories shall not grant export subsidies on products other than certain primary products. The EEC argued that pasta products were a type of primary product. The facts were that the EEC operated a common system for the internal market in cereals and cereal-based products. It provided for a single system of internal prices for the whole Community and a common trading system with third countries which prevented price fluctuations of the world market from affecting internal cereal prices. The system also provided for export licensing and for application of export refunds in a prescribed manner. Export refunds could be granted to cover the difference between the internal prices and those on third markets for cereals exported in natural state or in the form of specified goods. Pasta products were included in this list of specified goods. The funding of the export refund on durum wheat in the form of pasta was made by a public contribution from the EEC budget which also paid the export refunds on cereals. In its findings and conclusions, the panel was of the opinion that pasta was not a primary product, but a processed agricultural product. It also concluded that the EEC system of granting refunds had to be considered a form of subsidy in the sense of GATT Article XVI (Subsidies). The panel held that the terms of Article XVI, as interpreted in Articles 9 and 10 of the Subsidies Code, excluded the possibility of considering the export of a processed product on the same terms as the export of its constituent components. Accordingly, it concluded that the EEC export refunds were granted on the exports of pasta products and operated to increase these exports and that the EEC subsidies on exports of pasta products were granted in a manner inconsistent with Article 9 of the Subsidies Code.
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
Web site to visit: http://ctrc.sice.oas.org
Author of the text: W. Goode
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