Legal Analyses written by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.

Legal Analyses written by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.

1998 International Law Update, Volume 4, Number 3 (March).

EUROPEAN UNION LAW

Where Belgium prosecuted local broadcaster for disobeying local  ban  on retransmission of Ted Turner's "TNT & Cartoon Network," European Court of Justice holds that "television without frontiers" Directive did not authorize such unilateral action

The American Turner Group is a substantial force in the U.S. television market.  It has a subsidiary in the U.K. known as Turner Entertainment Network International Limited (TENIL) with its "seat" or headquarters office in London.  TENIL in turn owns all the shares in two TV broadcast companies known as the Cartoon Network Ltd. and Turner Network Television Ltd., both headquartered in the U.K.  The U.K. has granted a non-domestic satellite service license for their programs.  Turner International Network Sales Ltd.(TINSL), is the London-based Turner company that markets the programs.

Starting in September 1993, TINSL obtained U.K. authority to broadcast a program known as "TNT & Cartoon Network" via satellite to the U.K. and several countries in western Europe on a frequency allocated to Luxembourg.  A Belgian company known as Coditel Brabant SA (hereinafter "Coditel") contracted with TINSL to handle rebroadcasting of the above programs in Belgium.

In 1993, however, Belgian authorities banned their distribution in the Brussels bilingual region based on their reading of Council Directive 89/552, the "television without frontiers" directive.  According to Belgium, the programs did not meet the requirements of Articles 4 and 5 having to do with dedicating the majority of TV broadcasting time to European TV productions.  The U.K. Broadcast Act of 1990 has incorporated these two articles and generally regulates independent U.K. broadcasters.

After a number of civil proceedings on the matter, Belgium brought a criminal action against Paul Denuit, the Managing Director of Coditel, for violating Belgian statutes on TV broadcasting. It charged that Coditel had continued broadcasting in the Brussels bilingual region despite the 1993 ministerial ban. 

The Brussels Tribunal de Premiere Instance next referred several questions on EC law to the European Court of Justice in 1996.  Belgium argued that the TNT & Cartoon network programs did not come within any Member State's jurisdiction under Article 2(1) of the Directive.  The Turner Group had produced the programs in the U.S. and they did not qualify under Articles 4 and 5 of the Directive or under Section 43 of the U.K.'s Broadcasting Act of 1990.

The Court of Justice, however, disagrees.  Pursuant to Article 2(1), a television broadcaster established in a Member State comes within the jurisdiction of that State.  It does not matter where the programs originated or whether they conformed to Articles 4 and 5 of the Directive. 

The Belgian court also asked whether Article 2(2) of the Directive allows a Member State to oppose long-term retransmission on its territory of programs from a TV broadcaster over which another Member State has jurisdiction if the broadcasts do not comply with Directive Articles 4 and 5.

Answering in the negative, the Court of Justice cites settled EC law that Member States cannot unilaterally adopt internal corrective measures to obviate another State's supposed violation of Community law.

On the other hand, if one Member State believes that another Member State has failed to live up to its duties under the Directive, it may bring Treaty infringement proceedings under Article 170 of the EC Treaty.  It may also ask the Commission itself to take action against that Member State under Treaty Article 169.

Citation: Paul Denuit, Case C-14/96, 3 CMLR 943 (1997)(Sixth Chamber).

EXTRADITION

First Circuit rules that post-extradition consent by Hong Kong to fugitive's trial on added charges enabled U.S. to convict on said charges without violating principle of specialty

Stephen Tse was heading a powerful Boston crime syndicate known as Ping On during the 1980s with links to organized crime in Hong Kong.  Meng and Keung belonged to a competing gang.  After a two-year absence, Tse came back to find out that Meng and Keung were pressuring one of his gang members to pay money.  Enraged at what he thought were intrusions into his territory, he ordered two of his men to kill Meng and Keung.  They shot at the intended victims but without effect.

In December 1993, a grand jury indicted Tse on 17 counts.  Counts 14 and 15 charged attempted murder in aid of a racketeering enterprise and Count 16 involved conspiracy to commit murder in aid of such an enterprise.

In February 1994, a Hong Kong magistrate granted a U.S. request to extradite Tse only on Count 16.  After plea negotiations fell through, the U.S. Consul General handed a diplomatic note to the Hong Kong government in May 1996.  It explained that the prosecution had found new evidence and asked for leave to prosecute Tse also on Counts 14 and 15.  The reply note agreed.

Tse then moved to dismiss Counts 14 and 15 as violating the principle of "specialty" in that the government was planning to try him on charges not involved in the original extradition request.  The district court, however, denied it.  The U.S. tried and convicted Tse on Counts 14-16.  Tse then filed an appeal.  The U.S. Court of Appeals for the First Circuit affirms.

The Court first points out that the doctrine of specialty rests on international comity.  Under it, the requesting nation is not to try the fugitive for crimes other than those on which the requested nation agreed to extradite.  Here, the government argued that Hong Kong had waived the rule of specialty when it had consented to the second request of the U.S. Consul General.

The Court agrees. "Even if the diplomatic note from Hong Kong did not serve to waive the doctrine of specialty, the conduct underlying the attempted murder charges was sufficiently similar to that of the conspiracy charge to comport with the doctrine.  ...  [Treaty] language recognizes that a single set of facts can give rise to more than one extraditable offense and that the treaty allows prosecution for those offenses, even if they were not specifically mentioned in the extradition document." [Slip op. 3]

Citation: United States v. Tse, No. 97-1103 (1st Cir. February 3, 1998).

HUMAN RIGHTS

In tort litigation against leaders of Nicaraguan "contra" forces over murder of U.S. citizen, District of Columbia Circuit insists that lower court follow proper procedures for ruling on government's claim of state-secrets privilege

In 1983, Benjamin Linder, a U.S. national, went to Nicaragua to work on electrifying undeveloped rural areas there.  While Linder was working on a dam in April 1987, a patrol of the Nicaraguan Democratic Force (FDN) attacked Linder's group with grenades and machine guns.  After administering thirty to forty facial stabs to Linder, a contra soldier shot him in the temple at short range.

Linder's family filed an action for damages against three contra organizations and four leaders in Florida federal court.  Plaintiffs claimed that the leaders either ordered or ratified Linder's murder, or set down policies and practices that directed or encouraged the Contras to torture and kill foreign development workers or knowingly failed to stop such activity.  Upon the appeal of the suit's dismissal, the Eleventh Circuit affirmed the organizational dismissals but allowed the case to move ahead against the four leaders under Florida tort law.

Having failed to obtain many documents from defendants during discovery, plaintiffs filed third party subpoenas for the documents against the FBI, CIA, NSA and INS.  After the agencies refused to comply based on burdensomeness and state secrets privilege, plaintiffs moved in the District of Columbia District Court to compel production.  The court quashed the subpoenas as to NSA and the INS and refused to compel production as to the other agencies. 

After inter-party negotiations, the district court limited the search to documents about Linder's death in April 1987, a nearby attack on a power project and actions of the specific defendants. It ruled out, however, the subject of contra organization, policies and practices. 

Using exemption standards under the Freedom of Information Act (FOIA), the district court denied plaintiffs further relief and the father appealed.  The U.S. Court of Appeals for the District of Columbia Circuit dismisses the non-final orders involving the FBI and the State and Defense Departments, affirms some of the final rulings and reverses others. 

Rejecting the applicability of FOIA, the Court first sets out the scope of discovery under Civil Rules 26 and 45 and the wide discretion the lower courts have in resolving discovery disputes. "An abuse of discretion occurs when the court applies the wrong legal standard or relies on clearly erroneous facts." [Slip op. 7]  It also notes that the agencies have the burden of showing oppressiveness. 

In addition, the Court points out that only the head of the department can claim the state secrets privilege after "actual personal consideration" of the material requested.  Moreover, to determine the existence of state secrets without publicly disclosing them, the district court may have to examine the documents at issue in chambers. See United States v. Reynolds, 345 U.S. 1 (1947).

The Court finds two difficulties with the December 1996 order.  "First, although the FBI submitted an affidavit estimating that the additional search would require up to 2142 person‑hours, the district court simply assumed that the CIA, which provided no estimate of its own, would face a similar burden.  Without evidence from the CIA describing the precise nature of its burden, however, we see no way for the district court to exercise its admittedly broad discretion or for us to review it." [id.]

Second, there is no indication that the lower court took into account the relevance of the requested information to two theories of the Linders' case approved by the Eleventh Circuit. "But the Linders ... seek general information about the organizations' policies and practices toward civilians, foreigners, prisoners of war, and the wounded, information they claim was not produced in the search for documents directly linking the defendants to the killing.  According to David Linder, such information may very well provide the 'building blocks' his family needs to prove its case. ... We thus reverse the district court's decision to limit the scope of the FBI and CIA subpoenas." [id.]

Citation: Linder v. Department of Defense, 133 F.3d 17 (D.C. Cir. 1998).

INTERNATIONAL COURT OF JUSTICE

International Court of Justice rules that it has jurisdiction to determine merits of two cases brought by Libya against U.S. and U.K. to determine fate of two Libyan suspects in Lockerbie bombing

A bomb destroyed Pan Am Flight 103 high over Lockerbie, Scotland on December 21, 1988.  The U.S. and the UK claim that Libya must surrender two Libyan nationals accused in the bombing for trial in Scotland or the U.S.  Eventually, Libya filed two actions against the U.S. and the UK before the ICJ.

During the hearings, the U.S. and the UK had argued that the ICJ lacked jurisdiction and that the Libyan claims were inadmissible.  Libya had argued that the U.S. and the UK have no right to compel the surrender of the two Libyan suspects.  Libya argued that it had the right to try the suspects based on the Montreal Convention of 23 September 1971 for the Suppression of Unlawful Acts against the Safety of Civil Aviation.

On February 27, 1998, the International Court of Justice (ICJ) upholds its own jurisdiction to address the merits of the two cases. A majority of the ICJ also held that Libya's applications to the Court are admissible even though they challenged the legality of Security Council resolutions that imposed sanctions on Libya. In particular, the Court:

- Voted 13 to 3 that it had jurisdiction over the dispute based on the Montreal Convention, Article 14, para. 1.  This provides that the Court should decide disputes that arbitration cannot resolve. (paras. 17-39). 

- Voted 12 to 4, that Libya's application was admissible because Libya had filed this case in 1992 before the UN Security Council had acted.  Furthermore, the Security Council has never ordered Libya to surrender the two suspects [See Resolutions 748(1992) and 883(1993)] (paras. 40-45).

[At a press conference, the U.S. Department of State explained that the U.S. and the UK will file detailed answers to Libya's claims.  The UN Security Council resolutions that imposed sanctions on Libya will remain in effect.]

Citation:  Case concerning Questions of Interpretation and Application of the 1971 Montreal Convention arising from the Aerial Incident at Lockerbie, available on the ICJ website www.icj-cij.org. [See also ICJ press release No. 98/2 (23 February 1998), and Nos. 98/04 & 98/04bis (February 27, 1998); U.S. Department of State Daily Press Briefing Index (February 27, 1998); Washington Post, February 28, 1998, page A21].

JUDGMENTS

Supreme Court of German Land denies enforcement of Wisconsin judgment because, according to German rules, Wisconsin federal court lacked jurisdiction over any assets belonging to German defendant

The plaintiff is a company located in Milwaukee, Wisconsin. Through an Illinois intermediary, it bought a machine manufactured by a German company, L. Werkzeugmaschinen-fabrik.  Because the machine allegedly did not function properly, the plaintiff first sued the Illinois intermediary in U.S. district court in Wisconsin in 1991, and later joined the German manufacturer.  The Illinois company filed for bankruptcy a few months after receiving the summons.  Neither the Illinois company nor the German manufacturer responded to the summons.  The plaintiff eventually obtained a default judgment for $1,280,057.30 in compensatory damages and $1 million in punitive damages. 

The plaintiff then sought enforcement of the compensatory portion of the judgment in Germany.  After consulting a German law professor, the German district court (Landgericht) granted the enforcement.  The defendant appealed. The State Supreme Court (Oberlandesgericht, OLG) in Hamm, however, reverses and dismisses the case.

A threshold issue is whether the German defendant may require the U.S. plaintiff to pay a security deposit for court costs and fees.  According to Rule 110 of the German Rules of Civil Procedure (Zivilprozessordnung, ZPO), German courts require such a security deposit only if a German party in the foreign plaintiff's state would have to do so.

Wisconsin courts recognize and generally enforce foreign civil judgments pursuant to the doctrine of comity.  The recognition occurs through an action upon the foreign judgment in state or federal court.  In state court, Wisconsin law (Section 814.28 Wisconsin Statutes) requires a German plaintiff to pay a security deposit for court costs if the defendant so demands.  Although ZPO Rule 110 is similar, it applies only to attorneys' fees which are generally not reimbursable in the U.S. system.  In a Wisconsin federal court, a German plaintiff would not have to pay such a deposit.

The question is whether a federal court in Wisconsin would apply Wisconsin state law and require a deposit in this case.  So far, Wisconsin courts have not yet decided whether Wisconsin statute 814.28 is procedural or substantive.  The Court believes that Section 814.28 is probably procedural in nature and therefore the federal court in Wisconsin would not apply it.  Because a German plaintiff could sue to enforce a German judgment in Wisconsin, at least in federal court, without paying a deposit, the U.S. judgment in this case would be enforceable in Germany on the same terms.

The Court, however, ultimately refuses to enforce the U.S. judgment in Germany.  Enforcement of a foreign judgment is impermissible if the courts of the foreign state, under German rules, did not have jurisdiction.  Under ZPO Rule 23, only a state where the defendant had assets may acquire jurisdiction over the defendant.  The German defendant, however, has never had any assets in Wisconsin. Even though some commentators argue that, in countries with various legal systems such as the U.S., the relationship to the "country as a whole" should be decisive, the German Court looks only to the law of the individual state whose courts rendered the initial judgment.

Consequently, the U.S. judgment is not enforceable in Germany.  The Court therefore does not address the defendant's alternative arguments that plaintiff did not have the summons properly served and that the U.S. judgment would violate German public order.

[Submitted by John Wolff, Adjunct Professor of Law at Georgetown University Law Center in Washington, D.C.].

Citation: OLG Hamm, Urteil vom 4.6.1997 - 1 U 2/96, reported in 1997 RIW, Heft 12, Internationales Wirtschaftsrecht, page 1039. [A comment by Professor Rolf A. Schütze, who gave the above-mentioned statement to the district court, appears in the same issue at page 1041.]

JURISDICTION (PERSONAL)

In dispute between Indonesian and Pennsylvania companies, Second Circuit holds that district courts may exercise nationwide jurisdiction over RICO defendants only where "ends of justice" require

PT United Can Company (UCC) is an Indonesian corporation with a dominant market share in the South Asian metal packaging industry.  Continental Can International Corporation (CCIC) held part of UCC's stock and later transferred it to Crown Cork & Seal Co. (Crown), a Pennsylvania corporation. 

A 1977 Shareholders' Agreement had given UCC a right of first refusal if CCIC wished to dispose of its interest in UCC, the price being based on UCC's net worth.  The Agreement was silent, however, as to choice of law and venue.  In December 1995, Crown offered to sell back its UCC shares for $6 million.  At that point, however, UCC wanted an unfunded transfer since it had a negative net worth.  Crown refused.

UCC sued Crown and two of its Pennsylvania officers individually in a New York federal court. It alleged breach of contract and RICO claims.  The district court dismissed the claims against the individual defendants for lack of personal jurisdiction, and threw out the claims against Crown on forum non conveniens grounds.

The U.S. Court of Appeals for the Second Circuit affirms.  18 U.S.C. § 1965 (1994) provides that: "(b) In any action under section 1964 of this chapter [RICO] in any district court ... in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned ...  (d) All other process in any action or proceeding under this chapter may be served on any person in any judicial district in which such person resides, is found, has an agent, or transacts his affairs..." [emphasis supplied].

The Eleventh Circuit doctrine was that § 1965(d) provides nationwide jurisdiction over RICO defendants.  Based on Ninth Circuit precedent, the district court had held that § 1965(b) -- and not § 1965(d) -- governs the exercise of personal jurisdiction under RICO.  The Second Circuit agrees with the Ninth Circuit's reading of the statute.

"Courts treating both sections have specifically identified § 1965(d), not (b), as authorizing nationwide service on [RICO] defendants. ... Section 1965 makes sense [however] only if all of its subsections are read together ... § 1965(b) provides for nationwide service and jurisdiction ... This jurisdiction is not automatic but requires a showing that the 'ends of justice' so require.  This is an unsurprising limitation.  There is no impediment to prosecution of a civil RICO action in a court foreign to some defendants if it is necessary, but the first preference ... is to bring the action where suits are normally expected to be brought." [Slip op. 12-14]  Since the individual defendants work in Pennsylvania, plaintiff can readily sue them there.

As for Crown's forum non conveniens dismissal, UCC argued that the district court should have included in its analysis the interests of the individual defendants whom it had dismissed for lack of personal jurisdiction.  The Court disagrees. 

Once a court dismisses claims against a party for lack of personal jurisdiction, that party is no longer a defendant before that court.  If a court had to consider the motion to dismiss on forum non conveniens grounds as to all original defendants, including those properly dismissed for lack of personal jurisdiction, a crafty plaintiff could structure the case so as to neutralize most of these  motions.  For example, he could include a dismissible defendant with no links to the alternative foreign forum. 

Finally, the non-existence of a RICO statute in Indonesia does not, by itself, rule out Indonesia as an alternative forum.  The district court only had to determine whether the laws enforceable in Indonesian courts provide plaintiff an adequate, but not necessarily an identical, legal regime.

Citation: PT United Can Co. Ltd. v. Crown Cork & Seal Co., Inc., No. 97-7252 (2d Cir. February 25, 1998).

Sixth Circuit holds that personal jurisdiction of Kentucky federal court over Canadian corporate defendant was reasonable because of geographical proximity, similarity of legal systems, and state interest in litigation

Aristech Chemical Int'l Ltd. is a Delaware corporation that makes acrylic products in Kentucky.  Acrylic Fabricators Ltd. (AFL) of Ontario, Canada has on several occasions bought Aristech products.  In 1994, AFL approached Aristech to obtain 1-3 million pounds of acrylic with a custom green tint.  AFL was planning to manufacture literature racks for Canadian bank offices.

In 1995, AFL ordered 40,000 pounds of green-tinted acrylic for about U.S. $95,000.  Aristech changed its production schedule to meet AFL's deadlines.  When AFL failed to pay for the acrylic, Aristech sued in Kentucky state court.  AFL removed to federal court.  Without an evidentiary hearing, the district court dismissed the case for lack of personal jurisdiction over AFL.

The U.S. Court of Appeals for the Sixth Circuit reverses.  Kentucky has construed its long-arm statute to extend as far as the Due Process Clause.  Therefore, the court need only determine whether the assertion of personal jurisdiction violated the Fourteenth Amendment.

Whether specific jurisdiction over AFL exists depends on (1) whether AFL purposefully availed itself of the privilege of acting in Kentucky or purposefully caused a consequence there; (2) whether the cause of action arose from AFL's activities in Kentucky, and (3) whether an assertion of jurisdiction would be reasonable.

In the Court’s view, jurisdiction over AFL is not unreasonable simply because AFL is a foreign defendant.  Whether jurisdiction is reasonable ultimately depends on the extent to which Kentucky has an interest in resolving the dispute.  This is not like some cases where litigation in the U.S. would have imposed a substantial burden on foreign defendants.  Here, only a short plane flight separates Ontario from Kentucky; so that the distance is not overly burdensome.  Modern methods of transportation and communication have notably eased the burdens  on a Canadian defendant litigating in the U.S.  Furthermore, both the U.S. and Canadian legal systems are based on common law, making it less difficult to litigate in an unfamiliar legal system.

"Indeed, any burden on AFL is more than counterbalanced by the interests of Kentucky and Aristech.  With respect to the forum state, this case involves a product manufactured in and shipped from Kentucky.  A state has a significant interest in resolving a suit when 'a contract calling for substantial production of goods is entered into, with the production of goods and another performance under the contract to take place entirely within the forum state.' ... This interest is magnified when, as here, the transaction is expressly governed by the law of the forum state. ... And as for Aristech, it undoubtedly has an interest in receiving payment for its goods. ... Further, because the trial is likely to involve witnesses from both Kentucky and Ontario, litigating in Canada would not necessarily be more efficient than litigating in Kentucky.  Finally, we note that this is not the sort of case that strongly implicates the procedural and substantive policies of Canada and hence counsels against the exercise of personal jurisdiction." [Slip op. 12-14]

Citation:  Aristech Chemical Int'l Ltd. v. Acrylic Fabricators Ltd., No. 96-6525 (March 12, 1998).

SOVEREIGN IMMUNITY

Under new exception to FSIA, U.S. district court upholds jurisdiction over Iran in suit for death of American  student during terrorist attack in Israel by Iranian-supported Islamic Jihad and enters multi-million-dollar default judgment

Alisa Flatow, a 20-year-old student from New Jersey, died in April 1995 after a suicide bomber drove a van loaded with explosives into the bus she was riding in the Gaza Strip.  The Shaqaqi faction of the Palestinian extremist group Islamic Jihad, which Iran allegedly sponsors, claimed responsibility for the attack.  The Flatow family brought a wrongful death action against Iran and several Iranian government officials in District of Columbia federal court under the Foreign Sovereign Immunities Act of 1976.

The Flatows’ suit relied on two recent amendments to the Foreign Sovereign Immunities Act (FSIA) [28 U.S.C. §§ 1602-1611] that allow suits against foreign nations which the State Department has officially designated as state sponsors of terrorism.  See 1997 Int'l Law Update 78.

In the Antiterrorism and Effective Death Penalty Act of 1996, Congress lifted the immunity of listed foreign states for acts of terrorism [Pub.L. 104-132, Title II § 221(a) (April 24, 1996), 110 Stat. 1241, 28 U.S.C. § 1605].  As of October 31, 1997, these states are Cuba, Syria, Iran, Iraq, Libya, Sudan, and South Korea [see 22 C.F.R. § 126.1(d)].  Iran's funding of the Shaqaqi faction qualifies as sponsorship of terrorist activities within the meaning of 28 U.S.C. § 1605(a)(7) and 28 U.S.C. § 1605 note.

The amendment also applies to causes of action arising before April 24, 1996, the date of its enactment.  Congress included the Civil Liability for Acts of State Sponsored Terrorism in the 1997 Omnibus Consolidated Appropriations Act [Pub.L. 104-208, Div. A, Title I § 101(c) (Title V § 589) (September 30, 1996), 110 Stat. 3009-172]("Flatow Amendment"). The amendment provides for punitive damages.

Iran did not respond to the action. To obtain a default judgment against a foreign state under the FSIA, the plaintiff must "establish[] his claim or right to relief by evidence that is satisfactory to the Court." [28 U.S.C. § 1608(e)].

On March 11, 1998, the district court entered a default judgment that ordered Iran to pay the Flatows a total of $247 million in compensatory and punitive damages.  In its decision, the district court first notes that Iran is an experienced litigant in U.S. courts, and that someone opened the summons and thereafter returned it to counsel with the words "DO NOT USA" written across the envelope.

Congressional intent and legislative purpose show that 28 U.S.C. § 1605(a)(7) applies to extraterritorial conduct. One of its express purposes is to affect the conduct of terrorist states outside the U.S.  In the Court’s view, the extraterritorial application of the statute is consistent with international law, because actions by U.S. victims of foreign state sponsored terrorism may rest on three of the five bases for the exercise of extraterritorial jurisdiction.  These are  passive personality (nationality of victim), protective (national security interests), and universal (subject to jurisdiction wherever the offender may be found) [see Restatement (Third) Foreign Relations Law of the United States (1986) at § 402(2)-(3), § 423].

[The recent FSIA amendments were also the basis of the action by the families of "Brothers to the Rescue" pilots whom the Cuban Air Force shot down over the Straits of Florida on February 24, 1996. See Alejandre v. The Republic of Cuba, Nos. 97-10126-CIV-KING, 96-10127-CIV-KING, 96-10128-CIV-KING (S.D. Fla. December 17, 1997).  Other plaintiffs have refiled cases arising out of the bombing of Pan Am Flight 103 over Lockerbie under these amendments.  They are pending before the U.S. District Court for the Eastern District of New York, see, e.g., Rein v. Socialist People's Libyan Arab Jamahiriya, No. 96-civ-2077].

Citation: Flatow v. The Islamic Republic of Iran, No. 97-396 (D.C. Cir. March 11, 1998);[See also U.S. Department of State Daily Press Briefing (March 11, 1998); The Washington Post, March 12, 1998, page A1].

TRADE

In controversy between U.S. and EU, WTO Dispute Settlement Body decides that EU was violating GATT agreement by imposing greater tariffs on high-technology American exports

On February 5, 1998, the WTO circulated a consolidated Dispute Settlement Panel Report regarding higher tariffs upon U.S. high-technology exports to the European Union, the United Kingdom, and Ireland (respondents).

The U.S. had complained that the respondents had breached their WTO obligations by boosting tariffs on U.S. computer networking adapter equipment (LAN), as well as a type of multimedia personal computer with TV tuner.  They had reclassified the equipment from "automatic data processing machines" to telecommunications products, thereby almost doubling the applicable tariff.

In a consolidated report, the Panel found that the EU was violating Article II:1 of GATT 1994.  Under this Article, each WTO Member must give other Members "treatment no less favorable than provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement."

According to the Panel, the tariff concession for "automatic data processing machines" (tariff heading 84.71 or 84.73 in EC Schedule LXXX) in the EU's Uruguay Round tariff schedule applies to computer networking equipment.  Its breach of GATT Article II:1 consisted in levying higher tariffs on computer networking equipment than the ones listed in the tariff schedule. (Part IX. of the Report).

[The U.S. Trade Representative explained in a press release that, in terms of trade volume, this was the largest case the U.S. has ever brought before the WTO.  U.S. companies account for more than half of the annual $5 billion in sales of such equipment in the European market.]

Citation: WTO Dispute Settlement Body, European Community -- Customs Classification of Certain Computer Equipment (WT/DS62, WT/DS67, WT/DS68, circulated on February 5, 1998).  [See also the WTO website at www.wto.org; U.S. Trade Representative press release 98-11 (February 5, 1998).]

U.S. ends 35-year-old arms embargo against South Africa

Pursuant to a Joint Defence Industry Compliance Programme, the U.S. has lifted its long-term arms embargo against South Africa.  The agreement will allow South African defense companies to trade with the U.S.  The agreement will also permit South Africa to include U.S. technology in its own weapons systems built for export, and to buy weapons from other countries that incorporate U.S. components.

The U.S. had initially imposed the embargo to protest the South African system of apartheid.  Because of a dispute with certain South African companies which had allegedly transgressed the sanctions, the U.S. had extended it.  Effective February 27, 1998, the U.S. Department of State lifted the debarment of the Armaments Corporation of South Africa, Ltd. (Armscor), the Deniel Group (Pty) Ltd., and related entities.  A federal grand jury had indicted them for violating the Arms Export Control Act (AECA) [22 U.S.C. 2778] (see 59 Federal Register 33811).  After the companies accepted plea agreements, the Department of State imposed statutory debarments [§ 38(g)(4) of AECA, and § 127.11(b) of the International Traffic in Arms Regulations (ITAR), 22 C.F.R. Parts 120-130, prohibit the issuance of export licenses or other approvals to persons who have violated U.S. statutes].

Citation: 63 Federal Register 10671 (March 4, 1998); The White House, Office of the Vice President, Joint Statement by Vice President Gore and Deputy President Mbeki (February 27, 1998); Washington Post, February 28, 1998, page A16.

Russia specifies labelling requirements that set forth more detailed background information on imported foods

Effective January 1, 1998, companies that import food products imported into Russia must label them according to new rules published by the Division of Food Products Certification of the Center of Standardization, Metrology and Certification (Primorsky Krai).

Food product labels must contain the following information in Russian:

- Name of the product (importers must document designations such as "diet" or "sterilized" and explain special processing methods such as "ionization")

- Name and address of the manufacturer/packing company/exporter

- Country of origin (where the product was processed)

- Manufacturer's trade mark

- Net weight, volume, or quantity (in metric units)

- Contents (in descending order of weight) and nutritional value (carbohydrates, protein, fat, energy value in kilocalories)

- Storage conditions

- Shelf life and expiration date

Importers may repeat this information in English.  In case the information cannot fit on the package, the company may enclose it as an insert.

Baby food must not have a picture of a baby on the package; beer labels must identify the alcohol content in percent.

Citation: Business Information Service for the Newly Independent States (BISNIS), provided through the U.S. Chamber of Commerce, Phone: (202) 482-2000.  [Readers can obtain further details (in Russian) from the Information Department of the Center of Standardization, Metrology and Certification, 54 Praporschika Komarova Street, Vladivostok, Russia 690600, Phone: (7-4232) 224-755, FAX: (7-4232) 228-729.]

- Mexico publishes Treaty with U.S. regarding maritime boundaries in Gulf of Mexico and Pacific Ocean. The Mexican Official Gazette has published a boundary Treaty between Mexico and the U.S.  It describes the exact maritime boundaries between the two countries in the Gulf of Mexico and the Pacific Ocean.  A 1970 treaty had fixed the boundaries up to 12 nautical miles. The new Treaty supplements the 1970 one by setting the boundaries up to 200 nautical miles by latitude and longitude. The Treaty will enter into force once both nations have ratified it and the parties have exchanged the instruments of ratification in Washington, D.C.  Citation: Decreto de promulgación del tratado sobre límites marítimos entre los Estados Unidos Mexicanos y los Estados Unidos de América, 1998 [Mexican] Diario Oficial de la Federación (January 28, 1998).

- FAA allows commercial flights by U.S. carriers in Pyongyang regions of North Korea.  With a rule issued in 1997 (62 Federal Register 20076), the U.S. Federal Aviation Administration banned certain flight operations for U.S. carriers in the Democratic People's Republic of Korea (North Korea) because of safety concerns.  Based on a review of updated safety information, the FAA has issued a regulation that allows flight operations in the Pyongyang Flight Information Regions (FIR).  Citation: 63 Federal Register 8016 (February 17, 1998).

- FCC announces effective date for foreign participation in U.S. telecommunications market. In December 1997, the Federal Communications Commission had published a new standard for foreign participation in the U.S. satellite services market which is consistent with the WTO Basic Telecom Agreement (62 Federal Register 64167).  The effective date of the new standard was February 9, 1998.  Citation: 63 Federal Register 6496 (February 9, 1998).

- Following adverse WTO decision, EU plans new risk assessment of hormones in beef.  On February 13, 1998, the WTO Appellate Body affirmed that the EU did not carry out a proper risk assessment before restricting the use of certain growth hormones in cattle. The U.S. and Canada had brought the EU prohibition before the WTO claiming it was incompatible with GATT and the Sanitary and Phytosanitary Agreement.  On March 13, 1998, at the meeting of the WTO's Dispute Settlement Body in Geneva, the EU announced that it plans to carry out a complementary risk assessment.  It will, however, continue its 1988 hormone ban.  Citation: The European Union press release No. 17/98 (March 13, 1998).

- EC Commission opposes "Open Skies" aviation agreements of individual Member States with the U.S.  Several EU Member States (Austria, Belgium, Denmark, Finland, Germany, Luxembourg, Sweden) have signed "Open Skies" aviation agreements with the U.S.  The UK entered into a similar agreement with the U.S. in 1995.  The Commission of the European Communities claims an exclusive mandate for negotiating such an agreement and considers the individual agreements incompatible with EU law.  It has issued a "reasoned opinion" (see Article 169 EU Treaties), to which the Member States must reply within two months.  EU Transport Commissioner Neil Kinnock stated that "[b]y unilaterally granting US carriers traffic rights to, from and within the EU while ensuring exclusively for their own carriers the right to fly from their territory to the United States, these member states create serious discrimination and distortions of competition, thereby rendering EU rules ineffective."  In the absence of compliance with its opinion, the Commission may thereafter bring the case before the European Court of Justice.  Citation: The European Union press release No. 16/98 (March 11, 1998).

- U.S. and Philippines conclude agriculture agreement dealing with U.S. pork and poultry.  Based on a petition by U.S. pork exporters, the U.S. Trade Representative started an ongoing review of the Philippines' eligibility for preferential access to the U.S. market under the Generalized System of Preferences (GSP) in April 1997. The U.S. and the Philippines have now agreed to reform the latter's restrictive tariff quotas and licensing practices for U.S. pork and poultry exports to comply with the tariff rate quotas of the Uruguay Round.  The parties will sign the Memorandum of Understanding upon completion of internal procedures by the Philippine Government.  Upon signature of the Agreement, the USTR will wind up this review.  By March 5, 1998, the changes will enter into force as to imports that have entered the Philippines since January 1, 1998.  Citation: U.S. Trade Representative press release 98-14 (February 13, 1998).