WORLD TRADE WT/DS106/1
G/SCM/D17/1
ORGANIZATION 17November 1997
(97-5000)
Original: English
AUSTRALIA -SUBSIDIES PROVIDED TOPRODUCERS
AND EXPORTERS OFAUTOMOTIVE LEATHER
Request forConsultations bytheUnited States
Thefollowing communication, dated 10November 1997, fromthePermanent Mission ofthe
United States tothePermanent Mission ofAustralia andtotheDispute Settlement Body, iscirculated
inaccordance withArticle 4.4oftheDSU.
_______________
Myauthorities haveinstructed metorequest consultations withtheGovernment ofAustralia
pursuant toArticles 1and4oftheUnderstanding onRules andProcedures Governing theSettlement
ofDisputes, Article 4.1oftheAgreement onSubsidies andCountervailing Measures ("SCM
Agreement"),andArticle30(totheextentthatitincorporatesbyreferenceArticleXXIII:1oftheGeneral
Agreement onTariffs andTrade 1994) oftheSCM Agreement regarding prohibited subsidies provided
toAustralian producers andexporters ofautomotive leather, including subsidies provided toHowe
Leather. TheUnited States understands thatprohibited subsidies toHowe Leather include theprovision
bytheGovernment ofAustralia ofan$A25million loanonpreferential andnon-commercial terms
andgrants amounting potentially toanother $A30million.
TheUnited States considers thatthese measures appear toviolate theobligations ofthe
Government ofAustralia under Article 3oftheSCM Agreement. TheUnited States believes that,
inlightoftheirterms andthecircumstances under which theyhavebeenprovided, thesubsidies provided
toHowe Leather mayconstitute subsidies "contingent, ...,infact,upon export performance" within
themeaning ofArticle 3.1(a) andfootnote 4oftheSCM Agreement. TheUnited States considers
thatbenefitsaccruingtoitdirectlyorindirectlyundertheSCMAgreementarebeingnullifiedorimpaired
asaresult ofthefailure oftheGovernment ofAustralia tocarry outitsobligations under Article 3
oftheSCM Agreement. TheUnited States reserves therighttoraiseadditional factual andlegalmatters
during thecourse oftheconsultations.
Welookforward toreceiving yourreply tothisrequest andtofixing amutually convenient
dateforconsultations.