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MEMORANDUM OF UNDERSTANDING REFLECTING RESULTS OF ARTICLE XXIII:1 CONSULTATIONS ON EUROPEAN COMMUNITY RESTRICTIONS AFFECTING IMPORTS OF CORN GLUTEN FEED
A. At the request of the United States, consultations on European Community imports of corn gluten feed (CGF) were held in Geneva on September 24, 1991.
B. The United States noted that the European Community had agreed, as a part of the Kennedy Round, to a zero bound duty on the imports of residues of the manufacture of starch from maize. In recent months, however, the U.S. noted certain Member States of the European Community had raised the question of the incorporation of corn germ meal (CGM) in CGF and had indicated that certain standards should be applied to imports of CGF. As a consequence some Member States imposed requirements with regard to testing, posting of bonds, and in some instances, classified shipments under CCT heading that are not currently duty-free.
C. The European Community expressed its concern about the possible adulteration of CGF with substances not obtained as byproducts of the manufacture of starch, which should be subject to the variable levy. The Community considered that CGF which contained more than de minimus amounts of CGM should not be classified as a residue of the starch manufacturing process. The Community argued that CGM was a residue of the oil extraction process, such residue being separately classified in the CCT. Residues of the starch extraction process which also contained residues of the oil extraction process should more properly be classified as "preparations", which were subject to the variable levy when imported into the Community. Therefore, it was necessary to test shipments of CGF, to require the posting of bonds, and to classify shipments which did not meet standards set out for residues of the manufacture of starch from maize, in a heading subject to a levy.
D. The United States expressed the view that the Member State actions were a violation of, Inter al1a, Articles II, X, XI and XXIII of the General Agreement on Tariffs and Trade, since CGM could also be considered a residue of the starch manufacturing process. They noted that CGF has contained varying amounts of CGM from the time of the establishment of the corn refining industry, and well before the 1967 binding. In addition, the United States had never agreed to any chemical standards to be imposed in connection with the tariff binding on the residues of the starch manufacturing process. The United States stated its intention to request a panel under Article XX111:2 as soon as possible if the dispute could not be resolved.
E. At the conclusion of the consultations between the EC and the United States, the following understanding as a practical solution to the problem was reached. The EC will enter corn gluten feed which is a residue of the manufacture of starch from maize, meeting the conditions laid out in the following paragraphs, under the duty-free binding negotiated in 1967:
1. With retroactive application to 1 January 1991, CGF imported into the EC will respect a maximum 28 percent starch content (on a dry matter basis).
2. From 1 January 1992, CGF imports will also respect a maximum fat content of 4.5 Percent on a dry matter basis (employing test method A of the Directive 84/4/EEC of 20 December 1983).
3. CGF will continue to respect a maximum 40 percent protein content.
4. The Community agrees that CGF may or may not contain CGM obtained by the wet-milling process, irrespective of the percentage included.
5. The two parties take note that the U.S. wet-milling industry has engaged to arrange for certification of CGF to ensure that:
a) the product has originated in the wet-mill maize-refining process; and
b) the product conforms with the above specifications.
6. All variable levies or bonds that have been collected on shipments of CGF which meet the criteria of paragraphs 1, 3 and 4 above, will be refunded or released before December 31, 1991.
7. Usual entry procedures will be resumed immediately.
8. EC definitions of CGF under its directives on the marketing of feeding stuffs will continue to reflect the presence of CGM.
9. This understanding is without prejudice to the treatment accorded to any other residues of the manufacture of starch or similar residues.
F. This understanding is without prejudice to the rights of the United States or the EC under the General Agreement with respect to this matter.
G. The measures in paragraph E will enter into force on
October 15, 1991.
Geneva, October 15, 1991
/S/
For the Government of the
United States
/S/
For the Commission of the
European Communities
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