CANADA TO PHASE IN GATT RULES FOR WINE, BEER, FISH INDUSTRIES

CANADA TO PHASE IN GATT RULES FOR WINE, BEER, FISH INDUSTRIES

Canada's wine, beer and West Coast fish processing industries are relieved at a government decision to adopt a delayed approach in complying with two rulings by the General Agreement on Tariffs and Trade.

But U.S. officials are concerned that Canada's approach may be disadvantageous for U.S. processors in the fish industry.The rulings call for Canada to ease market restrictions deemed illegal and discriminatory last year by GATT. The 95-nation GATT sets international trade rules and adjudicates disputes between its members.

Pat Carney, Canada's minister for international trade, said Canada must accept the rulings to set an example and live up to its international trade obligations, but stressed Canada is not bound to remove the restrictions immediately.

When the Canadian delegation this week informs the full council of GATT of its position, it will outline steps Canada plans to take to soften the full impact of the rulings, she said.

For the salmon and herring processors, those steps mean an end as of Jan. 1, 1989, to regulations that forbid exports of West Coast salmon and herring to the United States for processing. The latter was found discriminatory by GATT after a complaint by the United States.

New rules will stipulate that all such fish caught in Canadian waters must first be landed in Canada for inspection, classification and quality control. The inspection stations are expected to be located close to Canadian processing plants - creating a cost advantage for processing within Canada.

Ms. Carney said she was not expecting a stampede of U.S. buyers. The new procedures would be consistent with GATT principles, she said.

The landing and inspection requirement eventually will be expanded into a national program applied on both the Atlantic and Pacific coasts of Canada.

Initial reaction from the U.S. Trade Representative's Office in Washington was one of concern that the new rules could be used as a means of denying U.S. processors access to Canadian fish supplies.

A ruling last November by a GATT panel backed up a decade-old European complaint against liquor pricing and listing practices by provincial government outlets in Canada. They were decried as discriminating against imported wine, beer and spirits.

Ms. Carney agreed that these practices are unfair, but she hinted this week that Ottawa authorities may stick to an earlier proposal to take up to 12 years to remove the wine barriers.

As to the rules on beer imports, Ms. Carney said they cannot be changed in the foreseeable future.

The minister said the real worry with the GATT ruling on beer is that it would apply not only to Europe but to all countries, including the United States.

We did not see any point in giving the Americans something through a GATT panel report that they never paid for at the bargaining table in the free trade agreement, she said.

Ms. Carney was referring to the fact that beer was excluded from the proposed U.S.-Canada free trade agreement. The pact includes provisions to remove restrictions on U.S. wine imports.

Spokesmen for Canadian wine, beer and distilling industries said the government had little choice in accepting the GATT ruling, and approved the idea of phased-in corrective steps.

Derek Oland, chairman of the Brewers Association of Canada, said he was pleased with the government's position.

It's not unexpected, noted Jan Westcott, president of the Canadian Wine Institute.

Having accepted the GATT panel's ruling on the wine dispute, Canada must inform GATT by the end of this year of all reasonable measures it will take to implement the ruling. Observers expect this to spark continued wrangling between Canada and the European wine producers.