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U.S. Will Appeal Gasoline Ruling Favoring Venezuela, Brazil

February 21, 1996

GENEVA (AP) _ In a case testing the World Trade Organization’s enforcement powers, the United States said Wednesday it will appeal the agency’s ruling that Washington discriminates against gasoline producers in Venezuela and Brazil.

The WTO announced last month that the United States holds foreign refiners to a higher cleanliness standard for gasoline than domestic firms, and demanded that it treat both equally.

The ruling, the first by the new WTO dispute settlement body, has become an issue in the U.S. presidential election campaign. It is seen as an important test of the WTO’s enforcement powers.

The United States advised the WTO on Wednesday that it will submit a detailed appeal within 10 days.

If it loses the appeal and refuses to eliminate the restrictions, the United States would be required either to pay compensation to Venezuela and Brazil or face the possibility of WTO-approved retaliatory sanctions by the two countries against U.S. products.

The WTO was created under a sweeping reorganization of world trade, which took effect Jan. 1, 1995.

Under the old General Agreement on Tariffs and Trade, disputes could drag on indefinitely. New WTO procedures set a limit of 18 months before a final ruling, which in this case would come about a month before the U.S. presidential election in November.

Republican presidential hopeful Pat Buchanan has called the ruling an attack on U.S. sovereignty. Senate Majority Leader Bob Dole, another Republican contender, says Washington should withdraw from WTO if it finds the organization is biased against the United States.

Venezuela and Brazil filed their dispute last year, maintaining that the United States was using certain clean-air regulations to curb petroleum imports.

At issue are rules introduced Jan. 1, 1995, by the U.S. Environmental Protection Agency, requiring reductions in some gasoline components to reduce exhaust pollution.

Although the rules apply to all refiners, foreign firms had to meet the standards immediately while U.S. companies were able to adopt them gradually.

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