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U.S. Automotive Leather Tanners Victorious in Trade Dispute With Australian Government

21 June 2000

U.S. Automotive Leather Tanners Victorious in Trade Dispute With Australian Government

    WASHINGTON - American automotive leather tanners prevailed today in their 
protracted unfair trade dispute with the Australian government and its practice of giving export subsidies to Howe & Co. Pty.
Ltd., Australia's sole automotive leather tanner.

    Today, the Office of the United States Trade Representative (USTR)
announced that it had settled its claims against Australia for its A$30
million grant to Howe in return for Howe's partial repayment of the grant and
Australia's commitment to refrain from further subsidies to its automotive
leather industry for a 12-year period.  The announcement was hailed as a
victory for the U.S. automotive leather industry, which has fought for many
years for a level playing field in this sector.  According to a spokesperson
for the U.S. industry, American tanners suffered millions of dollars in trade
damage annually as a result of the Australian government's hand-out to Howe.

    The settlement followed the World Trade Organization's rulings that
Australia's A$30 million grant to Howe was an unlawful export subsidy and that
Australia had failed to comply with its directive to withdraw the grant within
90 days.  As a result, the United States could have sought authorization to
retaliate against imports of Australian goods into the U.S. market.

    The United States initially filed a protest against Australian export
subsidies to its domestic automotive leather industry in 1996. The USTR took
this action after the Coalition Against Australian Leather Subsidies (CAALS)
filed a petition under section 301 of the Trade Act of 1974 against subsidies
provided to Howe through Australia's export subsidy programs for its
automotive and apparel sectors. After Australia agreed to exclude automotive
leather from these two programs, the Australian government gave Howe a A$30
million grant as compensation for its loss of these export subsidies.  A
further challenge to this replacement subsidy resulted in the WTO rulings that
would have justified U.S. retaliation against Australian trade.

    CAALS is comprised of U.S. automotive leather tanners, Garden State
Tanning, Inc., with facilities in Maryland and Pennsylvania, and Eagle Ottawa,
LLC, with facilities in Michigan and Iowa.  Lauren R. Howard, a partner and
international trade attorney with the Washington, D.C. law firm of Collier
Shannon Scott, PLLC, represents the Coalition.