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Opinion - US Hypocrisy In Trade Laws

A United States appeal to the WTO has seen an Australian company ordered to repay A$22 million it received in export assistance grants to the Australian government because it contravened global trade rules. John Howard reports.

In what must be the ultimate irony over the NZ/US sheep meats subsidy payments debate the WTO, in a ruling to be made public next week, is to require a Victorian leather producer, Howe and Company, to repay the A$22 million.

US antagonists had appealed to the WTO stating the company used the grant to build a state-of-the-art processing facility in Thomastown, Victoria in 1998.

Under an agreement struck last year between Canberra and the US, the ruling now, cannot be taken to appeal.

The WTO is understood to have rejected Australian government claims that it complied with a May 1999 WTO ruling by requiring Howe and Co to pay back just A$8 million of the A$30 million grant paid to the company in three instalments in 1997 and 1998.

A director of Howe's parent company, Australian Leather Holdings, Mr Kel Webster, said last year that any WTO requirement to fully repay the grant represented "a nightmare scenario." He declined to comment on this latest WTO ruling until it is made public.

Although a spokesman for the Trade Minister, Mark Vaile, also declined to comment, it is understood Canberra may offer Howe a loan to lessen the impact of the ruling.

The WTO ruling is a victory for two of Howe's US competitors - Garden State and Eagle Ottawa - which Mr Webster has previously accused of "trying every trick in the book" to keep Howe out of the lucrative US automotive leather market.

Howe first attracted attention in the US markets in 1995 when it secured a contract worth US$125 million to supply leather to General Motors.

Under pressure from the two companies, the US Trade representative confronted the Australian government arguing that federal export assistance programmes had underwritten Howe's inroads into the US market.

Protracted negotiations took place last year between the two Government's but the US companies were still not satisfied and appealed to the WTO resulting in the latest ruling.

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