Sunday, May 02, 1999
Trade relations still slippery
Banana wars over; now a new beef
BY NAOMI KOPPEL
The Associated Press
GENEVA — In principle, the banana war is over. But tensions remain between the United States and the European Union over banana imports, and a big trade fight over European restrictions on American beef is heating up.
The banana fight cooled off when the EU accepted a World Trade Organization finding that the EU unfairly discriminate against Latin American banana producers and their American distributors in favor of former European colonies in Africa and the Caribbean.
Under WTO rules, the EU now will rework its import rules, while Washington maintains punitive tariffs of $191.4 million a year on selected European goods. Once the U.S. side is satisfied, the sanctions will be removed, and everyone, the theory goes, will be happy.
But few people expect the Europeans and the Americans to easily agree on whatever changes the EU comes up with.
The $191.4 million equals the amount that the WTO set as the level of lost sales by two American banana companies, Cincinnati-based Chiquita and California-based Dole, because of European banana import restrictions that the WTO has ruled violate global trade rules.
Meanwhile, a showdown seems likely over Washington's complaints about the EU's 10-year-old ban on importing beef from cattle treated with certain growth hormones on the grounds the hormones may cause cancer. The United States says that is nonsense and just an excuse to protect Europe's cattle farmers from competition.
Washington claims the ban costs American exporters $250 million a year.
The WTO already ruled that the ban violates international trade rules because the EU's scientific evidence was insufficient.
The Americans said that meant the ban should be lifted, but the Europeans replied that they would do more scientific studies.
Then, the EU further angered Washington by saying it would ban even American beef that is certified hormone-free, because traces of hormones are still being found — a decision that affects another $20 million of exports.
The Europeans have until May 13 to comply with the WTO's beef ruling, but have already said they will not make the deadline to complete their scientific research and have no intention of lifting the ban. That could bring a round of more U.S. penalty tariffs on European goods imported into the United States. The Americans have compiled a list of $900 million in proposed sanctions.
The beef and banana fights have been around since the formation of the World Trade Organization in 1995, replacing a previous international trade regime set up after World War II.
The banana war tested the fledgling body's assertion that all trade disputes can be sorted out by sticking to a set of rules. There are more than 150 disputes currently on the WTO's books, and the United States is the country that appears most often, both as complainant and alleged violator.
“This is the heart of the system, and this is why our organization is different from other organizations,” said Renato Ruggiero, who is stepping down as the WTO's director-general at the end of the month.
He predicts that refining the organization's dispute settlement procedure will be the big challenge for whoever is named his successor.
The banana fight had lawyers on both sides finding loopholes and ambiguities in the rules that exasperated other members of the 134-nation WTO.
The WTO finally ruled against the EU, and the Europeans were given time to change their policies. When the Jan. 1 deadline arrived, Washington said the EU was still breaking the rules by discriminating against a region's produce.
The EU disputed that, and diplomats got down to intense marathon bargaining. Feelings were so bruised that American and European representatives refused to negotiate face-to-face for a time, and WTO officials had to shuttle between the delegations.
The talks lasted until this month. Finally, April 19, EU Ambassador Roderick Abbott announced that the EU would not oppose the United States' position.
An hour later, the meeting broke up with U.S. sanctions against European Union goods approved by the WTO and the EU saying it would change its rules to bring the banana crisis to a conclusion.
The $191.4 million equals the amount that the WTO set as the level of lost sales by two American banana companies, Cincinnati-based Chiquita and California-based Dole.
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Trade relations still slippery
