US dispute sours trade discussions

Date: 12/09/1996

By Elizabeth Wise

WHEN EU trade ministers meet next week, they are supposed to be drafting ideas to promote unity in the world-wide market.

But instead, they are more likely to continue the debate over whether to retaliate against Washington's plan to level sanctions against Europeans doing business in Cuba, Iran and Libya.

The ministers' informal meeting in Dublin on 18-19 September was originally intended to focus exclusively on issues the EU wants to raise at the first ministerial meeting of the World Trade Organisation (WTO) in December.

EU governments are counting on the December 'summit' in Singapore to give the two-year-old organisation unchallengeable legitimacy as the world's only trade arbiter. The meeting cannot be allowed to fail, EU officials chorus.

WTO chief Renato Ruggiero is expected to join ministers in Dublin as they begin consolidating EU positions on a host of trade matters, some concrete (such as liberalising textiles markets) and some philosophical (such as whether the WTO should set rules on child labour).

Trade ministers are likely to start their debate on an acrimonious note , however, by discussing whether to take the US to arbitration at WTO headquarters over the Helms-Burton law on Cuba and the D'Amato legislation on Iran and Libya.

The Union has already asked for consultations at the WTO regarding Helms-Burton.

But the drive for further action has been dealt a blow by Commission President Jacques Santer's statement last weekend that he would rather wait until after American elections on 5 November.

Trade Commissioner Sir Leon Brittan has been leading the drive for a “blocking statute” to provide a legal shield for European firms hit by the new US rules and to strike back with visa restrictions for Americans trying to come to Europe.

Working out the legality of such a statute in national legislations will be difficult enough, but the debate within the Commission and among member states now centres on whether to apply the statute as soon as it is ready, or wait until January to see whether President Clinton waives the sanctions of his own accord.

The American argument that the WTO is not the appropriate forum for resolving the transatlantic dispute finds little sympathy in Europe.

EU officials maintain that even if there are questions as to whether the WTO is the correct body for handling the dispute over Cuba, the US legislation punishing investors in Libya's and Iran's oil sector is a perfect case for the organisation.

Another subject likely to be discussed in Dublin looks set to make at least one EU member state angry.

The Commission is currently working on a proposal for further liberalisation of the textile industry, a measure which the UK and other northern EU nations favour but one which is sure to displease Portugal, struggling to shield its own industry from invasions of cheaper Asian imports.

The subject will force Lisbon to address the contradiction between the desire shared by most EU member states to liberalise world trade further, and Portugal's need to protect jobs at home.

Because the textile question is such a sensitive one, the EU is not expected to initiate discussion on the topic in Singapore. But Union partners may feel they need to have a position ready in case someone else (such as India) brings it up.

Europe's trading partners in the developing world are hoping that EU governments will not raise the issue of labour standards at the Singapore summit.

Although fully aware of their wishes, EU ministers - who are agreed on the need

to ensure proper working conditions throughout the world - are not dropping the subject from their discussions now. From now on, work in this area will focus on the technical tools which could be used to enforce those conditions.

“The Union will certainly stick to environmental and social components of trade,” said an official. “There is no question of giving them up.”

Also on the agenda will be a series of non-controversial items on which trade officials hope to make real progress in December, including market access, the defence of intellectual property and the compatibility of regional trade blocs with multilateral rules.

EU governments agree that whatever happens in new areas such as the environment and labour standards, it is vital to complete negotiations on business left unfinished when trading partners struck the Uruguay Round agreement that created the WTO.