7 March World Trade Organisation General Council

Date: 11/03/1999

WORLD Trade Organisation director-general Renato Ruggiero appealed to the EU and the US to settle their dispute over bananas, so as to end the “damaging” row which threatened to undermine the work of the WTO. At an emergency meeting of WTO ambassadors, Ruggiero said: “The two sides should find a mutually agreed solution to their problems in bilateral consultations.”

THE EU requested the session to discuss the US' decision to force importers of €490-million worth of EU goods to post bonds, effectively levying a 100&percent; duty on products including cashmere sweaters, pecorino cheese, biscuits, handbags and a range of other goods. The US decided to start implementing sanctions against the Union last week although a WTO arbitrator had still to rule whether the scope of the US measures was proportionate.

DURING the meeting of the general council, a large number of the WTO's 134 members expressed “irritation” that the two sides in the banana dispute had failed to reach a settlement, warning that the ongoing row threatened to undermine the ability of the organisation to resolve international trade disputes. One third-country diplomat commented after the meeting: “They are playing with fire, and we could all be burned.”

EU OFFICIALS claimed that an “overwhelming majority” of the 40 members who had spoken during the meeting had supported the Union's position that Washington was acting unilaterally by applying sanctions before winning approval from WTO arbitrators. They highlighted a statement from the Japanese government which said the US measures amounted to unilateral action. Commission officials admitted that the emergency meeting would not have any direct effect on the Americans' move to implement sanctions, but said they hoped that the mood of the discussions would influence the forthcoming work of the WTO on the issue.

RITA Hayes, the US ambassador to the WTO, accused the EU of trying to distract attention from its failure to implement previous WTO rulings on the banana regime by calling the emergency meeting. US sources said there had been some support for Washington's action in the meeting, claiming that some WTO members considered the US' initiative a “very smart move”.

THE EU and the US have to provide updated information next Monday (15 March) to a team of arbitrators, who must decide whether the US has suffered trade losses worth €490 million. The Americans claim that this is the business forfeited because of the EU's banana regime. The Union argues that the US has acted in “flagrant violation” of international trade rulesby starting the process for introducing sanctions before 12 April, when a WTO panel is due to decide whether the EU has made enough changes to its regime to bring the system into line with global trade rules.