Commission hits out at US sanctions threat

Date: 12/11/1998

By Simon Taylor

THE European Commission has warned that it will challenge threatened US sanctions worth nearly 1.5 billion ecu on EU exports at the World Trade Organisation later this month unless Washington backs down.

Commission President Jacques Santer has written to US President Bill Clinton following Washington's decision to publish a list of nearly 20 EU products which could be hit with up to 100&percent; import duties, in protest at the Union's banana import regime.

EU exports which could be subject to penalty duties include champagne and other wines, fruit juice, cheese, bread and pastry products. The list also covers clothing, toiletries, pens, scissors, children's toys and electrical goods.

In his letter to Clinton, Santer warns that the EU will launch a case at the WTO on 25 November “unless the US has indicated before that date that it has decided to desist from unilateral action”.

Washington claims the move is justified because the Union's banana regime still discriminates against Latin American bananas, in breach of global trade rules, despite the reforms introduced by the Union since the WTO upheld complaints against the system.

“We have done everything possible to work with the EU on these issues. We have seen no sign of a constructive response. The ball is in their court,” said Jay Ziegler, a spokesman for US Trade Representative Charlene Barshefsky.

But Trade Commissioner Sir Leon Brittan insists that there is no justification for what his officials describe as “this arbitrary list or the value it represents”, and has warned Washington that the move would do “wide damage” to EU-US relations.

Brittan accused the US of “setting itself above the law” by taking unilateral action and said the move would “seriously undermine WTO members' confidence in the multilateral trading system”.

He said if the US continued on its present course, it risked damaging broader economic and political cooperation between the EU and the US including the Transatlantic Economic Partnership, which was endorsed by EU foreign ministers earlier this week.

The Commissioner said the US was perfectly within its rights to challenge the EU's new banana import system, but that it had to follow the procedures set out in the WTO for dealing with this sort of disagreement.

He described the US move as a “grave error of judgement” at a time when the EU and the US should be working together to cope with the effects of the Asian crisis, and questioned the logic of taking such a provocative stance over an issue of minor economic interest like bananas. “The continental US is neither a grower nor an exporter of bananas,” he pointed out.

The US administration has said it will decide on a shorter, final list of products by 15 December following consultations with American industry. EU companies providing services in the US may also be hit by tariffs, although it is as yet unclear which areas might be affected.