Trade spats cast cloud over EU-US relations

Date: 17/12/1998

By Simon Taylor

AS 1998 drew to a close, the EU was still locked in a fierce trade row with the US over the Union's disputed banana regime, despite having made substantial changes to its import arrangements.

No one expected the US to lie down and endorse the EU's reforms in view of the immense political pressure on the Clinton administration from US banana multinationals.

But when Washington started to draw up a list of EU exports which could be hit with penalties, claiming that the revised scheme still broke international trade rules anddiscriminated against Latin American bananas, the reaction in Brussels verged on the apoplectic.

Trade Commissioner Sir Leon Brittan accused the Americans of undermining the World Trade Organisation's role as the arbiter of international trade disputes.

Relations with the US were the focal point of another major trade row this year after US Trade Representative Charlene Barshefsky accused the Union of failing to shoulder its responsibilities in the face of a growing economic crisis in Asia by not opening its markets to imports.

Again, Brittan rejected the US' charges, producing figures to show that imports of key Asian goods had risen more quickly in the EU than in the US during the year.

Attempts to free up trade between the EU and US by creating a 'New Transatlantic Market-place' had to be substantially scaled down in the face of fierce opposition from the French. But progress on a more modest alternative, the Transatlantic Economic Partnership (TEP), proved easier, with EU governments approving an action plan allowing negotiations to go ahead on a range of areas where technical barriers could be eased in 1999.

The biggest foreign policy issue for the Union in 1998 was the fighting in Kosovo, where military action by Serbian forces drove 250,000 people from their homes. More than 1,000 people lost their lives in clashes with ethnic Albanian separatists and hostilities were only stopped after the west threatened the Serbian government in Belgrade with airstrikes unless Serbian forces pulled back. The EU appointed special envoy Wolfgang Petritsch to mediate in the dispute to try to get the Serbs and Kosovan political representatives to agree a peaceful settlement as winter set in.

But it still appears unlikely that the Kosovan desire for greater political autonomy within the province can be squared with Belgrade's refusal to make any concessions which could strengthen the Kosovan's hand.

Hopes that the EU could appoint a single figure to represent the Union on the world stage were dashed after governments put off a decision on who should be their first High Representative for Common Security and Foreign Policy until next year.

Meanwhile, UK Premier Tony Blair launched a bid to improve the EU's ability to respond militarily to crises. Although a range of options were discussed, no concrete proposals had emerged by the end of this year.

Feature forms part of the European Voice 'Review of the Year'.