8:42 AM Nov 20, 1996

WTO SETS PANEL ON HELMS-BURTON LAW

Geneva 20 Nov (Chakravarthi Raghavan) -- The World Trade Organization agreed Wednesday to establish a panel to rule on the dispute raised by the European Union against the United States over the Helms-Burton law, extending US trade and other sanctions against third parties trading and investing in Cuba.

The WTO's Dispute Settlement Body acted on a EC request for a panel -- which came up before the DSB for the second time, and thus could not be blocked by the US. The US had blocked reference to a panel at the last meeting of the DSB on 16 October.

The United States took its stand, in justification of the measures, on the security exceptions provisions of the GATT 1994. While security exceptions have been invoked before at the GATT, and panels have not gone behind the invocation to adjudicate whether it was justified, in this case, the trade restrictions were in bilateral trade relations of two countries, and not actions against third parties. But the US was invoking it to justify extra-territorial applications for its laws, and restrict trade and other economic relations of third parties.

The DSB also set up a panel, requested by the United States, to look into its complaint that India had not given effect to the provisions of the TRIPs agreement, providing for pipe-line protection for patents in the areas of pharmaceuticals and agro-chemicals.

India did not object to the request and the DSB agreed to set up the panel.

On the US Helms-Burton law, the EC's Mr. Ian Wilkinson, noted that the EC had not seen any change in the US position since the last meeting and hence wanted a panel set with standard terms of reference.

Amb. Booth Gardner of the US, insisted that the issue was primarily not a trade issue, and involved US national security considerations. He regretted the EC decision to press ahead with a request for panel and warned that recourse to a WTO trade panel would not lead to a resolution of the dispute. "We do believe that proceeding further with this matter would pose serious risks for this new and invaluable organization, which is only in the early stages of its development".

Gardner said that the US measures included by the EC in its panel request reflected long-standing US foreign policy and security concerns, and the Libertad Act (Helms Burton law) had been enacted "to promote a swift transition to democracy in Cuba".

Some of the other measures included in the EC panel request had been in force for some years or decades and had been expressly justified by the US under GATT 1947 as measures taken in pursuit of essential US security interests.

Given "the common interests we share with our European friends in regard to Cuba", the US was surprised and concerned to find these differences raised before a multilateral trade forum. The US very much regretted that the EU had seen fit to move those differences one step further in the direction of a WTO panel.

The US dispute with the EC was not "fundamentally a trade matter" and not one of a nature that could be decided by a trade panel. None of the US measures reflected "trade protectionism".

Canada and Mexico said they reserved their third party rights.

Under the DSU rules, members have ten days to notify the WTO and reserve their rights.

In other interventions, New Zealand said it attached great importance to an early resolution of the dispute. Norway supported this and said the case was complicated in trade, economic and political terms.

Cuba's Amb. Caballero Rodriguez noted that the US had based its arguments (justifying the Helms Burton law) on national security considerations. Cuba, Rodriguez reminded the US, had never invaded the US while the US troops had occupied Cuba. There was still a US naval base on Guantanamo in Cuba. Cuba had also never organized any terrorist or hostile acts against the US (while such acts were being undertaken or organized from US territory). "Cuba is thus in a better position to invoke GATT Art. XXI (security exception provision) than the US," Rodriguez commented.

The US complaint against India is in relation to Art. 70.8 of TRIPs.

Under the TRIPs agreement India has time till 2005 to provide for product patents covering pharmaceuticals and agro-chemicals. However, in such cases (as India's), Art 70 provides that a country must set up a mechanism to receive applications for patents -- which has to be disposed off when the patent law is revised to comply with the provisions -- and give sole marketing rights to parties who have filed applications under the interim procedures, provided marketing has been approved in a WTO member that has granted the patent.

The US complained that the Indian law currently does not provide patent protection for pharmaceutical and agro-chemical products, nor has any provisions to receive such interim applications and grant exclusive marketing rights.

India's Amb. S. Narayanan noted that in the consultations with the US, India had tried to respond to the US concerns. But India recognized the right of any WTO member to establish a panel and would not therefore object to its being set up.

The DSB agreed to set up a panel with standard terms of reference. The EC reserved its third party rights.