DEADLINE FOR WTO PANEL ON HELMS-BURTON EXTENDED

9:57 AM Feb 12, 1997

DEADLINE FOR WTO PANEL ON HELMS-BURTON EXTENDED
Geneva 12 Feb (Chakravarthi Raghavan) -- The European Community has sent a communication to the WTO head, Mr. Renato Ruggiero, enabling him to put off till 20 February, the naming of panel members in the EC-US dispute over the Helms-Burton law, for US trade sanctions against third countries in their economic relations with Cuba.

The dispute has been referred by the WTO's Dispute Settlement Body (DSB) to a panel.

But the two sides have been unable to agree on the names of the panellists and in terms of the WTO rules, the EC shot off a communication to Ruggiero asking him to name the panel.

Under the rules, Ruggiero has to name the panellists by Friday evening.

Under the rules, Ruggiero would have had to communicate to the DSB chair, his choice of panellists, enabling the panel to get going.

But the EC has now asked him to put off the naming of the panel till 20 February.

According to reports from Brussels, Brittan said that the US could not hold up the establishment of the panel and its work, by invoking 'security' arguments, but that the EC was holding up the request to the WTO head as a goodwill gesture.

Brittan is expected to meet the US Trade Representative, Ms. Charlene Barshefsky, this weekend in Geneva. The US Secretary of State, Mme Albright is due to visit Brussels on Monday.

The US has been invoking the national security exception (Art. XXI of the GATT) to justify its actions, and US officials have been warning the EC that taking the issue to a panel, and getting a ruling, would have serious effects on US-EC relations.

At the Davos World Economic Forum meeting, Ruggiero has been telling the media that either way this dispute could have some serious effects on the WTO, and he hoped the two sides would resolve the problem bilaterally.

Art XXI.b.iii of the GATT provides a security exception to the GATT obligations of a member:

This provides that nothing in the agreement shall be construed "to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests.... taken in time of war or other emergency in international relations".

There have been only a few cases where this provision has been invoked, and has figured in disputes before panels, working parties, and or discussions of CPs.

It was invoked in 1961, by Ghana, when Portugal acceded to the GATT, to justify its boycott of Portuguese goods. In 1982, during the UK-Argentina Malvinas/Falklands war, apart from UK, the EC (and EC members), Canada, Australia and a few others invoked it to apply trade restrictions.

It then figured in the 1982 Ministerial meeting of the Contracting Parties and in a ministerial declaration. Again in 1985, the US invoked it to restrict sugar imports from Nicaragua, but the terms of reference of the panel precluded it from looking into the contention of Nicaragua that the Art XXI.b.iii provisions had to be construed in terms of the general international law. The question has also figured in terms of the Arab League mandated boycott of trade with Israel.

And while the US trade embargo against Cuba (imposed in Feb 1962) was never formally raised before the CPs, but the restrictions notified by Cuba in the inventory of non-tariff measures, the US invoked Art XXI as justification.

Sweden also invoked this provision to justify trade restrictions on imports of shoes for military use!

But the US action under Helms-Burton law (and the similar provisions in terms of third country dealings with Iran and Libya) go far beyond these (even beyond the restrictions that belligerents invoke during an actual state of war and conflict against non-belligerents), and provide for penalties on third parties.

In the discussions of the preparatory committee for the Havana Charter, and in subsequent panel hearings or working parties, there appears to be general acceptance that "each contracting party is the sole judge of what was necessary in its essential security interest".

But the CPs have also affirmed that when action is taken under Art. XXI, "all contacting parties affected by such action retain their full rights under the General Agreement."

This might mean that even if, a panel were to uphold the US right to invoke 'essential national security', and to that extend derogate from the US obligations, this would not affect the rights of other parties whose trade and other economic relations might be affected by the US unilateral decision and, at the least, they might be able to "retaliate" and withdraw trade concessions from the US.

But while the WTO head's anxiety not to be caught in the US-EC dispute, and come within range of Senator Jesse Helms ire, can be understood, the consequences of bypassing the problem, and allowing US "power" to prevail without any challenge may also have long-range, negative repercussions and make clear that the WTO system is based on "power", and the powerful need no obey the rules.