SUNS  4323 Friday 13 November 1998

Geneva, 12 Nov (Chakravarthi Raghavan) -- Ordinary readers of newspapers may be forgiven for wondering this week at the threats on two successive days of US unilateral trade sanctions against the EU over bananas and of military sanctions against Iraq and ponder whether it is all part of US Presidency going about demonstrating it is engaging in the nation's business to the exclusion of anything else.

During the 1990 Brussels ministerial meeting of the GATT (which failed to conclude the Round) - in the same week when the US was threatening the EC and Japan over agriculture and other trade issues, it was also sending out delegations to Japan and to European capitals and Middle East seeking financial and other support for the US military actions against Saddam Hussein.

Then GATT Director-General Arthur Dunkel remarked to a few newsmen that the two were really not compatible. The US got the money and support for the eventual Gulf War, but nothing very much happened when the Brussels talks failed.

This week, the United States Trade Representative has published a long list of European exports to the United States (mainly from France and UK) from out of which some will be selected to impose retaliatory trade sanctions of 100 per cent duty over the US view that the EC new banana regime does not comply with the rulings on banana at the World Trade Organization.

And the EC for its part has both promised to take up the case against the US at the WTO, while the EC Commission President Jacques Santer has appealed to Clinton to intervene.

At the same time, the US Pentagon has begun a build-up of attack aircraft, missiles and naval forces to launch attacks on Baghdad over the UN inspection team and its access to Iraq installations. And US top officials have been trying to drum up support for any eventual actions
from the region (where most governments appear to have not been enthusiastic) and from Europe - particularly France and UK, the two permanent members, who are also backing the EC banana regime favouring the ACP countries against the US banana transnationals.

In terms of the WTO, the US and others who win a dispute but find the other side not implementing within the time-limit set (in this case 1 January 1999), have to move the WTO, and follow the procedures and time-spans outlined in Art 22 of the DSU to withdraw equivalent concessions.

There is the additional complication here of a "dispute" between the US and the other complainants in the banana case, and the EC (and affected third parties, the ACP countries and particularly Caribbean banana producers who have no voice) as to whether or not the new regime agreed
upon by the EC is in compliance with the ruling.

In terms of the procedure, the original panel has to be reconvened, and pronounce whether the new EC regime complies with the ruling - but a process that could go on endlessly, as the Philippines feared at the DSB meetings when it surfaced.

Under Art. 22.2 of the DSU, the US and other banana complainants and the EC are also to hold consultations and agree with 20 days on the "compensation" to be provided by the EC to them for non-implementation.

Thereafter the DSB has to be moved, and in the event of a dispute on the actual trade loss by non-implementation, a further process of arbitration to settle the level of trade loss for which compensatory retaliation can be authorized by the DSB -- very protracted legalistic processes, but one among the many safeguards that were inserted at the time the WTO and DSU were agreed upon.

But the US issuance of the list of products from which some would be selected for trade sanctions is part of their "normal" practice of naming a large number of products, several times in trade value than the ones that would ultimately picked, so as to generate pressure lobbies of these exporters to lobby their governments.

And the exclusion of British scotch whisky from the list, according to US and UK reports are a response to appeal from British Prime Minister Tony Blair - whether it is for his services to Clinton during the fight over the Starr report or for promised support for actions against Saddam are not clear -- and may be will be clear only some 50 years later when both sides publish their secret documents!

But against some other countries, the US has also found that such trade threats are counter-productive, merely uniting the country behind the government and that the country tells them to go ahead and retaliate - and pay some political price too!

There is also another problem. The US may, if it follows the procedures, get the nod from the DSB to compensate itself for the losses of the chiquita and dole TNCs, but the other banana exporters of
Latin America who are affected have to do their own "retaliations" and can't benefit from the US retaliation - excepting to hope that the threat would persuade the EC to comply!

After the Gulf War, and the collapse of the Soviet Union, when George Bush declared his new order, a number of US columnists and writers spoke of the US as the sole super-power not needing to obey any rules.

US power since then, in the very short decade, has certainly become less, but the same mindset seems to operate in Washington.

In the meanwhile, everyone is getting some lessons, or is it the vision about the new order of the new millennium.