SUNS  4329 Monday 23 November 1998



U.S. RENEWS BANANA BATTLE WITH EU

Washington, Nov 19 (IPS/Jim Lobe) -- The United States Thursday opened a new offensive against the European Union (EU) over its banana import rules and called for a quick hearing by a World Trade Organisation (WTO) panel to settle the matter.

[However, the EU Commission in Brussels rebuffed Thursday night the US, insisting it would not negotiate so long as the US maintained its threat of unilateral sanctions.

The US administration, under growing pressure from Washington's politically potent banana and beef lobbies, said the WTO panel - - which last year ruled against the EU's import preferences for Caribbean and African bananas - should render a decision on the EU import scheme by Jan 15.

"We believe that this proposal provides the EU with an opportunity to try to prove its contention that its new measures are consistent with its WTO obligations," said Peter Scher of the U.S. Trade
Representative's (USTR) office. Such a solution, he added, was particularly urgent in light of the devastation wrought by Hurricane Mitch to Central American banana-growing economies which stand to benefit from any changes in the EU banana regime. "Without some assurance that ...Latin America will be able to expand its access to the (EU) market, it's going to be very difficult for these countries to get the type of investment (they) need to regain production," said Scher.

Reports from Brussels, however, suggested that the US proposal, which US officials said they had privately put forward twice earlier this year, may be a non-starter.

"The United States is twisting WTO procedures into their own arbitrary and illegal unilateral sanctions timetable," an EU spokeswoman told IPS here. "That is unacceptable."

Washington has been increasingly concerned about a sharply rising trade deficit which was set to break previous records this year and mushroom to as much as $300 billion in 1999. Much of that deficit is due to the increase in imports from Asia, and not directly related to trade with Europe. But the administration has become quite insistent in recent weeks that Europe could do far more to open its markets and reduce the burden on the US.

In addition, Washington is angry about what it says is the EU's refusal to comply with recent WTO decisions on banana preferences and on an EU ban on hormone-treated beef. The failure of Brussels to respond adequately to these judgements, according to the United States was undermining the very basis of the Geneva-based body which, unlike its predecessor, the General Agreement on Tariffs and Trade (GATT), can impose or authorise sanctions against countries which do not comply with its rulings.

The European Union on the other hand, insists that the binding power of WTO decisions is not at issue. On the banana case, in particular, it argued that, since the Sep 1997 decision by the WTO appeals body, it has made a series of changes to its banana regime which bring it into conformity with WTO rules. Those changes will take effect Jan 1.

Last week, the administration raised the stakes by announcing that it would unilaterally impose 100 percent duties on about one billion dollars worth of European products on Jan 1 unless Brussels presented an acceptable banana scheme.

The EU reacted harshly to this threat. "This unilateral action by the United States is politically unwise, is contrary to their WTO obligations, and risks doing wide damage to EU/US relations," said Sir Leon Brittan, the EU's trade commissioner.

Washington responded with its latest salvo. "The essence of (our) proposal is to seek an agreement with the EU to return to the original (WTO) panel immediately, to allow them to review the WTO consistence of the measures that the EU plans to implement on January 1," said Scher.

"We already have confirmed with the WTO secretariat that the original panel is available, ready to work, and prepared to provide its ruling by January 15th," he said. "If there is a request by the EU following the panel for appellate body review, that can be completed by March 1."

The stakes are significant, not least among the banana exporters affected by the case. Caribbean producers, many of which depend on banana exports for their economic survival, have repeatedly appealed to Washington to accept the EU's system of preferences.

"We only constitute three percent of world markets," one Jamaican official here, told IPS. "If we don't retain preferences, we can't survive."

Jamaican Prime Minister Percival Patterson last week issued a strong statement against the US sanctions threat, along with the prime ministers of Dominica, St. Vincent, St. Lucia, Grenada, and Belize. "We call on the Clinton administration not to pursue this proposed course of action and to honour its commitment ....that it would 'do nothing to damage our banana industry," they said.

The Caribbean leaders appealed for continuing negotiations between Washington and Brussels and have been joined by Ecuador, which has requested formal consultations via WTO procedures between the major parties.

But these voices have been drowned by the high-powered lobbying of Chiquita Brands International which this week took out full-page ads in several major national dailies with major U.S. beef producers accusing the EU of "breaking its WTO commitments and thumbing its nose at WTO
rulings against it."

Chiquita bananas dominates the Central American banana market. Its owner, Carl Lindner, is one of the most important funders of both Republican and Democratic candidates in the United States and has pushed for a showdown with the EU for several years.