-Caveat Lector- >From Int'l Herald Tribune Paris, Friday, May 14, 1999 WTO Fight Raises Risk Of Further Trade Wars Deadlock on Chief Stymies Trade Body ---------------------------------------------------------------------- -- By Alan Friedman International Herald Tribune ---------------------------------------------------------------------- -- ROME - With the World Trade Organization increasingly paralyzed by a bitter dispute over who will be its next leader, the risk of a series of regional and global trade wars is mounting, according to senior trade officials and economists. In Tokyo, a two-day meeting of senior trade officials from the United States, the European Union, Japan and Canada ended Thursday without agreement or even any apparent progress on who should be the next director-general of the WTO, the leading arbiter of international commercial disputes and embodiment of global trade rules and regulations. In Brussels meanwhile, the EU on Thursday ignored a deadline set by the WTO to lift its 10-year ban on U.S. and Canadian beef produced with genetically engineered hormones. This move is likely to trigger retaliation from Washington and could lead to a new trans-Atlantic trade war. (Page 17) The WTO leadership vacuum, and divisions among member states, could also delay efforts to negotiate terms for China's long-sought membership in the Geneva-based organization. Experts also note that preparations for an important fresh round of global trade talks, scheduled to begin in Seattle this year, remain stalled, a disagreement exacerbated by the WTO impasse. ''The big risk,'' said Robert Hormats, a vice president of Goldman, Sachs International and a former U.S. financial official, ''is that this situation will weaken the WTO at a time when it really needs all the cohesion and unity it can muster.'' Mr. Hormats warned that in the absence of strong leadership, trade tensions between the United States and its partners in Europe and Japan could fester. ''I think the great danger to the system now is that having survived the worst financial crisis of the postwar period, we could soon find ourselves embroiled in an escalating series of trade conflicts which would be very harmful to the world economy,'' he said. The leadership struggle - which pits a former prime minister of New Zealand, Mike Moore, against the deputy prime minister and commerce minister of Thailand, Supachai Panitchpakdi - is seen by both U.S. and European officials as highly divisive, especially as it has begun to polarize blocks of developing countries against some of the leading industrialized powers. White House officials refrain from criticizing Mr. Supachai in public. But some officials make clear privately why they are refusing to back him by accusing him of improper campaign tactics. In Washington, a U.S. official, speaking on condition of anonymity, said the Clinton administration ''began with a fairly agnostic position at first, but then swung behind Moore when we began hearing reports about Supachai being divisive, campaigning against the idea of discussing trade and labor issues, and even making promises of WTO jobs to some member countries in exchange for their support.'' Speaking from Tokyo on Thursday, Charlene Barshefsky, the U.S. trade representative, did not criticize Mr. Supachai, but gave strong support to Mr. Moore, a free-trade advocate who is credited with having helped to transform New Zealand from a bastion of protectionist regulations into a model free-market economy. ''We believe that Mr. Moore would be the most effective consensus- builder within the WTO, and on that basis support his candidacy,'' Ms. Barshefsky said. She added that the WTO needs ''leadership across a wide spectrum of issues of concern to developing and developed countries alike.'' While Mr. Moore has the backing of the United States, plus France, Germany, Italy and many countries in Africa, the Caribbean and Latin America, Mr. Supachai has won the support of Japan, most Asian nations, many in the Middle East and almost half of the European Union. Britain has voiced support for Mr. Supachai, arguing that it is time for a WTO chief who hails from the developing world, while the Netherlands supports him because of his ties to Amsterdam. Mr. Supachai, who could not be reached for comment Thursday, has denied claims of vote-buying and of opposing trade talks related to labor issues. In a recent interview with the International Herald Tribune, he complained of a campaign of rumor and innuendo against his candidacy. On Wednesday, Thailand claimed Mr. Supachai had majority support. ''In our latest survey, dated May 7, we have 77 countries supporting Supachai and 41 supporting Moore,'' a Foreign Ministry spokesman said. Those figures contrast sharply with those of Ali Mchumo, the Tanzanian trade ambassador who is chairman of the WTO selection committee. Mr. Mchumo has said that 62 countries support Mr. Moore and 59 back Mr. Supachai. Mr. Supachai, in an interview with The Nation, a daily Bangkok newspaper, said: ''The United States has said that it doesn't oppose me and doesn't dislike me but they prefer Moore to me. So if the U.S. stays neutral, we will be able to see a clearer picture of the two candidates.'' For the United States and France, the issue of linking trade and labor is critical. Paris, worried about unfair competition based on low wages in developing countries, has long called for talks on the issue, and Washington, meeting concerns of U.S. organized labor, has done the same. While Mr. Supachai has denied opposing Washington on the labor issue, Mr. Moore, who has a strong labor background as a union activist, has gone out of his way to assuage U.S. concerns while not alienating developing countries, who fear the labor issue will be used against them. ''We can't not discuss the issue of labor and trade,'' Mr. Moore said Thursday. ''We need to see the International Labor Organization do its job well, but we will also have to engage with non-governmental organizations on this issue in a way we never have before.'' ~~~~~~~~~~~~~~~ >From wsws.org WSWS : News & Analysis : World Economy First bananas, now beef fuels US-EU trade war By Nick Beams 14 May 1999 The stage is set for an escalation of the trade war between the United States and the European Union following the EU's decision not to comply with a World Trade Organization deadline of May 13 for the lifting of a 10-year ban on hormone-treated beef imports. The issue will now come before the WTO at a meeting on May 26 in Geneva. The US has threatened to seek the imposition of $900 million worth of sanctions on European imports. The European Commission says it will not lift the ban because studies carried out by European scientists point to a possible health risk posed by the six growth hormones used by beef producers. The US claims that the health concerns are a "ruse" to refuse the entry of US beef. Announcing the decision to retain the ban, European Commission trade spokesman Nigel Gardner said negotiations were continuing with the US on compensation in order to head off the threat of sanctions. But talks between EU Trade Commissioner Leon Brittan and US Trade Representative Charlene Barshefsky in Tokyo on Wednesday failed to reach agreement on the issue. Barshefsky insisted that the US reserved its right to seek WTO authorization for the imposition of sanctions. The beef hormone conflict has erupted less than a month after the WTO gave permission to the US to impose $191 million worth of sanctions on European imports in retaliation for EU measures which favour banana imports from its former Caribbean colonies over Latin American exports by the US companies Dole and Chiquita. Now even more European exports are threatened by sanctions that could lead to the doubling in the price of items as diverse as chocolate and motor bikes. And as the beef row goes to the WTO, another conflict is building up over the issue of genetically-modified crops. Next year it is predicted that almost all the soya growing in the United States will be genetically modified. However, the EU has banned the commercial growth of genetically-modified crops and the US Agriculture Under- Secretary Gus Schumacher has warned that America will take action if the EU delays approval of the new crops and food. The implications of the widening US-EU trade conflicts have been the subject of several comments in the British financial press. In an editorial comment published on May 7 under the title "At Daggers drawn" The Economist magazine noted: "Trade relations between America and Europe have rarely been so bad. Even as they fight side-by-side against Serbia, they are taking aim at each other across the Atlantic. They are embroiled in a battle over hormone-treated beef. They are at loggerheads over genetically modified crops. They have fallen out over noisy aircraft, mobile telephones and data privacy. They are coming to blows over aerospace subsidies and champagne. And they have yet to patch up their split over bananas. "True, transatlantic trade tiffs are nothing new. Indeed, some friction is perhaps inevitable between the world's top two trading entities, which do trade of around $400 billion a year with each other. But this is different. The mood in both Washington and Brussels is resentful and uncompromising. Events could easily get out of hand. The current conflict is about more than just hormones in beef or aircraft noise. It is a battle about how far countries are willing to accept constraints on domestic policy in sensitive areas such as food safety or environmental protection for the sake of free trade." Similar sentiments were expressed in an article by William Wallace, professor of international relations at the London School of Economics, published in the April 15 edition of the Financial Times. "Economic setbacks in East Asia and Latin America and political stalemate in Japan," Wallace wrote, "make transatlantic co-operation even more central to an open global economy and a stable world order. Yet the gap in mutual understanding between US policymakers and their European counterparts is wide." Wallace claimed there was "an alarming mixture of resentment, self- righteousness and plain misinformation in the Washington debate." He pointed out that some two thirds of the world's population is now covered by some form of US economic sanctions but that if the Europeans tried to take the Iran-Libya Sanctions Act or US legislation on Cuba before the WTO Washington would insist that "political priorities must override legal determination". "Yet where European domestic politics constrains trade negotiations, as on beef hormones and genetically modified organisms, Washington is narrowly litigious. Triumphalism about the American economic model is accompanied by aggressive attacks on European social capitalism, by Democrats as well as Republicans." The article pointed to wider geo-political issues of which trade relations form a part. "The White House sees NATO as its preferred framework for US-European relations, with the US as an alliance leader and the European allies following that lead." The consensus in Washington is that Europe should be drawn into a "global strategic partnership" with the assumption that this is a "partnership on American terms". The economic core of this geo-political strategy is the insistence that economic, social and legal relations in every country should be adapted to ensure the penetration not just of US goods but financial interests as well. These issues are set to dominate the so-called Millenium Round of negotiations within the WTO scheduled to begin in Seattle on November 30. Outlining the US agenda in a speech last month, Barshefsky said the US sought "market-opening results" not only after the conclusion of the negotiations, but while they were taking place and even before they commenced. She said the formal negotiations should have an accelerated schedule and include agriculture, services, government procurement procedures, intellectual property rights as well as tariff and non-tariff barriers. In advance of the discussions the US has launched a series of actions under the WTO against India, Canada, Argentina and South Korea, as well as the measures against the EU. The complaints cover manufacturing, agriculture, intellectual property rights and government procurements. Reporting on the measures to the US Congress, Barshefsky said action against foreign government practices that conflicted with international obligations would enable "the United States to open markets to US exports" and "identify US priorities for our future trade negotiations." But as the US pushes forward its economic agenda, its actions have resulted in a deep split in the WTO, the organization responsible for enforcing global trade regulations. The conflict centres on the appointment of a new director-general to replace Renato Ruggiero, whose term expired on April 30. Initially, Thai deputy premier Supachai Panitchpakdi was considered to have a firm grip on the post, but his support started to shift after intense lobbying by the United States in support of its favoured candidate, former New Zealand Labour Party prime minister Mike Moore. Supachai is regarded as more inclined to take his cue from Tokyo rather than Washington. The US campaign has provoked deep opposition in Thailand, where it is linked to the savage measures imposed by the IMF in the wake of the financial crisis. One Thai newspaper described America as a disgusting superpower while politicians have been quoted in the press as saying that it was time to stop kow-towing to America and review relations with Washington. Significantly the Thai government has criticised the US-led bombing of Yugoslavia. Other countries see the US push for Moore as signifying an even more intensive drive to impose a "free market" agenda in the coming negotiations. A representative of Zimbabwe, for example, has accused the Americans of launching "Scud missiles" at the Third World. More is at stake in the conflict than who will ultimately assume leadership of the WTO. As The Economist noted, the four-year old WTO, which replaced the previous world trade body GATT, is "at a crossroads". "It has become a quasi-judicial body, an embryo world government whose rulings on world trade are supposed to be binding even on America and the EU. Yet it is now being asked to arbitrate on matters which are intensely political. It lacks the legitimacy to do so." If the WTO broke down, it warned, then the possibility of a "catastrophic retreat into protectionism" was "all too likely". See Also: Much more than bananas at stake in US-Europe trade conflict [9 March 1999] US imposes tariff sanctions on European luxury goods [5 March 1999] Top of page Readers: The WSWS invites your comments. Please send e-mail. ---------------------------------------------------------------------- -- Copyright 1998-99 World Socialist Web Site All rights reserved ~~~~~~~~~~~~~~ NEATO Members 19 NATO MEMBER COUNTRIES BELGIUM, CANADA, DENMARK, GERMANY, GREECE, ITALY, LUXEMBOURG, NETHERLANDS, NORWAY, PORTUGAL, TURKEY, United Kingdom, USA, FRENCH MILITARY MISSION, SPANISH MILITARY MISSION, ICELAND, CZECH REPUBLIC, HUNGARY, POLAND ~~~~~~~~~~~~~~ EU Members >From ue.eu.int (!) = NEATO Austria, Belgium(!), Denmark(!), Finland, France(!), Germany(!), Greece(!), Ireland, Italy(!), Luxembourg(!), Netherlands(!), Portugal(!), Spain(!), Sweden, Britain(!) ~~~~~~~~~~~~~~ World Trade Organisation (WTO) >From wto.org The organization. The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by: •Administering trade agreements •Acting as a forum for trade negotiations •Settling trade disputes •Reviewing national trade policies •Assisting developing countries in trade policy issues, through technical assistance and training programmes •Cooperating with other international organizations <Picture: WTO: agreements, negotiations, disputes, policy reviews, assistance and cooperation> STRUCTURE The WTO has more than 130 members, accounting for over 90% of world trade. Over 30 others are negotiating membership. 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