-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
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By Alan Friedman International Herald Tribune
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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]
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All rights reserved
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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
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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.
A<>E<>R
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