SUNS  4361 Wednesday 27 January 1999

Geneva, 26 Jan (Chakravarthi Raghavan) -- The meeting of the WTO Dispute Settlement Body (DSB), which was suspended, without even adopting an agenda, Monday evening has now been put off till Thursday.

The impasse has arisen over the banana dispute and the US request, on the draft agenda, for authorization to retaliate against the EC over its new banana regime, which the US claims is not in compliance.

An extended, informal heads of delegations meeting Tuesday reportedly went over the legal and other issues involved. After the meeting, there was indication that if no solution to the impasse is found by Thursday, when the DSB meets again, the chair of the DSB, Kamel Morjane of Tunisia, would rule that the agenda had been accepted.

But whether he can or would do so is not very clear.

And the WTO head, Renato Ruggiero indicated that the elements of a compromise were available in his paper that was put before the DSB Monday - which involved, the reconvened banana panel going ahead and ruling on whether the new EC regime complied with the WTO ruling, and also simultaneously, the panel or an arbitrator, ruling on the extent of the sanctions that the US could impose.

In various compromise talks, the EC has said that it could not agree to this, since it prejudiced its position that the measures taken are in compliance (and any US retaliation would be against the WTO).

There were also indications that the EC was also being asked to give up its right to go to the appellate body, on legal grounds, if the panel were to rule against the EC.

The DSB, which met after repeated rescheduling on Monday evening, had been forced to suspend its meeting when two Caribbean banana-growing island countries, St. Lucia and Dominica, objected to the agenda of the DSB over its inclusion of the US request for authorization to retaliate against the EC. The two were formally supported by Cote d'Ivoire, but it was clear from remarks of other delegations that there was some support for their views, though there was some argument, and even an attempted ruling by the DSB chair, Mr. Kamel Morjane of Tunisia.

The WTO and the DSB rules, requiring consensus for all DSB decisions, (unlike the WTO General Council where if necessary a vote could be taken on some issues), were ironically put into the agreement at the insistence of the United States in 1993 and 1994 (before Marrakesh).

At that time, when these were negotiated in the Uruguay Round in Dec 1993, and in the subsequent legal drafting exercise, it was the United States that insisted that not only substantial issues before the DSB, but even procedural ones, should be decided only by consensus.

Perhaps, back in their minds, was the thought that the only one who would be able to withhold consensus and block things, was the Super-Power United States.

According to trade diplomats, when the DSB met on Monday evening, and the adoption of the draft agenda was before it, the Philippines, Colombia and India under 'other business' got inscribed three items, and this was agreed to by consensus.

But when the DSB chair, put the agenda (as circulated by Ruggiero) and as amended, before the DSB for adoption, the two Caribbean island nations, supported by Cote d'Ivoire objected to the inclusion of the US item.

The representative of St. Lucia noted that the DSB has referred the compliance of the EC's new regime with the ruling, to the reconvened panel under Art. 21.5, and the EC has summoned a special meeting of the General Council to provide an authoritative interpretation of Art.
22.6. In this situation, even the mere fact of the DSB taking on its agenda the US request under Art. 22.6, and automatically authorizing the sanctions, would be providing the authoritative interpretation of the DSU's 22.6.

This was beyond the jurisdiction of the DSB, since only the Ministerial Conference and in its absence the General Council can do so.

The draft agenda before the DSB, as prepared and circulated by the Director-General of the WTO, included the item given notice of by the United States, seeking the DSB's authorization under Art. 22.6 to withdraw equivalent concessions from the EC to compensate for trade damages over its new banana regime.

There had been prolonged and intricate consultations and negotiations over the weekend, involving the WTO head, Renato Ruggiero and the ambassadors of the US and the EC, over the banana affair.

The DSB at its last meeting this month, has referred (at the instance of both Ecuador and the EC) the question whether the new EC regime is in compliance with the ruling, to the reconvened original banana panel, under Art. 21.5. But the US has chosen the retaliation path under Art. 22.6, on the basis of its own determination of EC non-compliance.

There was some procedural discussions over the maintainability of the objection to the agenda from St. Lucia and Dominica, with EC among others expressing sympathy, and the US and some others challenging whether it could be blocked, more so when the amendment for "other business" had been accepted.

With St Lucia and Dominica seemed to be weakening as Morjane tried to face them down, and seemed at one stage ready to gavel the agenda as having been adopted, the EC stepped in and formally objected.

At a news conference later, the US Ambassador, Rita Hayes, denounced the EC, and said the US would act according to international trade law and exercise its rights.

Hayes, among others was asked whether the inability of the US to accept compromise, was related to the preoccupations in Washington (over the impeachment of President Clinton over Monica Lewinsky affair and the need of Clinton to ensure every vote in his favour (with some of the
senators supporting the Chiquita banana TBC), Mrs. Hayes avoided a direct response, but said the decisions were always a mix of political and other considerations.