Geneva, 27 Jan (Chakravarthi Raghavan) -- If a banana or a bunch of bananas had been subject to the kind of handling that the banana dispute has been getting at the WTO, by now it would have become a mushy, unedible pulp to be thrown away and the mess cleaned up.
But the US-EC banana marketing dispute has now become such a high-profile mess that whichever way it is resolved, the WTO would not find it easy to go on pretending that it is a "rule-based system" and is an institution protecting the rights of small nations and members (as a senior WTO official claimed at last week's economic meetings at Havana, in Cuba).
On Tuesday, after what trade officials called a "highly technical and legal" discussion of procedures, of the loosely worded rules of the WTO and its Dispute Settlement Understanding (DSU), the US and the EC (and the WTO Director-General) have been asked to try and resolve the substance of banana dispute, before the DSB meets Thursday.
But the prospects of a settlement became even more murky after, among other things,
the US accused the EC of having master-minded and acting through the proxy of two Caribbean islands to block the adoption of the agenda, a charge that the Brussels-based embassies of the Eastern Caribbean States to the EC angrily denied;the EC, the US, and the Cincinnati-based Chiquita banana TNC fired off salvoes of charges, denials and counters against each other (bringing in the impeachment trial in the US Senate, over the affair with Monica Lewinsky, and the administration's need to secure every vote in his favour, the Cincinnati-based Chiquita TNC owner Carl Lindner's generous contributions to Democratic and Republican candidates, and the votes he commands in the House and the Senate) and the EC's devious ways;The EC Vice-President and Trade Commissioner, Sir Leon Brittan, was quoted as having told a EU Parliament committee that a compromise accord had almost been reached, but was vetoed by Chiquita banana marketing TNC, and that the US "in the throes of the conflict with Iraq and the trial of President Clinton had been unable to override the political influence of Chiquita".
And in Washington, Senate Majority Leader, Republican Trent Lott of Mississippi said "I am worried that if we don't succeed in this first case, it is all over (with the WTO)."
the USTR, Mrs Charlene Barshevsky's announced that the US will be reinstituting the "Super 301" provision in its trade law (providing for unilateral determination of other countries' unfair trade practices, and demand for negotiations under threat of trade sanctions). At the core of the WTO/DSB problem, which has brought the EC some support from those who otherwise complain of the EC's trade behaviour and trying to run circles around others, is the US assertion of its unilateral right to determine whether or not some other country has carried out its obligation of complying with a WTO/DSB ruling, its right to impose (after getting the automatic sanction of the WTO) trade sanctions, and demand that the other party negotiate under threat of sanctions or with sanctions actually in place.The US assertion of its right, after a panel ruling, to use its own trade law (S.301) to determine whether the other party has complied with the ruling or not, and then seek (automatic authorization) and impose trade sanctions, before calling on the other party to negotiate a settlement in substance, was in effect an attempt to "embed" into the WTO system its trade law, has alarmed many nations, even those not very supportive of the EC in substance.
As one negotiator put it, "we were told that the whole idea of the WTO and its integrated dispute settlement system was to end US unilateralism and the US use of its family of 'S. 301' provisions of
trade law; but if the US has its way now, we may end up with the worst of all worlds."
The USTR's announcement in Washington about the Clinton administration seeking the re-insertion of the "Super-301" provision into the US trade law, to enable the administration "to promote US interests", and the reports that this would enable the Clinton administration to secure Congressional fast-track authority for trade negotiations, could have left little doubt among WTO diplomats (and governments of other countries), that the post-WTO trade system is no different from the previous one and that as in the Uruguay Round (under the old GATT), they would be negotiating under the threat of unilateral sanctions.
In the banana fight, there was some respite at the WTO, as the DSB (whose meeting is in suspension since Monday, unable to adopt its agenda), met informally Tuesday morning in private, and argued about the finer points of procedure and substance, and gave time to the two sides to reach a settlement before the DSB meets on Thursday.
On Monday, the DSB meeting was suspended, after two small banana exporting nations, St Lucia and Dominica (in the Windward Islands in the Caribbean), supported by Cote d'Ivoire, objected to the adoption of the draft agenda, which included a US inscribed item for (automatic) authorization from the WTO under Art. 22.6 of DSU, for retaliation over the EC's new banana regime measures (to comply with a WTO ruling) that came into effect on 1 January, 1999.
St. Lucia had contended that when the legality of the new EC measures had been referred to the panel for a decision, and the EC itself has sought a General Council meeting for an authoritative interpretation of the rules (21.5 and 22.6 etc of the DSU), even the mere bringing up on the agenda of the DSB of the US request for authorization for sanctions (and its automatic acceptance under the rules) would mean that the DSB was "interpreting" the DSU rules, which it had no authority to do, since the WTO vested this in the Ministerial Conference or in its absence in the General Council.
At the Tuesday meeting, where there was reportedly much back and forth about the old GATT practice that no one ever objected to the inclusion of an item on the agenda, about the worries that allowing "objections" could impede the rights of small members to bring issues before the DSB.
Trade officials said that towards the end Amb. S. Narayanan of India had intervened, and others agreed with him, that if the substance of the banana dispute could be resolved by the US and EC, the procedural questions raised by this could be addressed and resolved later.
After the meeting, DSB Chairman, Tunisia's Kamel Morjane, said that he would give a ruling Tuesday on the "adoption of the agenda" (implying he would rule that it has been adopted, as the US and its supporters and the WTO's legal division is asking him to do.)
But far from settling the problem, it may still set off procedural battles in the formal meeting - whether the ruling can be challenged and voted out by a simple majority (as the WTO rules of procedure would suggest), or a consensus is needed to set the ruling aside (as the DSU rules, and the footnote No. 3 to Art IX of WTO agreement, stipulates about the DSB decision-making).
After the Monday DSB meeting, the US accused the EC as having master-minded, and finally, having blocked in the DSB the adoption of the agenda with the US item.
According to those present, at the DSB, when the DSB chair tried to outstare (after some comments from the floor) the St.Lucia representative who had objected to the inclusion of the US item, and announce that the agenda had been adopted, the EC put up its flag that if he wanted to do this, the EC would object. In a press statement from Brussels the embassies of the Eastern Caribbean States, said that it was "most unusual" for small vulnerable countries to defy the US, but in the banana dispute, the Windward islands had vital interests due to their unique dependence on banana exports to the EC, and they could neither accept the US view of the legality of the current banana regime and would not wish any decision on the future of their banana industry to be prejudiced by the threats of sanctions, and a false assumption of legality. The Windwards Islands, have always urged a final and expeditious resolution of this dispute in a manner that respects the integrity of the multilateral trading system and the EU's obligations under the Lome Convention.
In his comments to the EU Parliament committee, Brittan that a deal could have been reached (at the EU-US summit on 10 December last), on the basis of his informal suggestions which have produced a definitive WTO ruling by end March. This compromise, acceptable to the White House, State Department and USTR, Brittan said, was vetoed "at the highest level... in Chiquita". Brittan said the episode showed where "this destructive US policy is being driven from, adding that the US,
in the throes of the conflict with Iraq and the trial of President Clinton, had been unable last month "to override the political influence of Chiquita".
The Chiquita banana spokesman (at Cincinnati) said this was "absolute nonsense".