Bridges Weekly Trade News Digest • Volume 5 • Number 43 • 20th December 2001
Dispute Settlement Update: Bananas; US-EC Steel
Bananas
Putting the final nail in the coffin of the almost decade-old dispute between the EC on the one hand and the US and Ecuador on the other, EU agriculture ministers on 19 December adopted regulations for the EC’s new banana-import regime. EC Trade Commissioner Pascal Lamy said on Wednesday that, "this WTO-compatible system the Council [of Ministers] has decided upon today signals not only the end of the banana dispute, but will result in the lifting of some $US 200 million worth of US sanctions, which is the good news EU exporters have been waiting for."
The adopted regulations will give the EU’s traditional banana suppliers (for the most part former colonies in Africa and the Caribbean) access to 83 percent of the total import quota of 2.4 million tons, while non-traditional suppliers such as Ecuador will receive the remaining 17 percent. The regime also includes provisions on compensatory aid for the affected Caribbean and African countries. There will be three import quotas with different tariffs until 2006, at which point a tariff-only system will take effect. The EC-Ecuador deal is expected to increase banana import volumes from Latin America by 100,000 tons to 353,000 tons (see BRIDGES Weekly, 15 November 2001).
In a statement addressed to the 18 December meeting of the WTO Dispute Settlement Body (DSB), the EC thanked Members for granting two waivers during the 9-14 November Doha Ministerial for both its commitments under the Africa Caribbean and Pacific (ACP)-EC partnership (Cotonou) Agreement and for its aforementioned transitional banana regime.
Calling these Understandings "a very good basis" for the introduction of a WTO-compatible banana import regime, Ecuador reminded the EC in its own statement at the DSB that the new TRQ-based system was only a transitional one, and that the EC had to enter into negotiations starting in mid-2004 in order to convert the regime to a tariff-only scheme by 2006.
Steel
Foreshadowing a potential future dispute between the US and the EC together with other WTO Members over trade remedy measures such as anti-dumping duties, the EC has condemned the US International Trade Commission’s (ITC) recommendation earlier this month to restrict steel imports to the US as a "blatant call for protectionism" to which — if adopted by US President Bush — the EC would respond with an immediate complaint at the WTO. Both states met at an 18-19 December Organisation for Economic Cooperation and Development (OECD) meeting to discuss steel capacity cuts in order to reduce the global excess production in the steel sector. The accusations come in the wake of the Doha Ministerial, where WTO Members agreed on negotiations in the area of anti-dumping
As of 7 December, the US ITC announced its recommendations and views on remedies (namely measures imposed against cheaper imported goods, such as anti-dumping) to be submitted to the President by 19 December in its global safeguard investigation regarding steel imports. The independent trade panel recommended both raised tariffs on steel up to 40 percent as well as quota restrictions during a four-year period. The ITC found that at least 12 out of 33 identified product groups were being imported into the US in such increased quantities that they constituted a substantial cause of serious injury or threat of serious injury to the respective US industries. US steel makers have lost more than $1 billion in 2001 through lower steel prices, and 25 steel companies went bankrupt. President Bush will have 60 to 75 days to make a final decision on whether to adopt the ITC’s recommendations.
Speaking at the 13 December UK Steel Association Annual Forum, EC Trade Commissioner Pascal Lamy called the recommended measures "totally unwarranted" and "a blatant call for protectionism". Stating that 123 anti-dumping and 31 anti subsidy measures had already turned the US into an "impenetrable fortress" resulting in a 25 percent decrease in steel imports compared to last year, Lamy called on the US steel industry to rather "put its own house in order" — just as the EC did when restructuring its steel sector in the nineties, he said — instead of "mak[ing] others pay for American restructuring."
The EC trade chief further declared that the EC would — in the event the recommendations where adopted — immediately file a complaint with the WTO as the ITC’s finding were in clear breach of WTO safeguard provisions.
China, together with Japan, Korea and New Zealand issued similar statements opposing to the proposed US tariffs and quota restrictions.
Several US trade remedy procedures have in the past been subject to adverse WTO rulings, including UK-Hot Rolled Lead and Carbon Steel (WT/DS138/AB/R), Japan-Hot Rolled Steel (WT/DS184/R) and Korea-Welded Carbon Quality Line Pipe (WT/DS202/R).
Not officially relating to this row between the US and its WTO partners, but in which regard a Korean trade representative saw an "invisible link", the world’s steel making nations met under OECD auspices on 18-19 December and agreed to cut global steel production by about ten percent during the next decade so as to boost the steel industry by reducing overcapacity. Although the EC had originally called for reducing overcapacity while refraining from any further trade restrictions, the final non-binding agreement did not contain any such commitment.
"EU Forcefully Condemns US International Trade Commission’s Recommendations To Hike Tariffs On Steel Products," EU PRESS RELEASE, 10 December 2001; "Little Avail, US Presses For Steel Output Cut Abroad," NEW YORK TIMES, 17 December 2001; "DJ China Joins International Opposition To US Steel Tariffs," DOW JONES, 14 December 2001; "ITC Announces Recommendations And Views On Remedy In Its Global Safeguard Investigation Involving Imports Of Steel," USITC NEWS RELEASE, 7 December 2001; "Steel-Making Nations See Capacity Cuts," REUTERS, 18 December 2001; "Pact to Cut Steel Production Doesn’t End Risk of Trade War," NEW YORK TIMES, 19 December 2001; ICTSD Internal Files.