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BRIDGES Weekly Trade News Digest - Vol. 2, Number 48 December 14, 1998

BRIDGES Weekly Trade News Digest - Vol. 2, Number 48    December 14, 1998



WTO Meetings

15 and 17 December 1998: Trade Policy Review Body (Canada).
 For information, contact Lucie Giraud, WTO, tel: (41-22) 739 50 75.

16-17 December 1998: Working Party on Russia.
 For information, contact Hans-Peter Werner, WTO, tel: (41-22) 739 52 86.

18 December 1998: General Council. Members will discuss the selection of
the next WTO Director-General.
 For information, contact Keith Rockwell, WTO, tel: (41-22) 739 50 07.

Other Meetings

13-15 January 1999 in Washington, DC, U.S.
 For more information contact the International Development Conference,
tel: (202) 884-8580; fax: (202) 884-8499; e-mail:

Northern Alliance for Sustainability, will organize two meetings to be
held from 31 January to 3 February 1999.
 For information, contact the ANPED international Secretariat, tel: 31-(0)
30-2310300; fax: 31-(0)30- 2340878; e-mail:; Internet:

RECOVERY, RECYCLING, REINTEGRATION: From 2-5 February, 1999, Geneva,
 The Fourth World Congress will address issues associated with the
environmental, economic and social implications of resource recovery and
reduction techniques. It will cover the most advanced technologies and the
latest findings of R&D in industry and academia. Language: English.
Contact: PEAK Ltd., Maria Buhler, R'99 Project Manager, Seefeldstrasse
224, CH- 8008 Zurich, Switzerland. Tel: (41-1) 386 44 44; Fax: (41-1) 385
44 45; Email:


 This report will be released in the second quarter of 1999. The
Sustainable Agriculture Initiative is a UK based non-governmental
organisation dedicated to enhancing agricultural yields and sustainability
in developing countries. The Action Report, published by the Novello
Press, will be distributed to agricultural practitioners and policy
formers throughout Asia, Africa and Latin America. Containing 120
individual, interlinked papers contributed by over 70 organisation
dedicated to agriculture and edited by AJ Fairclough, the Action Report is
based on working recommendations for agricultural practice and the
integration of modern appropriate technology.
 For more information, or to be considered for inclusion in the Preferred
Partner Schedule, contact Jeremy Flay at The Sustainable Agriculture

 In their paper on "Trade Liberalisation and the Environment: The Case of
the Uruguay Round, M.A. Cole et al. estimate the pollution and monetary
impacts of the Uruguay Round of trade negotiations. Using the Industrial
Pollution Projection System (IPPS) developed by the NIPR team as part of
their methodology, the authors' analysis indicates developing and
transition regions will generally experience an increase in major air
 The abstract is available on NIPR, while the full paper is available
through the World Bank's link to Blackwell Publishers, publishers of The
World Economy. See

 A new study, "Instruments of Change Motivating and Financing Sustainable
Development", has been written for UNEP by Dr. Theodore Panayotou of the
Harvard Institute for International Development, and makes a major
contribution to that debate, says UNEP Executive Klaus Toepfer. The book
takes stock of the available economic and related instruments such as
tradeable permits, user fees, pollution charges, subsidies, environment
taxes and fines, among many others.
 The publication is available from Earthscan Publications Limited, London,
at fax: (44-171) 278 11 42; email:; or from the
UNEP Environment, Economics and Trade Unit, Geneva, fax: (41-22) 796 92
40; email:

 This Discussion Paper--released by the Catholic Institute for
International Relations (CIIR)--identifies how the European Commission's
proposed changes for the short term might affect developing countries.
Offering a careful analysis of the so-called "Agenda 2000" proposals, the
authors warn that the changes might actually hurt developing countries
unless specific safeguards are put in place.
 The Paper can be obtained by contacting CIIR at tel: 44 (0) 171 354 0883;
fax: 44 (0)171 359 0017; email:

Table of Contents                           

- WTO General Council: Document Derestriction, High-Level Meetings
- EU Expected To Move On Bananas This Week
- OECD Talks On MAI Officially End
- WTO Dispute Settlement Review to Continue into 1999
- EU Applies Precautionary Principle To Ban Animal Feed Antibiotics
- MERCOSUR Summit: Social-Labour Declaration Signed
- World Bank Carbon Trading Plan Under Fire
- Japan Pressing Ahead With Rice Tariffication
- WTO In Brief
- In Brief


Meeting for its last session of 1998 last week, the WTO General Council
had a busy agenda. Items of interest to BRIDGES readers included the
High-Level Symposia on Trade and Environment and on Trade and Development,
the review of the 1996 document derestriction decision, the appointment of
the new WTO Director-General, and the report of the heads of the IMF, the
World Bank and the WTO on the issue of coherence. On the latter point, no
agreement was reached and the General Council meeting was suspended until
18 December, when Members will meet again to attempt to reach a decision.
As BRIDGES Weekly Trade News Digest goes to press, Thailand's first deputy
Prime Minister Supachai Panitchpakdi seemed to be favourite as next

Prior to its session, the General Council met as the Trade Policy Review
Body and held a discussion on developments in international trade and the
trading system, based on the WTO's annual report and in particular, on
the report's chapter 4 which examines the process of globalisation and
the impact of trade liberalisation on it. Representatives of more than 50
WTO Members spoke, mentioning inter alia the relationship between regional
trade agreements and the multilateral trading system, the need to speed up
accession procedures and the necessity of increasing technical assistance
for developing countries. The EU mentioned the need for a new round of
multilateral trade talks, and several countries lamented the lack of
liberalisation in agriculture and textiles.

There was no real discussion of document derestriction during last week's
General Council meeting. A new proposal for revising the 1996 document
derestriction decision has however been informally put forward. It differs
only from the prior proposal (reported on in BRIDGES Weekly Trade News
Digest, Vol. 2, No. 40, October 19, 1998, and BRIDGES Between Trade and
Sustainable Development, Vol. 2, No. 7, p.3) in that it further delays
derestriction of documents, in particular panel reports. General Council
Chair, Canada's Ambassador John Weekes, submitted the new proposal after
holding consultations with delegations. According to the current proposal,
only documents have been translated and are available in all three WTO
official languages can be proposed for derestriction. The proposal before
last week's General Council makes no change in that reports of panels
will remain restricted until they have been circulated to members. It
contains a change over the current situation and the previous proposal in
that it proposes that after the panel report has been issued to the
dispute's parties, the "Findings and Conclusions" portion of the report
shall be circulated as unrestricted as soon as it is available in all
three language versions. The previous proposal would also have allowed the
"Descriptive" part of the report to be made available as an unrestricted
document in its original language. One is obviously witness here to a tug
of war between the principles of linguistic equality and timely public
availability of documents. It is expected that the issue of document
derestriction will be on the agenda of 1999's first session of the
General Council, currently scheduled for 10 February, and that the Chair,
assisted by Deputy Director General Anwarul Hoda, will hold further
consultations with delegations between now and then.

The General Council confirmed the objectives, dates and agendas of the
High Level Symposium on Trade and Development and the High Level Symposium
on Trade and Environment. The modalities for NGO participation are not yet
known. The High Level Symposium on Trade and Environment will take place
on 15-16 March and will consider: Linkages between trade and environmental
policies; Synergies between trade

liberalisation, environmental protection, sustained economic growth and
sustainable development; and Interaction between the trade and environment
communities. The High Level Symposium on Trade and Development will take
place on 17-18 March and will consider: Links between trade and
development; Trade and development prospects for developing countries; and
Further integration of developing countries, including least- developed
countries, in the trading system. In the context of the latter meeting,
Egypt submitted a very detailed document entitled "Special and
Differential Treatment for Developing Countries in the Multilateral
Trading System."

On the issue of coherence of policies promoted by the Bretton Woods
institutons and the trade system, a report was presented by the three
managing heads highlighting areas where coordination among the three
bodies is taking place. Among the new opportunities for cooperation
mention is made of how the "expertise that the IMF and the World Bank have
in areas being considered for the WTO - such as foreign direct investment
and issues related to sustainable development - can contribute to the
WTO's efforts to enhance the trade community's understanding of these
issues." The report also enumerates the possibility of the Bank assisting
with the assesment of impact of further liberalization in industrial
tariffs, agriculture and other sensitive sectors for developing countries.
(See WTO document WT/GC/13).

"Thai seen front-runner in WTO leadership contest," REUTERS, December 14,
1998; ICTSD Internal Files.


The EU this week is expected to extend an olive branch to the U.S. in an
effort to settle the two sides' dispute over whether the EU has gone far
enough in its revised banana import regime to comply with the spirit of a
1997 WTO Panel ruling. The proposal could revive EU-U.S. banana talks,
which broke down earlier this month. (See BRIDGES Weekly Trade News Digest
Vol. 2, No. 47, December 7, 1998 and BRIDGES Weekly Trade News Digest Vol.
2, No. 44, November 16, 1998).

It is expected that the EU will ask a WTO Dispute Settlement Panel to rule
as soon as possible whether its revised regime does comply with the 1997
ruling. The EU until now has been dissuaded from conceding this option, as
it would suggest that the EU was indeed unsure whether its regime does
comply. It is unclear whether this option, if put forward as expected
December 15, would satisfy the U.S. It does come closer to previous U.S.
demands that a WTO panel review the EU revised banana regime by January

The EU and U.S. are scheduled to hold a summit on overall trade relations
at week's end. The EU proposal would be an effort to keep the banana
dispute from overshadowing that meeting between U.S. President Bill
Clinton and European leaders. The EU announcement would also coincide with
the publication December 15 of the U.S. list of products subject to 100
percent duties effective late next month unless the EU changes its revised
regime. The U.S. list is expected to target products from EU member-states
that have opposed opening the EU banana market, such as France, Austria
and Finland.

 "Dispute: EU softens banana line with U.S.," FINANCIAL TIMES, December
14, 1998;
 "EU ready to ask WTO to review its banana policy," JOURNAL OF COMMERCE,
December 15, 1998;
 "U.S. strategy in banana tiff: divide and conquer," JOURNAL OF COMMERCE,
December 9, 1998;
 "U.S. rejects Ruggiero request to meet with EU to resolve banana fight,"
INSIDE US TRADE, December 11, 1998.


The Organisation for Economic Co-operation and Development (OECD) December
3 announced, "Negotiations on the MAI are no longer taking place,"
officially ending three years of frustrating negotiations toward a
Multilateral Agreement on Investment (MAI). The end to ailing negotiations
was precipitated in October when France announced it was withdrawing from
negotiations. (See BRIDGES Weekly Trade News Digest Vol. 2, No. 43,
November 09, 1998). The MAI had been vigorously opposed by labour,
environment and citizens' groups for not incorporating labour and
environment standards and for lack of transparency. The OECD had also been
strongly criticised for its failure to include developing countries in
negotiations; these, led by India, Egypt, Pakistan and Malaysia expressed
strong suspicion and opposition toward the MAI and its presumed mandate
over developing countries.

The OECD statement offered no direction as to where talks on investment
would go next. It seems unlikely at this stage that talks would move to
the WTO, although some reports say France and other European countries
would like to move MAI talks there in order to expand participation from
the 29 OECD countries to the 132 WTO member countries, including
developing countries left out from OECD talks. Many developing nations
remain wary of WTO MAI-type talks, arguing that WTO members should focus
instead on implementing existing WTO agreements before embarking on
regulating new issues. The U.S. thus far remains sceptical that a MAI
agreement could be concluded at the WTO. The decision on whether to start
WTO talks on a MAI-type agreement is linked to the general issue of what
issues to include in a new round of international trade talks, if such a
round is indeed launched at the third WTO Ministeral Meeting at the end of

 "Informal Consultations on International Investment, OECD PRESS RELEASE,
December 3, 1998;
 "WTO seeks to extend deadline for completion of investment talks,"
 "OECD nations announce end of negotiations for investment rules," INSIDE
US TRADE, December 11, 1998;
 "L'accord multilateral sur les investissements officielement enterre," LE
MONDE, December 6-7, 1998;
 "OECD reaffirms need for international investment rules," AGENCE FRANCE-
PRESSE, December 3, 1998; ICTSD Internal Files.


The WTO General Council last week agreed to the request submitted to it by
the Dispute Settlement Body, to prolong the review of the Dispute
Settlement Understanding (DSU) until mid-1999. According to the provisions
of the DSU, the review should have been concluded by the end of this year,
but the number of suggestions for changes to the DSU have been larger than
expected, particularly in the light of the fact that the Dispute
Settlement Mechanism (DSM) is considered to be working very well on the

Amongst the main issues being discussed in the context of the DSU review
are set out below. For more details and country positions, see BRIDGES
Between Trade and Sustainable Development, Vol 2, No. 4, p. 7, No. 7, p.7
& No. 8, p. 9). Transparency of the DSM is one of the points of discussion
which has been the most aired, and on which country positions diverge the
most. Elements of the issue of transparency include early release of panel
reports and public access to country submissions, non-state actors' right
to submit amicus briefs to panels, and open panel hearings to the public.

Developing countries argue that the DSU's special and differential
treatment provisions in favour of developing countries have not yet given
the benefits hoped for. Some are advocating creation of an independent
unit to provide legal assistance to developing countries involved in DS
proceedings. Other issues put forward are the composition of panels,
compliance and implementation procedures, and rules relating to multiple

ICTSD Internal Files.


An EU ban on the use of four antibiotics used in animal feed moved forward
last week as the proposal won approval from ten out of 15 ministers to the
European Commission (EC). (See BRIDGES Weekly Trade News Digest Vol. 2,
No. 44, November 16, 1998.) EU Agriculture Commissioner Franz Fischler
proposed the ban, concerned that use of the antibiotics could build up
resistance in human consumers. When the proposal moved to EU farm
ministers this week, it passed, with 12 countries voting in favour. The
ban, which would go into effect January 1, is controversial because
scientists have yet to show any connection between the four antibiotics
and increased human resistance to medicines.

Sales of the four antibiotics are worth US$350 million a year to the four
manufacturers that produce and market them. The affected manufacturers and
opponents of the ban take issue not only with the potential sales revenue
lost, but also the premise under which the EU is pushing the ban forward.

The EU is utilising the "precautionary priciple" in justifying the ban - a
principle used to allow taking preventive measures when scientific
evidence is lacking. This principle - which is often cited in
international environmental policy - is the same principle France is using
to justify its ban on genetically modified seeds and feedstuffs, the
source of a trade dispute between the U.S. and France. Critics charge the
principle holds up billions of dollars of investments without any real
guarantee that the bans improve consumer safety. "The precautionary
principle undermines good policy by denying both due process and fair
treatment," said an executive with Pfizer Inc., one of the four-affected

Consumer groups argue the precautionary principle is entirely justified.
"Consumers will not tolerate a policy process that requires substantial
evidence of death and disease before public health action is justified,"
according to Jim Murray, head of Europe's main consumer lobby, the EEUC.

The ban would not affect imported meat.

 "EU to ban four animal feed antibiotics," FINANCIAL TIMES, December 3,
 "EU seeks ban on 4 animal feed antibiotics," WALL STREET JOURNAL,
December 7, 1998.


Officials from the Southern Cone Common Market (MERCOSUR, comprising
Argentina, Brazil, Uruguay, Paraguay and associate members Bolivia and
Chile) met last week for their semi-annual summit. The meeting yielded
agreements on two sectors, sugar and autos, which have been the source of
much internal tension within the grouping. With respect to autos, the four
full MERCOSUR members agreed that any new government subsidies for the
auto industry must win approval from all four MERCOSUR members. Members
also agreed to standardise technology levels among auto manufacturers in
MERCOSUR countries. Argentine officials said the auto agreement would
"create equality between the four countries and auto sectors, and give
consumers greater choice."

MERCOSUR leaders also signed a so-called social-labour declaration
establishing a Social Labour Commission comprised of government, labour
groups and businesses, designed to be a forum for ensuring compliance with
basic worker's rights. Labour groups staged protests at the summit,
calling for an even greater commitment to workers' rights by demanding
that MERCOSUR include social clauses in any free trade agreements
negotiated. Labour activists acknowledged however that the social-labour
declaration signed last week was at least a step in the right direction,
as it calls for a dialogue on labour issues. Trade liberalisation,
privatisation and regional financial difficulties have led to a decline in
the labour movement in MERCOSUR countries, forcing labour activists to
fight harder to ensure workers' rights are fully considered within the
economic group.

 "Argentina agrees to lower tariff on Brazil sugar by 10%;" "Mercosur
signs auto policy framework deal," DOW JONES, December 10, 1998;
 "A movement in decline stands up to MERCOSUR summit," IPS, December 8,


The World Bank has delayed - pending further consultation with non-
governmental and other interested organisations, a plan to control the
US$150 billion annual global carbon trading market. The World Bank plan
details a scheme in which the Bank would charge five per cent commission
on all pollution allowance trades. A global carbon-trading scheme is
called for under the Kyoto Protocol on climate change, and would establish
a system by which developing countries can sell their pollution allowances
to developed countries in return for cleaner combustion technology
investments. The U.S.-based Institute for Policy Studies published a
report sharply critical of the World Bank plan, in which it said the Bank
is in clear conflict with the World Bank mandate to work toward poverty
alleviation and sustainable development. The plan, the report noted, would
create a situation under which the Bank would fund fossil fuel projects in
developing countries and then profit off the pollution produced from those
projects via its carbon trading scheme. The World Bank is the largest
public funder of fossil fuel projects in the developing world -- fossil
fuels are the single greatest contributor to climate change.

Japan is forging plans to enter the emerging business of carbon dioxide
emissions trading. Russia reportedly figures prominently in Japanese
plans. It is estimated that the Japan's per tonne cost to reduce carbon
dioxide emissions domestically is US$200 versus US$20 via trading
emissions credits with Russia. Environmentalist voiced concern over the
Japanese plan, as it could signal merely a shift toward a low-energy
policy rather than a reduction in carbon dioxide production. Japanese
carbon emissions have grown by 10 percent since 1990.

 "Profiting from pollution," SAN JOSE MERCURY NEWS, November 22, 1998;
 "World Bank called on energy lending policy," CNN, December 2, 1998;
 "Environment: Eagerly, Tokyo jumps into emissions trading," IPS, December
4, 1998.


Japan continues to move forward with a plan to implement a rice
tariffication scheme in spring 1999 (See BRIDGES Weekly Trade News Digest
Vol. 2, No. 46 November 30, 1998). The proposed scheme would replace the
current Japanese "minimum access" policy for rice imports, implemented as
part of its commitments under the General Agreement on Tariffs and Trade
(GATT), which obliges Japan to import rice equal to eight percent of total
domestic consumption by 2000. Japan began importing rice at a rate of four
percent consumption in 1995 and committed to an annual 0.8 percent
increase in imports each year.

By adopting tariffication, Japan would now be allowed to slow its
mandatory increase in imports to 0.4 percent per year, while applying
tariffs on rice imports up to 1000%. The tariffication scheme is one
option prescribed under GATT, Japan is still expected to face strong
opposition to its rice policy from rice exporting countries when WTO
agriculture talks get underway next year. Japanese smaller farmers unions
and some non-governmental organisations are lobbying the government to
rethink the policy, fearful that tariffication paves the way for
elimination of rice tariffs all together as pressure mounts on Japan in
those trade talks. These opponents argue that the policy would ultimately
undermine Japanese food self-sufficiency, and say also that the policy
ignores the importance of protecting and enhancing the self- reliance of
small farmers both in Japan and other countries. Japan's largest
rice-growers lobby, the Central Union of Agricultural Co- operatives
(Zenchu) said it would support the tariffication scheme.

The U.S., Australia and Thailand worry that tariffication would limit the
guaranteed access for their rice exports. U.S. Trade Representative
Charlene Barshefsky last week requested consultations with Japan before
the tariffication scheme is adopted. Japan rejected the request saying
that it is under no obligation to hold consultations on the matter, as
long as the tariff rate falls within a WTO prescribed range. Specifically
for U.S. rice, Japan has proposed a 300 percent tariff, which would price
U.S. rice imports about 25 percent above domestic product.

In other regional news, Japan and South Korea have begun talks on a free
trade agreement. South Korea hopes to use increased trade with Japan as a
way to pull itself out of a deep recession. Japan hopes its relationship
with South Korea would help balance China's growing economic strength in
the region.

 "U.S. asks Japan to hold talks on rice tariff plan," KYODO NEWS
INTERNATIONAL, December 4, 1998;
 "Early acceptance of rice tariffs is right policy now, for long run," THE
NIKKEI WEEKLY, December 7, 1998;
 "Japan may strain rice relations," AUSTRALIAN FINANCIAL REVIEW, December
9, 1998;
 "Japan not to hold prior talks on rice imports," KYODO NEWS
INTERNATIONAL, December 4, 1998;
 "Japan, South Korea explore free trade," THE NIKKEI WEEKLY, December 7,


The EU last week renewed its call to use the WTO as the forum for
harmonisation of customs procedures and documentation around the world.
Canada offered support for the proposal, but the U.S. noted that existing
WTO bodies could reach the same end. South Korea noted the EU proposal
went beyond the WTO mandate. Importers and exporters are reported to
favour the move, because the WTO has better ability to enforce rules than
existing agencies.

 "WTO urged to promote customs harmony," JOURNAL OF COMMERCE, December 9,

Brazil last week complained to the WTO over an EU import regime for
instant coffee. Brazil said the EU discriminates against Brazilian instant
coffee exports in favour of instant coffee from Andean Pact and CARICOM
countries, both of which have programmes in place to combat drug
trafficking. Brazil does not have such a programme in place.

"Brazil takes EU to WTO," FINANCIAL TIMES, December 10, 1998;
 "Brazil to discuss high import taxes on soluble coffee with WTO," BRAZIL
December 12, 1998.

The 20-member Common Market for Eastern and Southern Africa (COMESA) is to
conduct an educational programme aimed at enabling its member states to
understand and comply with global trade rules under the WTO. The
programme, begun last week, includes seminars and workshops for trade
officials, political decision-makers and other officials from the public
and private sectors.

 "COMESA Initiates Education Programme On WTO," PAN AFRCIAN NEWS AGENCY,
December 10, 1998.


Four environmental groups last week filed suit to force the U.S.
government to apply the Endangered Species Act and the Environmental
Policy Act to the 1996 Softwood Lumber Agreement (SLA) between the U.S.
and Canada. The environmental groups argue that the SLA encourages
overcutting in British Colombia, harming grizzly bears in Canada and other
wildlife in nearby U.S. states.
 "Environmental groups sue over U.S.-Canada softwood lumber pact," DOW
JONES, December 10, 1998.

Over 20 major U.S. companies last week announced they would no longer sell
wood and paper products made from old-growth forests. Under an agreement
negotiated by the Coastal Rainforest Coalition, the companies (including
Kinko's, Nike and Hewlett-Packard), are to phase out use of old-growth
products over the next year, increase use of recycled products, and
increase use of alternative "tree-free" paper sources.

 "Corporations forsake ancient forest products," IPS, December 10, 1998.

An US$500 million deal between an U.S. fishing corporation and the
Pakistan government faces opposition from citizens' and environmental
groups which argue the deal threatens to strip a 200-mile coastal region
of its fish populations within a year. Environmental groups have called
for a social and environmental impact station to be conducted before the
deal moves forward.
 " U.S. Company Could Wipe Out Pakistani Fishing Grounds," ENS, December
3, 1998.

Africa is being targeted by multi-national corporations desperate for a
market to sell genetically engineered products which have been rejected
elsewhere, environmental groups have warned. Another problem is the
privatisation of state-owned seed distribution companies in countries such
as Zimbabwe, said participants in the first Euro-African Green Conference,
held in Nairobi early this month.
 "Environment: Groups involved in genetic engineering target Africa," IPS,
December 3, 1998.

BRIDGES Weekly Trade News Digest) is published by the 
International Centre for Trade and Sustainable Development 
with support from the Institute for Agriculture and Trade 
Policy.  Editor: Caroline Dommen, ICTSD, Geneva Executive 
Center, 13 ch. des Anemones, 1219 Geneva, Switzerland; 
email:; tel: (41-22) 917 8497; fax: (41-
22) 917 8093. Executive Director: Ricardo Melindez-Ortiz, 
address as above, email:

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