BRIDGES Weekly Trade News Digest Vol 3, No 1 & 2
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Bridges has been on vacation. Some events are mentioned too late in this
Double Issue for easy participation.
BRIDGES Weekly Trade News Digest - Vol 3, No 1 & 2: Double Issue
January 18, 1999
EVENTS & RESOURCES
20 and 22 January 1999:
Trade Policy Review Body (Argentina).
For information contact Lucie Giraud, WTO, tel: (41-22) 739-5075.
25 January 1999:
Dispute Settlement Body.
For information contact Nuch Nazeer, WTO, as above.
26-27 January 1999: Informal Inter-sessional meeting of the Special
Session of the General Council, on recommendations concerning other
possible future work on the basis of the work programme initiated at
Singapore; recommendations arising from consideration of other matters
concerning their multilateral trade relations; and organisation of future
For information contact Nuch Nazeer, WTO, as above.
27-28 January 1999: Trade Policy Review Body (Togo).
For information contact Lucie Giraud, as above.
18-22 January 1999, Costa Rica:
NGO/GOVERNMENT OF COSTA RICA INITIATIVE ON UNDERLYING CAUSES OF
DEFORESTATION AND FOREST DEGRADATION. This meeting will be organized by
NGOs and the Government of Costa Rica in cooperation with UNEP.
For information contact: Global Secretariat, Simone Lovera, e-mail:
21 January 1999, Geneva:
LA MONDIALISATION EST-ELLE UNE GUERRE DE RELIGION?, with Fabrizio
This conference will be held at 8.30 p.m. at 55 Ave Wendt, Geneva,
25-29 January 1999, Nairobi, Kenya:
SECOND MEETING OF THE POPS INC. This will be the Second Meeting of the
Intergovernmental Negotiating Committee for Persistent Organic Pollutants.
For information contact: UNEP Chemicals (IRPTC), tel: (41-22) 979-9111,
fax: 797-3460, e- mail: firstname.lastname@example.org, web: http://irptc.unep.ch/pops/
27 January 1999, Brussels:
NGO MEETING WITH THE EC ON INVESTMENT AND ENVIRONMENT.
The European Commission is inviting NGOs to two meetings (to be held back
to back on 27 January) on future WTO negotiations on investment and on
environment. Thus far there has been only lukewarm response from the NGO
community, and all NGOs are encouraged to attend. NGOs need to reply as
soon as possible if they wish to attend.
For information contact Brigitte Nau at the EC, tel: (32-2) 296-8332,
30-31 January 1999, New Delhi, India:
SYMPOSIUM ON SUSTAINABLE AGRICULTURE PRODUCTION: LESSONS FROM TRADITIONAL
TECHNOLOGIES. Representatives from federal and regional Indian
governments, agricultural scientists, industry, not-for-profit groups and
farmers organisations will be attending. Topics: crop production, seed
development, plant protection, storage, processing, water management,
For information contact Rita Sharma at email@example.com
1-5 February 1999, Nairobi: UNEP GOVERNING COUNCIL MEETING.
For information contact: B. Miller, UNEP, tel: (254-2) 62-3411, fax: 62-
3748, e-mail: firstname.lastname@example.org
6-7 February 1999, Nairobi, Kenya:
INTERNATIONAL CONFERENCE ON INTELLECTUAL PROPERTY PROTECTION AND THE
CONVENTION ON BIOLOGICAL DIVERSITY: AFRICA AND THE REVIEW AND REVISION OF
THE TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPs)
Organised by the African Centre for Technology Studies (ACTS) and UNEP
and sponsored by the Swedish International Development Agency (SIDA).
Objective: to prepare African delegations to effectively participate in
the TRIPs review through heightened awareness of the issues at stake,
particularly regarding synergies and conflicts with the Convention on
Biological Diversity (CBD). Corollary objective: formulation of a unified
approach to the review. Limited funding is available for authors from
developing countries to submit papers and for participation at the
For information contact: Robert Lettington or Mita Manek, ACTS, P.O. Box
45917, Nairobi, Kenya; tel: (254-2) 521-450-5, fax: 52100, U.S. tel:
(1-650) 833-6645, U.S. fax: 833-6646, e-mail: email@example.com
24-26 February, 1999, San Francisco, U.S.A.:
FROM FIELD TO FASHION: AN APPAREL AND TEXTILE INDUSTRY FORUM ON
ENVIRONMENTAL ISSUES IN COTTON AGRICULTURE.
Sponsored by Levi Strauss & Co, Patagonia, and Eddie Bauer, this
conference will explore various approaches to addressing environmental
stewardship in cotton agriculture. Registration US$ 500.
For information contact Environmental Resource Specialists, Inc., tel:
(1-303) 690-4245, e-mail: firstname.lastname@example.org, web:
CROSS BORDER LINKS: 1998 FAIR TRADE AND SUSTAINABLE DEVELOPMENT DIRECTORY.
This Directory aims to make it easier for progressive people and
organisations to find and get in touch with each other. It provides
descriptions and contact information for over 125 organisations dedicated
to building a world on the principles of equity and sustainability.
Published by The Resource Centre Press; Rachel Hays, ed. Publication
date: November 1998. 129 pp. ISBN 0-911213-64-3, US$ 10.95, paperback.
MARKET-BASED INSTRUMENTS FOR ENVIRONMENTAL POLICYMAKING IN LATIN AMERICA
AND THE CARIBBEAN: LESSONS FROM ELEVEN COUNTRIES.
This World Bank Report by Richard Huber, Jack Ruitenbeek, and Renaldo
Seroa da Motta summarizes a series of country studies addressing the use
of MBIs and command-and-control measures for environmental management in
the region. The authors conclude that MBIs can improve environmental
management, rationalise markets, reduce social costs and increase
The report is available at :
THE OFFICIAL READER OF THE NORTH/SOUTH CONFERENCE FOR SUSTAINABLE
This publication contains all speeches, workshop papers and discussions
of this conference on North/South topics, held 25-29 May 1998. All
contributions are published in their original language (mainly English,
but some in French and German). Cost: 30 Swiss Francs or, for
international orders, US$ 20.
To order contact Thomas Schempp, e-mail: email@example.com
THE PESTICIDES TRUST QUARTERLY.
This publication offers an international perspective on health and
environmental effects of pesticides. Articles ranging from farmer field
schools and pesticide reduction in cotton to links between dieldrin and
breast cancer. Includes updates on Prior Informed Consent, U.S. delay of
methyl bromide phase-out, and biopesticides. UK#15.00 for students and
individuals; UK#32.00 for non-profits and academic organizations; and
UK#65.00 for corporations.
To subscribe contact The Pesticides Trust, Eurolink Centre, 49 Effra Rd.,
London SW2 1BZ, UK; tel: (44-171) 274- 8895, fax: 274-9084, e-mail
BOLETIN DE LA RED DE ACCION SOBRE PLAGUICIDAS Y ALTERNATIVAS EN MEXICO
This newsletter focuses on pesticide-related issues in Latin America as
well as organic agriculture and biotechnology. Articles from recent issues
include methyl bromide use in Mexico; impacts of pesticides on flower
workers in Morelos, Mexico, and chili as an alternative pest control.
Includes book reviews and announcements of upcoming events. US$ 10.
To subscribe contact Red de Accion sobre Plaguicidas y Alternativas en
Mexico (RAPAM), Apartado Postal 395 C.P. 56101, Texcoco Edo. de Mexico,
tel/ fax: (01-595) 477-44, e-mail: firstname.lastname@example.org
Table of Contents
I. IN THE NEWS LAST WEEK
- WTO Panel Established To Determine Top Banana In Trade Dispute
- Trade-Labour Linkage: Indian Press Casts Wary Eye At US Funding
- UNCTAD Hosts G-15 Investment Forum
- Germany To Ban Nuclear Fuel Reprocessing Amongst Conern Re. Nuclear
- Ecolabelling: FSC Faces Obstacles In Asia
II. OTHER RECENT NEWS
- Indian Government Complies With WTO Patent Ruling
- EU, Japan To Push For Investment Talks At WTO
- 1998 Bleak Year For Commodity Markets
- WTO: Japan Adopts Rice Tariff Scheme
- EU, Asian Carmakers Spar Over Auto Emissions Reductions
- Mexico Opposition To Environmental Linkage Could Thwart FTAA
- In Brief
- WTO In Brief
In The News Last Week
WTO PANEL ESTABLISHED TO DETERMINE TOP BANANA IN TRADE DISPUTE
There's more than one way to split a banana. Or at least it appears that
way as the EU and U.S. continue to battle with each other over as yet
untested WTO rules (particularly Articles 21 and 22 of the Dispute
Settlement Understanding (DSU)) in the on-going dispute over the EU banana
The WTO last week agreed to establish a Dispute Settlement Panel to decide
whether the EU has gone far enough in its revised banana import regime to
comply with the spirit of a 1997 WTO Panel ruling. (See BRIDGES Weekly
Trade News Digest Vol. 2, No 44, November 16, 1998.) The WTO Dispute
Settlement Body (DSB) established the panel in response to separate
requests from Ecuador (one of five complainants - along with the U.S.,
Mexico, Honduras and Guatemala, known collectively as the G-5 - in the
case against the EU), and from the EU itself. The panel will have 90 days
to determine whether the EU did indeed comply with the 1997 WTO ruling.
On 15 December the EU requested "the establishment of a panel under
Article 21.5 of the DSU with the mandate to find that [its revised banana
import regime] must be presumed to conform to WTO rules unless their
conformity has been duly challenged under the appropriate DSU procedures."
Article 21.5 specifies that if one country disagrees with another
countries' approach to the implementation of a DSB ruling, the
disagreement "shall be decided through recourse to these dispute
settlement procedures, including wherever possible resort to the original
panel." The EU proposal, in simple terms, challenged the G-5 to join the
EU request for review under Article 21.5 if they believed the EU regime
was not consistent with the WTO, and that the absence of challengers
should indicate the regime is consistent. (See BRIDGES Weekly Trade News
Digest, Vol. 2, No 49, December 21, 1998).
Ecuador, the largest banana exporter to the EU, also requested a panel
under Article 21.5. According to informed sources, Ecuador's request went
against the wishes of the U.S., amid Ecuador's suspicion that it and the
U.S. have different interests in the WTO case. Further, retaliatory
measures like those the U.S. is pursuing do not serve Ecuador's interests,
as Ecuador receives a number of trade benefits from the EU. At the DSB
meeting last week, the U.S. said that with the establishment of the panel
requested by Ecuador, there was no longer any need for the EC request,
which, in its view, was based on a situation where none of the original
complainants had challenged formally the EC's implementing measures. The
EU worries that the U.S. will try to pressure Ecuador into dropping its
request, and is desperate to have a panel convened before the U.S. issues
a request for authorisation to retaliate via a punitive tariff regime
against the EU under Article 22 of DSB rules.
The Clinton Administration, under pressure from Congress and U.S.-based
Chiquita Brands, has been forced to pursue this course of action, called
for under Section 301 of the U.S. 1974 Trade Act. (The U.S. has published
a list of about US$500 million worth of EU goods on which it intends to
slap 100% duties February 1 in retaliation for alleged EU non-compliance
to the 1997 WTO ruling.)
The U.S. last week announced it would seek authorisation to implement
Section 301 against the EU at the January 25 DSB meeting. The EU hopes
that with a panel in place to decide on the compliance issue, the DSB will
instruct the U.S. to hold off on retaliation at least until after the
panel has completed its work. However, U.S. officials note that unless all
members including the U.S. reject the Section 301 request, the DSB must
authorise it. To complicate matters further, the EU announced it would
request the creation of a WTO panel at the January 25 DSB meeting to
decide whether U.S.-preparation for retaliatory measures violates Article
23 of the DSU, which prevents members from unilaterally deciding whether a
violation of WTO rules has occurred. The U.S. last week also requested WTO
consultations with the EU to try and settle the dispute outside of a
panel: however, the EU has been against consultations with the US while
under threat of U.S. sanctions.
The manoeuvring around WTO rules by parties in this dispute highlights a
loophole in the WTO dispute settlement system which allows retaliation
against members who disregard disputes judgements, but are at the same
time unclear about how compliance with WTO decisions should be determined.
Some observers note that this case is less about banana trade and more
about the legitimacy of the WTO as the premier arbiter of trade disputes.
The EU and U.S. are also eager to test WTO procedures before two equally
controversial disputes - over beef hormones and biotechnology - come to
the fore later this winter. Meanwhile, Caribbean banana producers which
rely on the EU for banana export revenues continue to worry that an EU
loss in the banana case could mean devastation for their banana dependent
"Banana panel recalled to examine EC's implementing measures," WTO PRESS
RELEASE, January 14, 1999;
"U.S. to request WTO consultations with EU to resolve banana fight,"
INSIDE US TRADE, January 15, 1999;
"WTO to examine new EU rules amid fight over banana imports," WALL STREET
JOURNAL, January 13, 1999;
"US renews threat to seek approval for sanctions over EU banana dispute,"
JOURNAL OF COMMERCE, January 13, 1998;
"Banane: l'OMC tranche aujourd'hui," LE FIGARO, January 12, 1999;
"WTO orders review but fails to cool tempers," FINANCIAL TIMES, January
"The banana war between the United States and Europe is more than a
trivial trade spat," NEW YORK TIMES, December 24, 1999;
"Les Etats-Unis et l'Europe se dechirent depuis six ans pour des
bananes," TRIBUNE DE GENEVE, January 13, 1999;
"US to press sanctions against EU in banana row," REUTERS, January 12,
TRADE-LABOUR LINKAGE: INDIAN PRESS CASTS WARY EYE AT US FUNDING
U.S. President Bill Clinton last week announced he would ask Congress for
US$25 million to create a new multilateral program at the International
Labour Organisation (ILO) to provide technical assistance to developing
nations to put in place basic labour protections. The funds would be part
of a broader program to improve international labour standards. "We hope
all countries will adopt and enforce ILO's core labour standards and that
developing countries will accept the unique assistance of the ILO," Mr.
The U.S. has previously pushed for a trade and labour linkage to be added
to the WTO agenda. The U.S. has contended that this kind of action is
necessary to squash fears by U.S. workers that their jobs are being lost
to cheaper labour in less-developed economies. The Indian press last week
criticised the Clinton Administration proposal as an attempt to push its
labour-linkage agenda in a new way. Developing countries worry that such
linkage would act as a mask of protectionism for Western goods competing
with less costly goods from developing nations.
In related news, THE ECONOMIC TIMES of India hailed a seeming shift in the
EU stance on trade and labour linkage. The paper quoted EC official Herve
Jouanjean, who said, "We don't believe in imposing work standards under
the WTO. These are rules that are governed by the International Labour
Organisation. As long as all the signatory countries follow these
standards, we don't have any need to bring any special labour norms under
the WTO." This marks a shift from two years ago, when the EU proposed
launching a global trade watchdog body within the WTO to examine the
relationship between social standards and trade. Developing economies
strongly opposed the move, and a general agreement was reached by WTO
members at the 1996 WTO Ministerial in Singapore that the ILO was the
appropriate forum to examine labour matters.
"Clinton Proposes Ex-Im Bank Increase, International Labor Standards
Initiative," INTERNATIONAL TRADE REPOERTER, January 13, 1999;
"Resist this move," ECONOMIC TIMES (India), January 12, 1999; "India, EU
converging on uniform eco, labour laws," ECONOMIC TIMES (India), January
UNCTAD HOSTS G-15 INVESTMENT FORUM
The UN Conference on Trade and Development (UNCTAD) last week hosted a
week long session for the so-called Group of 15 (G-15) developing nations
to negotiate bilateral investment treaties (BITs) between themselves. The
meeting took place January 8-14 in Glion-sur-Montreux, Switzerland. Egypt,
India, Indonesia, Jamaica, Malaysia, Sri Lanka and Zimbabwe participated
in the negotiating sessions, concluding a total of eight BITs by
session's-end, and bringing to 38 the number of BITs between G-15
According to UNCTAD's Secretary-General, Mr. Rubens Ricupero: "One of the
main attractions of this format for negotiating BITs is that it gives
developing countries the opportunity to share negotiating experiences. If
successful, this type of exercise can be replicated and involve more
developing countries". BITs are intended to signal a
foreign-investment-friendly environment to foreign investors.
Traditionally, the majority of BITs were concluded between the rich
developed economies and developing countries, however, in 1997, the number
of BITs between developing countries outpaced the number of BITs signed
between developed and developing economies.
G-15 Latin American countries (Argentina, Brazil, Chile, Mexico, Peru, and
Venezuela) opted out of the talks, saying they favour a comprehensive
multilateral agreement on investment over BITs. "We are going to work with
all forces to develop a multilateral investment regime," Venezuela's
Ambassador to the UN said. The Latin American position signals a split
with many developing countries over the merits of a global investment
accord (see related story this issue).
The conclusion of BITs was one of the policy measures identified by G- 15
Heads of State and Government at their Seventh Summit Meeting in November
1997, to enhance South-South co-operation over foreign direct investment
(FDI) and promote FDI flows among developing countries. The G-15 is
comprised of Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia,
Jamaica, Kenya, Malaysia, Mexico, Nigeria, Peru, Senegal, Sri Lanka,
Venezuela and Zimbabwe.
"UNCTAD hosts bilateral investment treaty negotiations by group of
fifteen countries," UNCTAD PRESS RELEASE, January 7, 1999;
"UNCTAD hosts investment forum for G-15 nations," JOURNAL OF COMMERCE,
January 8, 1999;
"Seven G-15 countries negotiated eight bilateral investment treaties
hosted by UNCTAD," UNCTAD PRESS RELEASE, January 14, 1999;
"G- 15 members negotiate bilateral investment treaties," IPS, jANUARY 10,
GERMANY TO BAN NUCLEAR FUEL REPROCESSING / CONERN RE. NUCLEAR TRADE
The German governing coalition last week shocked the British and French
nuclear industries by announcing that it had decided to ban the
reprocessing of the country's spent nuclear fuel from 1 January, 2000. The
ban is being implemented as part of a broader German plan to phase out
nuclear power. Spent fuel rods are currently reprocessed in the UK and
France under long-term contracts worth billions of Euros valid until well
into the next century. The German Green party said the decision would send
out a "widespread signal" that nuclear power did not have a future.
In other news, Japan last week announced plans to transport MOX nuclear
fuel containing plutonium from the UK later this year with no escort
ships. Protection against terrorist seizure would be provided by equipping
the British transport ship with firearms. Under the terms of a nuclear
co-operation agreement between the U.S. and Japan, any shipment containing
plutonium extracted from nuclear fuel originally supplied by the U.S. for
use in Japan's power reactors is subject to U.S. approval. The U.S. so far
has had no comment on Japan's plan. Up to 10 percent of MOX fuel is
plutonium. The Washington, DC based Nuclear Control Institute (NCI) warned
in a statement last month that plutonium is a key ingredient of nuclear
In related news, the environmental group Greenpeace last week made public
a leaked confidential document revealing that Swiss nuclear firms intend
to send spent nuclear fuel containing uranium originally from the U.S. to
Russia. "This is an immoral attempt to exploit Russian poverty and lack of
regulatory control," a Greenpeace spokesperson said. Greenpeace also
alleges that the move would violate the U.S.- Swiss nuclear co-operation
agreement, which like the agreement between the U.S. and Japan also
requires U.S. approval for shipping nuclear fuel containing weaponry risk.
"Japan plans to ship MOX fuel without escort;" "Germany cancels nuclear
deals," ENS, January 14, 1999;
"Swiss nuclear waste to be dumped in Russia," IPS, January 13, 1999.
ECOLABELLING: FSC FACES OBSTACLES IN ASIA
The Forest Stewardship Council (FSC) is increasing pressure on buyers of
wood products around the world to only purchase products with FSC
certification. (FSC certification indicates that the forest(s) from which
wood is harvested are managed sustainably.) The FSC had hoped that
softening demand in Japan and South Korea might provide opportunities for
FSC certification to gain ground among Asian wood producers whose export
base would shift to more environmentally conscious European and U.S.
buyers, where FSC certification is more in demand. However, new demand for
wood products in China and pressure to revitalise Asian economies could
thwart FSC efforts to promote certification among Asian wood producers.
The concern for FSC is whether demand in countries with weaker
environmental emphasis will outpace demand in Europe and the U.S. China
last summer banned logging on large sections of its wooded territory, and
now Malaysia, Indonesia and other Asian wood exporters are looking to
China, whose buyers do not place priority on FSC-certification, to help
boost wood exports.
Meanwhile, Asian economies are promoting timber exports as a way to boost
their ailing economies. Indonesia, for example, lifted a log export ban in
1998 as part of economic reform package devised to satisfy the
International Monetary Fund. Indonesia is home to half of Asia's remaining
forests. "The government's main priority now is to restart the economy,
and timber exports are an obvious place to start," says Emy Hafild,
director of the Jakarta-based Indonesian Environmental Forum, an
environmental watchdog. "Environmental concerns are not on the political
agenda." Moreover, Mr. Haflid notes, "Certification is only a half
solution," says Hafild. "We have over 500 logging companies in Indonesia
and it would take too long to certify them all. The solution has to be a
complete system of policies, policing and certification."
Meanwhile, Meyer International, the UK's largest timber trader, last year
announced that it would only purchase timber that has been FSC- certified.
New York and Los Angeles are both exploring bans on uncertified tropical
wood products in municipal building projects - a trend that could take off
in other U.S. cities.
"Sticker Shock," FAR EASTERN ECONOMIC REVIEW, January 14, 1999.
Other Recent News
INDIAN GOVERNMENT COMPLIES WITH WTO PATENT RULING
The Indian government January 5 issued an executive ordinance bringing its
patent laws in line with a 1998 WTO ruling.
The WTO found last year that India was not in compliance with the 1994 WTO
Agreement on Trade-related Intellectual Property Rights (TRIPs). As part
of TRIPs, developing countries agreed to implement by 2005 a system for
patent protection for agricultural chemicals and pharmaceuticals. The
10-year phase-in period was contingent upon countries' setting up an
interim system to accept patent applications and petitions for marketing
rights until the permanent system is in place. This "mailbox" system
allows companies to preserve their original filing dates to substantiate
the novelty of the product for which the patent is being sought.
The WTO panel found that the Indian system failed to adequately inform the
public of their intellectual property rights and that India's system
"failed to establish a mechanism that adequately preserves novelty and
priority" of patent applications, thus violating Article 70.8 of TRIPs.
The "mechanism" in this case, the panel felt, had to be legislative: India
failed to change its existing law requiring that chemical and
pharmaceutical patent applications be Ignored, and nothing in existing law
provided for the acceptance of foreign patent applications.
The newly adopted ordinance establishes a mailbox system and exclusive
marketing rights in compliance with the WTO ruling. The ordinance does
amend the 1970 Patents Act to include product patents as well as process
patents, but does not go as far as to include patent requirements on
iterations of products-- meaning a company could make replicate a product
with minor manufacturing variations. Multinational pharmaceutical
companies are especially keen for India to push through a strict product
patent regime, calling such a regime key to future investment there.
Domestic drug companies and consumer groups warn that a strict product
patent regime could result in higher costs for medications in India.
Further, critics worry that the patent ordinance could result in
multinational companies co-opting traditional Indian cures for
pharmaceutical patents. To address this, the ordinance excludes marketing
rights for products "based on the system of Indian medicine."
The patent issue is hugely divisive in India, and press reports indicate
that Prime Minister Atal Behari Vajpayee all but kept the patent bill from
being voted on in Parliament as a way to protect his coalition government
from collapse. Opponents see the bill as a loss of national sovereignty
and a further step into the uncertain world of global economic
integration, where multinational firms have increased power. A patent
regime will most likely be debated in the spring session of Parliament.
"Rethink patents," ECONOMIC TIMES (India), January 18, 1999;
"India implements patent law changes that were mandated by WTO DSB
ruling," INTERNATIONAL TRADE REPORTER, January 13, 1999; "Doubly wrong!,"
ECONOMIC TIMES (India), January 7, 1999; "Glaxo Wellcome chief wants India
patent law reform," FINANCIAL TIMES, January 6, 1999;
"Patent politics," OXFORD ANALYTICA, January 12, 1999.
EU, JAPAN TO PUSH FOR INVESTMENT TALKS AT WTO
The EU and Japan agreed on 7 January to push WTO members to launch a new
"comprehensive" round of global trade negotiations beginning in 2000. The
EU and Japan called for the inclusion of a global agreement on investment
rules within the proposed round of talks. The two trade powers are calling
for investment talks at the WTO after negotiations for a Multilateral
Agreement on Investment (MAI) shut down late last year at the Organisation
for Economic Co-operation and Development (OECD). (See BRIDGES Weekly
Trade News Digest Vol. 2, No 48, December 14, 1998). According to a
Japanese official, the lack of international rules on cross-border
investments "would discourage companies from moving production and other
activities to developing nations, as such an absence would make it more
likely for companies to encounter troubles and disadvantages" related to
their properties and activities.
The MAI was vigorously opposed by labour, environment and citizens' groups
for not incorporating labour and environment standards and for its lack of
transparency. The OECD was also strongly criticised for its failure to
include developing countries in MAI negotiations; developing countries led
by India, Egypt, Pakistan and Malaysia expressed strong suspicion and
opposition toward the MAI agreement and its presumed mandate over
developing countries. France ultimately withdrew from OECD talks over
differences with respect to so-called cultural exceptions, precipitating
the end of the MAI at the OECD. France subsequently called for the
transfer of talks to the WTO, where it said a broader group of countries
could participate in the talks rather than just the elite group of 29 OECD
Developing countries' opposition remains a tough obstacle to moving
investment talks to the WTO, in part because while all 132 WTO Members can
participate, power at the WTO remains heavily concentrated among a few
powerful members - specifically the so-called Quad countries comprised of
the U.S., Canada, the EU and Japan. (See BRIDGES Weekly Trade News Digest
Vol. 2, No 43, November 9, 1998.)
The EU and Japan may not have an easy time convincing the U.S. that the
WTO is the best forum for multilateral investment talks, either. The U.S.
thus far remains sceptical that a MAI agreement could be concluded at the
"Japan, EU to propose rules protecting investment at WTO," KYODO NEWS,
January 7, 1999;
"EU, Japan Agree to Urge Launching Of New Global Round of Trade
Negotiations," INTERNATIONAL TRADE REPORTER, January 13, 1999.
1998 BLEAK YEAR FOR COMMODITY MARKETS
1998 proved a depressing year for economies dependent on commodities for
export revenues. Commodity prices were down dramatically from 1997 levels.
An oversupply of oil and lower than expected increase in consumption led
to sharp decreases in oil prices for exporters in oil producing nations.
The International Energy Agency estimates that as of June 1998, oil
companies were overproducing by 2.4 million barrels a day, while at the
same time demand has declined in part due to the Asian economic crises.
Venezuelan crude oil prices fell to about US$10 per barrel last year, down
from US$16 per barrel in 1997. Venezuela, which depends on oil for nearly
half its budget revenues, said that growing its consumer base in South
countries is the key to revitalising its oil exports. For smaller oil
exporters like Trinidad and Tobago, the drop in oil prices has had
dramatically negative effects on its revenues. The country's attempt to
diversify into urea, methanol and ammonia was moderated by depressed
prices in all three areas in 1998. Oliver Flax, President of the South
Chamber of Industry and Commerce says it is important for Trinidad and
Tobago to focus on diversifying its economy away from energy-based
Last year, trade experts called for the inclusion of oil in WTO
negotiations, arguing the commodity and its producers have not benefited
from trade liberalisation in the same manner as other sectors. Trade
experts said that including oil would benefit producers and end- consumers
of oil by reducing tariff and non-tariff barriers to trade in place in
high-consumption countries such as the U.S. and Japan. Trade experts said
oil has been left out of the WTO for two main reasons: first, because
large oil-producing countries were generally not part of the GATT
framework until the 1980s, and second, because consumer-countries tend to
rely on oil-tariff revenues for domestic funding. (See BRIDGES Weekly
Trade News Digest Vol. 2, No 42, November 2, 1998).
In other commodities, Brazil increased coffee exports in 1998 over 1997 by
14.5 percent, which did nothing to stimulate export revenues: the volume
of Brazilian coffee on the world market put downward pressure on global
coffee prices, with the net result of a 15.2 percent decrease in coffee
export revenues for Brazil.
The cotton and wool markets both dropped significantly in 1998 versus
1997. The drop in textile prices was aggravated by an increase in the
production of synthetic textiles derived from cheaper petroleum products.
The rubber market suffered a similar fate, with prices dropping more than
15 percent in 1998 from 1997.
"Les cours des matieres premieres s'effondrent," LIBERATION, January 4,
"Mexico 1998 oil revenue falls below target," THE CONDE REPORT ON
U.S.-MEXICO RELATIONS, January 11, 1999;
"1998, a year of crisis for commodity producers," IPS, January 13, 1999;
"COMMODITIES-TRINIDAD AND TOBAGO: Low Oil Prices Take Their Toll," IPS,
January 4, 1999.
WTO: JAPAN ADOPTS RICE TARIFF SCHEME
Japan late last month notified the WTO of its decision to implement a rice
tariffication scheme in April 1999 (See BRIDGES Weekly Trade News Digest
Vol. 2, No. 48, December 14, 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 equal to the price gap
between Japanese and foreign rice. Japan's largest rice-growers lobby, the
Central Union of Agricultural Co-operatives (Zenchu) supported the
tariffication scheme. However, Japanese smaller farmers unions and some
non-governmental organisations warned that tariffication could pave the
way for elimination of rice tariffs altogether as pressure mounts on Japan
in WTO talks on agriculture, set to begin later this year. The U.S.,
Australia and Thailand are expected to press Japan hard to lower or
eliminate tariffs on rice to make way for their rice exports.
Under WTO rules, members have 90 days to examine the Japanese proposal and
consult with Japan on the scheme. Thai officials said they would examine
whether the tariff rate was consistent with WTO rules, but otherwise noted
the Japanese decision with optimism, saying, "We consider [the new
tariffication scheme] as a good indicator that Japan will liberalise and
widen its market for foreign rice." Thailand accounts for about 20 percent
of Japan's 190,000-ton annual rice imports.
The U.S. immediately criticised the methodology used by Japan to calculate
the tariff, which the U.S. said would make U.S. rice more expensive in
Japan than most domestic rice. The U.S. also argues that under current
Uruguay Round rules, it would take about 20 years of mandatory annual
tariff reductions for U.S. rice imports to be comparable in price to
domestic product in Japan. U.S. rice accounts for about 45 percent of
Japan's annual rice imports. The U.S. vaguely threatened to bring the case
to the WTO if the two sides cannot reach an agreement.
Japan's Agricultural Minister Shoichi Nakagawa noted that price is not the
problem for U.S. rice imports in Japan. "Recently, Japanese consumers have
shown less appetite for U.S. rice than rice imported from other countries.
The United States must make efforts [to win consumer support]," Mr.
Australian officials immediately criticised the Japanese decision, calling
the tariffs "excessively high." Australia's Trade Minister Tim Fischer
warned that Japanese trade with Australia could be affected. "I'm hardly
going to rush to the door to facilitate [trade in other sectors with
Japan] in light of their decision," Mr. Fischer said.
"New rice policy doesn't mean farm reforms can be put aside," THE NIKKEI
WEEKLY, December 28, 1998;
"Japan agrees to replace rice quotas with tariffs," THE NIKKEI WEEKLY,
December 21, 1998;
"NSW premier expresses concern over rice tariff plan;" "Japan's tariff
formula seen hitting U.S. rice," KYODO NEWS INTERNATIONAL, December 21,
"Thailand views Japan as opening rice market," KYODO NEWS INTERNATIONAL,
December 22, 1998; "Foreign rice does not meet Japanese needs- minister,"
REUTERS, December 22, 1998;
"Australia angry at increase in Japan rice tariff," FINANCIAL TIMES,
December 23, 1998;
"JAPAN OFFICIALLY ENDORSES RICE IMPORT TARIFFS," DOW JONES NEWSWIRES,
December 18, 1998.
EU, ASIAN CARMAKERS SPAR OVER AUTO EMISSIONS REDUCTIONS
The EU last month said it could impose binding restrictions on imports of
Japanese and Korean autos unless progress is made in negotiations over an
auto emissions reduction program.
The EU Automobile Manufacturing Association (ACEA) agreed last year to cut
airborne emissions by 25% by 2002. The commitment is non-binding and the
ACEA has said that its commitment is contingent on Japanese and Korean
carmakers making equivalent commitments. The ACEA made its commitment as
part of EU efforts to reducen airborne emissions in conformity with its
Kyoto Protocol commitments. The EU wants to reduce by 2008 the average EU
fuel consumption by 25 percent and to reduce CO2 emissions to 140 g/km
from 186 g/km today (see In Brief, this issue).
The EU, Japan and Korea met late last year to reach compromise on their
respective auto emissions reduction programs. According to the ACEA, Japan
called for unrealistic conditions to implement an ACEA-equivalent program,
demanding that the EU abolish its 10 percent import tariff on Japanese
autos in return for emissions reductions. Korea said that it did not have
the technology available to make an ACEA-equivalent commitment. Further,
Korea said it was unlikely support for such efforts could be mustered in
the midst of its economic crises which has seen car sales drop 30-40
The ACEA said Japan's plan to impose tougher controls on carbon dioxide
emissions based on auto-weight would target EU medium and luxury car
exports to Japan, while only lightly targeting lighter-weight Japanese
cars which actually have a higher rate of fuel consumption. The ACEA said
it would bring its case to the WTO if Japan does not revise its plan.
An European Commission (EC) official last month said that unless
substantial progress is made on the issue between the EU and Japan and
Korea by mid-1999, the Commission might impose restrictions on auto
imports from countries that do not accept the voluntary auto emissions
"EU mulls curbs on pollutive Japanese, Korean cars," REUTERS, December
"European carmakers to challenge Japan at WTO," JOURNAL OF COMMERCE,
December 22, 1998.
MEXICO OPPOSITION TO ENVIRONMENTAL LINKAGE COULD THWART FTAA
Negotiators to the Free Trade Area of the Americas (FTAA) are reportedly
concerned over Mexico's fierce opposition to trade and environmental
linkage within the hemispheric trade agreement. The FTAA will link
economies from Alaska to Patagonia in the world's largest single market,
estimated to be worth US$10 trillion dollars. Mexico is vehemently opposed
to any process under FTAA that could bring international pressure on a
country for domestic environmental policies. This could be a major
obstacle to concluding the FTAA, as the U.S. and Canada would most likely
not sign an agreement that did not have at least a passable environmental
As a partner in the North American Free Trade Agreement (NAFTA), Mexico is
party to a side agreement on trade and environmental linkage. The
Commission for Environmental Co-operation (CEC) was created as the
environmental watchdog of the North American Free Trade Agreement (NAFTA),
which has as part of its charter a provision requiring public
participation. While the CEC has been criticised by environmental groups
for its lack of strategic vision and for lacking the teeth to fulfil its
mission, it is at least a good model for collaboration by trading partners
on environmental matters. Mexico however, is dissatisfied with the level
of interference in its environmental affairs via the NAFTA environmental
mechanism, arguing that it has become the whipping boy for environmental
groups unhappy with NAFTA.
"What's really important here," according to one trade and environment
expert, "is that Mexico participates at a very high level in the NAFTA
environmental context, at the same time the Mexican government is seen as
the most obstructionist to civil society participation in the FTAA
context." After strong opposition from Latin American countries which made
it clear they would not consider environmental linkage within the FTAA, a
weak compromise was reached by FTAA negotiators to establish a sub-group
on civil society to consider input from environmental, labour and human
rights groups. The committee has no obligation to incorporate any
environmental (or other) recconomedations put forward, however.
In other news, the EU expressed displeasure with Mexico's recent emergency
trade measures that slap tariffs on imports from countries with which
Mexico does not have a trade agreement. The EU and Mexico launched talks
towards a free trade accord late last year with the hope of concluding an
agreement within two years. Collapsing prices for Mexican oil exports
caused a budget shortfall of US$500 million, which Mexico intends to cover
with the tariff revenues. The EU and Mexico are scheduled to meet this
week in Brussels for its second round of bilateral trade talks.
"Mexico adamant about keeping environment out of trade talks," JOURNAL OF
COMMERCE, January 11, 1999; "Mexico's move to hike import taxes upends EU
talks," THE CONDE REPORT ON U.S.-MEXICO RELATIONS, January 11, 1999.
The UN General Assembly (GA) last month gave UNCTAD new responsibilities
in two key areas. First, the GA called on UNCTAD to provide technical
assistance and analytical support to developing countries in advance of
the Third WTO Ministerial, to help developing economies forge an agenda
for future WTO negotiations. Second, the GA called on UNCTAD to provide
technical assistance to developing countries, especially the LDCs and
small island countries, so they may take fuller advantage of the WTO
dispute settlement system. "UN General Assembly endorses UNCTAD's capacity
to foster international consensus on hard-core economic issues,
" UNCTAD PRESS RELEASE, December 15, 1998.
U.S. environmental, health and consumer groups last month filed a petition
with the U.S. Food and Drug Administration (FDA) demanding that it
withdraw approval of the cattle hormone rBST (also known as rBGH and
Posilac). The groups argue that the drug could increase the risk of
certain cancers. The petition is the first step toward a legal challenge
against the hormone, which U.S. farmers have been using since 1993 to
stimulate milk production in cows.
"NGOs challenge government on cow hormone," IPS, December 21, 1998.
WTO IN BRIEF
Bosnia last month was expected to file its application to join the WTO. A
Bosnian official said Bosnia intends to join both the WTO and EU, and that
it would be necessary to undertake braod economic reforms, including the
liberalisation of its domestic market and the privatisation of state-owned
enterprises before it is admitted to either forum.
"Bosnia may seek EU, WTO membership soon," REUTERS, Decmber 21, 1998.
Canada last week said it would move ahead with domestic legislation
designed to protect its domestic magazine industry, despite U.S. threats
to retaliate against Canadian exports. Bill C-55 bans Canadian advertising
in so-called split run magazines, foreign magazines including minimal
Canadian content but selling Canadian advertising at cheaper rates than
those affordable to Canadian only publications. Canada has called the ban
a "cultural matter."
"Canada firm on magazine bill despite sanctions threat by US," JOURNAL OF
COMMERCE, January 13, 1999;
"U.S. warns Canada of magazine retaliation; U.S. industry split on idea,"
INSIDE US TRADE, January 15, 1999.
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