GENTECH archive


BRIDGES Weekly Trade News Digest - Vol. 3, Number 4 February 01, 1999



For a more complete list of events in coming months, please refer to
ICTSD's web calendar at:


18-19 February 1999: Committee on Trade and Environment.
 For information contact Hans-Peter Werner, WTO, tel: (41-22) 739-5286.

22 February 1999: Committee on Rules of Origin.
 For information contact Luis Ople, WTO, tel: (41-22) 739-5374.

24 February 1999: Dispute Settlement Body.
 For information contact Nuch Nazeer, WTO, tel: (41-22) 739-5393.

25-26 February 1999: Special Session of the General Council for the Third
Ministerial Conference.
 For information contact Nuch Nazeer, WTO, as above.


IN THE GATT/WTO FRAMEWORK. If you wish to register and participate in this
on-line event please write to
 For background information on the issue-area, and to enter the forum, go

1-2 February 1999, Geneva, Switzerland: ICTSD DIALOGUE ON TRADE POLICY AND
 The first in an annual series in which policy-makers and civil society
representatives exchange information on the sustainability objectives and
performance of regional integration schemes.
 For information contact Miguel Jimenez- Pont, tel: (41-22) 979-9478, fax:
(41-22) 979-9093, e-mail:, web:

 This cafe & croissants event will take place at 10 a.m. at Geneva
Executive Centre, 13 ch. des Anemones, 1219 Chatelaine, Geneva. Ambassador
Chak Mun See of Singapore, Chair of the WTO Committee on Trade and
Environment will present the topic and an interactive discussion will
 For information, contact ICTSD at (41 22) 917 8492, email:

PREPARATIONS AND EXPECTED OUTCOME. This cafe & croissants event, attended
by representatives of WTO Members, will take place at 14.30 at Geneva
Executive Centre, 13 ch. des Anemones, 1219 Chatelaine, Geneva.
 For information, contact ICTSD at (41 22) 917 8492, email:

Negotiations--The European Union and its Developing Country Partners: An
Agenda for Action".
 For information contact Alain Frank, WTO Director External Relations,
tel: (41-22) 739-5152, fax: 739- 5777. Reply requested by 3 February 1999.

23 February 1999, Brussels: INVITATION FOR NGOs TO MEET WITH EC ON "WTO
NEW ROUND ISSUES": Tariffs, Trade Facilitation and Competition. The
invitation has been sent by H. Jouanjean (Chief of WTO directorate).
 Reply requested by 8 February to (e-mail), tel:
(32-2) 299-1081, fax: 299-0900.

1-3 March 1999, Toronto, Canada: CANADA'S NRTEE WORKSHOP ON EMISSIONS
TRADING AND CLIMATE CHANGE. Canada's National Round Table on the
Environment and the Economy (NRTEE) is holding this international workshop
entitled "Domestic Greenhouse Gas Emissions Trading Programs, A Comparison
of Progress Around the World".
 For information contact Elizabeth Atkinson, Senior Policy Advisor, NRTEE,
344 Slater Street, Suite 200, Ottawa, Ontario K1R 7Y3, fax: (1-613)
992-7385, e-mail:, web:


 Set up by the Intergovernmental Panel on Climate Change Working Group
III, this website enables researchers in the area of climate change to
submit their new greenhouse gas emissions scenarios or any comments to the
IPCC SRES writing team. It also can be used as a window on the current
work of the IPCC SRES writing team. The website is at

 A final report from the international expert meeting on sustainable
consumption in Kabelveg, Norway, 2-4 June 1998. This report is intended to
give rise to a chain of initiatives in consumption. Giving examples of
action implying both environmental and economic gains, the report
underlines that more efficient and sustainable patterns of consumption
will benefit both rich and poor.
 For information contact Anne Solgaard, The Ministry of Environment,
Norway, Myntgt. 2, PO Box 8013 Dep, N-0030 Oslo, Norway, tel: (47) 22
24-60 17, fax: 22 24-95 60.

 This study identifies 102 medicinal plant species and 29 medicinal animal
species as priorities for conservation and management action. The study
finds traditional medicine critical to health care in the southern Africa
region where western medicine is largely unavailable to much of the
 For a copy of the study contact Nina Marshall at Traffic East/Southern
Africa-Kenya, tel: (254- 2) 506-839, or visit the website:

Table of Contents                           

- WTO Members Discuss Possible Future Negotiations on Investment,
Competition, Government Procurement
- U.S. To Hold Off On Banana Sanctions - For Now
- EU-U.S. Marinating in WTO Beef Dispute
- East Africa Moves Toward Integration
- Mercosur Trade Tensions Rise As Real Falls
- Accession Update: China-U.S. Ready For Spring Showdown
- In Brief
- WTO In Brief


The fourth intersessional meeting of the General Council's Special Session
entrusted with preparing the Third WTO Ministerial Meeting met again last
week and presented their views on whether investment, competition policy,
government procurement and trade facilitation should be included in a
future round of multilateral trade negotiations. This series of
Ministerial preparatory meetings in the context of the Special Session of
the General Council takes place separately from the usual meetings of the
General Council which deal with current WTO work.

At last week's meeting, WTO Members discussed possible future work arising
from the work programme initiated at the First WTO Ministerial (at
Singapore). The possibility of bringsing "new issues" (including
environment and labour) into the next round of trade negotiations will be
discussed at the next informal meeting of the General Council Special
Session, scheduled for 2 February.

Last week's meeting showed that there is considerable divergence of views
between Members as to whether issues recognised by the First WTO
Ministerial as needing further study - namely the relationship between
trade and investment, interaction between trade and competition policy,
transparency in government procurement, and trade facilitation - should be
included in the new round of trade negotiations.

Some countries' positions are already well-known. The EU and Japan, for
instance, have publicly stated that they would like a "comprehensive round
of trade talks," which would inlcude investment, competition policy and
government procurement as well as other issues. At last week's meeting the
Swiss delegation said that "it is urgent and imperative to put
multilateral rules into place on investment."

Many developing countries disagreed. Malaysia, speaking on behalf of
ASEAN, said on 27 January that "there have been no convincing arguments on
the need for global rules in either investment or competition policy [,]"
but that the issues should continue to be studied in the WTO Working
Groups on the Relationship Between Trade and Investment and the Working
Group on the Interaction Between Trade and Competition Policy.

India was not convinced that "a possible discipline on investment belonged
to the subject-matter of the WTO," but wanted the "educative process" in
the Working Group on Trade and Investment to continue. On competition
policy, India said that improving the implementation of existing WTO
provisions could go a long way towards creating a more competitive
environment, and that it is premature to talk of a multilateral framework
on the subject. Regarding government procurement, India felt that
sufficient progress in the work programme had to be made before
conclusions can be drawn about the need for a multilateral discipline in
this sphere.

In general developing countries, such as the African group and ASEAN,
wanted the exploratory analytical work on the four subjects to be

 "Japan decides on broad-based approach for trade talks" KYODO NEWS
INTERNATIONAL, January 26, 1999; ICTSD Internal Files.


The EU and U.S. late last week agreed to an interim compromise in its
dispute over bananas, averting for the time being a transatlantic trade
war. The EU agreed late Friday to request WTO arbitration over the amount
of the proposed U.S. retaliatory sanctions regime against the EU, putting
U.S. plans for retaliation into suspension until after arbitration is
complete. The two sides have yet to agree however on a time table for
concluding arbitration. The U.S. argues that arbitration should be
complete in 30 days (March 1). The EU holds that arbitration could not
possibly be concluded until after the panel decides whether the EU has or
not complied with the 1997 WTO Appelate Body decision against its banana
import regime, decision due on 12 April). In either case, the last-minute
compromise effectively buys the two sides time to try and resolve the
issue and head off a trade war.

The compromise came at the end of yet another week of unprecedented
procedural manoeuvring at the WTO. On January 25, St. Lucia and Dominica,
two small banana-exporting countries whose economies are threatened by the
dispute, blocked the agenda of the scheduled Dispute Settlement Body (DSB)
meeting. The countries argued that the DSB should not be allowed to
address (as per the agenda) the U.S. request for retaliation against the
EU before the panel on EU compliance had finished its work. (See BRIDGES
Weekly Trade News Digest Vol. 3, No 3, January 25, 1999). The move was the
first time any member had blocked a DSB agenda, leading some members to
worry it would set a dangerous procedural precedent if allowed to stand.
St. Lucia and Dominica later allowed the agenda to go forward January 28,
but St. Lucia repeatedly protested the consideration of the U.S.
retaliation request. St. Lucia and Dominica also vehemently denied U.S.
speculation that the EU had pressured them into blocking the January 25

India, Brazil, Japan, Switzerland, Canada, Egypt, and Indonesia - while
taking no formal position on the dispute's substance, spoke out forcefully
against DSB consideration of the U.S. retaliation request until the panel
on EU compliance issued a ruling. These members noted concern over the
long-term institutional implications of considering the request: the
members said the "unilateralism" with which the U.S. was proceeding
undermined the WTO foundation of decision by consensus. "We would urge the
disputing parties not to try to take advantage of any drafting ambiguities
in the DSU to seek to assert their rights in a manner prejudicial to the
rights of other Members and inimical to the continued stability of the
WTO," Canada said.

India's Ambassador to the WTO Srinivasan Narayanan urged the EU and U.S.
"to go beyond legalities and take a broader political view," of their
dispute with respect to the WTO system. "The US and EC will take care of
themselves and their interests. We are worried about India's rights and
the precedent that would be created for everyone."

Earlier in the week Italy's Foreign Minister Lamberto Dini broke ranks
with the EU party line on bananas, calling the EU banana import regime "a
very strong distortion of trade." He called on the EU to revise its regime
to reduce the level of protection extended to African, Caribbean and
Pacific producers. Italy's Foreign Ministry said Italy was wary that its
exports could be badly hurt by the U.S. sanctions regime.

 "Bananas: US postpones EU sanctions," FINANCIAL TIMES, February 1, 1999;
 "Hopes raised for end to WTO blockage over bananas," THE HERALD (St.
Vincent - Grenadines), January 29, 1999;
 "Trade: WTO mired in the banana quicksand," SUNS, January 29, 1999;
 "WTO members avert procedural crisis on bananas; will meet again today,"
INSIDE US TRADE, January 29, 1999;
 "US envoy sees 'rays of hope' in banana talks," JOURNAL OF COMMERCE,
January 29, 1999;
 "Banane: les sanctions americaines se rapprochent" LE FIGARO, January 27,
 "US-EC raise stakes in Banana war," IPS, January 25, 1999;
 "WTO skidding on banana peel," IPS, January 28, 1999;
 "Caribbean bands together in banana dispute," REUTERS, January 27, 1999;
 "Banana feud at the WTO turns into fight against unilateralism," AGENCE
FRANCE-PRESSE, January 28, 1999;
 "EU: Italians urge retreat in banana dispute," FINANCIAL TIMES, January
27, 1999.


Readers may think EU-U.S. trade battles are solely concerned with bananas,
but another, even beefier battle is ripening - over hormone treated beef.

The WTO Appellate Body in February 1998 ruled that the EU ban on beef
treated with growth hormones was not based on adequate scientific evidence
and so violates international trade rules. The EU has until May 1999 to
lift the ban or provide scientific justification for it. (See BRIDGES
Weekly Trade News Digest Vol. 2, No. 21, June 8, 1998).

U.S. Secretary of Agriculture Dan Glickman last week voiced concern that
the EU has thus far shown "no visible signs of taking even the first steps
to come into compliance," with the WTO ruling. Mr. Glickman said the
battle over beef could be even bigger than bananas. "[The] U.S. and Europe
has [sic] too much to lose by going to an augmented trade conflict. The
beef issue would risk a very serious trade problem," Mr. Glickman said
last week. U.S. farmers estimate that the ban costs them US$250 million
annually in lost export revenue.

The U.S. in December said it would impose retaliatory sanctions against
the EU if it fails to comply with a WTO ruling against the EU ban on
hormone-treated beef imports by the May 13, 1999 WTO-mandated deadline.
The EU has said it needs more time (beyond the May 13 date) in order to
conduct additional risk-assessment studies which the EU holds would
justify the ban. The EU points out that the 1998 ruling did not require
the EU to lift the ban, but was notice that the EU must provide an
adequate risk assessment on how hormone-treated beef affects human health.
The EU has so far proceeded down this path, ignoring U.S. calls to lift
the ban while it performs its risk assessment. The U.S. argues that the EU
is worried less about protecting its consumers than with protecting the EU
beef industry.

Meanwhile, Mr. Glickman warned that EU intransigence on the beef issue
coupled with the banana dispute threatens the legitimacy of the WTO. "Both
these cases raise a fundamental question: are we going to live by the
rules-based system that we agreed to under the Uruguay Round, and which
today is the foundation of our world trading system?" Mr. Glickman said
last week. Mr. Glickman and other U.S trade officials have also said the
two disputes could undermine U.S.-EU co-operation at WTO talks on
agriculture scheduled to start later this year.

 "Glickman rejects criticism of U.S. farm aid as trade protection," INSIDE
US TRADE, January 29, 1999;
 "UE/Etats Unis: Peter Scher a precise a Europe les positions Americaines
sur la viande aux hormones et sur les prochaines negociations a l'OMC sur
l'agriculture," BULLETIN QUOTIDIEN EUROPE, January 27, 1999; "Glickman
warns EU on beef trade," REUTERS, January 23, 1999;
 "US beef with Europe could mean trade war," JOURNAL OF COMMERCE, January
27, 1999.


Leaders from Kenya, Tanzania and Uganda met late last month in Arusha,
Tanzania where they agreed to a treaty establishing a regional economic
community from July 1, 1999. The East African Community (EAC) is intended
to help boost foreign investment in the region. The agreement would
abolish internal tariffs on nearly all goods except a list of agreed
products (not yet established), which would carry tariffs not to exceed 10
percent. The countries agreed to try and reduce respective budget deficits
to under five percent of gross domestic product (GDP); to attain
single-digit inflation by 2000; and to build foreign currency reserves
equal to six months imports. Free movement of people, capital and services
would be established as part of the common market. Eventually,
harmonisation of economic policy would be in place with a common regional
currency envisaged for five to 10 years out.

Kenya is the largest economy in the grouping with an annual GDP of US$9.2
billion. Uganda's annual GDP is US$6.1 billion and Tanzania's is US$5.8
billion. A previous attempt at East African integration failed in 1977 as
Kenya's industrialised economy dominated the region and benefited
disproportionately from free trade between members. The protective tariffs
allowed for under the new treaty are intended to balance Kenya's economic
advantage. Sceptics note that efforts to balance foreign investment
between EAC members may serve to deter potential investors.

Emmanuel Lule, deputy governor of Uganda's central bank last week warned
that the EAC must have sustained political backing at the highest level if
it is to succeed. "Events in other regional groupings have demonstrated
the criticality of political will in the success of regional initiatives.
The three East African countries have therefore got to "lock-in"
convergence criteria and limit powers of national authorities to vary it,"
Mr. Lule said.

East African Co-operation, predecessor to the new EAC, was launched in
1994 and has already spawned a common flag, currency convertibility within
member countries and agreements on double taxation, road and inland water
transport as well as digital telecommunications. Rwanda and Burundi have
been invited to join the grouping.

 "East African summit opens with free-trade area seen as irreversible,"
AGENCE FRANCE-PRESSE , January 22, 1999; "East African trade bloc to drop
internal tariffs," REUTERS, January 27, 1999; "Uganda: bank chief warns on
monetary plans," FINANCIAL TIMES, January 29, 1999.


Bilateral talks held last week to assuage difficulties between Brazil and
Argentina yielded little progress. Brazil's currency devaluation earlier
this month has strained relations within the Mercosur trade block
(comprising Brazil, Argentina, Uruguay and Paraguay), most especially
between Brazil and Argentina. Brazil is Argentina's main trading partner,
absorbing more than 35 percent of its exports.

Argentina is wary of an influx of cheap Brazilian imports, especially in
the automotive, steel and processed food sectors. Argentina last week
proposed that Brazil drop its export subsidies on exports to Mercosur
countries, arguing that in 1998 Brazil spent more than US$1 billion on
subsidies, aggravating its budget deficit which in turn contributed to
Brazil's decision to devalue its currency. Brazil agreed to review its
export programs. Argentina has refrained from imposing sanctions against
Brazilian imports despite pressure form Argentine businesses.

Brazil rejected a proposal by Argentine President Carlos Menem that the
trade block adopt the dollar as the Mercosur currency to avoid exchange
rate volatility.

The two sides will meet again next month.

 "Brazil braces for economic strife amid hopes market will calm down,"
JOURNAL OF COMMERCE, January 26, 1999; "Brazil, Argentina stall, no
results from trade talks," JOURNAL OF COMMERCE, January 27, 1999;
 "La Argentina presentara hoy sus reclamos al Brasil" LA NACION LINE,
January 25, 1999; "Brazil's ills pressure Latin trading bloc" WALL STREET
JOURNAL EUROPE, January 26, 1999.


An U.S. trade official January 20 said it would take "enormous political
will" by both China and the U.S. to make China's accession to the WTO in
1999 a reality. Robert Cassidy, chief U.S. negotiator for China's
accession to the WTO said agriculture, telecommunications, and financial
services remain the major sticking points for the U.S. in accession talks.
A Chinese official speaking at the same event noted that the distribution,
insurance, and telecommunications sectors remain the most sensitive areas
for China to liberalise. Xiao-Dong Hong said that China "needs to develop
its own industries and protect its infant sectors, while introducing
foreign competition."

The U.S. and China have reportedly dropped the issue of whether China will
enter the WTO as a developing or developed country (which would dictate
the terms of accession e.g. phaseouts of tariffs). The two sides would
instead consider China's market sector by sector and address
liberalisation schedules that way.

U.S. Trade Representative Charlene Barshefsky warned that the scheduled
visit of Chinese Premier Zhu Rongji to the U.S. in the spring is "perhaps
the last opportunity" for the U.S. and China to resolve their differences.
Mr. Cassidy noted earlier that the proposed Millennium Round of trade
talks could change the accession landscape for China if its accession is
not completed this year. "If China doesn't accede to the WTO this year,
before the next WTO negotiations commence, then the price of membership is
going to increase. ... The reality is that if China does not accede this
year then China will have no influence over the course of the
negotiations." Mr. Cassidy said.

Critics charge the U.S. warnings on China are all so much posturing,
calling the idea of the WTO as a truly global forum "comical" without
China, noting further that keeping an economy the size of China's outside
the WTO system would threaten the relevance of the WTO over time.

 "Barshefsky says spring meeting crucial to quick China WTO entry," INSIDE
US TRADE, January 29, 1999;
 "U.S. Seeks Agriculture Quotas From China After Failure of Pilot Meat
Import Program;" "Negotiators Say China's WTO Talks Stall Over
Distribution, Insurance, Telecom," INTERNATIONAL TRADE REPORTER, January
27, 1999;
 "China still keen on WTO admission" REUTERS, January 29, 1999;
 "Article tackles "grim reality" of economic globalisation," TA KUNG PAO
(Hong Kong), January 25, 1999.


Negotiations continue between Cambodia and Taiwan over the return to
Taiwan of nearly 3,000 tonnes of industrial waste delivered to Cambodia in
early December. The waste was found to have high mercury content after 3
people died in the village where the waste was dumped. Environmental
groups have called Cambodia the most vulnerable of Southeast Asian
countries for waste dumping, due to its coastal location and because it
has no ban in place on hazardous waste imports nor is it a party to the
Basel Convention. "Toxic waste trade sails on" IPS, January 29, 1999.

The EU and Mexico reported last week that they made "notable progress" in
the second round of bilateral trade talks held January 18-22 in Brussels.
The EU is reportedly pushing for tariff-free trade in industrial goods
between the two by 2003 - the same year Mexico is scheduled to drop
industrial good tariffs with the U.S. and Canada under NAFTA. Mexico
prefers a 10-year phase out with the EU. "EU, Mexico Claim Progress Made
In Second Round of Free-Trade Talks," INTERNATIONAL TRADE REPORTER,
January 27, 1999.

More than 400 delegates from at least 100 countries met in Nairobi last
week for the seond round of talks to negotiate an international convention
to phase-out Persistant Organic Pollutants. The Convention is due to be
ready for adoption by the year 2000. "UN Negotiates Global Treaty on
Dangerous Chemicals," IPS, January 27, 1999.

Hindered access to pharmaceuticals and higher medicine costs are expected
to be the first side effects from a revised Indian patent regime drafted
to comply with a 1998 WTO ruling.(See BRIDGES Weekly Trade News Digest
Vol. 3, No. 1-2, January 18, 1999.) Indians currently enjoy the lowest
prices for medicine in the world, but a new patent ordinance could affect
price and availability. Concern is greatest for India's poor, who even at
current low prices can barely afford vital medicines.

 "Indians brace for massive hike in drug prices," IPS, January 25, 1999.


The U.S. last week announced that the Third WTO Ministerial meeting would
be held in Seattle, Washington November 30 through December 3, 1999. San
Diego, Denver, Honolulu, Detroit, Dallas, and Seattle all vied to host the
event. Previous Ministerials were held in Singapore (1996) and Geneva
 "Seattle will host WTO talks" The Seattle Times, January 26, 1999;
 "Seattle to host WTO minister meet in 1999" KYODO NEWS INTERNATIONAL,
January 25 1999.

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:

Excerpts from BRIDGES Weekly Trade News Digest) may be used 
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