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G Sudhakar Nair
Bonn, Mar 3: The controversial Super 301 provision of the US Trade Act has come under the scrutiny of the World Trade Organisation (WTO) after the trade body authorised the setting up of a panel following a complaint by the 15-nation European Union.
The panel was set up automatically by the WTO's dispute settlement body (DSB) after Brussels insisted on pursuing the complaint and would examine whether the law that allows the American administration to take unilateral trade action against other countries was compatible with WTO rules. The panel was requested by the EU which feared more US threats of retaliation in other trade disputes coming close on the heels of the ongoing trade dispute between the US and EU over bananas.
According to EU officials, the Super 301, which authorised the American administration to target its trading partners for sanctions, amounted to a "unilateral" licence to "punish" others and went against the multilateral nature of the WTO and its rules. Several developing countriesincluding India have been a victim of Super 301 which has also been used against the EU in the past even as the 15-nation trade bloc lambasted the controversial clause as a prescription for unilateralism that runs counter to the founding principles of WTO and incompatible with Washington's commitment as a member of the 133-nation WTO. The EU has maintained that the Super 301 process has allowed the US to go outside the WTO's own procedures for resolving disputes while Washington said that the threat of the sanctions in the banana dispute was fully consistent with the WTO procedures and that it had the authority to act alone.
The EU, while seeking a panel to pass judgment on the Super 301 in line with its commitment to legally challenge the provision, said its member countries and other WTO members were concerned that the US would try to use its domestic laws to threaten its trade partners in other disputes.
An US official said in Geneva that American trade law did not violate any WTO rules and accused theEU of trying to divert attention from its "failure" to reform its banana import rules and seeking retribution against Washington. Meanwhile, the start of a trans-Atlantic trade war over bananas appeared to have been delayed by the WTO for the time being, giving the US and the EU some time to settle their banana dispute in bilateral negotiations started over the past week.
This followed WTO putting off a ruling on Tuesday on a US request for approval to penalise European imports in a raging trade feud over bananas with the arbitrators saying they needed more data and time to study the matter.
Barring a US decision to retaliate without WTO approval, European exports of goods such as cheese, hams, cashmere sweaters etc targeted by the US have gained temporary reprieve from punitive duties. The US has threatened to impose 100 per cent tariffs on $520 million worth of products exported by the EU in protest against the latter's banana import regime, contending it favoured the producing countries preferred byEurope to the detriment of Latin American countries supported by Washington.
According to EU officials, the US should not be allowed to seek retaliatory measures unless a WTO panel ruled against the modified banana import regime of the EU that became effective from January 1 this year. This panel is due to report its finding by April 12 next. Analysts said that though the fruity subject of the dispute was amusing and there was a tendency to trivialise the matter, at stake was WTO's credibility and economic relations between the world's biggest trading partners. Significantly, neither of the two warring parties produce the item under dispute. (PTI)
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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