From iatp@igc.apc.orgTue Dec 5 21:24:51 1995 Date: Tue, 05 Dec 1995 13:51:39 -0800 (PST) From: IATP To: Recipients of conference Subject: Trade News 12-5-95 TRADE NEWS Produced by the Institute for Agriculture and Trade Policy December 4, 1995 Volume 4, Number 18 __________________________________________ Headlines - WTO APPROVES APPELLATE BODY - U.S. EASES CONDITION OF CHINA'S WTO ENTRY - U.S. WARNS SOUTH KOREA ON MEAT ACCORD - U.S., EU ENTER INTO BROAD TRADE PACT - U.S., EU AGREE ON COMPENSATION FOR EU ENLARGEMENT - U.S. WARNS CHINA ON PIRACY __________________________________________ WTO NEWS SUMMARY __________________________________________ WTO APPROVES APPELLATE BODY On November 29, the World Trade Organization (WTO) approved a list of seven members that will make up its long-awaited appellate body, after the European Union (EU) backed down from its demand for two seats on the panel. On the approval list are James Bachus of the United States, Christopher Beeby of New Zealand, Claus Dieter Ehlermann of Germany, Said el-Nagar of Egypt, Florentino Seliciano of the Philippines, Julio Lacarte Muro of Uruguay and Mitsuo Matsushita of Japan. The EU said it would accept the composition of the panel, but would bring up the matter again at the WTO ministerial meeting in Singapore in December 1996. The appeals body will have the final word on disputes that come before the WTO. Three members of the body will sit at any one time to hear appeals. To date, 21 disputes have been brought to the WTO, of which nine are the subject of ongoing panels. None so far has reached a stage at which parties could turn to the appellate body. The first dispute that could go to the body is a complaint by Venezuela against US gasoline standards. The panel on the dispute was formed May 31 and will report in January 1996. "EU Gives Up Demands; WTO OKs Members of Appeals Body," JOURNAL OF COMMERCE, November 30, 1995. U.S. EASES CONDITION OF CHINA'S WTO ENTRY Last month, the United States softened one of its key conditions for approving China's entry into the World Trade Organization (WTO). While Washington will continue to insist that Beijing move much further in opening its market to goods, the Clinton administration is prepared to accept a smaller Chinese package for rules governing foreign banks and insurance companies. The U.S. compromise on services comes as part of the "road map" of U.S. accession demands presented to senior Chinese officials during the Asia-Pacific Economic Cooperation (APEC) forum meeting last month in Osaka, Japan. It represents a bid to end the nine-year negotiating stalemate that has blocked China's entry into the General Agreement on Tariffs and Trade (GATT) and WTO. Yongtu Long, China's assistant minister for trade in services, said Washington has "now specified it wants national treatment for goods" but has not requested a similar condition for trade in services. Specifically, Washington has agreed to allow China to prohibit foreign service providers from operating in certain regions of the country. Long said China will pursue a "gradual approach" in opening its service sector to foreign competition. National treatment means a government extends to foreign providers of goods or services the same rights and privileges that domestic companies receive. National treatment for goods is required under WTO rules, but such treatment is not automatic for services. John Zarocostas, "U.S. Eases Key Condition of China's WTO Entry," JOURNAL OF COMMERCE, November 30, 1995. U.S. WARNS SOUTH KOREA ON MEAT ACCORD Last month, the United States warned South Korea to honor a hard-fought agreement to open its markets to U.S. food imports, threatening to take the matter to the World Trade Organization (WTO). "These problems are very serious," said a U.S. trade official. "Our concern is that Korea live up to its very clear-cut obligations, and we don't believe that they've lived up to the letter of the agreement." The official said that if South Korea does not issue a new "notification" to the WTO by December 15, 1995 that would implement the terms of the agreement reached last July, Washington will request that an international WTO panel meet on the matter. After two years of negotiation, on July 20, 1995 South Korea agreed to drop regulations that Washington said were unfairly restricting imports of U.S. food products, especially pork and beef. Maggie McNeil, "South Korea Warned to Honor Meat Import Accord," JOURNAL OF COMMERCE, November 30, 1995. __________________________________________ REGIONAL/BILATERAL AGREEMENTS __________________________________________ U.S., EU ENTER INTO BROAD TRADE PACT On December 3, U.S. President Bill Clinton and leaders from the European Union's (EU) top policy making body, the European Commission, signed an accord to create a "trans-Atlantic marketplace" by reducing trade barriers. The accord, known as the New Transatlantic Agenda, falls far short of plans earlier this year to create a free trade zone between the U.S. and the 15-nation EU, but marks the first time the two trading powers have put in writing their intention to move toward a meaningful agreement. Specifically, the accord commits the U.S. and the EU to conduct a joint study on ways to spur trade in goods and services as well as steadily reduce or eliminate remaining tariff and non-tariff barriers to trade in goods, services and capital. The two sides backed up their declaration of principles with a concrete action plan that specifies more than 120 U.S.-EU initiatives that will make it easier to buy and sell goods and services from each other. The plan for freer trade across the Atlantic has been opposed by several EU countries, notably France, which fears Washington wants to launch a fresh attack on European farm subsidies. Some EU countries are worried about the wording of the text, particularly the phrase "trans-Atlantic marketplace." But the European Commission as a whole hopes regulatory cooperation and mutual recognition will reduce the use of trade defense weapons. Its long-term aim is to align EU and U.S. competition policies to gradually render unnecessary the use of anti-dumping and countervailing duties against each other's exports. Kenneth R. Bazinet, "Clinton, Leaders Sign Trade Pact," UPI, December 3, 1995; Bruce Barnard, "'Trans-Atlantic Marketplace' Accord to Cap Clinton's European Visit," JOURNAL OF COMMERCE, December 1, 1995. U.S., EU AGREE ON COMPENSATION FOR EU ENLARGEMENT On December 3, the U.S. and EU reached agreement on a plan to compensate the U.S. for the admission of Austria, Finland and Sweden to the EU this year. The agreement, which faces some opposition by four EU nations, calls for the EU to cut tariffs and other trade barriers on January 1, 1996 for electronics, chemicals, grains and other farm products. According to U.S. officials, the agreement, which will cut tariffs on billions of dollars of U.S. exports, will save U.S. companies about $200 million a year. The U.S. and EU have been trying all year to work out the terms of this compensation, and the Clinton administration had planned to begin imposing retaliatory trade sanctions on the EU on December 4 if an agreement was not reached. The agreement must still be approved by the national governments of the 15 EU countries. Spain, Portugal, Italy and Greece are unhappy with the higher level of imports expected for some of the agricultural goods in the agreement, including almonds and cherries, which they raise domestically. While the four could delay adoption of the agreement past the next meeting of EU governments, informed observers said the deal will probably hold together and be implemented on January 1, 1996. John Maggs, "U.S., EU Forge Pact on Trade Barriers," JOURNAL OF COMMERCE, December 4, 1995. U.S. WARNS CHINA ON PIRACY Reopening a major trade dispute with China, on November 30 the United States told Beijing it has 90 days to enforce an agreement struck with Washington earlier this year to end the pirating of computer software, music and movies, or once again risk the imposition of trade sanctions. The public warning comes after numerous private admonitions during meetings with top Chinese officials, U.S. trade officials said. While the renewed threat of sanctions risks a new breach in relations, American trade officials said that China's continued foot-dragging in closing the 29 factories that produce millions of illegal copies of American films and software had already cost United States corporations more than $800 million this year. In fact, there is evidence that some factories that had halted making illegal copies of compact disks have resumed production, this time producing far more expensive CD-ROMs containing pirated copies of just-released computer software. U.S. trade representative Mickey Kantor said that while he is encouraged by China's "spirit of cooperation" on a range of other economic issues, "we will not wait forever as the Chinese government attempts to implement these agreements." Kantor would not elaborate on the kind of action the Unites States would take unless the accord was enforced. But he has previously said that Washington had simply "suspended" the imposition of $1 billion in sanctions against Chinese imports that were averted at the last minute by the agreement in February 1995. That means the U.S. government would not have to go through a lengthy investigation of the harm done to American industry before imposing the 100 percent tariffs on Chinese imports. David E. Sanger, "U.S. Reopens Issue of Piracy With Chinese," NEW YORK TIMES, December 1, 1995; "U.S. Warns It Will Take 'Decisive Action' Unless China Controls Piracy," WASHINGTON POST, November 30, 1995. ___________________________________________ Trade News is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Orin Kirshner. E-mail versions of Trade News are available free of charge for Econet/IATP Net subscribers. For more information about fax or mail subscriptions, contact: Institute for Agriculture and Trade Policy, 1313 Fifth Street S.E., Suite 303, Minneapolis, MN, 55414 Phone 612-379-5980. To learn more about IATP's contract research services, please contact Dale Wiehoff at dwiehoff@igc.apc.org