From iatp@igc.apc.org Fri Aug 23 10:03:29 1996 Date: Thu, 22 Aug 1996 14:26:09 -0700 (PDT) From: IATP To: Recipients of conference Subject: TRADE NEWS 8-23-96 TRADE NEWS Produced by the Institute for Agriculture and Trade Policy August 23, 1996 Volume 5, Number 15 __________________________________________ Headlines: - TENSIONS OVER ECO-LABELING - U.S. MOVES ON GAS RULING - EU WANTS U.S. OUT OF BANANA CASE - U.S. ACCEPTS MEXICAN TOMATO REQUEST - EU MAY PRESS REVIEW OF REGIONAL PACTS __________________________________________ WTO NEWS SUMMARY __________________________________________ TENSIONS OVER ECO-LABELING As members of the World Trade Organization (WTO) prepare to convene in Singapore in December 1996 for the WTO's first summit, developing nations are raising concerns that so-called "eco-label" rules might handicap their exporters. In a recent discussion paper circulated to WTO delegates, India argued that any WTO environmental measures in the eco-label area should ensure they "do not create unnecessary obstacles to exports from developing country members." Similarly, in a submission to the WTO's Committee on Trade and Environment (CTE), Egypt cautioned against formulating new eco-labeling schemes that might hurt developing nations' "competitiveness and market access." A major issue of contention is whether the existing WTO rules, such as the agreement on Technical Barriers to Trade (TBT) or Sanitary and Phytosanitary measures, cover all eco-labeling schemes. The majority of developing nations, along with the European Union (EU), Norway and Australia, say the TBT accords only cover labels based on production process methods. They argue that the global accords do not cover labels based on so- called non-PPMs or life-cycle analysis. Critics of the use of non-PPMs for eco-labeling maintain that such analysis is not easy to carry out or verify. Thus, they could result in trade restrictions and distortions. For its part, the United States argues that the existing TBT rules cover all types of eco-labeling schemes. It believes trade panels can sort out any contentious trade issues. "The bottom line is eco-labeling is covered in all its forms," said a U.S. official. A number of WTO ambassadors, who spoke on the condition of anonymity, said that without "sustained political pressure" from major capitals, they do not see eco-labeling, or other sensitive trade and environment issues, sorted out ahead of the Singapore summit. In recent years, the introduction of eco-labels by developed country governments, industry groups and nongovernmental organizations has been rising. Product lines subject to or under consideration for eco-labeling schemes include batteries, paper products, marine engines, washing machines, refrigerators, textiles, insulation materials, detergents, dishwashers, footwear, paints and varnishes, cleaning agents for cars, ceramic tiles, cartridges for copying machines, reused plastics, fluorescent tubes and light bulbs, and aluminum cans, among others. John Zarocostas, "'Eco-Labeling' is a Sticky Issue, Say Developing Nations at WTO Talks," JOURNAL OF COMMERCE, August 20, 1996. U.S. MOVES ON GAS RULING The Clinton administration has reached a tentative agreement with Venezuela to bring U.S. gasoline regulations into conformity with World Trade Organization (WTO) rules by August 1997. But an agreement has not been finalized with Brazil, which is pressing the U.S. to adopt an ever quicker timetable. The agreement with Venezuela, which covers only the timetable and not the substance of U.S. compliance with the WTO ruling, is likely to force the U.S. to change regulations covering both reformulated and conventional gasoline. If the U.S. had been able to stretch the process out much further it would not have had to make any changes to the regulations governing pollutant content for reformulated gas. Discriminatory rules on reformulated gas are only in effect through the end of 1997. The regulations on conventional gas currently include no provision to end discrimination against importers. The WTO appellate body report which found that U.S. regulations under the Clean Air Act violate the General Agreement on Tariffs and Trade (GATT) was formally adopted by the WTO on May 20, 1996. The U.S. only recently struck a deal with Venezuela to bring the regulations into compliance within 15 months of that time, as stipulated by WTO dispute settlement rules. Informed sources say the U.S. and Brazil are still trying to reach an agreement. While the U.S. is hoping that Brazil will agree to the 15-month limit, Brazil wants the U.S. to comply within eight or nine months. "They change regulations much faster than that when it's in their interest," said one Brazilian official. According to WTO dispute settlement rules, if the parties to a case cannot agree on a schedule for implementation, the WTO will appoint an arbitrator to do so. "Administration Agrees to Comply with WTO Gas Panel by Next August," INSIDE U.S. TRADE, August 16, 1996. EU WANTS U.S. OUT OF BANANA CASE Last month, the European Union (EU) moved to exclude the U.S. from a World Trade Organization (WTO) dispute settlement panel examining the EU's banana import regime. In a statement to the WTO, the EU said that because the U.S. does not export any bananas to Europe, and has no prospects to do so in the future, the U.S. should not be allowed to act as one of the plaintiffs in the case. Specifically, the EU argued that the U.S. has no legal right or interest in the case because it could not obtain any remedy in the WTO. Compensation or retaliation would not be due to the U.S. even if it won the case, because the U.S. produces only a token amount of bananas and has not traded in bananas with the EU. Furthermore, the EU said that the U.S. should not be allowed to challenge the banana regime to protect the interests of other countries, given that there is no provision in the WTO for action on behalf of the membership in general against an alleged infringement of the rules. Such actions should be prohibited, the EU submission stated, so that the WTO does not become a system where discipline is maintained by the major trading powers acting as "bullies." On July 9, 1996 the U.S. submitted a complaint to the WTO charging that the EU's banana import regime violated world trade rules because it discriminated against U.S. companies operating in Latin America. The dispute settlement panel is expected to rule on the EU's request to exclude the U.S. in September. "European Union Presses to Exclude U.S. From WTO Banana Panel," INSIDE U.S. TRADE, August 16, 1996; Canute James, "Caribbean Growers Seek Truce in Banana Battle," FINANCIAL TIMES, July 2, 1996. U.S. ACCEPTS MEXICAN TOMATO REQUEST The Clinton administration has accepted a request by Mexico to hold formal consultations under the World Trade Organization (WTO) Antidumping Agreement regarding the ongoing U.S. Department of Commerce investigation of alleged sales of fresh and chilled tomatoes from Mexico at below-market prices. The two sides are now discussing a venue and a date for the consultations. The U.S. has suggested to Mexico that the consultations be held in Washington, D.C., where there are more officials who are familiar with the case. "We are waiting for a Mexican response." said one U.S. trade official. On July 1, 1996 Mexico launched a request at the WTO for expedited consultations with the U.S. on the ongoing dumping probe, charging that the Department of Commerce has artificially chosen a period of investigation that unduly focuses on months when Mexican tomato prices were at their lowest. "U.S. Accepts Mexican Request at WTO to Hold Talks on Tomatoes," INSIDE U.S. TRADE, August 9, 1996. EU MAY PRESS REVIEW OF REGIONAL PACTS Sir Leon Brittan, the European Union's (EU) trade commissioner, is seeking to persuade the European Commission (EC) to press the World Trade Organization (WTO) to launch a comprehensive review of regional trade agreements in order to determine whether they violate multilateral principles by discriminating against non- member nations. While not all members of the EC approve of the proposal, Brittan is gaining support in light of the drop in the EU's exports to Mexico coincident with the North American Free Trade Agreement (NAFTA), involving Mexico, the U.S. and Canada. He also has warned of the negative consequences for EU exports of the free trade area planned by the Association of South East Asian Nations (ASEAN), which aims to remove all barriers to trade among member countries early in the 21st century. Brittan is proposing a two part program for review of regional agreements by the WTO. He would require the organization first to study 90 regional agreements already in effect, including some developed only in the past year. These arrangements would be studied under accelerated procedures, while the WTO would at the same time consider how it could assure that future regional trade agreements do not depart from the goals of the WTO to foster multilateral trade regardless of membership in regional organizations. "EU May Press WTO to Study Whether Regional Pacts Conform to Trade Rules," MILLING AND BANKING NEWS, August 13, 1996. __________________________________________ 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