EUROPEAN DISPUTES

• EU BANANA DISPUTE
• The dispute over the EU's banana regime has been among
the most contentious in recent years. It is also among the
more legally and politically complex .

• The dispute involves the EU's regulatory regime for

imported bananas, enacted in 1993.(1) Prior to 1992 each
of the 12 EU member states had its own banana import
regime. Germany operated on a free market system and
had no import restrictions. The other 11 members imposed
a 20% tariff, and 6 members (France, Italy, Portugal,
Spain, Greece, and the UK) also applied quotas on bananas
produced in Central and South America. These latter
restrictions were designed to protect the EU market for
bananas produced in former EU territories and in the ACP
countries (developing countries in Africa, the Caribbean and
the Pacific) that entered duty free under the Loma
Convention. As part of its 1992 integration program the EU
established, effective July 1, 1993, an EU-wide banana
trade regime.
 DISPUTES
• US STEEL TARIFF DISPUTE
• The Section 201 steel tariff is a political issue in the
United States regarding a tariff that President George W. Bush
placed on imported steel on March 5, 2002 (took effect March 20).
The tariffs were lifted by Bush on December 4, 2003.
• in march 2002 the us administration imposed protective duties to
safeguard its steel manufacturing industry. the measure was
subsequently found to be illegal and case was registered in WTO
by Korea, Japan, New Zealand, China, EU.

• The temporary tariffs of 8-30% were originally scheduled to

remain in effect until 2005. They were imposed to give U.S. steel
makers protection from what a U.S. probe determined was a
detrimental surge in steel imports.. Steel producers had originally
sought up to a 40% tariff. Canada and Mexico were exempt from
the tariffs because of penalties the U.S. would face under free-
trade agreements.
 SUBSIDIES AND
WTO(ARTICLE XVI)
• Subsidies and countervailing measures
• World Trade Organization (WTO) ruled that most of the $4 billion-
plus that the US government gives annually to producers and
exporters of US cotton is illegal under current trade rules. The
panel also stated that these payments - of which $3.2 billion are
producer subsidies, while the rest help underwrite costs of
exporting - must be ended by July 1,2005

• This agreement does two things:

• It disciplines the use of subsidies, and it regulates the actions
countries can take to counter the effects of subsidies. It says a
country can use the WTO’s dispute settlement procedure to seek
the withdrawal of the subsidy or the removal of its adverse
effects. Or the country can launch its own investigation and
ultimately charge extra duty (known as “countervailing duty”) on
subsidized imports that are found to be hurting domestic
producers.
• Prohibited subsidies: Subsidies that require recipients to meet
certain export targets, or to use domestic goods instead of
imported goods.
• They are prohibited because they are specifically designed
to distort international trade, and are therefore likely to
hurt other countries’ trade.
• They can be challenged in the WTO dispute settlement
procedure where they are handled under an accelerated
timetable. If the dispute settlement procedure confirms
that the subsidy is prohibited, it must be withdrawn
immediately. Otherwise, the complaining country can take
counter measures. If domestic producers are hurt by
imports of subsidized products, countervailing duty can be
imposed.

• Actionable subsidies: In this category the complaining

country has to show that the subsidy has an adverse effect
on its interests. Otherwise the subsidy is permitted.
 EU –US Aircraft dispute: Recent
events – Brussels, 31 May 2005
• October 3 2004 The US announces its unilateral withdrawal
from the 1992 bilateral EU-US agreement on civil aircraft.
• October 6 2004 The US requests formal consultations at the
WTO on launch investment to Airbus.
• October 6 2004 The EU requests formal consultations at the
WTO over subsidies granted to Boeing.
• October 8 2004 EU rejects US claim that the 1992
Agreement, which remains valid for 12 months following
withdrawal of either party, is no longer binding.
• January 11 2005 EU Trade Commissioner Peter Mandelson
and USTR Bob Zoellick agree to a three month negotiation “to
end subsidies in a way that establishes fair market
competition”. Both sides agree that no new government
support will be made during this 3month period.
• February 16 2005 In the course of negotiations, EU Trade Commissioner
Peter Mandelson and USTR Bob Zoellick agree on a two phase approach
to negotiations based on mutual initial reductions to be followed by a wider
final agreement “to end subsidies”.
• April 11 2005 Three month negotiation period and standstill commitment
lapses. Both sides signal willingness to continue to seek negotiated
solution.
• April 18 2005 US threatens to take the dispute to the WTO.
• May 2 2005 After a meeting in Paris, both sides agree to continue a
dialogue.
• May 27 2005 EU Trade Commissioner Peter Mandelson offers a specific
phased deal –proposing matching cuts in government support on both sides
immediately, to be followed by further cuts leading to elimination of
government support on both sides
• May 30 2005 US rejects this offer and relaunches its WTO case.
• May 31 2005 EU relaunches its own WTO case against subsidies to
Boeing.
 US FARM SUBSIDIES
• Brazil has filed a new complaint against the United States at the
World Trade Organization, alleging that U.S. payments to farmers
have exceeded WTO limits.
• The request for consultations marks the first step in what could
become another lengthy dispute between the U.S. and Brazil over
the billions of dollars (euros) Washington gives out annually in
farm subsidies. They have argued for the last four years over the
legality of U.S. payments American cotton farmers.
• The Canadian government alleges that the US has exceeded its
legal limit for trade-distorting subsidies in five of the past eight
years. It is also specifically targeting the billions of dollars that
Washington pays to corn farmers, charging that they have
distorted world prices and hurt producers in Canada

• The complaint appears to follow along the lines of Brazil's

successful WTO case against US support for cotton growers in
2005. In that decision, the Appellate Body ordered Washington to
cancel certain subsidy and export credit programmes that violated
its WTO commitments, and distorted production and depressed
global cotton prices to the detriment of Brazil's trade interests (see
BRIDGES Weekly, 9 March 2005).
 SEA TURTLE,SHRIMPS
DISPUTE
• lIn early 1997, India, Malaysia, Pakistan and Thailand brought a
joint complaint against a ban imposed by the US on the
importation of certain shrimp and shrimp products. The protection
of sea turtles was at the heart of the ban.
• The US Endangered Species Act of 1973 listed as endangered or
threatened the five species of sea turtles that occur in US waters,
and prohibited their “take” within the US, in its territorial sea and
the high seas. (“Take” means harassment, hunting, capture, killing
or attempting to do any of these.)
• Under the act, the US required that US shrimp trawlers use “turtle
excluder devices” (TEDs) in their nets when fishing in areas where
there is a significant likelihood of encountering sea turtles .
• The US lost the case, not because it sought to protect the
environment but because it discriminated between WTO members.
It provided countries in the western hemisphere — mainly in the
Caribbean — technical and financial assistance and longer
transition periods for their fishermen to start using turtle-excluder
devices.
• It did not give the same advantages, however, to the four Asian
countries (India, Malaysia, Pakistan and Thailand) that filed the
complaint with the WTO
 EU-US BEEF DISPUTE
• In the 1990s, in the midst of the
mad cow disease crisis, the European Union
banned the import of meat that contained
artificial beef hormones.
• Under the
Agreement on the Application of Sanitary and
Phytosanitary Measures, signatories are
permitted to impose restrictions on health and
safety grounds subject to scientific analysis.
• Canada and the United States opposed this ban,
taking the EU to the
WTO Dispute Settlement Body. In 1997, the WTO
ruled against the EU. The EU appealed the ruling.