-Caveat Lector-

EUROPEAN UNION


[01/19] EU seeks last-ditch reprieve from U.S. sanctions
BRUSSELS, Jan 19 (Reuters) - European Union diplomats said they will try on
Wednesday to make a last ditch effort to head off a half-billion dollars in
sanctions threatened by the U.S. in the latest round in a trade war over
bananas.
Washington intends next Monday to seek World Trade Organization (WTO)
authorization to slap punitive 100 percent duties on a wide range of EU
imports on the grounds that the 15-nation bloc has persistently failed to
bring its banana import regime into line with WTO rules.

If the request for sanctions is made, authorization is sure to follow, since
it would take a unanimous WTO decision to reject it.

The sanctions -- on goods ranging from cashmere sweaters to pork -- could
cost EU exporters about $520 million a year, according to U.S. calculations.

EU sources told Reuters the bloc appeared to have only limited options for
preventing the sanctions.

It could refuse to let next Monday's WTO meeting go ahead, but that would
mean stalling other business that was in its own interest.

It could appeal to the Geneva-based WTO to rule that the sanctions were
excessive and should be reduced to a more reasonable level.

Or it could ask the WTO to set up a disputes settlement panel to rule
whether Section 301 of the U.S. Trade Act -- which allows the U.S. to invoke
unilateral sanctions in a trade row -- was legitimate under global free
trade rules, the officials said.

But a U.S. official in Brussels said nothing short of a negotiated EU-U.S.
settlement to the dispute could stave off sanctions.

"It's in the hands of the EU," the U.S. official said, "if they can see
their way clear to negotiating with the U.S. in good faith and good form."

She rejected the EU's argument that the best way to end the bitter row was
for the WTO, as an independent arbiter whose ruling would be binding, to
judge whether the latest version of the banana regime complied with free
trade rules.

The EU and Ecuador requested the creation of such a panel last week to
examine the newest import arrangements, which took effect on January 1.

But the U.S. official said there was no guarantee the EU would genuinely
respect a WTO ruling against it.

"There's nothing to stop the EU changing a comma and saying the regime is
now in compliance with the WTO ruling, and putting us back where we started
all over again," she said.


Last Updated: 01/19/99 19:17 EST


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