-Caveat Lector- EU, Ex-Colonies Deadlock on Trade By PETER JAMES SPIELMANN .c The Associated Press BRUSSELS, Belgium (AP) - European Union nations and their former colonies ended two days of talks Friday in a deadlock over how to update the conditions of a 24-year-old trade pact known as the Lome Convention. Under the Lome Convention, the 15 EU nations give their former colonies preferential access to their markets. The EU also subsidizes refugee relief and development projects at a cost of about $2.65 billion a year. Now, with the Lome Convention due to expire next February, the EU wants to change its conditions to link aid and trade with respect for human rights, democracy, the rule of law, economic reforms, and other issues of ``good governance.'' But the 71 African, Caribbean and Pacific nations - or so-called ACP members - are resisting the new condition, saying their current commitments to law and human rights are good enough and they don't want any more stipulations that could limit or cut off aid or trade. The ACP nations say they particularly resent being lectured by the EU's Executive Commission, as commission members submitted their resignations en masse last March due to rampant corruption, nepotism and mismanagement. ACP Deputy-General Carl Greenidge dismissed good governance as a ``nebulous concept.'' Last month, the EU suspended some $17 million in aid for the Ivory Coast after the discovery of massive fraud in health care spending there. The impasse means the talks won't be taken up again until a ministerial-level meeting in November, leaving scant time to reach agreement before the Lome Convention expires next year. The European Center for Development Policy Management, a think tank based in the Netherlands, warned that ``the last few weeks of the year will not suffice to negotiate an agreement, unless significant progress is made in the July round.'' A diplomatic stalemate is particularly risky as the World Trade Organization is close to outlawing the Lome Convention, saying its preferential trade deals are illegal and unfair to other, equally poor nations. Many poor countries have built industries on Lome Convention trade deals, including exports of rum and bananas from the Caribbean and tea and coffee from Africa. If reforms are unavoidable, the ACP nations want them phased in over 10 years, so their industries and economies can adapt to the new system. The European Union wants to allow five years for the transition. S.Africa says European gold tour cancelled JOHANNESBURG, July 31 (Reuters) - A proposed tour of European capitals by African mining ministers to protest against central bank gold sales has been cancelled. South African Minerals and Energy Minister Phumzile Mlambo-Ngcuka said African mining ministers had adequately voiced their concerns at meeting of 71-developing countries in Brussels last week. The two-day meeting of African, Caribbean and Pacific (ACP) ministers issued a statement on Wednesday calling for a moratorium on central bank gold sales pending study of a "central mechanism" to permit orderly gold sales. "We were able to discuss all the issues which we would have taken on a (European) tour. It would be overkill," Mlambo-Ngcuka told Reuters late Friday after visiting the Mponeng mine near Johannesburg where a gas explosion killed 19 miners late Thursday. South Africa had originally planned a mission to London and other European capitals after Britain's first auction of gold reserves on July 6 sent bullion prices tumbling to 20-year lows. But the tour was postponed while South Africa gathered support from other African gold producing countries like Ghana, Mali and Tanzania. In the interim, a separate delegation of South African gold executives and union leaders had travelled to London to plead the industry's case. But they failed to shift the British government's thinking on its plan to cut its gold reserves by 415 tonnes over the next few years. South Africa's gold mines are struggling to cut costs in the face of weak gold prices, which if they persist, could threaten 100,000 direct and indirect mining jobs. Aside from the UK sales, proposed gold sales by Switzerland and the International Monetary Fund (IMF) have also raised fears among gold producers of a further drop in bullion prices. The ACP statement urged "that a moratorium be placed on all official sector gold sales until a representative forum is speedily established to explore a central mechanism that can be put in place to ensure that gold sales take place in a structured and orderly manner..." Mlambo-Ngcuka said the ACP declaration had given European Union (EU) officials at the meeting "food for thought." "There is willingness to find a mechanism to continue to discuss this. At an EU level, the issue has been noted," she said. NSI rejects EU domain name monopoly charges BRUSSELS, July 30 (Reuters) - U.S. firm Network Solutions Inc <NSOL.O> on Friday denied it had a monopoly over Internet domain names, saying the market was already open to competition. The European Commission on Thursday said it had begun an informal investigation into NSI's licensing contracts with two European companies over the registry of names in the .com, .org and .net domains. A Commission spokesman said the European Union competition watchdog's main concern was that NSO "does not perpetuate its monopoly" by locking in distributors while the market is still being liberalised. NSI spokesman Christopher Clough told Reuters that the company's registrar service was only offered within .com, .org and .net and that there were 248 other registries worldwide, including country domains such as .us, for the United States, and .be for Belgium. He added that NSI's alleged monopoly ended in June under an agreement between the firm and the U.S. Department of Commerce. Five companies were selected in April to compete with NSI for registrations of the top level Internet domain names. They include New-York-based Register.com, which started operations in June, America Online Inc <AOL.N> and Oleane, a subsidiary of France Telecom SA <FTE.PA>. EU OKs Gene-Technology Patents MUNICH, Germany (AP) - Genetically altered plants and animals can be patented in the European Union beginning Sept. 1, the European Patent Office said Friday. The office's administrative council made the decision based on a policy adopted a year ago by the EU. Christian Gugerell, director of the office's gene-technology division, said he expected about 100 patents to be issued in the coming months for such things as herbicide-resistant plants or animals bred for laboratory experiments. IMF report sees possible threats to EMU By Janet Guttsman WASHINGTON, July 30 (Reuters) - Europe's Economic and Monetary Union could break apart if individual countries face big external shocks and are unable to agree a common monetary policy, an International Monetary Fund working paper said. The June 1999 document, published on the IMF's website this week, said there were doubts whether the 3-1/2 year transition to EMU would be "as smooth as generally expected." The monetary union started in January with the irrevocable fixing of national exchange rates to the new European single currency, the euro. The transition phase ends by July 1, 2002, when national currencies are replaced. But the IMF report said "asymmetric shocks" -- shocks affecting individual countries rather than the whole of the euro bloc -- were still possible during the transition period, and this could threaten the system. "If the asymmetric shock is large enough, EMU might even break apart as consensus on monetary policy cannot be reached and as economic costs of staying in EMU become too large for some countries to bear," said the report, written by economists Norbert Berthold, Rainer Fehn and Eric Thode from Germany's Wuerzburg University. "Although there are no provisions in the Maastricht Treaty (on monetary union) for countries that wish to exit from EMU, it is hard to conceive of a sovereign country being forced to stay in EMU against its will." The IMF publishes a number of working papers each month, some written by staff members and some by outsiders. The report said Berthold, a professor at Wuerzburg University, had been a visiting scholar at the IMF's research department. "The IMF is generally viewed with a certain amount of credibility in terms of things like this," said Tim Fox, currency strategist at Standard Chartered Bank in New York. "It may have the potential to be a little bit disturbing to investor sentiment if it gets a lot of attention." The euro, introduced with much fanfare in January, is designed to smooth trade flows, cut the cost of doing business and simplify matters for travelers and holidaymakers. But the euro did little but fall in the first six months of its short lifespan, and it came embarrassingly close to hitting parity against the dollar early this month. It has bounced back in the last two weeks amid signs of recovery in Europe and of slower growth and rising inflation in the United States. The IMF working paper, described as views of the authors rather than of the fund, said political considerations had played a major role in deciding which countries would be EMU members from the start, and it questioned to what extent the EMU countries constituted an optimal currency area. Labor mobility was much lower than in the United States and there were few signs that major labor market reforms would be realized during EMU's transition phase, it added. "If real wages do not become more flexible in EMU, tensions concerning the right course of monetary and fiscal policy are bound to arise in case of adverse shocks," the report said. It noted that Europe's Growth and Stability Pact, which sets strict limits on countries' budget deficits, meant it would be harder for individual countries to use fiscal policies to cushion their economies from external shocks. "EMU will be more fragile during the relatively long transition phase of 3-1/2 years than afterwards," the report said. "As EMU countries in general already display excessive levels of unemployment, it is doubtful whether substantial increases in joblessness are politically sustainable. "A pullout will become a lot more costly after the transition phase is finished," it said. "Countries might therefore regard the transition phase as a testing period during which abandoning the system is still possible at lower costs than afterwards." EU says U.S. scores own goal by imposing sanctions BRUSSELS, July 30 (Reuters) - The United States has scored an "economic own goal" by slapping sanctions on European Union food exports, an EU official said on Friday. Long-threatened punitive U.S. duties on $116.8 million of European pork, mustard, foie gras and other food exports took effect on Thursday. Washington imposed the sanctions because of the EU's refusal to lift its decade-old ban on imports of hormone-treated beef, as U.S. officials say it was required to do by a World Trade Organisation (WTO) ruling. Canada, also a plaintiff in the WTO case, said on Thursday it would impose 100 percent tariffs on C$11.3 million ($7.48 million) in annual imports of EU beef, pork, cucumbers and gherkins. Those sanctions take effect on August 1. Nigel Gardner, spokesman for acting European Trade Commissioner Sir Leon Brittan, said American consumers would have to pay twice the price for EU goods hit by the punitive, 100 percent U.S. duties. "This is a political gesture which is an economic own goal for the United States. Compensation would have been better for everybody -- better for the EU, but also better for the United States," Gardner told Reuters. The 15-nation EU has tried to avoid sanctions by offering the United States and Canada compensation in the form of expanded access to the EU market for other products. Gardner said compensation would have expanded transatlantic trade rather than diminishing it as sanctions did. The United States however has said it is only prepared to discuss compensation as a temporary solution if the EU pledges to lift its import ban on hormone-treated beef in the future, something the EU refuses to do. The EU ruled out lifting the ban in May after a preliminary EU scientific report said there was evidence that one of six hormones commonly used in the North American cattle industry could cause cancer. The United States insists hormones are safe. Gardner said the EU was carrying out a full scientific assessment of possible risks from hormone-treated beef as requested by the WTO. "In the absence of comprehensive science it would be irresponsible to lift the ban," he said. EU sources said the full scientific assessment was expected to be ready in January or February of next year. Gerry Kiely, a spokesman for EU Agriculture Commissioner Franz Fischler, said on Thursday that the EU remained open to discuss compensation with the United States, even though the sanctions had already taken effect. But another EU official on Friday saw little hope that there would be talks on compensation. "I don't think the Americans are interested in compensation. It's a political matter for them rather than economic." Peter Scher, special U.S. ambassador for agricultural trade, said in an interview with Reuters Television in Washington on Thursday that the steep new U.S. duties would stay in place as long as the EU maintained its ban on hormone-treated beef. DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! 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