Funding the War

Doug Henwood dhenwood at panix.com
Mon Mar 3 10:44:08 PST 2003


Paul_A wrote:


>There ARE Geneva Conventions against the use of natural resources by
>an occupying force but ...

Which is a nice lead-in to this, another example of how the U.S. doesn't give a damn about the "rules" it expects others to obey.

Doug

----

Wall Street Journal - March 3, 2003

Come on, America, Play By the Rules!

By PASCAL LAMY

BRUSSELS -- Neither the U.S. nor the European Union has a 100% record to brag about when it comes to the implementation of rulings of the World Trade Organization. But the problems, particularly on the U.S. side, are starting to mount up. Meetings of the WTO's dispute settlement body have become a litany of complaints against the U.S. and its failure to implement WTO findings.

What's the current balance sheet? Against the one outstanding case where the WTO found against the EU -- concerning growth hormones in beef, where the U.S. imposed $100 million in trade sanctions in 1999 -- the U.S. faces no less than five cases where implementation is overdue, four of them brought by the EU. This is not counting others where the WTO legal process has recently concluded against the U.S., such as the case against the Byrd amendment by which money received from antidumping duties imposed on foreign firms is funneled to the firms who bring the actions. But this list does include the famous Foreign Sales Corporation export subsidies case, where the EU has been awarded the right to impose $4 billion in trade sanctions, and where we are now consulting member states on the products potentially affected.

Thus far Europe has held off on retaliation (unlike the U.S., which imposed sanctions on hormones and bananas at lightning speed). But without concrete steps toward compliance, that is not a situation which can be maintained for much longer. Five outstanding cases is a lot in any context, and let's not forget that the WTO also has to pronounce on U.S. steel tariffs. But aside from the rights and wrongs of individual cases, surely it is time we cleaned up our act, and agreed to take compliance more seriously.

Why? There are several reasons. Most people agree that it's a good thing to have binding international rules for the settlement of trade disputes. It would be a great mistake to go back to the GATT system, where, in the absence of sanctions, the findings of dispute settlement panels were ignored. More to the point, compliance is in both our own interests. The U.S. Trade Representative office itself pointed out recently that of the 73 cases in which the U.S. has been involved, the U.S. obtained satisfaction more than two-thirds of the time. That is why, frankly, I for one do not understand why some in Washington are arguing that the WTO dispute settlement system is a bad deal for the U.S. Moreover, noncompliance weakens a system which enforces our own rights. If we, the elephants of world trade, don't follow the rules of the road, we weaken our ability to get others to do so.

Some people ask me why we insist on compliance from the U.S. Is it just a theoretical interest? Not at all. Ask the German companies which are facing triple damages in a U.S. court case under the 1916 Antidumping Act, even after the law was found to be out of line with U.S. obligations in the WTO. Ask European companies that try to compete with billions of dollars in unfair export subsidies each year. And ask the European firms that have to compete with the U.S. companies that under the Byrd amendment receive another subsidy of more than $135 million each year. These are concrete examples of unfair, illegal practices. And Europe is not alone in its concerns.

Of course, most of the cases I have mentioned require congressional action for U.S. compliance. I recognize that primary legislation to comply is always going to be more difficult than simple administrative implementation. And a number of these areas are clearly politically sensitive for the U.S., such as their use of trade-defense instruments, like antidumping. I fully recognize how hard Bob Zoellick, Bill Thomas, Charles Grassley and others on both sides of the aisle are working to bring the U.S. into line with the rules. But that is precisely why the EU has been rather accommodating -- some say too accommodating -- in giving the U.S. extra time for implementation on a number of these cases. Time, I can only repeat, which the U.S. was not willing to give us either in the bananas or hormones cases, before I took office.

Finally, remember that all of this sets a poor backdrop to the negotiations on a new round of trade talks, the Doha Development Agenda. Developing countries remain uncomfortable with the multilateral trading system, and have yet to be convinced that it is in their true interest. If they see either of the two big players disregarding common obligations, we will find it even harder to persuade them to move forward. So, isn't it high time we turned this situation around? Let's agree to make 2003 the year of WTO compliance. It's one thing for the big powers of the WTO to rule the waves. What we can't afford to do is waive the rules.

Mr. Lamy is the EU trade commissioner.



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