World Trade Organisation members yesterday urged the US and the European Union to resolve their quarrel over bananas, saying the standoff was in undermining the authority of the dispute settlement system.
At an emergency meeting called by the EU, some WTO members criticised a US move last week to impose conditional sanctions on a wide range of European goods. The UK has been especially critical because the targeted goods appears to hurt British exporters more than those in other EU countries.
Mr Renato Ruggiero, WTO director-general, appealed to both sides to reach a mutually acceptable settlement "in conformity with the letter and the spirit of the system".
However, Ms Rita Hayes, US ambassador to the WTO, said that in calling the meeting, the EU was trying to divert attention from its failure to implement banana rulings.
The US argues that the EU's banana import regime, which favours fruit from African, Caribbean and Pacific producers, discriminates against US distributors of Latin American bananas, despite "cosmetic" changes made in response to previous WTO rulings.
The EU, with the support of many WTO members, says Washington is acting illegally in imposing what amount to trade sanctions. It has urged Washington to wait for the WTO to rule on the EU's new banana import arrangements and for it to decide what sanctions the US can levy.
EU officials said yesterday the US move to require importers of $520 million (€476 million) of European goods to post bonds equivalent to 100 per cent duties was "unjustified" and set a dangerous precedent. Among the goods under threat are £3 million (€3.8 million) in annual Irish exports.
Washington maintains that it is acting within its WTO rights, after a WTO panel of arbitrators said it needed more time to assess the extent of retaliation. The panel, which is also examining the EU's banana regime for compliance, is expected to report on both issues towards the end of the month.
EU officials acknowledged that the EU's amended banana import arrangements were unlikely to be given a clean bill of health. "They will find probably something out of line," said Mr Rod Abbott, the EU's WTO ambassador
He noted, however, that WTO-authorised sanctions must be equivalent to the trade loss from non-compliance. "I don't expect the answer to be zero because this is a political process as well," he said, while noting that it would not be the $520 million the US has claimed either.
Mr Abbott said the EU would change its arrangements if told to do so by the panel which, for the first time, has been asked to make recommendations on how Brussels should bring its regime into line with WTO rules.
