WRITTEN QUESTION P-3914/98

by Bertel Haarder (ELDR) to the Commission

(11 December 1998)

Subject: Penalty duty on European exports to the USA

The USA has announced that it is imposing a penalty duty on a series of products including biscuits and ballpoint pens - and that it will publish the final list on 15 December 1998 - so that all EU countries are affected. The prohibitive 100 % duty is expected to come into force on 1 February or 1 March 1999 and will affect many firms through exports they are very dependent on. It is unfair that random firms should be held hostage because of the current banana trade dispute between the EU and the USA.

Will the Commission take steps to solve the problems vis-à-vis the USA by implementing the WTO agreement on less restrictive banana imports before 1 January 1999 so that the conflict on banana quotas does not cost random European firms exports and jobs?

What does the Commission estimate the extent of the drop in exports in the branches affected to be if the problem is not resolved?

What in the Commission's view will be the employment consequences in the branches concerned?

Answer given by Sir Leon Brittan on behalf of the Commission

(19 January 1999)

The Commission is making maximum efforts to solve the problems which have been caused by the United States announcement that it intends to unilaterally determine that the Community implementing measures in the bananas case do not comply with World trade organizations (WTO) rules, and impose trade sanctions against Community exports not later than 3 March 1999.

These United States actions clearly violate the provisions of the dispute settlement understanding, which state that any disagreements regarding the conformity of measures taken to implement recommendations from the dispute settlement body (DSB) must be resolved through recourse to a new, accelerated panel ruling, and not through unilateral action.

The Commission considers that the new Community regime for imports of bananas is a correct implementation of the DSB recommendations in the bananas case. This implementation has been achieved in two stages, by Council Regulation (EC) 1637/98 of 20 July 1998 on the common organization of the market in bananas(1) and Commission Regulation no 2362/98 of 28 October 1998 laying down detailed rules for the implementation of Council Regulation (EEC) 404/93 regarding imports of bananas into the Community(2), well in advance of the expiration of the reasonable period of time for implementation, which expires on 1 January 1999.

The Commission is entirely willing for this regime to be examined in a new panel procedure. For this purpose, the Commission conducted detailed discussions with the United States to explore the possibilities of further accelerating the timeframe for such a procedure. The United States has, however, insisted that any timeframe must meet its arbitrary and unrealistically short domestic time limit of 3 March 1999 and appears intent on pursuing its unilateral course of action. The Commission cannot accept that a WTO member considers that it can be judge and jury in its own cause and proceeds with sanctions in the absence of any multilateral condemnation of our implementing measures. The Community has therefore initiated dispute settlement action against the United States section 301 legislation on which the unilateral actions are based.

At this stage, it is not possible to know the fall in exports that could result from the United States sanctions that may enter into force on 3 March, as the WTO has not yet determined any level of concessions that could be suspended. For the same reason, any consequences for employment in the sectors concerned cannot be known yet. In any case, the Commission's entire efforts are geared towards preventing those measures from entering into force. It is important that those likely to be affected in European industries and businesses make their concerns known directly to the Office of the United States Trade Representative.

(1) OJ L 210, 28.7.1998.

(2) OJ L 293, 31.10.1998.