3. Cases dealing with US unilateralism

‘Carousel’:
The ‘Carousel legislation provides for a mandatory and unilateral revision of the list of products subject to sanctions against imports from WTO Members which have been determined not to have implemented WTO rulings. The EC requested WTO consultations, which were held on 5 July 2000. Despite strong rumours that rotation could have taken place by 14 November or 18 November 2000, this did not happen. However, the EC will consider a request for the establishment of a WTO Panel should the legislation be applied and sanctions rotated.

4. Current major cases launched against the Community

‘Bananas’:
In the past, two European Union banana regimes were challenged successfully in the WTO, prompting US retaliation against EU products. On 11 April 2001, the US Government and the European Commission reached an understanding to resolve this long-standing dispute. A new EU regime will provide a transition to a tariff-only system by 2006. During the transition, bananas will be imported into the EU through import licences distributed on the basis of past trade. After the transition, a tariff-only system is scheduled to take effect on 1 January 2006. The understanding marks a significant breakthrough. It demonstrates the commitment of the Bush Administration and the European Commission to work together closely and effectively on trade issues. Most important, both parties agreed that the time had come to end a dispute which had led to prolonged conflict in the world trading system. Phase 1 of the understanding has been implemented by the EC on 1 July 2001. A working party for a GATT Article I waiver for the Cotonou Agreement has been established on 11 October 2001. The EC has also urged the US to actively support the EC request for a GATT Article XIII waiver, which is a prerequisite for the implementation of Phase 2 of the Understanding and in particular the reservation of the reduced C quota for ACP bananas. The ‘WTO waiver process’ was successfully completed by the approval of both waivers during the 4th WTO Ministerial meeting in November 2001 in Doha, Quatar.

‘Hormones’:
In February 1998, the WTO condemned the EU ban on imports of beef produced with growth promoting hormones since it was not based on a sufficiently specific risk assessment. The Commission, therefore, decided to carry out such an assessment, in line with indications given by the WTO. While awaiting the results of the ongoing assessment, the US was authorised by the WTO to suspend concessions equivalent to the losses to their industries caused by the maintenance of the EC import ban. On 5 May 2000, the Commission adopted a proposal to amend the ‘hormones directive’. In addition, further studies will be launched with the objective of obtaining more complete scientific information. The Commission proposal is not yet adopted. In the meantime, the EC still has every interest to convert present US sanctions into compensatory tariff reductions. The US has showed some interest in increased market access for non-hormone treated beef and both sides are engaged in negotiating a possible trade-enhancing compensation package. However, the drop in the EU market following the BSE crisis and the long lead time needed by the US industry to gear up hormone free production recently diminished the prospects for an amicable solution. The resolution of the bananas dispute and the realisation that trade sanctions are not productive may increase the possibility of an agreement on temporary compensation on hormone- free beef.