September 11, 2002
African countries have asked for poorer states in the World Trade Organization to be given the right to retaliate collectively against rich powers in disputes, trade sources said Wednesday. And India has called for new rules under which advanced economies who lose dispute cases against developing countries in the WTO would be ordered to contribute toward the legal costs of the defense, according to the sources.
The proposals came in discussions in the 144-member WTO on how to improve the dispute settlement system which has been hailed by some officials as the "jewel in the crown" of the 8-year-old trade body. "The means provided for enforcement of (dispute panel) findings and recommendations -- trade retaliation -- are skewed against, and disadvantage, developing countries," Kenya's envoy Amina Chawahir Mohammed told the session. Presenting a paper on behalf of the African Group in the WTO, she said the system should "provide for and recognize the possibility of collective retaliation by all WTO members" against any rich power found breaking the rules.
Although there was no immediate reaction from the European Union or the United States, one industrialized country envoy said there was no chance such a change would ever be approved. "It's just a non-starter," he said.
Under the dispute resolution system, in place since 1995, retaliation is authorized when a neutral panel and an appeals body have agreed that a WTO member has violated the organization's open trading agreements. The value of the retaliatory measures that can be imposed normally in the form of extra tariffs on imports from the offending country -- is determined by WTO arbitrators and is meant to compensate the winning country for trade it has lost.
In the biggest case involving retaliation, the European Union was last month given the go-ahead for sanctions worth $4 billion a year on the United States in a dispute over tax laws. In other cases, the United States has been imposing annual sanctions worth $116 million a year on EU goods over a Brussels ban on hormone-treated beef, and earlier hit EU goods with tariffs worth $191.4 million over limits on banana imports.
But smaller developing countries say that though the system appears fair, retaliation is not really an option for them. They point to another banana dispute in which Ecuador won a separate case against the 15-nation EU -- the world's biggest trading power -- and was given the go-ahead to impose sanctions to the value of $201.6 million. However, Ecuador has never taken up the option, saying that making EU goods more expensive for its own citizens by putting higher tariffs on them would seriously damage its own economy and be little more than a pinprick for the Europeans.
In a separate presentation at the discussion on reforming the dispute system, Zambia's WTO envoy M B Bowa said many of the poorest countries in the WTO simply did not bring cases to the body because they could not afford the costs involved. An Indian representative said this problem could be tackled by making rich countries losing dispute against poorer ones pay compensation for damage caused by WTO-illegal measures dating back to the time the measures were introduced. At present, countries winning cases can only get compensation -- or retaliate -- dating from the time when the WTO dispute procedure is completed.
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