Banana dispute could slip into trade war

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THE TRANSATLANTIC trade dispute over bananas exploded into acrimony yesterday, just days before a full summit between Europe and the United States in Washington.

Amid concern that the row could provoke a full-scale trade war, Sir Leon Brittan, Europe's trade commissioner, accused the US of being "petulant" and trying to "avoid justice by running away from it". Rita Hayes, American ambassador to the World Trade Organisation (WTO), responded by arguing that the latest move by the European Union amounted to "a mockery" of the global trading system and its rules.

The bitter dispute arose as Brussels braced itself for the publication by Washington of a definitive list of European goods on which the US plans to levy a 100 per cent tariff, unless the EU backs down over banana imports.

Later it emerged that Washington had delayed publication "for a few days" although there was no sign that the US intends to withdraw its tariff threat.

The dispute threatens to overshadow Friday's summit between US President Bill Clinton, and Jacques Santer, the European Commission president.

Washington argues that the EU banana import regime is unfair to South American distributors, most of which are owned by US companies, because it allows preferential treatment for former European colonies, including the Winward islands.

The WTO has condemned an earlier EU banana import system, but Sir Leon argues that 10 changes have been made and that the EU's new regime complies with all of the World Trade Organisation's concerns.

The US dismisses these as cosmetic and does not want to go through the same WTO settlement procedure, despite the fact that Brussels has agreed to speed up the procedure from 449 days to 170 days.

Yesterday Sir Leon announced that the EU was taking the initiative in asking a WTO panel to hear the case.

If the US did not contest it the EU would assume it was in the right in international law, he said.