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US stance over Cuba sparks trade row

One of the most serious trade rows between industrial countries of recent years erupted yesterday, pitting the United States against its main trading partners.

The dispute, over a new US law allowing it to take Draconian action against foreigners doing business with Cuba, overshadowed the final day of the annual meeting of the Organisation for Economic Co-operation and Development in Paris.

The ministerial meeting had struggled through the day to find a form of words that would affirm the industrial countries' commitment to multilateral trading rules without condemning America's unilateral action too openly.

But other countries, especially Japan, were harsh in their criticism of the blatant US disregard for the normal world trading procedures.

Sir Leon Brittan, the EU's trade commissioner, also launched an unusually forthright attack at the Paris meeting, saying the US had no right to impose its own policies on the rest of the world.

The EU lodged a formal complaint about the US action two weeks ago.

US officials had suggested that the same unilateral measures could be taken against foreign firms with investments in other ''rogue'' nations such as Iran and Libya.

The ''Helms-Burton'' act stepping up the US embargo of Cuba was passed following the shooting in February of civilian planes piloted by Cuban- Americans, killing four people.

Papering over the row exercised officials' ingenuity yesterday.

One official said: ''The wording of the communique took a long time and was very finely crafted.''

It concluded that OECD members would ''strengthen confidence in and the credibility of the multilateral trading system by avoiding taking trade and investment measures that would be in conflict with World Trade Organisation and OECD rules.''

Discussions between the US and its partners about how to resolve the dispute will continue in the weeks before the next international meeting, the G7 economic summit at the end of next month.

However, the US raised the stakes by filing a separate complaint with the World Trade Organisation yesterday, alleging that some EU countries including Britain were charging excess tariffs on high-technology goods.

The clash had one favourable side-effect for the British government. Ministers were pleased that the US was forced to drop its plans for the World Trade Organisation to try to incorporate minimum social standards in trade agreements.

Along with France, the Americans had argued that the best way to prevent Third World countries from exploiting child and forced labour would be to outlaw these practices through trading rules. However, research by the OECD found no evidence that these forms of exploitation gave developing countries an unfair trade advantage.

Britain, backed by several other countries, has firmly opposed the introduction of ''social clauses''. Ministers saw the US proposal as a form of backdoor protectionism.

The day after Russia's surprise application to join the rich countries' club, many ministers present called for a pause in new memberships.

Hungary and the Czech Republic joined earlier this year, and Korea, Poland and Slovakia will become members within the next 12 months, taking the total to 30.