EU will take US to trade dispute panel

THE European Union has stepped up its campaign against the use by the US of extra territorial trade legislation in its campaign against Cuba, Iran and Libya.

Foreign ministers yesterday agreed to take the US to a disputes panel of the World Trade Organisation on October 16th over the Helms-Burton and D'Amato bills.

These bills make it possible for US courts to fine international companies trading in the US if they are also trading in Cuba, Iran, or Libya.

The decision marks a significant escalation in a dispute that is predominantly with Congress. President Clinton has already partially suspended until the new year the effects of the legislation. But the hearing of the case by the WTO is unlikely to take place before the middle of November, minimising its potential effect on the US presidential election.

The Tanaiste and Minister for Foreign Affairs, Mr Spring, said the Union was committed both to upholding the fight for democracy in Cuba and the need to penalise terrorism. But such aims had to be pursued by methods other than extra territorial action, he said.

According to diplomatic sources, the vast majority of member-states were determined to press ahead with the legal action. The French Minister, Mr Herve de Charette, spoke strongly at the meeting of their obligation to defend European companies and the need to create a world of "law-based free trade".

The British Foreign Secretary, Mr Malcolm Ritkind, rejected the suggestion that the move represented the opening of a trade war saying it was an "honest difference of opinion between close friends" which could be resolved through the adjudication of the WTO disputes procedure.

The decision on the Helms-Burton-D'Amato legislation reflects a wide perception. articulated at the meeting by the EU Trade Commissioner, Sir Leon Brittan, that a failure to act would he seen in the US as a sign of political weakness and seriously affect the Union's credibility.

Speaking later, Sir Leon said: "What has happened today has shown to the world that the EU has the capacity to defend itself and the political will to do so - and this applies not just to the Helms-Burton law."

He also told the ministers that EU-blocking legislation to prevent US fines being levied against EU firms would be ready by the end of the month. A watch list of US companies which have sought to use Helms-Burton against EU competitors is already in place; the Union may attempt to recover from such firms' European assets any fines successfully levied against EU companies in the US.

Measures are also being contemplated to restrict the visas of US executives of such firms when travelling in the EU.

The foreign ministers also set in train the preparation of the EU's negotiating mandate for the Singapore WTO ministerial meeting in December. They particularly welcomed a report from Sir Leon on Commission work on a mini-Uruguay Round on information technology, particularly the reduction of tariffs on semiconductors.