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Monday, May 17, 1999 Published at 15:08 GMT 16:08 UK

Business: The Economy

Trade watchdog in trouble

Trade talks: Sergio Marchi, Kaoru Yosano, Charlene Barshefsky and Leon Brittan

As trade wars rage over beef, bananas and steel, the BBC's Rodney Smith asks wether the World Trade Organisation is up to the job it is meant to do.

World trade wars
Trade tensions are increasing.

European Union Trade Commissioner Sir Leon Brittan tells the Japanese he is worried by protectionist sounds "on the hill" - a reference to hard line US senators with worried rustbelt constituents or big business pushing them in the back.

[ image: Rodney Smith]
Rodney Smith
He was talking mainly about steel. Japanese steel exports to the US have slowed from the hectic pace at the start of the year, when they were running at double the pace of a year earlier.

But they are still significant enough to catch the eyes of the hard-eyed senators who are also eager to have a go at Russia, Korea and other steel exporters they believe are threatening the US steel industry.

And still Japan's trade surplus with the United States grows like Topsy, with rarely a hint that Tokyo really believes it should do something to curb it.

Tokyo may feel differently when US economic expansion slows, as it will inevitably do one day. We've seen it before. It will happen again.

Ironically, given US support for the WTO concept, Congress's hard liners could become the single biggest threat to the successful working of the World Trade Organisation.

Japan is not the only target in Congress. Europe has lost the banana war and the beef hormone war to the United States on paper. Here, US beef exporters want to bypass European regulators and appeal to European consumers direct.

Chandler Keyes of the National Cattlemen's Beef Association articulated this clearly when he told the BBC - put hormone treated beef on the shelf and let labelling and the consumer decide.

The WTO has made a ruling the EU is not too anxious to sanction; this at a time when the powers that be can't decide on the new boss of the WTO.

Not only that, China is backing away from its previous high pressure efforts to squeeze into the WTO in time for the millennium.

These two factors alone weaken hugely the attempts at the latest meeting of trade ministers from the EU, US, Japan and Canada, to outline a structure for the proposed Millennium Round of trade liberation talks pencilled in for Seattle at the end of the year.

One of the aims lauded by EU Commission Deputy President Sir Leon Brittan: to make the WTO more transparent.

Not good. There is a sense developing that the WTO is in one respect too transparent already. It does not have the teeth nor the support necessary to do the job.

It may even be losing its appeal as the guardian of modern commercial expansion.

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