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Wednesday, May 26, 1999 Published at 18:26 GMT 19:26 UK

Business: The Economy

World trade headaches grow

Conflict over trade is causing worldwide protests

The United States has accused the European Union of bad faith in the increasingly bitter row over the import of beef.

World trade wars
US Trade Representative Charlene Barshefsky said that the EU had no intention of complying with a ruling by the World Trade Organisation (WTO) that US beef treated with growth hormones must be admitted to the EU.

[ image: Charlene Barshefsky: talking tough to the EU]
Charlene Barshefsky: talking tough to the EU
"We do not have the sense that Europe has any serious intent to negotiate a solution to this issue," she said

Accusing the EU of 'perhaps 30 years' of defying international trade rules, she said the current dispute was 'exceptionally debilitating' to global trade talks.

"We cannot maintain a multilateral trading regime on the basis of selective compliance," she added.

Ms Barshefsky was speaking ahead of talks with Acting EU Trade Commissioner Leon Brittan in Paris.

The United States has asked the WTO to approve $200m in sanctions against EU agricultural products in retaliation. On Wednesday Canada, whose beef exports have also been hit by the ban, asked for $50m of sanctions of its own.

No head for WTO

Meanwhile, In Geneva the World Trade Organisation failed yet again to pick a new leader over a month after its former Director General retired.

[ image: Thailand's candidate is not quitting]
Thailand's candidate is not quitting
The organisation is deadlocked between two candidates: Thai Commerce Minister Supachai Panitchpakdi, supported by many developing countries and Japan; and former New Zealand Prime Minister Mike Moore, supported by the United States and Latin America.

After another deadlocked meeting, WTO General Council chairman Ali Mchumo expressed his despair.

"We are all very conscious that to declare the current process at an end would bring the organisation into uncharted and dangerous waters," he said.

"We cannot foresee how long we should then be without a director-general or how easy it would be to reach agreement on any candidate or even on the procedures for choosing one," he added.

Mr Supachai has denied reports that he was about to withdraw from the race.

He has accused the United States of trying to block his candidacy.

China still outside

The biggest single issue for the World Trade Organisation is the proposed membership of China, whose exports and imports are not regulated by international trade rules.

China wants to join the WTO before the next round of trade talks begins in November, but negotiations with the United States have stalled.

Charlene Barshefksy insisted that the negotiations will be completed in time, while holding out the prospect that 'prospective members' might be allowed to take part in the trade talks.

"WTO accession is good for China, good for the US, and good for the world community, provided it's on commercially meaningful terms," she said.

Bad omen for trade talks

The next round of trade liberalisation talks will be getting off to an inauspicious start.

Not only could the issue of China still be unresolved, but it looks like the world's biggest trading nation - the United States - will go into the talks without the power to conclude an agreement.

The weakened Clinton Administration looks increasingly unlikely to receive full negotiating authority from a hostile Congress. Previous trade negotiations were conducted under 'fast track' negotiations which allowed any trade deal to be approved as a whole. Without such legislation the US Congress could tie up any agreement for years.

As a result of political pressures, the United States is also proposing an ambitious agenda, broadening the trade talks to include issues like labour standards and protection of the environment. These are likely to be opposed by many developing countries, who see them as protectionism through the back door.

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