On 25 January, Brazil, Australia and Thailand, co-complainants in the dispute against the EU's subsidized sugar export regime filed separate appeals at the WTO contesting the 15 October panel ruling on the case. The appeals focus on the panel's decision not to rule on their claims that the EU's subsidies for sugar exports were in violation of the Agreement on Subsidies and Countervailing Measures (SCM Agreement). The panel had declined to rule on the matter because it found that its findings under the Agreement on Agriculture (AoA) rendered such a ruling unnecessary and because the parties had not sufficiently substantiated their subsidiary claims relating to the SCM Agreement (see BRIDGES Weekly, 20 October 2004).

The SCM Agreement requires prohibited subsidies to be withdrawn 'without delay.' The co-complainants want to take advantage of this provision to shorten the time frame within which the EU has to comply with the ruling. The EU itself had already appealed the panel report -- which found that the EU was subsidising sugar exports beyond the level it had formally notified to the WTO -- on 13 January 2005.

Trade observers point out that if Brazil and the other complainants win this appeal, it would put pressure on the EU to expedite its sugar reform plan which is still under consideration (see BRIDGES Weekly, 1 December 2004). This, they argue, could have implications for the adjustment mechanisms that the EU proposes to put in place for those African Caribbean and Pacific countries (ACP) whose economies are dependent on preferential access for sugar to the EU market (see BRIDGES Weekly, 26 January 2005).

ICTSD reporting; "Seeking Action, Australia, Brazil, Thailand File Counter-Appeals in WTO Sugar Dispute," WTO Reporter, 28 January 2005; "EU sugar policy under fresh pressure at WTO" Reuters, 27 January 2005.

On 31 January, Russia's Trade Minister German Gref met with US Trade Representative Robert Zoellick in Zürich to discuss a bilateral deal on Russia's WTO accession. Before joining the WTO, Russia is required to clinch bilateral deals with any Members that request them. The meeting, which lasted for eight hours, covered all areas of the accession deal. Services continue to be a sticking point, with Russia unwilling to further open up its banking and insurance sectors, a key US demand. The US has also expressed concerns over Russia's dual energy pricing policy under which domestic prices amount to approximately one-fourth of export prices. Several WTO Members have charged that these prices constitute a de facto subsidy to Russian industry, although the EU did not take a hard-line stance on the matter when signing its bilateral agreement with Russia in May 2004 (see BRIDGES Weekly, 2 June 2004). On this point, Zoellick specified that US interests on the dual energy pricing issue differed from those of the EU -- a major importer of Russian gas -- as the US was "focused on the narrower issue of energy as an input, particularly for fertilizer."

Following the meeting, Gref and Zoellick said good progress had been made overall, and indicated that they might reach an agreement later in the year. Gref added that once a deal was reached with the US, "we will have a very good window of opportunity to get things done by December," expressing his hope that Russia could join the WTO by the Hong Kong Ministerial meeting. Russia began its drawn-out WTO accession process some 11 years ago.

"Russia, US reach agreement in talks on Russia's entry in WTO," ITAR-TASS, 1 February 2005; "8 Hours Not Enough to Ultimately Agree," KOMMERSANT, 1 February 2005; "Russia's Trading Partners Set Out 'Bottom Line' on WTO Accession Terms," WTO REPORTER, 31 January 2005; "U.S. Sees Possible WTO Deal with Moscow in 2005," REUTERS, 31 January 2005.

EC ANNOUNCES BANANA TARIFFS; LATIN AMERICAN EXPORTERS DISSATISFIED

On 31 January, the European Commission (EC) notified the WTO of its proposed new tariff for banana imports. The new tariff of 230 euros per tonne for most favoured nation (MFN) suppliers -- mostly in Latin America -- will replace the current tariff quota system from 1 January 2006, while maintaining a preference for African, Caribbean and Pacific (ACP) countries. In its press release, the EC stresses that "the notification of its intentions to the WTO is an unavoidable procedural step that does not preclude constructive engagement with the exporting countries."

Under WTO rules Latin American banana exporting countries have the right to enter into negotiations with the EC if they disagree with the new tariff rate. They may also request a WTO arbitration under their previous agreement with the EC -- a development that seems likely as these countries have expressed their dissatisfaction with any tariff rate above their current preferential level of 75 euros (see Bridges Weekly, 6 October 2004).. Media reports indicate that several Latin American countries are already considering the arbitration option and signed a declaration on 26 January rejecting the EU's proposal.

On the sidelines of the WTO Doha Ministerial Conference in November 2001, WTO Members granted a waiver to the EC allowing it to give preferential market access to banana exports from ACP countries -- with the additional proviso that third parties, such as Latin and Central American banana exporting countries, would have the right to request arbitration before future EC banana tariffs replacing the quota system went into effect on 1 January 2006 (see Bridges Weekly, 15 November 2001).

The commission's press release, IP/05/118, is available at: http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/05/118&format=HTML&aged=0&language=EN&guiLanguage=en

ICTSD reporting; "Latin American Nations Reject EU Proposal For 230 Euro Banana Tariff Notified to WTO," WTO Reporter, 2 February 2005; "Latin American countries ready to bring bananas back to WTO" EU business, 1 February 2005.