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EUROPEAN REVIEW

ISSUE 6 - Page 3

Momentous fortnight for EU: Commission resigns, budget rejigged

DURING PROBABLY THE most tumultuous two weeks in the history of the European Union, the organisation found itself without a head and with many of its core procedures changed by the heads of government. As mentioned in our last issue, the Court of Auditors report for 1997 was not signed off by the European Parliament (EP), instead a 'Committee of Experts' was set up to investigate irregularities in the report. By confining the scope of their investigations the committee managed to produce their findings on 15th March and to pull no punches in their attack on aspects of the Commission: 'The responsibility of individual Commissioners, or of the Commission as a body, cannot be a vague idea, a concept which in practice proves unrealistic..... Each individual must feel accountable for the measures he or she manages. The studies carried out by the Committee have too often revealed a growing reluctance among the members of the hierarchy to acknowledge their responsibility'. President Santer and Commissioners Cresson, Wulf-Mathies, Pinheiro and Marín were personally criticised.

Out: Jacques Santer	& In: Romano Prodi?

In response and in the knowledge that the EP was likely to hold a vote of censure and call for a mass resignation, on the evening of the same day the whole Commission resigned. Reaction to the standing down was mostly favourable. The Presidents of the political groups in the EP thanked Mr, Santer for 'drawing the appropriate political conclusions from the report', the European Trade Union Confederation (ETUC) believed that 'the resignation.... was both an inevitable and necessary political act [but] must not paralyse EU activities in the field of social and employment policy'. Charged with carrying the ball forward, the European Council of member states, meeting at Berlin, to finalise a new EU budget from the year 2000, moved with commendable swiftness to nominate Romano Prodi, the former Prime Minister of Italy, as the new President of the Commission. He is expected to be considered for ratification at the EP session in April, the last before the elections. The individual commissioners would then have to be nominated by their governments and examined by the Parliament and would serve until January, the end of the old commission's term of office.

Dealing with their scheduled business, the Berlin leaders came to an agree ment on the vexed question of the future EU budget - Agenda 2000. The reforms are not as radical as many politicians wanted. Several countries fought hard to protect their share of EU money and, as all budget decisions have to be unanimous, they could have vetoed any deal going against them. EU leaders reconfirmed a budget ceiling 1.27% of Gross National Product. But in future VAT-linked contributions will be replaced by money raised as a proportion of each country's Gross National Product. Economically successful EU members will have to pay more as they can afford more. EU regional aid policy(structural funds) has been successful in places like Spain and Ireland and some of their regions will lose their priority (objective one) funding but will receive interim money as will special cases like Northern Ireland and the Scottish Highlands. The Common Agricultural Policy (CAP) which currently takes up nearly half the budget was revised largely according to the previous deal agreed by agriculture ministers (see page 5).

Bananas to beef: EU-US jobs war

ON MARCH 3 the United States imposed sanctions on a wide range of goods which it imports from EU countries with the intention of doubling their price on the U.S. market. The action could have a serious effect on employment around Europe, including the U.K., as companies which export to the U.S. find it impossible to sell their wares. This unprecedented state of affairs has come about because of one product: bananas. Various small nations, usually ex-colonies of the U.K. or France, have specialised in exporting bananas to the EU. For example, on the Caribbean islands of St. Lucia, St. Vincent and Dominica, bananas provide over half of all export earnings. The EU has recognised this dependence in its import regime which favours these countries.

However due to their mountainous terrain, they cannot compete on price with the larger, flatter growing areas in Latin America. The product in these areas has historically been controlled by 3 big U.S. companies which now have 64% of world trade. The largest of these, Chiquita, prompted the U.S. decision to pursue the case at the World Trade Organisation (WTO) to make the EU abandon this preference. The total export earnings of all the traditional providers of bananas to the EU amount to only 4% of the sales of these companies. Both the EU and the U.K. government have condemned the U.S. action. The EU Commissioner for external relations with the banana growing countries, Mr Pinheiro, said that if the USA was not prepared to accept the WTO's findings, what was the sense of having a global liberalisation system ? The US Ambassador to London, Philip Lader, was summoned by both the Foreign Office and the Department of Trade and Industry for a protest. General Secretary of the Transport and General Workers' Union, Bill Morris, said:'We don't believe that what America is doing represents free or fair trade. Our members in Scotland are facing the possibility of losing their jobs over this'.

The UK Government is issuing certificates to US customs so that if the banana dispute is settled in favour of Washington, the Treasury will settle the bill. Mr Morris has written to leading supermarket chains asking them to clearly label their bananas so that British customers can make a choice about whether to buy Caribbean or Latin American. The Caribbean reaction has been marked, Sir James Mitchell, Premier of St Vincent and the Grenadines says, 'We are talking about a war between 25,000 farmers in a property owning democracy in the Caribbean and one plantation owner and 19th Century slavery in Latin America'. Even some American opinion is against the U.S. action. In a strongly worded letter to Charlene Barshefsky, the US trade representative, citing Chiquita's 'long record of anti-union, anti-worker behaviour', the AFL-CIO, the American T.U.C., questioned the Clinton administration's support for the banana grower. The Washington Post says 'it seems to be a matter of the United States putting everything on the line for Chiquita Brands International'.

Most recently the trade war spotlight has shifted to another edible: beef. The EU ban on US hormone-treated beef, which has been ruled unlawful by the WTO, could prompt a substantial increase in the range and value of European goods under threat from US retaliatory import duties. If the beef ban is not lifted, a new range of export goods including clothes and food would have 100% duties imposed in mid-May, according to the Wall Street Journal. A provisional list of EU products worth $900million, would be reduced to a final list of $300 million (£200 million), after representations from producers. Many US farmers treat beef cattle with hormones to make them grow fatter more quickly. The US says the 11-year ban costs its meat industry at least $250m in annual exports.

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