Associated Press Worldstream | By NAOMI KOPPEL | April 7, 2004
A World Trade Organization appeals panel Wednesday upheld a ruling declaring EU trade deals aimed at countering the production of illegal narcotics to be in breach of international law.
The panel said the special low import tariffs to encourage exports of legitimate products from 12 countries go against WTO principles that say all countries should generally be treated equally.
The case was brought by India, which complained about the "Special Arrangements to Combat Drug Production and Trafficking," introduced by the 15-nation EU in 2001. The deal applies to India's rival Pakistan as well as to 11 countries in Latin America - all considered to be major producers of drug crops like coca and opium that find their way into the EU.
The original ruling, in December, said WTO allows better deals for developing countries but doesn't permit the EU or others to discriminate among those countries. The appeals panel - whose decision is final - overturned that, but ruled that measures still must apply to all countries that have the same "development, financial and trade needs."
It said the "closed list" of countries produced by Brussels breached this.
Brussels had argued that its measures reduce the supply of illegal narcotics into the European Union while at the same time aiding the development of poor nations.
But India claimed the selection process was "arbitrary" - pointing to the fact that Myanmar, Thailand and other major drug producers are excluded. It also could not understand why India itself was left out while Pakistan was included.
India said the trade measures had little to do with countering drug production and were instead aimed at providing extra aid to certain countries.
The EU denied that its choice of countries was arbitrary, insisting it was based on "an overall assessment of the gravity of the drug problem in each developing country in accordance with the importance of production or trafficking of drugs as well as the effects in these countries."
Some countries were excluded because they are not a significant source of supply to the EU or because they are covered by other EU trade arrangements, it said.
The ruling must be adopted by the 146 WTO members within a month, and then the EU will have to announce how it plans to change its policies to fall in line with WTO rules.Associated Press Worldstream:
