The Government has joined a legal and diplomatic offensive across the European Union against Washington's imposition of sanctions on $520 million (€477 million) of EU exports to the United States in the row over the banana trade.
In Geneva, the EU called for an urgent meeting of the World Trade Organisation's (WTO) ruling general council to air its anger over what it called a blatant US violation of the body's rules. The WTO said the council would meet on Monday.
The Minister of State for International Trade, Mr Tom Kitt, contacted the US ambassador, Mr Michael Sullivan, yesterday. He said he told him the US action was "unwarranted". He stated the Government would co-operate with any measures the EU thought were necessary in the coming days. Mr Kitt said the Government's position was to await adjudication on the dispute from the WTO.
"The United States should have waited for the results of the WTO examination of the issue before imposing trade sanctions against Ireland and the rest of the EU," he said in a statement.
"The WTO results will be available in a matter of weeks and the European Union has committed itself to accepting the final decision of the WTO on the problem." Up to £3 million of annual Irish exports to the United States are under threat at present. However, officials said yesterday the Government hoped the situation would not spiral out of control.
The Irish Exporters' Association and the Small Firms' Association (SFA) yesterday warned that small Irish firms would be worst affected by the trade dispute. "Small companies operating in high-quality knitwear, clothing and hand-made Irish food and confectionery products will be hit most and may not be able to withstand these measures," said Mr Pat Delaney, the director of the SFA.
In Brussels, diplomatic activity continued. "What we are trying to do is use every legal avenue open to us in the WTO to try to get this sorted out," Mr Nigel Gardner, a spokesman for European Trade Commissioner, Sir Leon Brittan, said. However, he ruled out unilateral retaliation by the EU.
Condemnation flew thick and fast from European capitals of the US move, which raised fears of a trade war between economic giants which exchange more than $300 billion of goods each year.
Washington accuses the EU of failing to comply with a 1997 WTO ruling that found the bloc's banana import rules favoured its former colonies in the Caribbean at the expense of Latin American producers and US marketing companies.
Britain summoned the US ambassador in London for the second time in 24 hours to reprimand him for the US move.
The ambassador, Mr Philip Lader, sought to calm troubled diplomatic waters and insisted the United States would work with Britain to find an amicable solution.
The British Prime Minister, Mr Tony Blair, who discussed the row with President Clinton by telephone on Thursday, said yesterday he would make an urgent effort to resolve the threat of a trade war. France called the US action unacceptable, while Japan joined in the criticism, saying it very much regretted the US action.
The United States said it imposed the customs measure this week to "protect (its) interests" after WTO arbitrators asked for more time to decide on the amount of duties the United States could impose in the banana row.
The step means that if the United States wins WTO authorisation for sanctions in the coming weeks, it could backdate them to March 3rd.
