Reading: (From http://www.dailytimes.com.pk/default.asp?page=story_8-4-2004_pg7_51)

WTO judges back ruling against EU anti-drug plan

* EU will have to abolish or change programme governing low import tariffs to Pakistan

GENEVA/BRUSSELS: World Trade Organisation (WTO) appeals judges ruled on Wednesday that a European Union (EU) tariff programme designed to reduce the production of illegal drugs violates global free trade rules.

The European Commission said the ruling — eessentially upholding an earlier finding by a WTO panel in a case brought by India — was positive in that it allowed the EU to continue to offer developing countries preferential trading terms.

But the commission also accepted that the ruling meant it would have to make its anti-drug programme more transparent and non-discriminatory. The report, the result of an EU appeal against the earlier panel ruling handed down in December, said the anti-drug programme went against the WTO principle that all trading partners must be treated equally.

It means the EU will have to abolish or change its Special Arrangements to Combat Drug Production and Trafficking programme, which offers low import tariffs to Pakistan and 11 Latin American countries to encourage them to produce goods other than drugs.

All 12 are seen as leading producers of narcotics, including opium and coca that are sold illegally on European streets. The EU said the programme helped poorer countries focus on legal crops and thus helped their economies grow. Trade analysts said the EU would probably adjust the programme, in force since 2001, leaving open the possibility of a new case if India was not satisfied.

The commission focused on another part of the ruling, which said trade benefits to developing countries could be offered in different ways, as the EU does under its special Generalised System of Preferences (GSP) for poor states.

“Today’s decision makes it clear that we can continue to give trade preferences to developing countries according to their particular situation and needs, provided this is done in an objective, non-discriminatory and transparent manner,” Trade Commissioner Pascal Lamy said in a statement.

“This is certainly good news for many developing countries whose preferential access to the EU was being put at risk by India’s WTO challenge,” he added.

Lamy’s spokeswoman, Arancha Gonzalez, said the EU would work out how to apply the ruling. “We can have different types of GSP, we can keep the drug system, but we need to make sure the criteria are clear, transparent, non-discriminatory,” she said.

There was no immediate comment from Indian officials in Geneva or Brussels, but sources attuned to their thinking said they were likely to be generally satisfied with the outcome of the legal battle at the WTO. —Reuterss