TRADE-LATAM: Nicaraguan Policy Prompts 3-Nation Dispute at WTO

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Apr 7 2000 (IPS) - Nicaragua wielded national security reasons Friday before the World Trade Organisation (WTO) in defending the tariffs it imposed on goods and services imported from Colombia and Honduras and the cancellation of fishing permits for boats originating from those two countries.

Arguments of this political stripe had not been made before the multilateral trade body’s Dispute Settlement system since the end of the Cold War.

The only close precedent was in 1985, and that case also involved Nicaragua, then governed by the leftist Sandinistas who were engaged in a full-blown conflict with the United States, led at the time by president Ronald Reagan.

In justifying its trade embargo against Nicaragua, Washington invoked Article 21 of the General Agreement on Tariffs and Trade (GATT), which establishes exceptions for protecting national security interests.

Latin American diplomats in Geneva, who requested anonymity, expressed concern that new regional disputes will revive militarism and damage the region’s still fragile democracies.

Until now, observed one ambassador, this danger was only present in the anti-drug trafficking strategies that include the active involvement of Latin America’s armed forces.

The Nicaraguan delegate before the WTO, Mauricio Díaz Dávila, maintained that the tariff measures to which Colombia and Honduras object are essential for Nicaraguan security and are clearly supported by Article 21 of the WTO’s dispute settlement norms.

Colombia asked the WTO to set up a special panel to study the compatibility of Nicaragua’s tariff measures with the regulations on preferential trade status, which extends equal trade benefits to all WTO member nations.

Colombian trade representative Andrés Valencia said his government had requested the panel because “Nicaragua is applying, through this measure, a discriminatory policy” against his country.

Regarding the Nicaraguan delegate’s argument about “essential security interests,” Valencia told IPS that “it is not our interest to mount a political debate,” adding that the WTO is not the appropriate forum to settle political differences.

The origin of the international trade lawsuit is related to a dispute over territorial waters in the Caribbean Sea.

Nicaragua lays claim to the San Andrés and Providencia islands, and Roncador, Quitasueños and Cerrana keys, which it lost to Colombia, Nicaragua says, in a 1928 treaty it was forced to sign because it was occupied by the US Marines at the time.

In his presentation before the WTO, Díaz Dávila said another accord, the Ramírez-López treaty signed by Honduras and Colombia in 1986 and “surprisingly” ratified Nov 30, 1999, is an attempt to strip Nicaragua of more than 130,000 square km of its territorial waters in the Caribbean.

This area is particularly rich in fish, lobster and shrimp, and holds great potential for hydrocarbon extraction.

Dávila said the treaty violates Nicaragua’s political sovereignty and independence and generates serious international tensions, “which were manifest in the immediate movement of Honduran troops and military equipment” to the shared border.

Díaz stated before the WTO that “if Colombia and Honduras intend to establish a naval presence in the region, it could lead to regrettable incidents of unpredictable scope, capable of damaging regional peace and stability.”

The gravity of the conflict, said the Managua delegate, has been recognised in the hemispheric arena in a ruling by the Permanent Council of the Organisation of American States (OAS), which designated a special envoy to assess the situation and formulate recommendations.

With these precedents, and “in order to safeguard its security,” Nicaragua decided last Dec 13 to establish an additional tariff of 35 percent on any imported, manufactured or assembled good or service of Colombian or Honduran origin.

Another measure, announced days later, revoked all fishing permits granted by the Nicaraguan government for boats flying the Colombian or Honduran flag.

These measures, Díaz insisted, are not for commercial ends nor are they intended to protect Nicaraguan industry, but are meant to safeguard “the essential interests of our national security.”

The Honduran government, through its representative to the WTO, Dacio Castillo, denied that there had been movement of its military troops to the Nicaraguan border.

The creation of a special panel, according to WTO norms, occurs automatically once the accuser makes a second petition to the Dispute Settlement system. Its next meeting is scheduled for May 18.