Trade: MS and Boeing get ready to rock with Rocky

Microsoft and Boeing will figure prominently when the next phase of the US-EU trade battle kicks off on their home turf later this month. The World Trade Organisation Ministerial meeting takes place in Seattle from 29 November to 3 December. The US has already filed an appeal against a WTO ruling that declared that export subsidies in the form of tax breaks for US companies' operations outside the US were illegal under WTO rules (see story). Charlene Barshefsky, the US trade representative, claimed that the WTO trade panel had erred legally on substantive and procedural issues. The ruling was made in repsonse to a complaint by the EU. The appeal is expected to take until the end of January. If upheld, the ruling will require the US government to enact legislation to stop the tax breaks. Major beneficiaries of the existing tax regime include Boeing, Microsoft and General Motors. The cost to Microsoft if the US loses the appeal, which looks likely, may well be in excess of $1 billion/year. The WTO Seattle meeting looks like being not just a media circus but a protestors' open season as well. Protestors - mostly labour, environmental and consumer activists - are organising protests against corporate globalisation. The first day of the meeting has been declared a "global day of action, resistance, and carnival against the global capitalist system" (and dubbed "n30" for November 30th). Volunteers are being recruited and trained for greeting delegates and journalists, providing concierge services, operating cybercafés, and the like. Of course, Microsoft is helping as much as it can by encouraging its staff to volunteer and to put the Microsoft view to those attending. Already Rocky Ruggiero, the director general of the WTO, has been the victim of a lemon pie topped with whipped cream and thrown in London by a British imitator of Noel Godin, the Belgian entarteur who scored a direct hit on Gates. Ruggiero boasts of having rewritten the rules of the global economy so that "free trade" takes precedence over working conditions, wages and environmental protection. The most outrageous action so far by the Seattle Host Organisation was an attempt to restrict schmoozing with the top trade officials attending by selling access to them. "Emerald" level donors would, for a minimum of $250,000, be allowed to bring five guests to the opening and closing receptions and a dinner, as well as four guests to a business conference. Stingy "bronze" donors at the $5,000 level would only get to push a brochure and have a mention on the SHO Web site. Naturally, the co-chairs, Microsoft and Boeing, are emerald members. After some seriously adverse reaction to the SHO fundraising letter announcing this, US Trade Representative officials told the SHO to stop the attempt to restrict access, and to clear the texts of future letters with them before they were sent out. The prospect of an escalation of a US-EU trade war appears to be growing. The skirmishes so far have included the EU's ban on four antibiotics that are fed to animals; retaliatory US tariffs on EU produce, and the notorious banana wars. The WTO enforces trade rules such as the General Agreement on Tariffs and Trade (GATT); Trade Related Intellectual Property Measures (TRIPS); and the General Agreement on Trade in Services (GATS). The Uruguay Round expanded GATT rules to cover non-tariff barriers to trade, such as product standards. The WTO rules allow challenges of national laws and regulations, although the dispute settlement process is quaintly managed by three trade bureaucrats who may have vested interests and little understanding of domestic laws and government responsibilities. EU strategy for the Seattle talks is far from homogenised, with Germany wanting a strict stance on labour standards and France wanting a "cultural exception" to allow it to subsidise its film, music and TV industries from the forces of the free market. The EU and Japan have accused the US of trying to skew the agenda to increase the prominence of issues that favour US trade. The Finns, who of course have the presidency, will have a tough time trying to persuade European "partners" to agree to a common stance. The WTO meeting could also see an attempt to resuscitate the draft Multilateral Agreement on Investment (MAI) that was defeated a year ago at the OECD. Ironically, in April the home-team Seattle City Council unanimously opposed the MAI, which it saw as being against local initiatives, fair labour practices and the environment. Microsoft is believed to be pro-MAI. The choice of Seattle as the venue was made, according to strategists TransAtlantic Futures, because Microsoft and Boeing offered to cover the cost of the meeting as co-hosts. The previous two WTO ministerial meetings had been funded by the host nations. Although both Boeing and Microsoft are concerned about losing their export tax subsidies, both have additional concerns. Boeing doesn't like losing orders to Airbus and is believed to be considering taking action against the EU. Microsoft's hormonal beef is to get piracy on the WTO agenda and to try to get trade sanctions against any country that does not toe the Microsoft line on piracy. Perhaps we'll see some more of those agreements whereby Microsoft "regularises" the pirated software of a government in exchange for some degree of anti-piracy enforcement. ®