Disputes at the WTO that result in sanctions, such as a record US$4 billion the EU was given permission to impose on the US, threaten to undermine the trading system, new WTO Director-General Supachai Panitchpakdi said.
"If the system allows more and more countries to retaliate, it seems to me we are working against the rightful goals of the system," Supachai said in an interview at his office overlooking Lake Geneva. "The goal is to work more on trade promotion and incentives rather than retaliation."
A WTO panel in August granted the EU the right to impose US$4.04 billion in duties on imports from the US in retaliation for tax breaks the US gives companies such as Boeing Co, Caterpillar Inc and Microsoft Corp. The trade arbiter said the tax program was an illegal export subsidy.
The US has yet to amend its laws to comply with the WTO ruling.
"Even when some countries do win cases, it's not always true they can really effect the needed changes," Supachai said.
Widening US-EU disputes may imperil the Doha Round of WTO talks, named after the Qatari capital where they started last November. The aim of the talks, due to be wrapped up by 2005, is to open more markets such as cars, banking and food, worth an estimated US$700 billion in new business, if global tariffs and subsidies are slashed.
Lack of progress in dismantling barriers to imports of farm products may encourage some developing countries, which comprise two-thirds of the WTO's 145 members, to balk at opening their financial, energy, telecommunications and other markets.
The volume of global trade contracted last year for the first time since 1982. Trade will increase 1 percent this year, the WTO forecast last month, after shrinking 1.5 percent in 2001.
Disputes "can hurt trade per se, and that is a problem, even for powerful countries," Supachai said.
Supachai, who took office in September, is the first WTO head to come from a developing country. He served as Thailand's deputy prime minister from 1997 to 2001 and spent 12 years at the Bank of Thailand.
The US opposed Supachai's appointment, favoring Mike Moore, a former prime minister of New Zealand. The discord led to a compromise split of the WTO chief's normal six-year term between the two.
Moore began his stint in September 1999. Three months later, he presided at a WTO meeting of trade ministers in Seattle where streets nearby were filled with tear gas as anti-globalization protesters clashed with riot police.
Supachai's term lasts until September 2005. He has inherited a list of unresolved trade clashes between the US and EU on issues ranging from farm and export subsidies to European government loans for the new Airbus A380 "super-jumbo" passenger jet.
In recent weeks, the US has threatened to use the WTO's dispute system, a last resort for enforcing access to other nations' markets, to challenge EU plans to tax Internet downloads as well as state aid for Airbus.
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