Posted on 12/05/2003 4:26:01 PM PST by MrFreedom
U.S. faces new pressure on trade
After steel victory, a united Europe pushes its advantage
LONDON A day after President George W. Bush ended U.S. tariffs on steel to avert a trade war with Europe, Pascal Lamy, the European Trade Commissioner, said Friday that he would press ahead with punitive tariffs worth some $4 billion if Washington did not end tax breaks for offshore U.S. corporations.
. His remarks reflected assessments by some European trade experts that, after the American retreat on steel, European negotiators sensed a shift in the power balance of global trade in their favor.
. Patricia Hewitt, the British trade minister, said, "We in Europe, by standing together, by using the World Trade Organization and saying, 'We're going to uphold the rules of world trade,' we've played our hand very, very effectively indeed."
. In an telephone interview from Brussels, Lamy said the outcome of the steel dispute should demonstrate that Europe "punches its weight."
. "It's a message sent within Europe," he said. "It's a basic lesson: union equals might and strength. It's why we are building Europe."
. A deadline of March 1, 2004, is looming for the United States to comply with another WTO ruling in a separate fight with the European Union over tax breaks for American offshore corporations.
. As in the steel dispute, the WTO - which functions both as a negotiating forum and as an adjudicator of high-profile trade disputes - has ruled against the United States and in favor of the European Union argument that the tax breaks benefit U.S. exporters unfairly.
. In the steel dispute, President Bush's decision to lift the tariffs headed off the threat of reprisals worth some $2.2 billion, which had been directed specifically at states that will be important in the U.S. presidential election next year. In the newest dispute, the European Union has said it will begin to impose progressive tariffs, starting on March 1, 2004, on up to $4 billion worth of American exports, beginning with a 5 percent tariff to be increased by 1 percentage point a month to a total 17 percent.
. The reprisals will target the same range of goods as those in the steel dispute, aimed specifically at states such as Florida and Michigan that are critical to the President's hopes for re-election, European officials said.
. In the telephone interview, Lamy said the European Union planned to go ahead with the reprisals if the United States authorities "have not complied, which we hope they will do" by the time the March 1 deadline expires.
. Europe, he said, would "proceed with the sort of clear, constant and predictable behavior" to persuade Washington to comply.
. In the aftermath of the steel dispute, the WTO itself made no formal statement, seeking to maintain its public position as a neutral arbiter of global trade. But, trade experts in Geneva said, the American retreat on steel was likely to be interpreted as a huge boost for the organization's credibility - and its ability to promote the liberalization of world trade - at a time when the collapse of the WTO ministerial talks in Cancún last September had left it in the doldrums.
. Not only that, by forcing a retreat by a major player, the WTO had countered the arguments of its critics that it functioned as a club of rich countries subjugating the poor, these experts said.
. Lamy said that, if unresolved, the steel dispute could have set a "bad precedent: if the big guys in the system use it this way, it's a very bad precedent for the others."
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