Posted on 16-1-2004
EU
and US threaten fresh trade war
Brussels warns of retaliation against American dumping duties.
WTO to adjudicate in new dispute
A fresh trade war was looming between Europe and America last
night after Brussels said it planned to impose multi-million
euro sanctions on the US.
The European Union, backed by seven other countries, said it
would seek authority from the World Trade Organisation to retaliate
against a controversial US trade law. The US said it would object
to any sanctions.
The latest tensions come just weeks after the two economic
superpowers reached the brink of a trade war over illegal tariffs
imposed on steel imports to protect struggling US companies.
The so-called Byrd amendment allows the US Government to impose
duties on cheap goods it says are being dumped on the US market
and share the proceeds amongUS companies.
An unprecedented 11 WTO members - Australia, Brazil, Canada,
Chile, India, Indonesia, Japan, South Korea, Mexico, Thailand
and the EU bloc - successfully challenged the rules. The WTO
confirmed exactly a year ago that the Byrd amendment was illegal.
Brussels estimates £160m worth of subsidies was distributed
to US companies last year from the extra duties imposed on European
imports.
Pascal Lamy, the European trade commissioner, said the Byrd
amendment had raised widespread concerns "as evidenced
by the large number of complainants in this case".
He added: "I hope the US will now take action to remove
this measure, thus avoiding the risk of sanctions."
The EU and its allies put no figure on the sanctions sought.
But they said it should be in line with sums handed out by Washington
to US companies.
The retaliation request will be heard by the WTO's disputes
settlement body at a special session called for 26 January.
EU and other officials have stressed that getting the go-ahead
does not mean sanctions will be immediately enforced. The sectors
affected include ball bearings, steel, seafood, pasta and candles.
The Byrd amendment enjoys strong support in the US Congress
and the threat of sanctions could spark a backlash among US
politicians as they prepare for a presidential election in November.
The EU declined to say where it would impose sanctions although
experts credited its strategy of targeting exports from key
marginal US states for its victory over the steel tariffs.
In London the Department of Trade and Industry said the UK
had not been significantly affected but backed the principle
behind the sanctions. A spokesman said: "It is at an early
stage and we hope that the US will pull back from it but if
they don't we support action against them via the EU."
The Conservatives backed the Government. "This action
by the European Union is necessary to enforce the rules of free
trade," said James Arbuthnot, the shadow trade secretary.
It is the latest in a series of international rows involving
George Bush's administration. It was accused of sharing the
blame for the collapse of crucial trade negotiations in September
for refusing to back down on its support for cotton subsidies.
The EU also has authorisation to impose sanctions in retaliation
for an illegal subsidy paid to US export companies, called the
foreign sales corporation tax.
The EU has prepared a list of American imports to be hit with
extra duties starting in March unless US lawmakers abolish legislation
that gives companies tax breaks worth $5bn (£2.7bn) a
year.
Dan Ikenson, a policy analyst at the Cato Institute, a US free-market
think-tank, said earlier this week: "This mounting record
on non-compliance calls into question the commitment of the
US to the rules-based trading system. "With the Doha round
of multilateral trade talks faltering, US delinquency on these
matters could hasten the round's collapse."
|