Editorial comment: Transatlantic trade tensions
news.ft.com
Published: January 15 2002 19:27 | Last Updated: January 15 2002 19:31
This week's landmark World Trade Organisation ruling against a US corporate tax break has handed the European Union an awesome weapon: the right to impose swingeing sanctions on US exports if Washington does not comply. However, the weapon would inflict such devastating damage on US-EU relations, businesses and the global trade system that surely no sane person would consider using it.
Nonetheless, the unthinkable could still happen. The greatest risk is that brinkmanship will cause one side or the other to overstep the mark, triggering a spiral of tit-for-tat retaliation. Fortunately, Robert Zoellick, US trade representative, and Pascal Lamy, EU trade commissioner, recognise the danger and appear determined to manage the dispute sensibly.
If they are to succeed, clear rules of engagement are needed. First, further trade provocation must be avoided. In the current combustible atmosphere, for the US to slap threatened curbs on steel imports would be the political equivalent of arson. It would destroy hopes of settling the tax dispute and invite EU reprisals
Each side also needs to recognise that genuine political constraints limit the other's room for manoeuvre. Ideally, the US should comply with the WTO ruling by changing its law. However, the chances of the Bush administration persuading a reluctant Congress to do so in the foreseeable future look small. Trying to force it to act could simply fuel demands for US withdrawal from the WTO.
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so the author thinks the u.s. should abandon any defense of our steel industry and we should change our tax law to conform with the ideas of the wto. sounds like we come out on the losing end. if the president had any courage he would slap on some steel tarrifs and then tell the eu if you want to play hardball on the tax issue in retaliation, you can start checking the mail for our withdrawal papers. |
