March 23, 2002
Europe Lists U.S. Imports It Plans to Tax
By PAUL MELLER
RUSSELS, March 22 — The European Union has drawn up a list of imports from the United States, worth about $2.1 billion annually, to penalize in retaliation for the Bush administration's recent imposition of tariffs of up to 30 percent on some imported steel.
American steel, textiles and citrus fruit are among the items that would face punitive duties, officials said.
The European Union has threatened sanctions if the United States does not agree to pay compensation for its measures to protect the struggling American steel industry. Under World Trade Organization rules, the union is permitted to impose sanctions as harsh as a 100 percent import tariff almost immediately, if the United States "safeguard" measures for steel cannot be justified.
The union is confident that the Americans will not be able to justify them, an official said, speaking on condition that he not be identified. But the official said rapid action was looking less likely.
Instead, he said, the union will rely on the more thoroughgoing but slower dispute- resolution system at the trade organization. Under the procedure, the trade group conducts hearings in Geneva and then rules on what sanctions the union can impose. The process takes about 18 months.
"There is a lot of frustration in European public opinion," said Pascal Lamy, the union's trade commissioner. The feeling, he said, is that "if we wait for the judge for 15 months, we are crazy or naïve or weak." He continued: "But it's a political decision on our side. I want to stay within the international rules."
Under the trade group's dispute procedure, which began this week, the union has until May 20 to submit a list of products to be sanctioned. The draft list is now being circulated among the union's member states for comments before it is submitted to the trade group.
[In Washington, an American trade official said the Bush administration had hoped that the European Union would allow the dispute-resolution process to go forward before drawing up plans for retaliation. American officials have already begun discussions with the Europeans and with other countries, including China, over the steel tariffs and demands for compensation.
["We're disappointed because we're still in the consultative phase at the W.T.O.," the American official said. Any retaliation now, he said, was "definitely premature."]
The European official who spoke about the way the union was proceeding said the list of products to be sanctioned was drafted with American domestic political impact in mind. Citrus fruit is on the list because of its importance in Florida, where the 2000 presidential vote was extremely close, the official said; steel made the list because of its importance in West Virginia and Pennsylvania, and textiles because of North and South Carolina, four important battleground states in midterm elections this year.
Separately, the union is putting final touches on protective measures for its own steel industry, which it will activate as soon as next week if it sees a risk of a surge in cheap steel diverted from the United States reaching its shores.
The union is expected to set up quotas based on average annual imports over the last two or three years, and then impose "safeguard" tariffs on imports above the quotas. The tariffs will be lower than those of the United States, the official said, because the point is to maintain current trade patterns and keep them open, not to disrupt them, as the American measures will.
The steel tariffs and threats of retaliation come as another trans-Atlantic trade dispute is also at a critical stage. The union has applied to the World Trade Organization for authority to impose $4 billion in trade sanctions on the United States to compensate for the unfair tax breaks the United States gives its exporters. Washington has said that the harm done to the union by the tax breaks is closer to $1 billion. The panel hearing the dispute is scheduled to reach a decision next month. |
