EU threatens US with £9bn worth of sanctions
Mark Tran
Friday September 13, 2002
The Guardian
The EU today stepped up the pressure in its trade dispute with
the US by publishing a list of American goods liable for
sanctions worth billions of dollars.
This initial list includes products ranging from chewing gum and
boiled sweets to parts for nuclear reactors. The goods are worth
around $14bn (£8.9bn) annually, but the final list may be
trimmed once European companies exclude products they need
or to avoid retaliation.
"It has been published today and we have given industry 60 days
to react, up to November 12," an EU trade official said. "After
that we will draw up a definitive list."
The EU won the right to impose the duties after the world trade
organisation (WTO), the global trade body, ruled that a US tax
break scheme for companies amounted to a massive illegal
subsidy for exporters. The EU has said it would prefer
Washington to change the offending law rather than resort to
sanctions that could rupture world trade.
For its part, America has said that sanctions would be like
"using a nuclear weapon" against the world trade system. A
trade war on this scale would be disastrous for the global
economy, already struggling with slow growth. The markets are
also jittery over the prospect of a war in Iraq and a dispute
between the world's largest trading partners is yet another
challenge the world economy could do without.
Last month, the WTO called on the EU and the US to resolve
the dispute amicably.
"The EU and the US are among the most important members of
this organisation and both hold a special responsibility to ensure
the continued health and soundness of the WTO and the global
trading system," said Mike Moore, the former director general of
the WTO.
Earlier this year, the US infuriated its trading partners by
imposing punitive tariffs on steel imports. The move was strongly
attacked by trade experts as a bid to win votes in the November
midterm elections where key industrial states could decide
whether Republicans retain control of Congress.
President George Bush says he wants to change the law at the
root of the dispute, but members of Congress from his own
Republican party, under heavy lobbying from US companies,
have opposed abolishing tax breaks for firms selling goods for
export.
An escalation in the current dispute over US tax breaks would
also cast a pall on current efforts to liberalise global trade,
launched at Doha, Qatar, last year. Other products on the EU's
list include raw cane sugar, unflavoured glucose, gum and jelly
confectionary, dairy products, meat, oil seeds and various
animal and vegetable oils.
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