The EU was ready to retaliate and impose sanctions on US products if the Bush administration did not comply with World Trade Organisation (WTO) rulings on steel and foreign sales corporations, Mr Pascal Lamy, the European Commissioner for Trade has warned. Cliff Taylor, Economics Editor, reports.
Speaking in Dublin yesterday, he also reiterated the EU's commitment to the Doha trade talks and said it would consider some changes to its negotiating position and others must do likewise.
Referring to trans-Atlantic trade tensions on steel and the US tax treatment of foreign sales corporations, Mr Lamy said it was up to the US to comply with WTO rulings and end trade-distorting practices in these areas.
The US needed to lift steel tariffs, imposed earlier this year, by mid-December. The issue was being considered by US President Mr George Bush. If the US does not lift the tariffs, the EU has published a list of countermeasures totalling $2.2 billion (€1.8 billion) in tariffs on US exports.
On the foreign sales corporation issue - which the WTO has ruled amount to an illegal export subsidy by the US - the EU is seeking a decision by the US to repeal the measure and is again threatening retaliatory tariffs - amounting to more than $4 billion - if this does not happen.
The EU hopes that the US will move on these issues and does not " relish" the prospect of retaliation, Mr Lamy said, in a speech to the Institute of European Affairs. However, he added: "Is the EU ready to retaliate if the US does not move? Answer: yes."
On the Doha trade round, the EU will consider making some changes to its negotiating position in a bid to restart the negotiations, but other parties must do likewise, according to Mr Lamy.
The Commission is due to consider a position paper on the talks from Mr Lamy next week, ahead of meetings in Geneva on December 15th, which will try to re-start the talks after the failure of talks in Cancun, Mexico, in October.
The EU would consider "a few changes, not a revamp of our position", according to Mr Lamy, speaking at a later press conference.
Among the areas where the EU was considering "flexibility" was the so-called Singapore agenda - proposals for negotiations on investment, competition, trade facilitation and public procurement, which are objected to by many developing countries who argue they should not be included in the round.
Asked whether the EU might be prepared to drop these items completely from the talks, he said it was examining the possibility of removing some or all of them from the main Doha round negotiations. The Commission was also looking at the possibility of agreements in these areas not including all participants to the round on the same basis.
This would suggest that the EU sees compromise in this area as a key element of restarting the talks. Any change in the negotiating position would have to be discussed and approved by EU trade ministers.
However, Mr Lamy, in Dublin for discussions ahead of the Irish EU presidency, said that the other parties to the talks also needed to consider adjusting their positions in various areas if there was to be a chance of relaunching the round.
"We have already paid quite a lot," he said, including putting forward proposals on reforming farm supports. The negotiating position on agriculture gives enough room for flexibility in this area, he indicated, suggesting that the EU would not offer further ground on this issue.
