Trade crisis with US put on hold

The mass resignation of EU commissioners has left the bridge deserted just when skilful political helmsman-ship is needed in …

The mass resignation of EU commissioners has left the bridge deserted just when skilful political helmsman-ship is needed in Brussels to avoid a serious deterioration in trade relations between the European Union and the US.

The two sides are on the brink of a trade war over banana imports and appear headed for conflicts over the EU's ban on hormone-treated beef and proposed rules for reducing aircraft noise.

Unless these disputes are settled in the next few weeks, they risk inflicting lasting damage on US-EU ties and undermining their efforts to exercise joint leadership in the run-up to a global trade liberalisation round.

In public, US and EU officials insisted yesterday the upheavals in Brussels would not distract from the search for solutions.

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But in private, some were less sanguine.

"These problems cannot be settled by regular negotiators," said one EU official.

"They require high-level political agreement, which will be much harder to find if there is paralysis in Brussels for any length of time."

Another warned that a power vacuum could allow advocates of a hard EU line towards the US to gain the upper hand, making compromises still more difficult to achieve.

"The bananas dispute, in particular, could become very tricky very fast," he said.

Some US officials drew consolation from the expectation that Sir Leon Brittan would be re-appointed as EU trade commissioner.

Although not universally popular in Washington, Sir Leon is respected as an astute deal-maker and a safe pair of hands.

But Mr Dan Tarullo, a former senior White House adviser on international economic policy, said hopes of solving the disputes would hinge on the Commission's ability to rapidly re-establish authority as an institution.

"Whatever deals can be struck will probably be less than satisfactory to all parties concerned.

"The task for the negotiators would be to make them stick by selling them to influential constituencies at home.

"If I were still a US government official, I would be sceptical about whether a weakened European Commission could do that," he said.