- The Washington Times - Saturday, July 20, 2002

The European Union yesterday postponed its plans for quick retaliation against the United States over the tariffs President Bush imposed on imported steel last March.
Europe's top trade official said yesterday's move by the Bush administration to exclude 76,000 tons of European steel exports from the tariffs persuaded the 15-nation group to delay hitting back for now. But he cautioned that Europe will impose $366 million in tariffs on U.S. exports if more products are not exempted in the next two months.
"The U.S. have taken useful steps in this direction and have told us there is more to come, but there is much more to do," European trade commissioner Pascal Lamy said in a statement. "They know that we need to see substantial additional exclusions between now and September."
The Bush administration welcomed the decision to avoid a trade war, but said, as it has in the past, that Europe should not retaliate without a decision by the Geneva-based World Trade Organization that the U.S. tariffs violate international rules.
"We're pleased to see that the Europeans have stepped back from unilateral trade retaliation, which would not have helped Europe, the United States or the world trading system," Associate U.S. Trade Representative Josette Shiner said in a statement.
In March, under intense pressure from steel companies and the United Steelworkers of America, Mr. Bush slapped tariffs of between 8 and 30 percent on imported products. The move angered governments worldwide, but especially in Europe, which bore the brunt of the duties.
While planning for short-term retaliation, Europe has lodged a protest with the WTO. Observers on both sides of the dispute expect the United States to lose the case, which is going through the organization's 18-month arbitration process.
Earlier this week, Mr. Lamy called the exclusions granted by the United States "manifestly insufficient," suggesting that he would call for retaliation at meeting of European Union foreign ministers Monday. Instead, the additional delay highlighted the European dilemma in taking its own countermeasures and left European officials trying to explain the delay.
"There is no climb-down here," said Peter Carl, a top deputy to Mr. Lamy, in a press briefing in Brussels. "We and our industry consider we have received a strong positive signal from the U.S., and we have responded to that."
Under pressure from Europe and domestic companies that use steel, the Bush administration has granted five rounds of exemptions. It has said more exceptions will come next month, and Europe does not want to disrupt the process.
"If we pulled the trigger on retaliation, there would be no more exclusions," one European official said. "So that would be a silly thing to do."
At the same time, Mr. Lamy wants to avoid upsetting the Bush administration's quest to obtain trade-negotiating authority from Congress, a European official said. Mr. Bush wants "fast-track" authority which would allow the president to submit trade agreements for an up-or-down vote in Congress to complete a new WTO negotiating round, which Europe strongly supports.
Many Republican House members from steel-producing states voted for the fast-track bill in December because Mr. Bush had signaled he would impose the steel tariffs. Massive exemptions from the duties may lead them to oppose final passage of the fast-track bill, which is in a House-Senate conference.
Congress could sign off on the bill by September, one business lobbyist in Washington said. Then, the Bush administration could grant Europe politically sensitive exemptions without jeopardizing the legislation.

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