- The Washington Times - Saturday, June 1, 2002

The European Union plans to hold off on retaliating this month against the United States over steel-import curbs that President Bush imposed in March, European officials said.
Europe is betting that delaying a decision to penalize American exports will give the Bush administration time to grant exemptions from the tariffs that will soften the impact on European steel-producers and head off a confrontation with the United States.
The 15-nation organization hopes to finalize by June 18 a list of $377 million worth of American products that will face heavy European import duties. If the exemptions to the tariffs are not forthcoming, Europe would impose the sanctions in late July, European officials said.
Anthony Gooch, spokesman for European Trade Commissioner Pascal Lamy, hinted at the approach in a statement issued yesterday at EU headquarters in Brussels.
"We might be willing to envisage a limited delay [in hitting back at the United States] if this would contribute towards the early and successful resolution of this matter," Mr. Gooch said.
The European decision to shift its strategy slightly is intended to defuse what has become the most explosive trans-Atlantic trade dispute in a decade. Mr. Bush imposed tariffs as high as 30 percent in response to pleas from the U.S. steel industry, much of which is in bankruptcy.
But the decision touched off protest around the world, with foreign leaders charging that Mr. Bush had betrayed his principles as a free-trader. The Bush administration has insisted its actions are consistent with international trade rules.
Europe has started a challenge to the U.S. action at the World Trade Organization, a process that will take as long as two years and could result in billions of dollars in trade sanctions being levied against the United States. Other countries, including Japan, have also filed cases at the WTO.
But it has also said WTO agreements give it the authority to impose a limited menu of sanctions beginning June 18. The United States disputes this interpretation and has urged Europe to first go through the WTO process.
"Unilateral trade retaliation will not benefit EU economic interests or the world trading system," Richard Mills, spokesman for U.S. Trade Representative Robert B. Zoellick, said in Washington.
The United States has said it will consider exemptions to the tariffs for products that do not undermine the effort to protect the U.S. steel industry from imports. Undersecretary of Commerce for International Trade Grant Aldonas traveled to Europe this week carrying that message.
Exemptions to the tariffs that benefit European producers, especially the Anglo-Dutch company Corus Group and possibly several German companies, are seen as crucial to forestalling early action against the United States, European officials said.
If they were granted, Britain and the Netherlands in particular would be more likely to argue against retaliation, potentially tipping the balance among the 15 European Union member states, the officials said. Germany and Sweden have hinted they would oppose hitting back at the United States.
But the Bush administration is under heavy pressure from the U.S. steel industry, and its allies in Congress, to grant as few exemptions as possible.

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