- The Washington Times - Friday, May 3, 2002

The European Union's plans for quick retaliation against American curbs on imported steel have suffered a series of setbacks in the past week as its member countries have expressed opposition to the plan.
Additionally, business leaders from both sides of the Atlantic Ocean have cautioned European officials against escalating the dispute that began March 20 when the United States slapped tariffs of up to 30 percent on imported steel.
The Trans-Atlantic Business Dialogue, a group of senior executives from Europe and the United States, yesterday advised both governments to avoid any new conflicts.
"We urge the EU and U.S. administrations to resolve existing trade disputes by negotiation, rather than retaliation," said Leonard Lauder, the American head of the group who is also chairman of the Estee Lauder Cos.
European and American leaders, meeting yesterday in Washington, struck a positive tone and did not dwell on the steel issue, the most contentious subject in trans-Atlantic relations over the past few months.
"We have agreed to work very hard on a positive agenda to further enhance the commercial ties," Spanish President Jose Maria Aznar said after a meeting with President Bush.
Most important, Mr. Bush promised to work with Congress to revamp American tax laws that help U.S. exporters. The United States last year lost a case to Europe on the issue at the World Trade Organization and could face up to $4 billion in punitive trade sanctions starting in June.
"I will work with our Congress to fully comply with the WTO decision on our tax rules for international corporations," Mr. Bush said yesterday.
European officials have hinted they will resist applying trade sanctions, provided Congress makes progress toward changing the tax law.
On the steel issue, the European Commission, the European Union's executive body, has outlined a plan to retaliate against $377 million in American exports and said it would make a decision by early June.
Europe also is bringing a WTO case against the United States over steel. The group is charging that the Bush administration abused international rules that allow up to three years of tariffs to protect an industry from a surge in imports.
That case could drag on for two years and Europe has drafted plans to impose $2.4 billion in sanctions on the United States when it is complete.
But Europe says it has the authority under WTO rules to retaliate immediately because imports of some kinds of steel into the United States have dropped.
The Bush administration has rejected this step, calling the European go-it-alone approach hypocritical.
"Such a unilateral action would not only conflict with what Europeans have said in the past and at present, but would strike me as a negative course for the trading system," U.S. Trade Representative Robert B. Zoellick told reporters last month.
Important countries have departed from the stance of the 15-nation European Union, saying an escalation of the dispute would be counterproductive.
German Economy Minister Werner Mueller said last week the European measures would "have substantial effect for the entire German economy," and Sweden has expressed reservations as well.
France and a few smaller countries are inclined to support hitting back at the United States, European officials said.
Britain's position on retaliation will be crucial, both because it is a traditional ally of the United States and because it was hit hard by the tariffs.
British officials have not shown their cards, but the Confederation of British Industry, the country's main business group, said European action would be "a dangerous step down the road to escalating this dispute."

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