- The Washington Times - Thursday, November 21, 2002

The United States must eliminate a number of trade barriers or it will face hearings at the World Trade Organization, the European Union said in a report released yesterday.
Trade disputes resolved at the WTO can lead to expensive trade sanctions. The United States is involved in some high-profile WTO cases brought by the EU that affect U.S. industries, the U.S. tax code and the way Congress allocates money.
The EU executive commission's annual report on trade barriers raises new concerns about security-minded legislation resulting from the September 11 terrorist attacks and corporate-responsibility bills that followed U.S. corporate accounting scandals.
On the security front, the EU is worried about air and maritime measures. Excessive invoicing requirements on importers add to costs, and the U.S. Customs Service's Container Security Initiative could disrupt traffic and transportation patterns, the EU said.
The initiative allows U.S. inspectors to screen cargo containers at foreign ports. The Netherlands, one of 15 EU member states, was the first nation in Europe to sign an agreement with the U.S. Customs Service to participate in the container initiative, and the first inspectors started working at the Port of Rotterdam in late August. The EU is worried that a phased-in approach will favor ports with inspectors over ports without them.
And with corporate responsibility, the EU singled out the Sarbanes-Oxley Act of 2002, which attempts to limit conflicts of interest by barring accountants from providing many non-audit consulting services to their audit clients. The EU has complained that the legislation would subject its firms to U.S. regulations.
The EU's executive body said the best way to address trade barriers is by deepening cooperation. "Tackling bilateral trade obstacles is essential to trans-Atlantic confidence-building," EU Trade Commissioner Pascal Lamy said in a statement.
If cooperation does not work, "the European Commission will resort to more formal dispute settlement procedures should this prove necessary," the EU added.
Along with its latest concerns, the EU report also highlighted ongoing disputes and chastised the United States for not responding quickly to WTO decisions.
"One of the most disquieting aspects of U.S. policy is that domestic pressure to adopt protectionist measures appears to be stronger than willingness to seek internationally agreed solutions. The poor U.S. record of 'prompt compliance' of WTO dispute settlement recommendations, and the actions recently taken on steel and agriculture, illustrate this," the EU said in its annual report on U.S. trade barriers.
One area where the EU wants quick resolution involves a WTO ruling against the U.S. Foreign Sales Corporations (FSC) law. The WTO found that the United States was giving export subsidies to some firms through tax breaks and said the EU could respond with $4 billion in sanctions. U.S. lawmakers are looking at the problem but so far have not offered a solution.
A pending WTO case involves U.S. tariffs of up to 30 percent on steel products that President Bush initiated in March. With agriculture, the EU, which heavily subsidizes its own farmers, is concerned with U.S. supports.
"In particular the big issues are FSC and steel," said Ben Goodrich, a trade expert at the Institute for International Economics, a Washington-based research group. The EU is likely to treat the sensitive security issues delicately and apart from the WTO, he said.
U.S. trade officials were not immediately available to comment on the EU's report.
The United States has had its own issues with EU trade policy. U.S. agricultural producers this month urged the Bush administration to seek WTO dispute resolution because of an EU moratorium on genetically modified crops. The United States has also filed WTO cases stemming from EU import restrictions on bananas and beef treated with hormones.

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