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Old 11-05-2003, 06:12 AM   #1
Dreamer128
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Join Date: March 21, 2001
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The European Union says its patience is running out with the United States over two long-running trade disputes involving steel and company tax breaks. After two days of talks in Washington, the EU trade commissioner Pascal Lamy warned that Europe would not hesitate to retaliate against more than six billion dollars of US exports if the US did not comply with World Trade Organisation rulings. "For those who remain interested in the simpler question which is whether Europe will or will not retaliate: the answer is yes if the US does not move to comply with these clearly recognised deadlines," Mr Lamy said.

At the centre of the dispute are steep US tariffs on foreign steel and tax breaks the US government has been handing out to large exporters such as Boeing. The WTO has ruled that both violate international trade rules. The EU has drawn up a hit list of US products including fruit and textiles, saying sanctions against these products could be imposed from mid-December.

[Source: Euronews.net]
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Old 11-05-2003, 11:18 AM   #2
GForce
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My apologies to the EU. Our country IMO is currently slow to join up with the World as a community. We still have our "every man for himself" mentality. Yet eventually we will gradually let down our guard, learn to get along, and be a real neighbor in the global community. My vision is for a World Council, no borders, a common monetary system, global health care & schooling, vocational training, etc.
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Old 11-05-2003, 11:30 AM   #3
Pikachu_PM
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The American steel industry...and the constuction industry as a whole, in fact, are infested with organized crime. It will be a cold day in hell before we (rightly) get rid of the tariff on imported steel.

Its kind of scary actually...the Federal and State governments...as well as a large perccentage of the American population...are well aware the mafia infestation, and yet...nothing is being done about it. And my parents wonder why I've lost my youthful idealism.

[ 11-05-2003, 11:31 AM: Message edited by: Pikachu_PM ]
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Old 11-05-2003, 11:31 AM   #4
Skunk
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A bit more detail:

EU slaps $200m tariff on US imports
The EU has said US imports are to face duties of $200m (£120m) from March 2004.
The European Commission decided to impose the duties in retaliation against US tax breaks for exporters, which have been criticised by the World Trade Organisation.

Initially, the tariffs will be applied at a rate of 5% on up to $4bn of goods.

Trade Commissioner Pascal Lamy said: "The Commission hopes to pass a very clear message to the United States that their continued failure to implement three years after the expiry of the original WTO deadline is unacceptable."

The World Trade Organisation (WTO) gave the EU the right to impose 100% tariffs on more than $4bn of US exports after ruling that the US tax breaks were illegal.

During a visit to Washington on Tuesday, Mr Lamy urged the US Congress to repeal the measure, known as the Foreign Sales Corporation scheme, to avoid sanctions.

The Commission also warned that the penalty would rise from the introductory rate by one percentage point a month for a year - by which time it hopes Washington will have repealed the measures.

Arancha Gonzalez, spokeswoman for the EU Trade Commissioner added: "The faster the US acts, the less the measures will bite.

"This should focus the minds of US legislators."

She added the union had adopted "measured but responsible" approach which would give the US a "last chance to comply".

Sanctions damage US producers by making it difficult for them to sell their goods in Europe.

However, they can also backfire by pushing up prices in Europe or disrupting production if other suppliers cannot be found.

Steel row

Meanwhile, the EU has also warned it is considering sanctions on another $2.2bn of US goods in a separate dispute over steel imports.

The dispute arose after President Bush imposed tariffs of up to 30% in March 2002 in an effort to protect US steel producers from foreign competition.

The EU has vowed to impose punitive tariffs on the US industry in December if the WTO rules that the US steel tariffs breach international trade rules.

A decision in the case is expected on Monday.

The EU has already drawn up a hit list of US imports worth about $2.2bn a year which will targeted with retaliatory sanctions.

The list, which includes Harley Davidson motorcycles, citrus fruit, and textile products, is said to have been calculated so as to hit hardest regions which support President Bush's Republican party.
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Old 11-05-2003, 12:08 PM   #5
Timber Loftis
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Well, if you aren't familiar with my take(s) on the WTO, you needn't look more than a few pages into this forum to find lots about it.

However, as to the WTO Dispute Settlement Body process, it can be abused for a period of time. Since the DSB says "this law violates the WTO/GATT, so go fix it," you have ample room for abuse. Typically, the nation's legislature passes the law again in a new form, trying to accomplish the same protective goals in a way that doesn't offend the WTO/GATT.

For instance, the EU redefined "banana" four, yes FOUR, times in its efforts to keep out Central and South American banana imports. As well, the EU's hormone beef ban was rewritten a few times as well. So, the US going back to the board a time or three to rewrite these offensive measures is normal.

And, since each delay takes one legislative session followed by a new round of DSB proceedings, each step of this delay can take a year. That's a 3-4 year window, on average, for the protective measures to stay in place, even if they are finally struck down. In the steel industry instance, this provides enough time (possibly) for the industry to adjust and for business to turn around in that industry. So, nations will continue to use protective measures as "life support" in such instances, knowing good and well they won't last and offend the WTO/GATT.

Let me rail on the Boeing tax breaks for a bit. The EU directly subsidizes Airbus and other air carriers. In fact, when United was vying for the European air travel business, and had a market advantage, the UK reacted by directly subsidizing European airliners (Airbus, IIRC). The relatively small money injection from the UK was enough for Airbus to outprice United, which finally fled the market completely.

So, to complain about Boeing tax cuts is disingenuous at best. A tax break and a subsidy are the same thing. Why the WTO is okay with one and not the other is beyond me -- but likely the result of shortsighted treaty negotiations.

Anyway, the nations on both sides of the table (US/EU) are getting fed up with things and starting to just walk away from it altogether. Remember, with the WTO "Fine, my law is protectionist, apply some penalties" is an acceptable final resolution. In the bananas instance, the EU wouldn't give up on it, so the US was allowed to place "retaliatory" tarriffs on all manner of things from Ducati motorcycles to Teletubbies to Roblechon cheese.

This attitude was recently picked up and mocked outright by The Economist.



[edit] Skunk posted while I was busy typing. Good post, Skunk, thanks for the update.

Willingness to pursue a DSB-granted remedy is a factor in and of itself in these matters. Mexico won the Dolpin-safe Tuna case against the US, but never enforced it with retaliatory tarriffs. (Thank goodness, IMO, as I think this is another fine example of externalities the WTO fails to address, and should address -- I'm glad Dolphins didn't pay the price of free trade.)

On steel specifically, there wouldn't be nearly as much of a problem if the WTO had an anti-dumping provision.

[ 11-05-2003, 12:14 PM: Message edited by: Timber Loftis ]
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