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Hoping for Washington Compromise

Trade is the thorniest of issues right now between the US and the EU. Despite the rhetoric, offficials on both sides of the Atlantic want to avert an all-out trade war.

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The next victims in an EU-US trade war

After months of hurt feelings, bitter sound bites and vague threats, European and United States trade officials meet in Washington to discuss past and looming disputes in its 1 billion-euro-a-day trade relationship.

Top of the agenda is steel. After President George W. Bush decided to impose 30 percent tariffs on steel imports in order to protect American steel-makers, European politicians and businessmen protested loudly. Around 2.4 billion euro worth of steel from Europe is affected by the decision, made because American markets have been flooded with inexpensive, foreign steel in recent years. High tariffs would hit Europe’s steel industry just as the region needs it for its economic recovery.

In response the European Commission announced it was placing tariffs of its own. These would affect a broad swath of American products, among them fruit and ball point pens, all produced in states politically important for Bush.

Brussels has yet to impose the 100 percent tariffs. Reports that some of the EU’s major economies, such as the Scandinavian countries and Germany have hesitated on imposing such a measure have led many in the Union to appealing for compromise rather than a flat-out trade war.

The steel dance is burdened by the presence of other outstanding issues between the two sides in the World Trade Organization.

Large EU tariffs looming

Brussels is to decide within the next month whether to place around $4 billion (4.4 billion euro) worth of duties on American exports following a decision by the World Trade Organization. The international body ended a decades-old disagreement in January when it ruled a US corporate tax law violated global trade laws. It then gave the European Union the option of applying the duties.

Billions of euro in tariffs on both sides of the Atlantic would slow trade and severely threaten the recovery of the world economy, experts have warned. Trade representatives on both sides have expressed their hesitancy in engaging in an all out trade war.

That’s why both US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy have scheduled extra meetings the day before and the day after Thursday's one-day summit.

European Union officials said before leaving they were keeping their expectations relatively low. At the very least, Europe wants a sign of goodwill from Washington that the Bush administration intends to comply with WTO rules.

The United States is reportedly willing to give that sign. The details can be worked out later.

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