New showdown puts tense transatlantic ties to test

Date: 07/03/02

By Laurence Frost

THIS week's transatlantic steel showdown follows months of mounting tension and confirms what both sides already feared: after a period of edgy restraint, the EU-US trade relationship has taken a new nose dive.

The threats and counter-threats had been growing in volume and vehemence since last June, when the US International Trade Commission (ITC) was asked to recommend new tariffs and quotas on steel imports.

Although the penalties imposed stop well short of the duties of up to 40 suggested by the ITC, they will nonetheless add to a daunting tangle of existing disputes, ending the uneasy ceasefire agreed last year to bolster transatlantic cooperation on the Doha global trade round.

Trade battles with the US have plagued the EU ever since the establishment of its forerunner, the EEC, in 1958.

But they became more serious and more frequent in the late 1990s as they spread to new sectors and policy areas such as services, environment and electronic privacy.

One of the more destructive, diplomatically if not economically, was the eight-year row over EU banana import quotas, outlawed by the World Trade Organisation (WTO) for giving preferential treatment to former European colonies in the Caribbean.

The row was finally resolved last year when the Union backed down in the face of a €218 million package of WTO-approved sanctions imposed by the US against European luxury goods.

In another simmering dispute that could come back to the boil, Europe is maintaining a ban on imports of hormone-treated US beef over health concerns, despite an adverse WTO ruling and ongoing sanctions against some of its own food exports.