Getting down to business withthe good ol’ boy from Texas

Date: 15/03/01

By Craig Winneker

AFTER an election season lull that lasted a little longer than expected - thanks to a drawn-out quarrel over the little matter of who had won the US presidency - it's back to business for EU and US negotiators hoping to settle transatlantic tiffs.

And business is booming. From the usual roster of trade disputes to disagreements over how best to approach global environmental concerns and unease over defence and security policy, the world's two political and economic superpowers have a lot to talk about.

Progress on several fronts has been hard to come by since last summer. Trade negotiators hoping to resolve long-running battles over aircraft noise-reduction devices, banana import quotas, tax breaks to multinational corporations and restrictions on hormone-treated beef waited to find out which direction US policy would take after the November election.

Hopes that outgoing US President Bill Clinton would try to spit-shine his political legacy by brokering a last-minute deal with the EU on bananas or beef proved fleeting. In fact, little if any progress was made in the closing days of his administration, although Clinton did persuade Congress to ban the controversial Foreign Sales Corporation (FSC) tax regime, which the World Trade Organisation said was illegal.

But even that particular squabble remains, as the US merely replaced the FSC plan with another one that EU officials found just as objectionable.

Other trade disputes will keep Commissioner Pascal Lamy and his US counterpart, Robert Zoellick, racking up the frequent flier miles. (The rapidly escalating fight between Boeing and Airbus over subsidies to build the new A380 superjumbo aircraft could give their means of travel political significance.)

It may help that the two men have been friends and jogging partners since their days as G7 negotiators. Their first official meeting last week was little more than a courtesy call but afterwards Lamy announced the EU would put off launching its new banana regime until a solution was on the horizon.

While the EU trade chief was in Washington, the US Secretary of State, Colin Powell, was in Europe paying his respects to Union leaders and NATO foreign ministers. The US military brass has grown increasingly wary of EU plans to establish a rapid-reaction force.

The inauguration of George W. Bush should have come as welcome news to EU foreign policy-makers - notwithstanding his support for a 'Son of Star Wars' missile defence shield. After all, the Republican campaigned on a policy of letting Europe handle its own peace-making tasks. But in Brussels Powell echoed the concerns voiced by Clinton's defence officials last year - namely, that the new EU force should not in any way undermine NATO.

In other words: do what you want, but make sure you clear it with us first.

Also looming large on the agenda are controversial investigations of mega-mergers. The latest deal to face scrutiny from EU competition chief Mario Monti, the €48 billion take-over of Honeywell by GE, threatens to revive claims in the US of Union protectionism.

Environmental policy is another cloudy area. Climate change talks in The Hague last year broke down mainly because EU and US negotiators could not agree on how to meet emissions targets. Discussions will resume later this spring, and even though Bush says he takes the issue seriously Union governments are dubious.

Relations between the EU and Clinton were almost always warm, even if they yielded few solutions to problems. But Union leaders got off to a bad start with Bush - some of them openly lamented his White House victory.

The question now is whether the Texas good ol' boy and his high-powered foreign policy team will hold it against them.

Article forms part of a survey on EU-US relations.