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Mon, May 20, 2002 - Page 21 News List

Europeans label Bush a `protectionist'

INTERNATIONAL TRADE The US president is set to arrive in Europe this week amid rows over some very contentious issues, such as agricultural subsidies and steel tariffs

REUTERS , BRUSSELS

US President George W. Bush's European tour kicks off this week under the cloud of transatlantic trade rows on steel, a subsidy-laden farm bill and allegations of protectionism against Washington.

The US portrays itself as the bastion of free trade, but partners have recently slammed it for backsliding after introducing new steel duties in March and approving a farm bill that includes billions in domestic subsidies.

Top industrialized states in the Organization for Economic Cooperation and Development were so worried about trade friction that their annual ministerial meeting explicitly urged nations last week to reject protectionism.

German Finance Minister Hans Eichel renewed the attack just days before Bush was due to fly into Germany, telling a conference he was worried the US had "fallen back into extremely protectionist behavior."

Germany and other allies are likely to press Bush over his commitment to free trade at a time when the US and the EU are trying to drive global talks that will lead to further liberalization of world commerce.

The negotiations, launched in Doha in Qatar last year, also aim to allow developing nations to benefit from global trade.

Despite the rows, trade experts say that so far a full-scale trade war is not on the horizon.

"There are threats here and there but the parties are still talking," said Raed Safadi, principal economist at the trade policy division of the OECD.

"It has not escalated and I hope it will not escalate so long as they keep talking," he said.

"The spirit of Doha is still alive," European Union Trade Commissioner Pascal Lamy said, pointedly expressing hopes that US free trade rhetoric would be translated into reality. The steel row is one of the bitterest to break out between the US and its trading partners in recent years.

The EU has threatened to slap sanctions worth about US$300 million on a range of US goods from June if Washington does not agree to compensation for the steel tariffs in the form of lower duties on other products.

To cap this, the US has approved a bill on the agricultural sector which raises government subsidies for crop and dairy production by 67 percent.

Other EU-US trade rows are simmering, including European resistance to importing genetically modified crops, dubbed "Frankenstein foods" by critics, and an EU ban on imports of beef from cattle reared using growth-promoting hormones, a practice common in the United States.

The EU has been successful in getting global trade body the WTO to rule against the US system of corporate tax breaks for exporters.

Brussels has demanded US$4 billion in compensation for the subsidies, but the United States has asked the WTO to limit potential EU retaliation to no more than US$1 billion. The world trade body is due to rule in mid-June.

US Secretary of State Colin Powell, in an interview with European journalists published on Saturday, criticized European leaders for "bashing" the US over its war on terrorism and defended against wider charges of unilateralism.

"The suggestion that somehow the United States goes its own merry way without consulting with Europe is a canard. I spend an enormous amount of time listening to my European colleagues," Powell said in Britain's Guardian newspaper.

Anthony Gooch, spokesman for Lamy, noted that the EU and the US had held a summit recently in Washington.

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