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Mon, Nov 17, 2003 - Page 12 News List

Cross-Atlantic war over steel could derail WTO talks

AFP , GENEVA

The countdown to a WTO deadline next month to revive global trade talks could become a ticking time bomb as the date may coincide with a threat by the EU to hit the US with billions of dollars in sanctions in a bitter row over steel tariffs.

Three months after negotiations on liberalizing trade collapsed in Mexico amid deep divisions between rich and poor nations, members of the WTO are due to regroup at its Geneva headquarters on Dec. 15 to try to breathe life into the so-called Doha Development Agenda (DDA).

The atmosphere is already expected to be tense and could worsen if Washington decides to ignore a recent WTO ruling that some US tariffs on steel imports violate international rules and must be amended.

That stance would open the way for the EU and seven other countries to retaliate.

"People recognize we do not need a transatlantic trade war as we are in the middle of resurrecting the DDA," said Canada's WTO ambassador, Sergio Marchi.

"There is never a good time for a war, let alone one in the current circumstances," he said.

"You don't want to run the risk of having the tones of a dispute creep into the negotiating agenda. The impact ... would not be helpful," he said.

Last Monday, the WTO's highest tribunal declared that temporary US tariffs of up to 30 percent on certain steel imports -- seen by Washington as safeguard measures to protect its struggling domestic steel industry -- were illegal.

The decision is final and must be adopted by member states within 30 days.

US President George W. Bush, under pressure from steelmakers at home before next year's presidential elections to keep the safeguards, said Thursday he would decide whether to lift the tariffs "within a reasonable period of time."

But EU Trade Commissioner Pascal Lamy has warned that failure to comply with the ruling would mean "retaliation is a racing certainty in mid-December."

And the 15-nation bloc has indicated it is ready to impose sanctions of up to US$2.2 billion by introducing duties on certain US imports.

"It is not a good omen, it does not help. It will probably hinder the process," said Alfredo Chiaradia, Argentina's ambassador to the WTO, when asked about the impact of the quarrel on attempts to relaunch the Doha round, which is due to conclude on Jan 1, 2005.

Conversely, if Washington does concede defeat in the dispute it may help to re-ignite the discussions, thus boosting the WTO's reputation as a global trade negotiator and arbitrator, experts said.

Joining the EU in the case against the US were Brazil, China, Japan, New Zealand, Norway, South Korea and Swtizerland.

The EU rejected suggestions the steel dispute would hurt WTO trade talks, which collapsed in Cancun, Mexico, when bickering over cross-border investment and competition added to a more fundamental row about richer states' farm subsidies.

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