TRADE: Negotiators Dig in Heels as Steel Talks Begin

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Mar 19 2002 (IPS) - Trade negotiators from the United States initiated talks with representatives of the European Union (EU), Brazil and other member countries of the World Trade Organisation (WTO) that are condemning the tariffs Washington recently slapped on its steel imports.

The initial contacts ended without favourable results, which implies the possibility of a protracted conflict, said trade negotiators in this Swiss city, home to the WTO.

The detonator in the conflict was the hike in tariffs and imposition of quotas announced Mar 5 by U.S. President George W. Bush on imports of certain steel products from at least eight trade partners.

The customs rights Bush announced, which include tariffs varying from eight to 30 percent and enter into force Wednesday, are intended to shore up the flailing U.S. steel industry.

Among those affected by the decision are the EU, Australia, Brazil, China, Japan, New Zealand, Norway and South Korea.

The consultations begun Tuesday in Geneva constitute the first instance in the proceedings outlined by the WTO Dispute Settlement Body for resolving trade grievances between its member countries.

The EU, which calculates that the U.S. tariffs will cost it 2.0 billion dollars in trade annually, turned to the WTO tribunal to intervene in the matter.

The WTO’s procedural norms call for a 60-day period from the presentation of the complaint for the parties to reach an understanding on the dispute through bilateral consultations.

If those attempts fail, the complainant may request the creation of a special WTO panel to study the case and issue a ruling.

This first formal meeting included U.S. assistant trade representative for industry, Florizell Liser, and the EU director for dispute resolution and trade barriers, Ignacio García Bercero.

The U.S. negotiator told the Swiss news agency ATS that her country would study closely the compensation requests presented by the EU, but she stressed that Washington’s position on the matter remains unchanged.

Diplomatic sources reckon that the conversations have run into a dead-end because none of the parties in the dispute is willing to make compromises.

The United States has said the tariffs it imposed on steel are in keeping with the rules established by the WTO for adopting safeguard measures when there is a considerable increase in imports of a certain commodity.

The Europeans maintain that the difficulties confronting the U.S. steel industry are not related to steel imports, which have decreased 33 percent since 1998, but rather to the inefficiency of the companies in that sector.

The U.S. steel industry survives thanks to the support of some 200 anti-dumping measures (which fight disloyal pricing competition), subsidies and safeguards established by the government, according to the EU.

Negotiators from Brazil, another country that will likely be hit hard by the U.S. tariffs, also engaged in consultations Tuesday with Washington’s representatives.

Japan, which held informal talks with the United States last week, is waiting for the new tariffs to take effect before initiating legal action within the WTO, according to reports from Tokyo.

The decision of the United States to protect its steel industry is causing concern among trade representatives in Geneva, who see the possibility that the dispute could turn into a large-scale trade conflict.

WTO director-general Mike Moore tacitly recognised that the rules of the multilateral trade system accept the implementation of safeguard measures in special cases.

But negotiators in Geneva do not hide their anxiety about the poor timing of the dispute, coming on the eve of the beginning of a new round of global trade talks for further liberalising trade, agreed in November at the WTO Ministerial Conference held in Doha, Qatar.

María Livanos Cattaui, secretary-general of the International Chamber of Commerce, stated that the U.S. decision constitutes a distortion of the rules of free trade.

But the EU heavily subsidises its farm sector, and that situation is no different than the case of U.S. steel, she said, adding that an international dispute on the matter is not advisable, because “a trade war is not good for anyone.”

Future WTO director-general, Supachai Panitchpadki, who takes the helm Sep 1, says a ruling by the WTO Dispute Settlement Body would not solve the problems of the world steel market, and urged a multilateral accord to reduce over-production.

Panitchpadki, a Thai economist and politician, also proposed creating a global fund for assuming the costs of rebuilding the steel industry in poor countries.