Bush Faces Hostile Reception In Europe Over Protectionist Tax Policies

by Ulrika Lomas, Tax-News.com, Brussels

24 May 2002

Kicking off a four-country European tour in Germany on Wednesday, President George Bush faced a hostile reception from politicians and the German public alike.

The US President is in Europe to increase support for his government's tough stance on Iraq within the context of the 'war on terrorism', and also to try to persuade EU members to hang fire on responses to what are seen by many as 'protectionist' import tariffs on certain steel and agricultural products.

However, the people of at least one German city have already made their feelings clear on the issue. According to reports this week, around 20,000 demonstrators took to the streets of Berlin on Tuesday, chanting slogans such as 'Yankee go home', and hitting out at Bush's policy statements on Iran, Iraq and North Korea, which he has famously descibed as constituting an 'axis of evil'.

The political response to the US President's visit, although more muted, is also likely to be fairly negative, given the widespread condemnation of the Administration's tax policy and its impact on international trade.

The European Union earlier this month presented the World Trade Organisation with two extensive lists of American products to be targeted in two stages. The first, a shorter list to be hit with 100% import tariffs, will be imposed if the United States refuses to compensate the 15 nation bloc before June 18. The second group of products will become subject to additional taxes of between 8% and 30% in Europe if the WTO rules that the US action is incompatible with its trade rules.

Many in the European media believe that the President's four-nation tour may deepen the transatlantic rift rather than rebuilding bridges, as the US government clearly hopes will be the case. However, it is widely felt that although trade ties between the United States and the European Union have been strained as a result of US actions, and the President is likely to find the reception rather cool throughout his visit, the relationship between the two regions is unlikely to have been irreparably damaged.

Speaking to the Swissinfo news service earlier this week, Julian Hottinger, a senior researcher at the Institute of Federalism at the University of Fribourg explained that:

'Bush's protectionist measures are really an answer to an internal demand more than anything else. And even though the Europeans are not happy about it, I don't think the decision came as a surprise to them.'

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