EU-US Summit Fails To Resolve Steel Tax Spat

by Ulrika Lomas, Tax-News.com, Brussels

06 May 2002

Speaking at a press conference held after the EU-US summit meeting, European Commission President, Romano Prodi revealed that no concrete progress has been made on resolving the steel import tax dispute, although both sides are concerned that the spat does not escalate into a full-scale trade war.

'We agreed that discussions should continue,' the EC President told reporters, adding that: 'We both intend to play it by the WTO rules.'

This decision should come as a great relief to the Bush administration, which has been fiercely critical of the EU's plans to impose punitive retaliatory tariffs on certain American goods, prior to a WTO ruling on the issue. Reports have revealed that discussions between the European Union's Trade Commissioner, Pascal Lamy, and US Trade Representative, Robert Zoellick continued on Friday, although many experts feel that the EU is unlikely to get what it wants in this instance.

On the issue of an American tax break for exporters, ruled against several times by the World Trade Organisation, and shortly to result in around $4 million in retaliatory tariffs being imposed by EU member states, the US mood was a bit more conciliatory, although opinion is divided over whether President Bush is actually 'stepping into the compliance process' as one EU official put it last week, or whether he is just playing for time.

'I will work with our Congress to fully comply with the WTO decision,' President Bush told the visiting European Union officials. According to reports, Mr Lamy countered that the EU would have to see signs of progress if it was to hold back on the imposition of sanctions, which it would be legally entitled to impose in just two months' time.

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