Trade chiefs still at odds

WASHINGTON

U.S. and EU trade chiefs remained at loggerheads March 3 over hot-button issues even as they sought to ease friction in the face of a possible war with Iraq.

European Union Trade Commissioner Pascal Lamy and U.S. Trade Representative Robert Zoellick met for more than three hours in an effort to deal with a half-dozen simmering trade issues between the two largest trading blocs.

"I think we both agree on the fact that the present geopolitical circumstances make it even more necessary that this EU-U.S. trade agenda is handled with care and with a lot of cooperation," Lamy said.

Still, he urged the United States to rewrite its tax laws following a World Trade Organization ruling that the current law amounts to an unfair export subsidy for U.S. companies valued at roughly $4 billion.

"We have a compliance problem with the U.S.," Lamy said at the joint press conference outside Zoellick's office. "We are worried that not much has happened on this."

In a Wall Street Journal opinion piece appearing March 3, Lamy called on the United States to "play by the rules" in international trade disputes, saying that European officials are running out of patience.

"Thus far Europe has held off on retaliation (unlike the U.S.A., which imposed sanctions on hormones and bananas at lightning speed)," Lamy wrote. "But without concrete steps toward compliance, that is not a situation which can be maintained for much longer."

Zoellick, for his part, agreed with Lamy's sentiment that the disputes should be handled with care but had his own beef with EU policy.

"We both recognize that this is a time of international tensions and uncertainty, and I think we both recognize the importance of the international economy given this context," Zoellick said.

The United States wants the EU to lift its four-year de facto ban on genetically modified foods, allowing U.S. firms to export to Europe.

"We are at a point where we believe that the moratorium needs to be lifted," Zoellick said, adding "we are in the process of trying to work with others around the world to try to have that happen most expeditiously, and we are eager to see what progress the commission makes as well."

Lamy said EU officials understood that some changes in U.S. law need congressional approval, and that is "precisely why the EU has been rather accommodating - some say too accommodating - in giving the U.S.A. extra time for implementation on a number of these cases."

But he said this situation "sets a poor backdrop to the negotiations on a new round of trade talks, the Doha Development Agenda," with developing countries yet to be convinced that it is in their interests.

"If they see either of the two big players disregarding common obligations, we will find it even harder to persuade them to move forward," Lamy said.

"Let's agree to make 2003 the year of WTO compliance. It's one thing for the big powers of the WTO to rule the waves. What we can't afford to do is waive the rules."

Meanwhile in Brussels, a confidential document obtained by AFX News, a financial news unit of Agence France-Presse, said the European Commission has shortened a list of products which could incur penalties in a trade dispute with the United States.