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Australia-Kyoto Delivered-To: [EMAIL PROTECTED] >Washington Post / Fear of punitive sanctions after U.S. loses trade case to Europe / Paul Blustein >Fear of punitive sanctions after U.S. loses trade case to Europe >Paul Blustein > >The United States lost an international trade case to the European Union last week that could result in billions of dollars of punitive duties on U.S. exports to Europe, according to industry and official sources. Such sanctions, if imposed, would far exceed any that have been allowed in previous cases decided by the World Trade Organization, which has handed its confidential decision to the U.S. and EU governments. The decision involves a $4 billion tax break for U.S. exporters that a WTO panel found to be an export subsidy that violates international trade rules. Because of the amounts of money at stake, the ruling threatens seriously to inflame transatlantic tensions and could set back efforts to launch a new round of negotiations to lower trade barriers worldwide. U.S. Trade Representative Robert B. Zoellick exhorted European officials last month to settle the dispute, warning that "it would be like using a nuclear weapon" on the global trading system if the EU were to win the case and fully exercise its right to impose sanctions. A U.S. appeal of the decision is virtually certain and would take months. But if that ruling goes in the EU's favor, Washington would face a painful prospect: If the United States failed to abandon or substantially alter its export tax system, the EU would be entitled to $4 billion in "compensation." That could involve duties of 100 percent and possibly more on selected U.S. products, enough to price the American products out of the Euro pean market. It is impossible to say which U.S. products might be subject to European sanctions, because WTO rules give the winner of a case considerable leeway in deciding how to take its compensation. Many of the companies that would be vulnerable would presumably be among the hundreds of U.S. multinationals, such as General Electric, Boeing, Caterpillar and Microsoft that benefit from the tax break in dispute. The duties would hurt European importers, too, which is why companies on both sides of the Atlantic have been urging a negotiated settlement. Zoellick and his EU counterpart, Pascal Lamy, have expressed determination to keep the issue from damaging broader relations, but both are under severe pressure to stick to their guns. Congress rewrote the export tax law last year when a previous version was ruled illegal by a WTO panel, and lawmakers are loath to change the current law. On the European side, many policymakers feel strongly that the United States shouldn't be allowed to wriggle out of WTO rulings. Moreover, the ruling comes at a time when ties between Washington and Brussels are under strain because of disagreements over environmental and defense issues and the recent opposition by EU antitrust authorities to a proposed $45 billion merger of GE and Honeywell International Inc. "This is a very dangerous case because of the size of any retaliation that might follow a U.S. loss," said Willard Berry, president of the European-American Business Council. "It's clear that both EU and U.S. companies would be terribly hurt." U.S. exports to the EU totaled $152bn last year. Although $4bn might seem small by comparison, it would dwarf the $191m in sanctions that Washington imposed on European products in a recently settled dispute over bananas and the $117m in sanctions that remain on European products in another EU-U.S. dispute over hormone-treated beef. In another development that does not augur well for transatlantic trade, Zoellick formally asked the U.S. International Trade Commission for a broad investigation into whether increased imports are causing serious damage to the U.S. steel industry. The independent commission could issue a finding that would lead to stiff duties on steel imports. The Guardian Weekly 28-6-2001, page 32 > ****** from: [EMAIL PROTECTED] subject: Herald: Europe presses Aust Minister Hill on Kyoto [SMH Home | Text-only index] Europe presses Hill to move on Kyoto Date: 07/07/2001 By Andrew Clennell and Joseph Kerr Europe asked Australia yesterday to dump what it described as its "wait-and-see" approach on international greenhouse gas talks. But three senior European delegates failed to persuade Australia's Environment Minister, Senator Hill, that Australia should ratify the Kyoto protocol on climate change without the US. The delegation, led by the European Union Environment Commissioner, Ms Margot Wallstrom, Belgian Energy Minister, Mr Olivier Deleuze, and Swedish Secretary for International Affairs, Mr Lars Danielsson, received what it found to be a more attractive reception from the Federal Opposition in Sydney. Labor's foreign affairs spokesman, Mr Laurie Brereton, said the Opposition believed Australia should be prepared to stay in Kyoto negotiations with a view to the protocol coming into force by the target date of 2002. Ms Wallstrom said Mr Brereton had led her to believe that Labor would be prepared to ratify without the US. She said Labor came out clearly in favour of the Kyoto protocol and for ratification. The Europeans' visit to Australia followed the announcement by US President George Bush that he did not believe in pursuing Kyoto - which sets targets for reducing greenhouse gas emissions by 2010 - and he wanted another greenhouse agreement that would not harm the US economy. The Federal Government has said if the US does not agree to Kyoto, the deal is dead. All countries involved in the protocol will take part in the next crucial meeting on Kyoto rules in Bonn, Germany, starting on July 16. Ms Wallstrom said Europe and the Australian Government had different views on how to persuade the US to return to the Kyoto process. "We are not so [keen] on the wait-and-see approach," she said. "We gave our best arguments on how we should use the Bonn meeting to reach an agreement and put some pressure on the US." Ms Wallstrom said the delegation - which will also visit Japan - was as much about maintaining public pressure on the two governments as trying to change their minds. "I think it's important this stays in the media, [that] we use the political momentum for moving this issue forward," she said. It was also an attempt to show Australia and Japan that this was not purely an environmental issue - that it had to do with international relations, she said. "We expect these countries also to show political leadership," Ms Wallstrom said. Senator Hill said yesterday the Government would settle its negotiating position for Bonn on Monday but it felt to settle rules without the US in Bonn would not progress getting an international agreement. He said the US wanted to consider a new policy and had asked for time to do that. "Where we differ a bit from the European position ... is they think by settling a final position in Bonn, which will enable countries to ratify, that will put pressure on the United States," he said. "We think by doing that will be to close the gate on the United States." [SMH Home | Text-only index] " JC ______________________________________________________________________ To unsubscribe, write to [EMAIL PROTECTED]
