Brussels, 26/09/2002 (Agence Europe) - The spokesperson for Pascal Lamy announced, on Thursday, that the European Commission has invited the Member States to hold back their fire. This comes just a few days from the 30 September deadline when the Union is to decide on the fate of EUR 378 million in "immediate" sanctions pointing at the United States in the dispute over steel. Their ambassadors discussed the matter on Wednesday and the go-ahead will be given on Monday, she said.
During preparatory discussions for the General Affairs Council that is to meet the same day, the Fifteen said they were ready to follow the Commission without even discussing the conclusions that it will draw from its assessment of rebalancing measures already agreed by Washington (in the form of exemptions, compensations strictly speaking being abandoned this summer as there was no response from the American side). Pascal Lamy nonetheless explained why the Commission is not, at this stage, proposing to trigger retaliatory measures. The WTO verdict is expected for March 2003 and the Commission is convinced that the WTO will say these measures are illegal. If such is the case, Europeans will call on the United States to immediately dismantle the condemned provisions, failing which, retaliatory measures would be automatically set in progress.
In the meantime until next March, when the United States is to implement new exemption decisions, the Europeans prefer to focus their attention on what they can still do to gain exclusion of 40% of steel deliveries that are still subject to American protectionist measures. We want to support the Community industrialists in discussions to come with Washington and tackle in a more serene light the process of exemptions that must be reactivated during November, sources familiar with the dossier state. The European tactic is just as much intended to encourage the United States to withdraw its measures immediately after publication of the report by the special WTO group. The Council will recall, moreover, in its conclusions that the threat of automatic retaliation still hangs over American trade.
Worth noting that although the Commission "does not at this stage" propose applying sanctions, the "short" list ($378 mio) continues to figure with the "long" list ($606 mio) in the regulation establishing the reprisal provisions notified to Geneva, so as to reserve the right to impose punitive surtaxes.
On the other side of the Atlantic, "we are delighted to hear that the Europeans are moving away from the threat of sanctions", says the spokesperson for the Trade Representative. Then adding: "our steel safeguards comply with WTO rules and if other think otherwise, the appropriate place to settle differences is in multilateral dispute settlement procedures and not unilateral reprisals". The report that Commissioner Lamy will present to Council considers that "the seven lists already published could concern a volume of European steel production in the order of $650 million", or close to 60% of EC steel exports to the United States. "Although the new and substantial exclusions granted in August (..) will be beneficial both to European exporters and a good number of American companies that need Europe's high-quality steel, the refusal to agree to certain well justified demands remains surprising". The report essentially deduces, regarding the impact of the "re-balancing measures" taken by Washington, that: - exemptions "contribute to dampening the negative trade effects" of the American surtaxes, but over 40% of these exports" are still surtaxed; - it is thus wise to "vigorously pursue the action begun within the WTO" against these measures and encourage the United States to withdraw them; - the problem of compensations still presents a primordial systematic interest to avoid an abusive recourse to safeguard actions"; - "sufficient pressure should continue to be applied on the united States for it to still further reduce the negative trade effects of its safeguard measures, thanks to further product exclusion