EU prepares sanctions against US

The EU will rapidly impose economic sanctions on the US if it receives a favourable ruling next week in a bitter trade dispute involving steel, Trade Commissioner Pascal Lamy said today.

“If the United States does not move, retaliation is a racing certainty in mid-December,” Lamy said in a speech in Washington audience following two days of discussions with the Bush administration and congressional leaders.

The EU has threatened to impose €2bn in sanctions on US imports to Europe if the United States does not remove steep tariffs on various types of foreign steel that President Bush imposed in March 2002 in an effort to give the beleaguered domestic industry breathing room to reorganise.

On another bitter trade dispute, Lamy also said that the EU would impose up to €3.5bn in sanctions starting “in the early part of next year” if the US Congress has not repealed by the end of this year a tax break for US corporations that the World Trade organisation has ruled is an illegal export subsidy.

The WTO is scheduled to rule on Monday on a appeal of a ruling last May that the US steel tariffs violate trade rules.

The EU drew up its hit list of American products with the goal of maximising the political pain for Republicans, targeting Harley Davidson motorcycles produced in Wisconsin, textile products from the south-east and citrus products from Florida.