Global Policy Forum

By Patrick Lannin

The European Commission has decided which U.S. products it wants to hit with $2.0 billion of trade sanctions in a row with Washington over steel, a spokesman for the European Union's executive arm said on Friday.

President Bush's administration has infuriated the EU by setting tariffs of up to 30 percent on steel from Europe, Asia and Latin America, to help struggling U.S. steel producers.

Brussels is considering retaliation against U.S. goods and trade steps to protect its steel makers.

"The Commission has today provided member states with what it considers would be an appropriate list to be submitted to the WTO (World Trade Organization) in order to protect our rights in the future to be able to impose counter measures on the United States over steel," spokesman Anthony Gooch told reporters.

The EU, Japan and Australia have appealed to the WTO, which arbitrates trade rows, to get the U.S. steel duties overturned, although a decision on this could take a year.

The compensation demand and possible retaliation are also part of EU tactics.

Gooch stressed that such retaliation would only come into force if attempts at getting compensation in the form of lower U.S. import duties on other goods failed.

Gooch declined to comment on the contents of the list but EU sources say textiles, steel and citrus fruits would be included.

Asked about the motivation behind the move, Gooch said the point of counter measures was to encourage the United States to bring itself into line with WTO rules.

POLITICAL STRATEGY

A Wall Street Journal report said EU retaliation would target goods from states which are politically sensitive for President Bush, such as Florida, Wisconsin, Pennsylvania and West Virginia, where Bush battled for his victory by a razor-thin margin in the 2000 election.

The list could include Harley Davidson motor bikes and orange juice. EU sources said the bloc would probably target citrus fruit and textiles, as well as American steel products.

The newspaper said the strategy was to get the White House to change course on the steel tariffs by hurting regions and companies the Bush administration needs politically.

While refusing to comment on any political motive, Gooch said the United States had used such tactics in past disputes with the EU over bananas and hormone-treated beef. It had targeted French cheese and wine because Paris was seen as driving European protectionism.

The Commission is also drawing up plans for steel quotas and tariffs, known as safeguard measures, to protect the European market from a surge of steel imports barred from the United States.

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