The European Commission on Friday proposed slapping more than $300m of
trade sanctions on politically-sensitive US products, including fruit,
T-shirts, steel, guns and even billiard tables, in retaliation for
US-imposed steel tariffs.
The Commission's proposal for retaliation, which would require majority
backing from the 15 EU member states, is designed to "hit the US where it
hurts" by targeting exports from states crucial to US president George W.
Bush's re-election. These include citrus fruits from Florida, apples and
pears from Washington and Oregon, and steel from Pennsylvania, Ohio, and
West Virginia. The plan would levy tariffs worth E377m ($336m) on US
exports of those products.
The plan calls for the sanctions to be imposed on June 18. But the US
warned such early retaliation would be a fundamental violation of
international trading rules. One US trade official said it would "strike
at the heart of the multilateral trade system".
The Commission proposal is aimed at increasing pressure on the US to
reconsider its decision last month to impose tariffs of up to 30 per cent
on steel imports, i ncluding E2.4bn ($2.1bn) of steel from Europe.
"There's a feeling we should, at least, keep this weapon in play for the
time being, in the hope it'll persuade the Americans to move, but there's
no final decision on whether to pull the trigger," said an EU diplomat.
Some EU states, including Germany and the Nordic countries, have already
expressed concern about the implications. Lawyers representing the member
states have yet to decide whether short-term retaliation would be legal
under World Trade Organisation rules, the diplomat said.
But Pascal Lamy, EU trade commissioner, is convinced the EU has a legal
right to retaliate because the US imposed the steel tariffs even though
imports of many steel products had actually been declining.
"The Commission set out its ideas and while member states will need time
to consider them, the initial reactions were positive and supportive of
our strategy," said Mr Lamy's spokesman.