'the buildup to build down'

["Ian Murray" <seamus2001@xxxxxxxxx>]

[Zoellick goes pomo twice in one article...]

American and EU trade officials swap jabs over steel and farm subsidies
Tue May 21, 8:03 PM ET
By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON - The top trade official for the United States and his counterpart from the European
Union (news - web sites) swapped jabs over steel and farm subsidies, issues that threaten a
trans-Atlantic trade war.

U.S. Trade Representative Robert Zoellick on Tuesday defended President George W. Bush (news - web
sites)'s imposition of tariffs up to 30 percent on foreign steel imports to protect American
steelmakers and his signing into law of a huge increase in subsidies to American farmers.

Citing criticism from Europe that the moves betrayed the administration's free-trade principals,
Zoellick said that it has become fashionable for European leaders to contend that the United States
was veering toward protectionism.

"Sanctimoniousness is a posture. It is not a policy," Zoellick told a global economic forum at the
U.S. Chamber of Commerce (news - web sites).

In reply, European Trade Commissioner Pascal Lamy, who spoke to the conference by satellite hookup,
said the only conclusion one could draw was that the steel sanctions and the big increase in farm
subsidies were supported by the administration with an eye toward winning votes for Republicans in
key congressional races this November.

"These disputes ... do not stem from the rationality of economics," Lamy said. "They stem from the
irrationality of politics."

Lamy said the administration has defended the moves as necessary to win congressional support for
the authority Bush needs to negotiate trade agreements. Legislation to that effect is pending before
the Senate this week.

But Lamy said the tariffs on imported steel and the big boost in farm subsidies were too high a
price to pay for a Bush victory on "trade promotion authority," which would allow Bush to negotiate
trade deals that cannot be amended by Congress.

"We Europeans are not prepared to pay for TPA with steel protection," Lamy said. "If TPA has a
price, it must not be too high a price."

Lamy said that the big increase in U.S. government subsidies to farmers in the new farm bill would
make it harder for Europe to continue to reduce its own high farm subsidies.

EU officials have charged that the farm bill that Bush signed into law last week violates World
Trade Organization (news - web sites) rules. Zoellick said the new subsidies would keep the United
States within the WTO cap of dlrs 19.1 billion annually in U.S. farm subsidies, and he noted that
the 15-nation EU has a far higher WTO cap of dlrs 60 billion in annual subsidies.

"In some ways, it is a buildup (in U.S. subsidies) to build down," Zoellick said. American
negotiators, he said, would have more leverage to win concessions on the issue from Europe in the
new global round of trade talks.

On the steel issue, Zoellick said the United States believed it had acted within WTO rules when it
imposed the tariffs of up to 30 percent on certain categories of steel imports to provide three
years of protection to the domestic industry.

Europe has contended otherwise and threatens to impose its own sanctions of dlrs 345 million on
American exports to Europe, starting next month, unless Bush compensates Europe for the higher steel
tariffs.