8th March, 2002 No easy answers as new EU-US trade war looms

The European Union is set to retaliate following the United States' decision this week to introduce tariffs on steel imports. The EU said the decision mocked international trade rules, and promised to launch an immediate complaint with the World Trade Organisation. EU Trade Commissioner Pascal Lamy on Wednesday accused White House squatter George Bush of putting domestic interest above international duties. "This is a political decision, with no legal and not even economic fundamentals," Mr Lamy said.  Bush’s approval of tariffs follows demands from both corporations and the people they employ, and was at least partly motivated by the fact that steelworkers’ jobs are concentrated in a number of electorally marginal states. (Many are white, and therefore tricky to knock off electoral registers.)

The US decision to impose tariffs of up to 30 percent on some steel products is against the WTO rules.  These allow “safeguard measures”, but only in the event of a sharp increase in imports. In fact, steel imports to the US are declining, albeit slowly.  The EU’s main fear now is that steel excluded from the States will flood into Europe.

The Commission will therefore try to protect the EU market by itself launching a safeguard procedure, as well as demanding compensation from the US for the amount of money the EU’s own exports to the US are likely to suffer. The EU is also in contact with other countries concerned by the decision, notably Japan, China and Korea, in order to decide on concerted action.

According to the Commission, the decision will strike the EU steel industry more than other steel producers, as it mainly applies to value added steel products, and not to raw materials. However, the EU decision to protect the European market is likely to trigger a wave of protectionism across the world, as other countries follow the example and protect their own markets, or adopt retaliation measures against the US in other sectors.

The spat pits Bush’s hypocritical concern for workers’ jobs against Commissioner Lamy’s apparently sincere devotion to free trade. Free trade in this case, of course, means the unnecessary movement of heavy products around the world. On the other hand, US protectionism could cost jobs, especially in the UK and the Netherlands. And whilst it may save the jobs of relatively well-organised US steel workers, those who work in processing industries able to buy steel more cheaply abroad will suffer.

Commission: Four new fraud investigations under way

EU Commission whistleblower Paul van Buitenen presented a report to his employers last summer detailing 270 cases of alleged wrongdoing in the Commission. As a consequence, four investigations have been opened by the EU anti-fraud office OLAF. Mr van Buitenen, whose revelations of corruption brought down the  Santer Commission in 1999, has now provoked OLAF into opening investigations into irregularities related to the European Social Fund, the EU’s employment creation scheme, and into OLAF’s own predecessor UCLAF, the Centre International de Formation Européenne (a training facility), and special inspectors. All relate to alleged wrongdoing before the current Commission took office.

  Convention: snoring is just people “dreaming of Europe”

Valery Giscard d’Estaing, president of the Convention on the future of the European Union, opened it by prejudging its outcome, a form of procedure typical of the Union’s way of doing business. According to the former President of the French Republic, the Convention’s job is to reach a consensus which will allow it to “open the way towards a constitution for Europe” which could then be put to an EU-wide referendum.

Mr Giscard also invited everybody to “dream of Europe,” presumably because his speech had led to the audience’s nodding off in large numbers. On a more practical note, he proposed that the Convention eventually draft a “constitutional treaty” to be put before the people of the member states – which by then will probably include at least some of the current candidates for accession – at the European Parliament elections in June, 2004.  As the turn-out in 1999 was only 49%, this raises the possibility that such a “constitutional treaty” could be approved by only around a quarter of eligible voters and yet come into force, if all that is required is a simple majority. Another potential source of trouble would be uneven voting across the member states. What if the British hated it and the Germans loved it, or vice versa?  Or all the small states voted against and were overwhelmed by popular endorsement in France, Germany, Britain, Spain, Italy and possibly Poland. Clearly, for this process to bear any resemblance of democracy the treaty should be approved by over 50% of the electorate in all member states.  Given that you probably wouldn’t get 50% of the votes for a proposal to make beer free, this would kill the thing stone dead. So let’s be reasonable: 40% of the total electorate in every member state.  This would also extend the right of effective abstention to the many who would not want to legitimise the process by casting a vote.