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Europe, US Try to Diffuse Trade Tensions - 2002-05-21

Top European Union and United States trade negotiators Tuesday attempted to ease transatlantic tensions over steel and agricultural subsidies at a Washington meeting of the World Economic Forum.

European Union trade commissioner Pascal Lamy said recent U.S. measures to subsidize farmers and the steel industry are the result of political posturing in the run-up to mid-term Congressional elections this November. While conceding that America's biggest trading partner recognizes the political pressures on the Bush administration, Mr. Lamy said the protectionist measures are incompatible with World Trade Organization guidelines.

Despite vigorous opposition to U.S. protectionism, Mr. Lamy minimized the risk of a transatlantic trade war. He emphasized instead that Europe and America should seek to expand free trade around the world.

"The whole thrust of the relationship we have with the U.S. and the relationship I have with [U.S. Trade Representative] Bob Zoellick is based on this joint consideration that we have a lot in common. That it is in our joint interest to open other markets. And that it is our joint interest that a fair system exists so that the rules of the game will allow us to use our comparative advantages and for others to use their comparative advantages."

The United States and European Union are the major powers in world trade, and their cooperation was vital to achieving last November the launch of a new round of global negotiations to expand trade.

With the Senate set to vote on trade promotion authority this week, Mr. Zoellick appealed to business leaders to raise their voices in support of freer trade. "Because for people in this audience who either care about free markets or expect them to exist as a natural state, I strongly suggest that you get involved with the political process," he said.

The Senate is expected to ratify the trade measure that has already been approved by the House of Representatives. Mr. Zoellick dismissed claims that with the steel and agriculture subsidies the Bush administration is abandoning free trade. He said Europe is far more protectionist on agriculture than the U.S., with subsidies that are three times greater.