001131 More USA-EC Disputes Likely As Trade Grows

Cincinnati - An international business group that advocates a decrease in trade barriers between the United States and Europe is finding that growing trade means growing problems.

“Tensions are at an all-time high,” George David, chairman and chief executive of United Technologies Corp. and the U.S. chairman of the Transatlantic Business Dialogue, said Friday.

The annual meeting of the group drew street protests, but David was referring to economic tensions. The 15-member European Union said Friday that it has asked the World Trade Organization to impose tariffs of up to $4 billion on U.S. products ranging from food to glass to tools over a new export tax system signed into law this week by President Clinton .

It is the biggest dispute yet among partners that traded $500 billion in goods and services in 1999 and have previously fought over such products as bananas and beef.

TABD's annual CEO conference brought about 200 corporate executives and government officials from Europe and the United States together to form recommendations for making trade regulations more uniform. Police used force to keep several rowdy protesters away from the conference hotel, and at least three arrests were reported.

A series of mostly peaceful demonstrations drew up to 400 protesters. The activists contend that business leaders want to water down rules that protect workers, consumers and the environment.

David said trade between the United States and Europe has tripled in the past 15 years and growing trade is bound to lead to problems.

“The fact is, our economies have become much more interdependent,” said David, speaking during a conference break.

The EU says the new export tax system amounts to an illegal subsidy on more than half of U.S. exports and would hurt European companies, particularly those that sell chemical, pharmaceutical, machinery and other products. U.S. officials disagree, and say the new system complies with a WTO order that struck down the previous system earlier this year.

The WTO will review the law before sanctions go into effect. The review will take several months.

Other government officials played down the EU's actions.

“We are bound to have major trade disputes with major trading partners,” Robert Mallett, deputy secretary of the Department of Commerce, said in an interview.

“The existence of trade disputes is quite normal in view of the huge volume of trans-Atlantic trade,” European Trade Commissioner Pascal Lamy said during the opening session of the conference Friday morning.

He said the key issue is how the disputes are handled.

“I hope that in the future, sanctions are the last and not the first resort,” he said.

Earlier, Treasury Secretary Lawrence Summers defended the new law, saying it complies with the WTO ruling and is not a subsidy.

“It is critical that we continue to work together in a cooperative manner to resolve this question,” he said.

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