Possible Trade War

Transatlantic tensions over steel, farm subsidies and tax regimes threaten to affect both our biggest export market and WTO progress in opening overseas markets, which are currently closed to European, ie British, footwear. Footwear from the USA is on the list of products for compensatory duties threatened by the European Union if the US Government does not withdraw its steel duties. BFA was involved in DTI and CBI consultation on the measures and protested about the likely effect on consumer sentiment in this vital export destination, but European governments have chosen to make a firm stand. For fuller details see box below: Many observers are concerned about a serious impact on the WTO’s Doha Round of tariff reductions and market opening. A possible transatlantic trade war, with much wider involvement if the US Farm Bill is passed in its present form, seems certain to weaken commitment to trade liberalisation. Many overseas markets are virtually closed to our footwear exports yet the European Union and Britain in particular, is wide open to imports. We very much hope that WTO tariff and non-tariff negotiations are not derailed, as there are many export opportunities at stake. Interestingly, Oxfam recently published a report which confirms that the poorest countries also benefit from freer trade - the campaign by anti-globalisation campaigners is not well founded. Another factor in the looming trade war will be the ruling expected shortly from the WTO Disputes Panel about even larger compensation duties which the EU may be able to impose on the US over export tax subsidies. EU governments say the American steel tariffs are illegal under WTO rules. To get President George W Bush to remove them, they have drafted a list of goods produced in politically sensitive US states where Bush is campaigning for Republican candidates in midterm Congressional elections. In recent weeks, the 15 EU governments have fine-tuned the list, dropping some products and adding others. Added to the product list have been toilet paper, accounts books, cigarettes and uncoated paper. In case the WTO makes a definitive ruling that the US steel tariffs violate its trade rules, the EU also filed an additional list of American imports – this one worth $547 million – that would face European duties. This list does include footwear. A final WTO ruling on the legality of the American tariffs, however, is not expected for at least two years. The EU submitted the list following 2 months of talks to resolve the dispute. The EU has said the US steel duties were wrongly applied. Washington said the tariffs were needed to protect its industry from cheap imports. The EU has also demanded the US provide compensation for its lost trade in steel, saying it wants the US government to reduce import duties on a range of products. So far the US has refused.