[OPE-L:6716] inter imperialist rivalry

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Mon Mar 11 2002 - 14:22:34 EST

[Financial Times]
US warns steel trade tensions may spread
By Guy de Jonquières and Edward Alden in Washington
Published: March 10 2002 21:22 | Last Updated: March 11 2002

The US administration has warned that strains in international
trade relations could spread from steel to other sectors unless
the European Union and Japan reflate their economies.

Grant Aldonas, under-secretary of commerce for international
trade and one of the architects of the decision last week to
impose steel tariffs of up to 30 per cent, said other sectors
affected could include agriculture and semiconductors.

In an interview with the Financial Times, Mr Aldonas said: "We
have told people over time that if you don't see stronger growth
abroad, you end up seeing friction on the trade account," he
said. "There is only so much patience that you have when you are
talking about very serious macro-economic issues that have been
out there for a long time."

This is the first time the Bush administration has linked the
steel measures to larger problems in the global economy.

Mr Aldonas indicated Washington was determined to stand firm in
the face of the international outcry its steel measures had
provoked. "This is one of those situations ... where things have
to get worse before they can get better," he said.

He also said the US would reject EU demands for $2bn in
immediate compensation for the steel curbs, in the form of lower
barriers to other imports. Washington insists the EU should
first prove its claims in the World Trade Organisation.

The rejection means the EU must decide whether to escalate the
dispute by retaliating against US exports or await the outcome
of its separate legal challenge to the steel curbs in the WTO,
which could last more than a year.

Mr Aldonas said Washington was prepared to stiffen its stance on
trade partly because it no longer feared unnerving financial
markets. Such concerns led the US to accept much higher imports
from east Asian economies after their 1997 financial crisis.
However, Mr Aldonas pointed out that recent turmoil in Argentina
had not spread.

He said failure by the EU and Japan to reflate their economies,
combined with the strength of the dollar, would imperil recovery
by the US agriculture and high-technology industries, which
depended heavily on sales abroad.

On agriculture, Mr Aldonas said the effect of deflation in Japan
and recession in Europe had been "to drag down commodity prices
across the board in the US," while the strong dollar had hurt
exports. He said Washington planned no specific trade measures
to protect those sectors.

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