EU to impose sanctions on U.S.
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Lamy says the U.S. failure to comply with the WTO rules is unacceptable.
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(CNN) -- Citing the failure of the U.S. Congress to repeal tax laws deemed illegal last year by the World Trade Organization, the European Union says it will begin imposing retaliatory sanctions next week.
But the EU has held out the hope that a resolution could still be reached.
The European Commission adopted the proposal Thursday at its weekly meeting. The countermeasures are to be imposed gradually, beginning March 1, the group said in a statement posted on its Web site.
"The commission's proposal is in line with the WTO authorization, granted earlier this year, to apply countermeasures of up to $4 billion following the failure of the U.S. to comply with the WTO rulings," it said.
"The commission hopes to pass a very clear message to the U.S. that their continued failure to implement three years after the expiry of the original WTO deadline is unacceptable," Trade Commissioner Pascal Lamy said in the statement.
"I have just been to Washington and have clearly explained our position. Still, we have opted for a measured approach and have actually left the door open for U.S. action before countermeasures are to be applied in March 2004. I hope the U.S. will seize this opportunity."
U.S. trade representatives did not immediately return telephone calls.
Under the proposal, a 5 percent sanction on U.S. products worth $4 billion would be imposed starting March 1, followed by monthly increases of 1 percent up to a ceiling of 17 percent the following March.
The products on which countermeasures may be applied include nuclear components, toys, spare parts, electrical machinery, live animals, meat, dairy products, honey, vegetables, fruits, nuts, cereals, grains, sugar, leather goods, wood products, paper, books, newspapers, cotton, synthetic fabrics, carpets, clothing, footwear, ceramics, gems and pearls, iron, steel copper and aluminum.
The list was made public last May.
The EU action comes as WTO Director-General Supachai Panitchpakdi said in Washington Thursday that the United States, more than any single country, created the world trading system and "has never had more riding on the strength of that system".
Supachai, addressing the National Press Club, said that U.S. leadership, especially in the current Doha trade talks, was "indispensable" to the system's success.
"The fiction that there is an alternative to the WTO -- or to U.S. leadership -- is both naïve and dangerous," he said.
Supachai said that strengthening the world trading system was essential to America's wider global objectives, including fighting terrorism, reducing poverty, improving health, and integrating China and other countries in the global economy.
