Glenn Somerville/Reuters
Forbes.com
November 17, 2003

London: U.S. Treasury Secretary John Snow on Monday dismissed concern that anger at U.S. steel import tariffs could spark a trade war with Europe and said the Bush administration was still mulling whether to drop the tariffs.

“I think the prospect of some significant eruption here or of a trade war is really quite remote,” Snow told reporters after meetings with businessmen and regulators in London.

The World Trade Organization recently ruled that U.S. steel import tariffs imposed in March 2002 were illegal, and the European Union said that unless they were lifted it would impose its own penalties on $2.2 billion of U.S. goods.

“We don’t know yet whether those tariffs will come about,” Snow said when pressed to assess the risk of a damaging trade war. “I think the real answer is that we find ways to work out our differences . . . and we tend to have differences on a small minority of the overall trade picture.”

Snow has said repeatedly that a decision on the steel tariffs rests with President George W. Bush, who also is to visit London this week.

Lifting the tariffs is a sensitive issue with U.S. presidential elections on the horizon in 2004, since many other U.S. industries want protection, but the Bush administration has made a campaign of preaching free trade to others.

Interviewed on CNBC Television, Snow said the United States remained a believer in free trade and denied it was protecting more of its own industries ahead of approaching elections.

Denies U.S. protectionist

“I don’t think the U.S. is going into the protectionist mode at all,” Snow said. “We are committed to the notion of free trade liberalisation.”

Snow, who is scheduled to address the British Confederation of Industry’s annual conference in Birmingham on Tuesday, offered a backhanded defence of the steel tariffs that were supposed to give American steelmakers breathing-time to restructure their businesses in the face of stiff competition.

“I wasn’t part of the administration when they were (imposed) but I think they served a useful purpose for that time and we await what the President’s final decision will be in response to the WTO action,” Snow said on CNBC

Snow repeated that China should allow its yuan currency, pegged at about 8.28 to the U.S. dollar for a decade, find its own value in markets and said China should honour pledges it made when it joined the WTO.

“We believe we should let the market set relative currency values,” Snow said.

Snow travelled to Paris at the end of last week, meeting French Finance Minister Francis Mer on Sunday before moving on to London. He told a small group of reporters travelling with him that the discussions with Mer and with British businessmen left him more optimistic about Europe’s growth prospects.

“Including the conversations with Minister Mer and the meetings today, I’m encouraged that we’re going to get better growth numbers out of the eurozone countries next year, somewhat higher growth rates,” Snow said.

    Relief for Iraq

Snow said he intended to discuss debt relief for Iraq with British Chancellor of the Exchequer Gordon Brown, as he had done with Mer. He also said he had a figure in mind for how much Iraqi debt should be forgiven but declined to give details.

“It has to be a debt level that’s sustainable and that doesn’t cripple the country going forward, suffocate it,” Snow said.

The U.S. has complained that while it cut taxes and interest rates to spur growth, other key economies have lagged and, as a result, America’s trade and current account deficits have swollen as other countries export to U.S. markets.

Asked on CNBC about the deficits, Snow said the most important cause of budgetary red ink had been a weak economy and its impact on government revenues.

“The deficits are unwelcome. We’re not happy about them and we’re taking important steps to fix them,” the Treasury chief said, citing Bush’s commitment to halve the deficits in the next five years. – Reuters News Service