Chancellor to tackle US trade tariffs

Published on Monday 17 November 2003 00:00

CHANCELLOR Gordon Brown will this week address the impending trade war over steel and tax breaks between the European Union and the US - a problem he believes is costing Europe £100 billion a year.

Speaking to the CBI national conference in Birmingham, Brown will unveil a review of the trading relationship that has caused mounting tension on both sides of the Atlantic.

The European Union is already planning trade sanctions in opposition to the US steel tariffs and a set of tax breaks for US companies that the World Trade Organisation says are illegal.

Brown’s review is designed to bring down tariffs imposed by US president George Bush on non-US steel and will be modelled on the Cecchini Report which shaped Europe’s single market in 1992.

Brown will say: "In 1998, when Europe was at the outset of the great project to move towards deeper... integration, the Cecchini Report broke down the barriers preventing the creation of a single market in Europe, by clearly showing the benefits in commerce and jobs."

He will go on to forecast that an extra 2 per cent growth per year in the European economy and one million new jobs could be achieved by settling trade disputes with the US.

Brown will conclude: "The UK, the US and other countries have agreed to proceed with a major transatlantic review on how we can move beyond the old trade disputes and reap the benefits of greater trade and investment liberalisation."

The Chancellor’s speech will be delivered in response to concerns voiced by CBI president Sir John Egan, who will open the three day conference today with a damning criticism of what he sees as a move in the US towards "isolation and protectionism".

Egan will say: "We are deeply concerned, not as some say that America is trying to dominate the world, but rather that it is not interested enough."

Commenting ahead of the conference yesterday, Egan argued the US government’s stance on steel tariffs was not only illegal but was a "quick fix" that damaged business on both sides of the Atlantic.

He said: "The tariffs may have saved a few steel jobs in Ohio, but they have destroyed car worker jobs in Detroit. I urge the president to abandon the tariffs as soon as possible. It is business everywhere that pays the price when politicians engage in trade wars."

The issue over transatlantic trade has intensified ahead of the state visit of President Bush that begins in London tomorrow.

Bush is thought in some quarters to be planning to announce a deal on steel during his tour.

But critics have poured cold water on the speculation, arguing the US will not be persuaded to take part in any kind of economic revolution with an election due in November 2004.

In support of Egan, CBI director general Digby Jones toured the TV studios yesterday, pushing for Bush to end the steel tariffs which the CBI say discriminate between domestic and foreign firms.

UNINVITING UK

ALMOST one-third of companies have relocated some of their business abroad, the CBI will say today. Manufacturing, R&D, call centres and IT support have all switched from the UK in recent years.

The CBI will add that its latest survey of company executives shows "deeply worrying" trends. About seven out of ten said they believe the UK has become a worse country to invest in over the past five years, and 60 per cent expect the trend to continue.

Most said government had become less business-friendly since 1997.