US Plays 'Divide and Rule' in Steel Conflict

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Last updated at: (Beijing Time) Friday, May 31, 2002

US Plays 'Divide and Rule' in Steel Conflict

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The United States and the European Union wrestled Thursday to resolve a worsening transatlantic row over punitive steel tariffs imposed by the former, less than three weeks before a deadline for EU retaliation.

But signs were growing that Washington is trying to break a united EU front by holding out exemptions for some specialist products from its tariffs of up to 30 per cent on imported steel, while rejecting European demands for compensation for all.

US Under Secretary of Commerce Grant Aldonas met the European Commission's Director-General for Trade Peter Carl to discuss ways to reduce world overcapacity and try to avert EU sanctions in response to duties imposed by President George W. Bush in March to protect uncompetitive US producers.

Diplomats said US tactics appeared to be to try to buy off enough close European allies by offering exclusions for their products to block a Commission proposal to impose countervailing duties of more than US$300 million on US exports next month.

"It's the old tactics of divide and rule, but on steel I don't think it will work," one EU diplomat said.

EU ministers are due to decide on retaliation at a meeting in Luxembourg on June 17. Britain, Germany and Sweden have voiced uncertainty about hitting back so soon.

On a visit to London on Monday, Aldonas again rejected the EU's demand for compensation in lower tariffs on other goods to make up for a loss of steel exports, but he suggested some European steel products could be granted exemptions.

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