US tariff battle dominates OECD

CONFERENCE: A cigar-somking Bill Gates lookalike, who happens to be the leader of a small European state, was the scourge of the United States at the OECD ministerial meeting that ended here yesterday.

Mr Guy Verhofstadt, the Prime Minister of Belgium and the chairman of the meeting, was frank in his condemnation of the US Farm Bill, signed by President George W. Bush on Monday, and the additional €660 million in tariffs that the US intends to charge on its €2.3 billion in annual steel imports.

The farm bill will increase subsidies to US farmers by at least 70 per cent.

The US actions went against the spirit of the November, 2001 Doha Development Agenda and risked provoking retaliatory measures, Mr Verhofstadt said at the closing press conference yesterday.

The Doha agreement promised free trade between the developed and developing world, Mr Verhofstadt explained earlier.

"Exactly the opposite is happening. It's hypocritical to talk about liberalising markets and not do it ... It gives the impression that globalisation works only in one direction, that it's a fools' game that profits only the rich. Our egotism is destructive."

On Tuesday, the EU drew up a list of €583 million in customs duties that it may impose on €2.2 billion worth of US goods exported to Europe.

The looming trade war between the US and Europe dominated the two-day OECD meeting. Trade officials from 29 of the world's 30 richest countries were spoiling for a fight with the US Trade Representative, Mr Robert Zoellick but Mr Zoellick stayed in Washington.

Mr Glenn Hubbard, the economic adviser to Mr Bush, tried to ease tension by predicting between 3 and 3.5 per cent growth in the US this year.

In the rest of the world, prospects were "weaker but encouraging", he said, adding the he expected "modest" growth in Europe.

The OECD's final communique noted that "a recovery has begun after what proved to be a relatively brief and shallow downturn". The global economy had "shown resilience in absorbing and largely overcoming the terrorist shocks of last September".