Bonn faces sanctions dispute: EU investigates accord with US on telecoms and procurement

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The Independent Online
THE European Commission is in talks with Germany over the details of a US-German accord on telecoms and public procurement to find out whether Bonn has fallen foul of its European Union colleagues.

If it is found that the German government has failed to implement agreed EU sanctions against the US - imposed last year in the context of a row over the issue of public procurement - it will incur the ire of the rest of the 12 and rekindle fears that Germany is increasingly acting out of self- interest, against the interest of the Union as a whole.

A spokesman for Sir Leon Brittan, Commissioner in charge of trade and external affairs, said the Commission believed that all problems had been resolved last year but that, if Germany had infringed the rules, the Commission would take action.

The issue dates back to a row with the Clinton administration over allegedly unfair EU access to America's lucrative public procurement market. The Union imposed fines of dollars 15m against the US, but Germany challenged its legal right to do so. Germany also said it would not apply an article of EU law that gave European companies a 3 per cent price preference over their European competitors. The row was resolved, although symbolic trade sanctions applied. It is the Commission's understanding that Germany never made good its prior promise not to apply EU legislation in full.

But a quiet announcement from Washington that the US has dropped trade sanctions against Germany has rekindled speculation that Bonn and Washington have done a private deal. Such action would seriously undermine the solidarity of the Union and call into question German loyalty on trade questions.

There have been signs of German impatience to move in line with the EU. It is feared that Bonn is trying to forge independent trade links with developing Asian economies.

Fears that the Commission's powers over trade are being infringed by member states have also arisen in the last stages of the Gatt negotiations before the signature of an agreement in Marrakesh. The EU's executive bureaucracy will sign a text with the member states, not on its own as some officials originally wanted.