EU warns US on trade sanctions

ANDREW MARSHALL

Paris

The European Union and Japan delivered a rebuke to Washington yesterday over its threat of trade sanctions against Japan.

With unilateral US tariffs on Japanese cars just days away, an EU-Japan summit in Paris said such problems should be settled multilaterally by the World Trade Organisation. "It is vital for the functioning of the WTO that all its members without exception fully respect their obligations," the statement said. "Disputes between WTO members which cannot be resolved through bilateral consultations should be brought before the new, reinforced system of dispute settlements."

Sir Leon Brittan, the EU trade commissioner, described the statement as a very strong reinforcement of the commitment of Europe and Japan to the multilateral approach.

The US is threatening to apply punitive tariffs to imported Japanese luxury cars in protest at what it sees as obstacles to US car manufacturers in the Japanese market. The deadline for the sanctions, 28 June, is looming without any apparent solution in sight, though talks are continuing in Geneva.

Sir Leon said he had pressed the US and Japan for commitments that there would not be a bilateral deal between Washington and Tokyo that would harm EU industry. "I have received such promises from the Japanese and the Americans, but it is necessary to examine them in great detail," he said.

Europe is also pressing Japan for an improved stance at talks, under the aegis of the WTO, aimed at opening the world's financial services market. "We have less than two weeks to arrive at an accord," Sir Leon said. "It is absolutely necessary that Japan improve its offer."

Pressure is also being put on the US, which is reluctant to allow all countries equal access to its financial services market if they are not able to respond with their own market-opening.