Downing Street plays down hopes of trade war deal as President eyes steel votes

Hopes that Tony Blair and George Bush would reach a deal to avert a trade war between the United States and Europe during the President's visit to Britain were dashed yesterday.

Downing Street played down hopes of a breakthrough and US sources suggested that President Bush had rejected a proposal from some advisers to announce a concession on steel tariffs during his visit. Other aides have warned him that a climbdown could cost him support in America's steel-making areas in next year's presidential election.

Although Mr Bush will spend three days in Britain, he will have only about two and a half hours of talks with Mr Blair and No 10 sought to lower expectations of a firm announcement by the two leaders on any policy issue.

Mr Blair's spokesman said the President and Prime Minister spoke every week, often by videolink, and so this week's discussions should not be seen as a "World War Two summit". He added: "It is part of a continuing conversation. It is not a one-off event where each side has to produce goodies for the other."

The spokesman said the steel tariffs imposed by the US on Europe would only be discussed "in passing" when the two leaders hold their talks at Downing Street tomorrow. "This is not the deadline week," he said, referring to the 6 December date by which the US must act to avoid retaliatory action by the European Union.

Similarly, there is little prospect of a breakthrough this week on the fate of the Britons being held at the US base at Guantanamo Bay in Cuba. Sources said it would be discussed "in passing" and negotiations would continue after the President returns to Washington on Friday.

President Bush hinted in a BBC interview at the weekend, that the British terrorist suspects would be tried in a military court in the United States. But it appears that Mr Blair has not given up hope that they could be returned to Britain for trial.

Tomorrow's talks are likely to be dominated by Iraq. At a time when the coalition forces face increasingly difficult security problems, the two leaders will be determined to show the world they are standing firm and standing together.

Their message will be that they were right to remove Saddam Hussein and they will emphasise their desire to return the governing of the country to the Iraqi people as soon as possible.

The Prime Minister and the President will also stress they are "at one" over the Middle East peace process, although no fresh initiative is expected.

Efforts to combat HIV/Aids are on the agenda and they will pledge to join forces to combat the disease by holding a round-table discussion at No 10 with charities and representatives of African countries.

The pressure group Action Aid warned that the meeting should not be used as a "smokescreen" and accused the US President of dragging his feet over his promise of $15b (£8.8bn) for fighting Aids.

Efforts to cool the dispute over steel tariffs were stepped up yesterday when Gordon Brown announced a series of measures to boost trade links between the US and Britain. He travelled to Birmingham with his American counterpart, John Snow, the Treasury Secretary, who said he had "thrown cold water" on fears of a full-scale trade war.

The Chancellor said it would be "extremely unfortunate" if the EU and US found themselves in a "tit-for-tat protectionist war" reminiscent of previous disputes that hit the sale of goods, including bananas, clementines and cashmere sweaters.

In his speech to the CBI, Mr Brown emphasised the "shared values" and interests between the two countries, including fighting global terrorism and dealing with rogue states.

Where UK and US agree...

Iraq

Having taken the greatest political risk of his premiership by backing George Bush on Iraq, Tony Blair can hardly be seen to part company now, but there are tensions. Britain, which has 10,000 troops on southern Iraq, complains it is insufficiently consulted, and its troops' methods are much less gung-ho than the Americans'.

Afghanistan

The UK was desperate to get in on some of action after 11 September when the US ousted the Taliban in Afghanistan as part of the war on terror, but in reality the non-American contribution was minuscule. There is international consensus over Afghanistan, and the UK is a strong supporter of Nato's role there.

EU Defence

The White House fears that EU defence initiatives will undermine Nato, but Mr Blair has assured Mr Bush there is no threat to the transatlantic alliance. Downing Street needs to keep the US happy as the detail is negotiated among EU partners. Criticism from Washington would hand the advantage to Mr Blair's Eurosceptic critics.

Aid To Africa

One of Mr Blair's visions is a push to mobilise the continent's economy. Mr Bush also stresses the need to lift Africa from the despair caused by Aids and rampant poverty, and the President has won plaudits for the initiatives he has taken to fight disease.

...and where they are at odds

Middle East

The Foreign Office feels the US has failed to keep its promise to work all-out for an end to the Israeli-Palestinian conflict, and has given up on its road-map plan for peace. Britain feels the US has tilted too far in favour of Israel. On Iran, there is resentment of US criticism of the joint approach of Britain, France and Germany.

The Environment

America has never enjoyed the finest of reputations, but green campaigners believe Mr Bush has worsened it. After three months in office, he withdrew from Kyoto, suggesting that the protocol was potentially damaging to US industry, and unfair, as there were no demands on developing countries. The chasm with Britain is growing.

Guantanamo

A source of grievance is the detention without charge at Guantanamo Bay, Cuba, of nine British subjects picked up in Afghanistan and Pakistan in the war on terror. British demands for them to be turned over to the British legal system or be released or charged, have produced nothing. The issue is unlikely to be resolved this week.

International Criminal Court

The US refuses to validate the ICC, which Britain has ratified. Washington's attitude to the ICC was criticised on Monday evening by Cherie Blair QC. US objections to the court were "not well-founded", the Prime Minister's wife told a human rights conference at Georgetown University.