U.S. President Bush on Thursday called for removal of controversial steel tariffs, narrowly avoiding a trade war with Europe. After the announcement, the EU said it would forego planned retaliatory measures.
 
Under considerable pressure from both abroad and home to remove the tariffs, Bush said the duties of up to 30 percent on steel imports had served their purpose and the U.S. steel industry was now well positioned to compete globally.
 
Had the United States refused to eliminate the tariffs – deemed illegal last month by the World Trade Organization – the European Union was set to target U.S. goods with retaliatory duties of around $2.2 billion (€1.8 billion). But EU Trade Commission Pascal Lamy said Europe would now forego slapping tariffs on products like orange juice and farming equipment from states that will be important to Bush in next year's presidential election.
 
“This is good news for Europe,” Lamy said at a press conference in Brussels. “We will freeze our sanctions system that would have taken effect from the 15th of this month.”
 
Bush imposed the steel tariffs almost two years ago to allegedly protect U.S. producers from excessively cheap foreign steel imports. However, many politically observers believed the move was also aimed to shore up support in electorally-important steel states like West Virginia, Pennsylvania and Ohio.
 
U.S. steel consumers annoyed
 
Unfortunately for Bush, the tariffs sparked outrage from its most import trading partners, including the EU, Japan and other nations in Asia and South America. They also annoyed U.S. steel consumers like the auto industry, which suddenly had to pay higher prices for imported steel.
 
Dieter Ameling, president of the German Steel Federation, welcomed the U.S. decision in a statement: “We are pleased that in this way the looming trade war with the EU can be avoided. We now expect that our exports to the USA – which after the EU domestic market is the most important market for us – will return to normal.”  
 
Lamy said European steel exports had dropped by around 15 percent due to the U.S. tariffs. But he said Washington’s decision to repeal the measure also showed how effective the EU could be when it worked together on a matter.
 
“When Europe is united, and it is on trade policy, it can play a role that corresponds to its weight,” he said.

 
Russia is waiting for EU countries and Japan to show more interest in buying so-called emission rights before ratifying the Kyoto protocol. Russia’s support is crucial to activate the carbon gas emission control treaty.
First they said “no,” then they said “maybe,” then came another “no.” Russian leaders have so far failed to reach a decision on whether to put ratification of the Kyoto Protocol before parliament for a vote.
On Tuesday, Russian President Vladimir Putin’s economic advisor, Andrei Illarionov, said it wouldn’t happen because of negative effects the ratification would have on Russia’s economic growth.
 
A day later, Putin’s deputy minister for economic development changed gears. “Russia will ratify the protocol if it proves to be in our interest,” said Mukhamed Tsikhanov, whose ministry is responsible for environment issues.
 
On Thursday, Illarionov countered with what he called a definitive “no.” He said he was speaking for Putin when he rejected the treaty in light of this week’s conference on climate in Milan. Illarionov said Tsikhanov was mistaken in his earlier comments.
 
“The statement was made physically by me, but the words I was using were those of the Russian president,” the economic advisor told reporters. In September, Putin had shocked Kyoto supporters by saying his government was still weighing the treaty’s pros and cons for Russia’s economy.
 
Russian “no” likely to kill Kyoto protocol
 
Should Putin have made up his mind in opposing the treaty, it would almost certainly signify the demise of the six-year old document. The Kyoto protocol calls for a five percent reduction in carbon gas emissions by 2012, a goal many environmental experts say is already outdated and ineffective in countering global warming.
 
While 119 nations, including EU member states, Japan, Canada, New Zealand, Brazil, India and China, have ratified the protocol, the treaty needs to be approved by countries accounting for 55 percent of global carbon gas emissions to become effective.
 
So far, ratifying countries only account for 44 percent of emissions, making Russia’s 17 percent crucial to activate the protocol. The U.S., which accounts for a third of global emissions, is steadfast in its refusal to ratify the document.
 
Emission rights as decisive factor?
 
While opposing the protocol, Washington has pushed for allowing trading in “emission rights.” Under this scheme, countries with fewer emissions would sell their allowance to others.
 
At least until Wednesday, Russia seemed to see too little interest from EU countries and Japan in this “carbon market,” potentially worth billions of dollars. Tsikhanov said Russia would make its decision dependent on an increased interest from others to buy its emission rights.
 
“The countries that have increased their emissions haven’t shown any interest in buying rights so far,” he said.
 
Final decision unlikely before Russian elections
 
Some believe a final decision by Russia is unlikely to come in the near future, probably not until after parliamentary elections on Sunday and Putin’s own election next spring. Until a definitive answer comes, the future of Kyoto remains uncertain.
 

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