TRADE WAR LOOMS

l IN various ways President Bush is discovering that the world does not always dance to America's tune. The World Trade Organisation has ruled that the duties of up to 30 per cent which he imposed on imported steel in March 2002 were illegal and should be withdrawn. His reponse this week was to reject the ruling, and in turn the European Union has threatened sanctions against a range of American goods. A tit-for-tat trade war which will do nobody any good is in prospect. Trade disputes are often highly complex and difficult for the layperson to understand but that is not the case on this occasion. President Bush introduced the tariffs for a simple reason: most of the old and inefficient American steel plants that are unable to compete with European and Asian imports are to be found in parts of the country where the Republican Party needs all the votes it can get. If large numbers of steel workers were laid off they would be unlikely to vote Republican.The duties were introduced in time for the 2002 mid-term elections, and served their purpose then, and it is unlikely therefore that President Bush will be willing to withdraw them when he is facing re-election in one year from now - whatever the World Trade Organisation might say. THE European Union's Trade Commissioner, Pascal Lamy, has drawn up a list of American imports on which retaliatory duties of up to 100 per cent could be imposed if there is not a change of heart in Washington by 15 December. Among the targetted products are likely to be US fruit and juice concentrate from Florida where the citrus growers would certainly have something to say about this blow to their exports through their governor Jeb Bush.