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  U.S. – EUROPE COMMERCE NEWS

A weekly service provided to the American Chambers of Commerce in Europe

US & EU ECONOMIC STATS

U.S. TRADE DEFICIT INCREASES IN AUGUST, DEFICIT WITH EU DECREASES

According to a Department of Commerce report issued on October 18, the U.S. trade deficit in goods and services was a record high $38.5 billion in August, $3.4 billion more than the $35.1 billion deficit in July (revised). The August deficit comprised a goods deficit of $42.3 billion and a services surplus of $3.8 billion. August exports were down by $1.1 billion from July to $81.9 billion, but August imports were up by $2.3 billion from July to $120.3 billion. The U.S. trade deficit with the EU decreased by $4.1 billion from July to $6.2 billion in August. Exports increased from $10.5 billion in July to $11.7 billion in August, while imports decreased from $20.9 billion in July to $18.0 billion in August.

U.S. CONSUMER PRICE INDEX INCREASES IN SEPTEMBER

In a Department of Labor report released on October 18, the Consumer Price Index (CPI), which represents changes in the prices paid by urban consumers for a representative basket of goods and services, increased by 0.2 percent in September, following an increase of 0.3 percent in August. The September level of 181.0 is 1.5 percent higher than in September 2001. The CPI has remained within a range of 0 to 0.3 percent growth over the past four months, indicating that inflation remains low and stable.

GROWTH IN EUROZONE INDUSTRIAL PRODUCTION REMAINS WEAK

According to data from Eurostat, growth in demand for eurozone industrial production will remain weak in the third quarter, augmented by reports from nine member countries of larger year-on-year rates of decline for production in August than in July. Industrial production increased by 0.6 percent in August, less than the forecasted rise of 0.9 percent, after a 0.8 percent decline in July.

U.S. CHAMBER URGES CONGRESS TO REJECT PENALTIES ON OFFSHORE BUSINESSES

The United States Chamber of Commerce urged the U.S. Congress on October 16 to reject legislation that would penalize American businesses that locate their headquarters offshore in an effort to compete with foreign companies who have an unfair tax advantage over U.S. companies. The U.S. Chamber urges Congress to reject the short-term and counterproductive legislative measures such as proposals that would treat inverted corporations as if they were still domestic; impose “moratoriums” on corporate inversions or disregard the tax inversion for a predetermined period of time; treat inverted corporations’ property as being sold for fair market value on the date before the “move”; and deny the use of international tax treaty benefits. The Chamber opposes a recent trend in Congress to include language in non-tax legislation that would bar federal contracts to certain inverted U.S. companies. A copy of the testimony is attached.

U.S. CONGRESS “LAME DUCK” SESSION SET FOR NOVEMBER 12

Congress approved a new five-week continuing resolution on October 16 to keep unfunded government agencies in business until November 22. The House will remain in recess unless recalled to a session, and although the Senate will hold a series of pro forma sessions between now and November 12, no substantial legislative business is expected to be completed. A “lame duck” session of Congress is scheduled for November 12-14, to be used by both parties in both the House and the Senate to organize for the new 108th Congress.

U.S. TRADE REP SUBMITS PROPOSAL TO WTO ON DUMPING AND SUBSIDIES RULES

The Office of the U.S. Trade Representative announced on October 17 that the U.S. is submitting a proposal to the World Trade Organization (WTO) Rules Negotiating Group on dumping and subsidies that seeks to prevent WTO dispute-settlement panels from overstepping their bounds and to make other countries’ systems for imposing antidumping and countervailing duties more open and transparent. The U.S. rules paper, presented to the WTO this week in Switzerland, outlines four guiding principals for U.S. negotiators: (1) to maintain the strength and effectiveness of the trade remedy laws; (2) to ensure that the trade remedy laws operate in an open and transparent manner; (3) to enhance the rules to address more effectively underlying trade-distorting practices; and (4) to emphasize that, in disputes on trade remedy laws, dispute bodies follow the appropriate standard of review and do not impose obligations not contained in the Agreements. The WTO negotiations were initiated in Doha in November 2001 and must be completed by the January 1, 2005 deadline.

EC ISSUES NEW DIRECTIVE ON SYSTEM FOR AUTHORIZATION OF GMOs

On October 18 the European Commission applied a new Directive on the deliberate release into the environment of genetically modified organisms (GMOs), which replaces the previous Directive in place for the past ten years. The new Directive strengthens the previous legislation, calling for a more detailed pre-market scientific evaluation of GMOs and better transparency throughout the authorization procedure and handling of GMOs. While applicants should use the Commission guidelines to ensure that their applications meet the new Directive’s requirements, companies still maintain the right to decide what products they want to put on the market and member states decide whether or not to initiate the procedure for authorization. The Office of the U.S. Trade Representative issued a statement after the EC’s announcement expressing doubt that the new Directive will truly end the EU’s four-year moratorium on approving biotech foods. Supporting this conclusion, several member states have stated that they will not end the moratorium until strict traceability and labeling rules are in place.

USDA WILL ALLOW CONDITIONAL IMPORTATION OF SPANISH CLEMENTINES

The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service amended its regulations on October 17 to allow shipments of Spanish clementines, banned since December 2001, to resume to the U.S. provided that precautions are taken to protect against the introduction of Mediterranean fruit flies. Clementines from Spain were banned by the USDA after live Mediterranean fruit fly larvae were discovered in several shipments already in the U.S.

USITC ENDS INVESTIGATION OF STEEL IMPORTS FROM 15 COUNTRIES

On October 16, the U.S. International Trade Commission voted against imposing duties on imports of cold-rolled steel from 15 countries, including Belgium, France, Germany, the Netherlands, Russia, Spain, and Turkey. The decision follows a September ruling from the U.S. Department of Commerce that cold-rolled steel products from these countries were dumped on the U.S. market, with dumping margins ranging from 4 to 137 percent. However, the USITC has ruled that imports of cold-rolled carbon flat steel products from these countries do not hurt domestic producers, and thus investigations will be terminated and no duties will be imposed.