EU Scolds U.S., Accusing It of Hypocrisy on Trade

The European Union on Tuesday launched fresh attacks on a number of U.S. policies and accused the Americans of hypocrisy in their free-trade posture, especially in technology and telecommunications.

In its annual “Report on United States Barriers to Trade and Investment,” the EU assailed U.S. barriers to everything from foreign satellites to telephone companies and wheat gluten. It also questioned a new export-subsidy program proposed by the Clinton administration.

The report reflected an ever-expanding list of transatlantic trade grievances as European companies flex their wings globally, presenting new competitive challenges to U.S. firms.

The most notable cases include Deutsche Telekom’s bid to acquire a U.S. wireless phone company and plans by the European Airbus consortium to build a jumbo jet that would directly challenge Boeing’s 747. Both plans have encountered resistance in the United States.

The EU report found a number of “worrying new impediments to EU exports to, and investments in, the U.S.” over the last year. One alarming example was what it termed U.S. “carousel” legislation to rotate EU goods hit by U.S. sanctions in marathon trade disputes over bananas and hormone-treated beef.

While it repeated many long-standing grievances, the emphasis of this year’s report was on perceived barriers to trade in the fast-growing telecommunications and technology sectors.

The EU’s Executive Commission warned that a measure being considered in Congress to block Deutsche Telekom’s takeover of U.S. cell-phone firm VoiceStream Wireless would be a clear violation of U.S. commitments to the World Trade Organization on foreign investment.

“The European Union reserves its right to take any appropriate course of action should such provisions become law,” the commission said. It referred to a measure, proposed by Sen. Ernest F. Hollings (D-S.C.), that would close a loophole permitting acquisitions of U.S. telecom firms by foreign companies that are more than 25% state-owned, as is Deutsche Telekom.

The commission also voiced doubts about a U.S. effort to bring an export-subsidy program in line with WTO regulations. The WTO, ruling this year in a case filed by the EU, found that the scheme of tax breaks to American exporters was an illegal export subsidy and gave the U.S. until Oct. 1 to change it.

The Clinton administration and congressional leaders last week unveiled a sweeping plan to overhaul the program, but the EU said the goals are similar to those of the discredited plan.

“We haven’t even been given a text by the U.S. side this time. It makes you wonder whether they are interested in knowing what we think,” one EU official complained.

The EU also said European satellite companies had run into problems in serving the U.S. market. It cited a recent U.S. law on the privatization of global satellite consortium Intelsat and maritime satellite communications provider Inmarsat, and reserved the right to go to the WTO if the law was used against the interests of EU operators.

On mobile communications, the commission noted that “access of third-generation mobile communications systems to the U.S. market could be restricted due to lack of availability of frequencies.”

This followed a U.S. decision to allocate to second-generation systems frequency bands identified in 1992 by the International Telecommunications Union for third-generation systems.

On digital television, the EU noted that the Federal Communications Commission in 1996 had mandated an exclusive standard--ATSC--for digital terrestrial television in the United States. That had prevented technology developed in Europe--DVB-T--from entering the U.S. market, it said.

Meanwhile, the EU seized on a report Monday from a WTO dispute-settlement panel that said the U.S. had violated a WTO agreement when it imposed a three-year quota on wheat gluten imports from the EU and other suppliers.

In response, the EU threatened to slap a tariff on U.S. corn gluten.