Brown holds out hope on trade row

UK Chancellor Gordon Brown is set this week to lay out moves to settle the impending trade war over steel and tax breaks between Europe and the US.

Speaking to the CBI business conference in Birmingham, Mr Brown plans to unveil a review of the transatlantic trading relationship that could ease tension.

Bringing down barriers could boost trade by £100bn a year, he will say.

The review is to be modelled on the one which laid out the shape of Europe's single market.

Trade issues are likely to figure strongly in the agenda in Birmingham.

On Sunday morning, ahead of the annual conference's opening later the same day, CBI director-general Digby Jones toured the TV studios to push for US President George Bush to end the tariffs he imposed on non-US steel three years ago.

The CBI fears that US trade policy could be particularly painful for British business, which is highly dependent on the American market.

The European Union is planning trade sanctions in opposition to the tariffs, as well as against a set of tax breaks that the World Trade Organisation says are illegal.

Mr Bush is thought in some quarters to be planning to announce a deal on steel when he arrives in the UK this week on the first full state visit for a US president in more than 80 years.

'Beyond the old'

Mr Brown's plan, he will tell the CBI, is for a rerun of the Cecchini Report, the process which led to the creation of the European Single Market in 1992.

Digby Jones will be pushing trade issues

"Just as in 1998, when Europe was at the outset of the great project to move towards deeper... intergration, the Cecchini report broke down the barriers prventing the creation of a single market in Europe by clearly showing the benefits in commerce and jobs," Mr Brown will say.

"So the UK, the US and other countries have agreed to proceed with a major transatlantic review on how we can move beyond the old trade disputes and reap the benefits of greater trade and investment liberalisation."

An extra 2% on growth and a million new jobs could be Europe's reward for settling its trade dispute with the US, Mr Brown will say.

But critics are likely to charge that with an election due in November 2004, domestic politics will trump international harmony in Mr Bush's thinking.

Many senior officials in the White House are reluctant to do anything which might make life easier for France and Germany, Europe's two biggest economies, because of their antipathy over Iraq.

And the US Congress has been working on alternatives to the illegal tax breaks for years, and is pushing for a package which will boost benefits to US companies rather than cut them.