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WASHINGTON — U.S. and European Union trade negotiators on Friday reported no breakthroughs in a dispute that could lead to the EU slapping punitive tariffs on U.S. exports, including apparel.

This story first appeared in the June 24, 2002 issue of WWD.  Subscribe Today.

At a joint news conference, U.S. Trade Representative Robert Zoellick and EU Trade Commissioner Pascale Lamy said both sides are still mulling over their differences. However, the officials, as they’ve done in the past, made repeated comments to demonstrate how the U.S. and EU remain allies on trade issues and to express their desire to stave off a trade war.

“Our common interests far outweigh the differences,” Lamy said.

The EU has threatened to slap punitive duties totaling about $335.6 million on U.S. goods to retaliate against the Bush administration imposing tariffs of up to 30 percent on imported steel. The EU hasn’t said when it might retaliate, after having delayed a mid-June decision following the U.S. announcement that some EU specialty steel products are now exempt from the U.S. super-tariffs. The U.S. is expected shortly to announce more EU steel exemptions.

The specter of the EU levying punitive tariffs on U.S. apparel couldn’t come at a worse time for the Bush administration. EU officials have picked several women’s and men’s apparel products to target. The garments are made in Southern states that are key battlegrounds in November’s election, which could determine whether Republicans maintain control of the House.

The Bush administration said it levied the tariffs to protect the flagging steel industry in the face of low-cost import competition, a temporary measure allowed by the World Trade Organization in order to give an industry time to regroup. The EU argues the steel tariffs aren’t needed because steel imports have been declining.

In another trade dispute, the EU continues to wait for Congress to alter a tax break for U.S. corporations operating abroad that was deemed an illegal subsidy by the WTO.”