The Clinton administration turned up the heat on Europe Friday by abruptly canceling a negotiating session aimed at resolving a trade dispute between the United States and its largest trading partner.
U.S. Trade Representative Mickey Kantor said it was now very likely that threatened trade sanctions against the 12-nation European Community would take effect on March 22.The sanctions would bar European firms from bidding on U.S. government contracts for utility projects and services.
The sanctions, which the new administration had threatened in one of its first trade actions, would be in retaliation for a rule that went into effect on Jan. 1 that put American companies at a competitive disadvantage in bidding on government contracts in the EC in the areas of telecommunications and power-generating equipment.
U.S. and EC negotiators had been scheduled to meet to try to resolve the issue on Monday and Tuesday, but Kantor told reporters he had canceled that session because EC officials had given no indication they intended to withdraw the new rule.
"If a meeting is not going to be productive, there is no reason to hold it," Kantor said.
Kantor said the latest development means that the ban on European company bids "will almost certainly go into effect."
Ella Krucoff, a spokeswoman for the EC in Washington, said that the Europeans were "surprised and distressed" that Kantor had abruptly canceled the negotiating sessions.
"It is not a very businesslike way of handling negotiations," she said. "How can we be flexible if we are not even allowed to negotiate?"
Only about $50 million a year in European sales in the United States would be affected initially, but the administration also is threatening to broaden the retaliation to cover as much as $500 million in European products and services sold to the federal government annually.
But European officials have said if the United States does retaliate, it will consider counter-retaliation against American companies. EC officials said while their January rule is discriminatory, it represented an improvement over previous practices.
Asked about the possibility of a full-fledged trade war over the issue with American firms losing sales as well, Kantor said he did not believe Europe would counter-retaliate.