LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)

April 6, 2005 Wednesday
London Edition 2

SECTION: INTERNATIONAL ECONOMY; Pg. 11

LENGTH: 636 words

HEADLINE: Harking back to the days of Lamy friendship: Mandelson rift shows no signs of healing, report Edward Alden and Raphael Minder

BYLINE: By RAPHAEL MINDER

BODY:


Before the first meeting last December between Robert Zoellick, the US trade representative, and Peter Mandelson, the new European trade commissioner, the US offered what it thought was an olive branch.

Rather than escalating the dispute over aircraft subsidies to the World Trade Organisation, the US chose to give Mr Mandelson time to consider the issue.

The EU response was curt: "Peter Mandelson is looking forward to Zoellick clarifying the US position," the commissioner's spokeswoman said. "If the US is now pulling back from the WTO, Mr Mandelson would be interested . . . to hear what they intend to do next."

The frosty response to what Washington thought was a friendly gesture set the tone for what has since been a remarkable deterioration in trade relations between the US and Europe. It reached a head yesterday when Mr Zoellick bluntly charged that, in his handling of the aircraft dispute, Mr Mandelson was no Pascal Lamy, the former EU trade commissioner.

Mr Zoellick, on a two-day trip to Brussels in his new job as deputy secretary of state, made it clear that he blamed Mr Mandelson for the breakdown of talks on the issue.

On two separate occasions, he highlighted how he had managed to resolve high-profile and complicated disputes with Mr Lamy, whom he described as "a friend".

US officials say the dispute is part of broader deterioration in good working relations between Brussels and Washington since the departure of Mr Lamy.

Some of the complaints are small. The EU, for instance, did not warn Washington last week before it imposed trade sanctions on the US over an antidumping law known as the Byrd amendment. Canada, which imposed similar sanctions, did alert Washington.

The US also says that larger issues involving rice and wood imports have proved harder to resolve with the EU than under the Lamy regime.

EU officials rejected the notion that Mr Mandelson had precipitated the crisis. They pointed out that it was the US that chose to make public the result of last month's acrimonious phone call that broke off the aircraft negotiations, without prior notification to Brussels.

A senior aide to Mr Mandelson insisted that, despite the phone incident, "we have made sure that our views are put forward through official channels".

Another European trade official said Mr Zoellick's charges were unfair, noting there were plenty of spats in previous years that had the two sides shouting at each other through the press.

"To say that Mandelson is different than Pascal Lamy is obvious," he said. "We don't clone our trade commissioners."

Iain MacVay, who heads the European trade practice of Steptoe & Johnson, the US law firm, said the deterioration in relations should be seen in context.

"You have to remember that Zoellick and Lamy have a long history, are used to dealing with each other and suddenly you have a new guy coming in. You might normally expect a honeymoon but this time you didn't get it. I am optimistic about Mandelson's time but it is early days."

Since taking charge of EU trade policy last November, Mr Mandelson has brought to the job what Mr MacVay and others call "a more political approach" than Mr Lamy. Mr Mandelson has won plaudits for his cautious handling of some sensitive issues such as Chinese textiles.

However, keeping a healthy transatlantic relationship remains a litmus test of his ability to handle the job, and one that could decide the fate of the Doha round of world trade talks, where the EU and the US are trying to align their positions.

Trade experts also said the imminent change of US trade representative, with Rob Portman likely to be confirmed within the next month, could prove timely for Mr Mandelson.

"Mandelson apparently got the chemistry totally wrong with Zoellick but there is chance to start afresh soon," said one Brussels-based lawyer.

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