Treasury's O'Neill Offers Reassurance on Oil, Steel Spat
PARIS – U.S. Treasury Secretary Paul O'Neill said on Wednesday the "shrillness" of the reaction to the U.S. steel import tarrifs would soon pass and that global economic recovery will not be threatened so long as oil prices stay in their current range.
Last month the U.S. said it would impose tariffs of up to 30 percent on a wide range of steel imports for a period of three years to protect its struggling domestic industry.
"I made note of the fact that right now something of the order of 1,000 requests of exemptions (to tariffs) are being looked at and I think as some of these exemption requests are processed that the shrillness of this conversation will be reduced," O'Neill told reporters after meetings with France's Finance Minister Laurent Fabius and with officials of the Organisation for Economic Co-operation and Development.
He said U.S. trade rules had obliged President Bush to impose the tariffs on steel imports amid a global steelmaking overcapacity that was damaging to U.S. producers.
"The world will get through this," O'Neill said.
O'Neill said there was a global glut of steelmaking capacity and said that "hopefully there will be a substantial reduction in the 30 or 35 percent overcapacity that exists in the world and that we can go on to another subject."
Both O'Neill and Fabius struck an optimistic note about oil prices, which have risen about $7 dollars a barrel since early March to about $27 on Middle East tensions.
O'Neill said that since Saudi Arabia, the biggest world oil producer, was offering to make up any shortfalls in production, costlier energy should not derail a global recovery.
"It seems to me that the Saudis and the rest of the oil producing community are together on maintaining their stand of a band of prices and doing (ensuring) whatever production it takes to stay in that band," O'Neill said.
"It's an issue we can proceed with, an assumption that things are going to be OK.," O'Neill added.
In a television interview after his meeting with O'Neill, Fabius said as long as oil prices were stable the economic outlook remained positive.
"I'm pretty optimistic provided that the price of oil is not too high," the French finance minister said on CNBC television.
G7 WARY ON OIL PRICES
The global economy is recovering from a downturn that set in early last year, leaving it vulnerable to an oil price shock.
O'Neill and other finance minister from the Group of Seven industrial nations, who meet in Washington on April 20, have been playing down the risk of such a shock to a recovery.
The G7 comprises the United States, Britain, Canada, France, Germany, Italy and Japan.
O'Neill is spending the week in Europe. He met German Finance Minister Hans Eichel in Berlin on Tuesday, Fabius on Wednesday and will head to London on Thursday for meetings with Gordon Brown, Chancellor of the Exchequer, and others.
O'Neill's European agenda includes discussions on how to tighten restraints on the flow of funds through the world banking system to groups that sponsor terror.
In response to questions on Wednesday, he conceded that such groups were "clever" and that it was forcing governments around the world to find new ways to outwit them.
U.S. officials have indicated they want Europe to take more initiative in identifying and naming individuals or groups suspected of being agents of terror but O'Neill has avoided saying publicly what exactly he wants Europeans to do.
He insisted on Wednesday there was no doubt that government actions so far to thwart the movement of funds have been disruptive to terror groups but added: "We're a long way from complete on this."
The U.S. Treasury has put 192 individuals, businesses and groups on suspect lists so far and frozen about $104 million in suspected terror assets in 150 countries. Of that total, about $35 million has been frozen by European countries.