LONDON, 15 April — US Treasury Secretary Paul O’Neill could not have hoped for a better reception when he visited Britain last week. Ostensibly, he was in London to consolidate efforts in the fight against money laundering of terrorist funds and flushing out these funds.

This seems to be a bigger priority, even though tough measures are already in place in most international and other financial centers. This on the back of the flaying last week by the US Congress and Senate of the European countries for not pulling their weight in the fight against international terrorism.

What was surprising is that “President Bush’s best friend in Europe”, British Prime Minister Tony Blair and his ministers, especially Chancellor of the Exchequer Gordon Brown, and Trade & Industry Secretary Patricia Hewitt, did not publicly raise the vexed issue of the recent unilateral imposition by President Bush of heavy tariffs on foreign steel imports into the US.

London’s initial reaction was to cooperate with its European partners to slap retaliatory measures against US exports to the European Union, which would also take up the matter with the World Trade Organization (WTO). Countries round the world had argued that the US action was in contravention against WTO rules and had more to do with US domestic politics given the looming mid-term US congressional and senate elections, especially in Florida and Ohio, where the Republicans need to win.

Instead it was left up to the British media to take up the case of UK Plc and British steel workers. Even, the formerly aggressive Confederation of British Industry (CBI), now a compliant fellow-traveler of the New Labor-Business partnership, is now defending the US action by supporting the reported blocking by the British government of a plan by the European Commission to impose tit-for-tat tariffs on American exports to the EU, planned for June this year. The German equivalent to CBI, the BDI together with the government of Chancellor Gerhard Shroeder, are also supporting the British stance.

Is this because that London and Berlin, the two strongest economies in Europe, have stitched up their European allies? Treasury Secretary O’Neill hinted in London that the US might exempt certain countries from the tariffs. He confirmed that over a thousand applications from foreign steel producers have been received seeking this exemption. Is the UK and German reported blocking of EU counter-sanctions against US goods a cynical ploy because London and Berlin have privately been assured by the Bush administration that their steel producers would be guaranteed exemption against the punitive tariffs? Is it also payback time for the UK’s and Germany’s close cooperation with Washington in the fight against international terrorism?

Britain and Germany, together with their business organizations, argue that there would be no benefits from a tit-for-tat policy and that the best way would be to seek a negotiated settlement with all the steel producers to eradicate the current 35 percent overcapcity in world steel production, to prevent future dumping.

The US, UK and German ‘Axis of Steel’ raises serious implications especially for the efficacy of the WTO especially when the two trading giants of the world, the US and the EU, are at loggerheads.

In the Euro-Atlantic banana and beef hormones wars of the past, Europe was unified against the unilateral US actions.

The difference this time is that the two powerful European economies, together possibly with France, have broken ranks with the rest of the EU countries, to side with the US. A US official on a recent visit to China, in a tongue-in-cheek fashion, urged the Chinese not to follow in the footsteps of the ‘European imperialist dogs’.

The message all this posturing sends out to the world is that free trade is a matter of political, electoral and business expediency, and that the top five economies have the trade agenda all stitched up and can act with virtual impunity under the cover of their version of interpretation of this or that WTO rule, the point in case with the current US steel tariffs.

The emerging economies have a daunting task ahead in this respect. How do they own up their markets ostensibly to create a level playing field for all comers, when the overwhelming majority of their companies and agencies do not have a remote chance of competing in terms of capital, marketing expertise, technology and product innovation? Does free trade only imply free access to markets? If so, emerging economies would be privy to and partners in the relentless march of corporate globalization.

So when Prince Abdullah ibn Faisal ibn Turki, the governor of the Saudi Arabian General Investment Authority (SAGIA), confirmed in Jeddah last week that the government through the Supreme Economic Council was in the process of reviewing the country’s foreign investment regime, with the possibility that the so-called ‘Negative List’ — those economic sectors in which foreign investors are currently banned from investing in, would be extensively revised, the hope must be that the Saudi government must move cautiously in the interest of its economy and business sector and not because of the pressures to adopt market liberalization per se, at the say so of the developed economies, the WTO itself and the International Monetary fund (IMF).

Governor Prince Abdullah in the recent past has assured that the Kingdom would pursue economic liberalization at a cautious pace.

The ‘Negative List’ as such was unlikely to be scrapped. “It is still too soon to see what the effects are of the foreign investment law. You can have direct investment and privatization even with subsidies,” he stressed.