US faces dual pressure at G7

EMBATTLED US Treasury Secretary Paul O'Neill is expected to come under pressure this weekend to justify recent decisions to impose protectionist barriers on imports of foreign steel and to boost government aid for farmers.

A meeting of G7 ministers in Canada comes amid growing fears in Europe that protective steel tariffs and increased aid to America's biggest farmers threaten prospects of a global economic upturn. There are specific concerns that American protectionism may scupper a new round of world trade liberalisation talks and trigger more tit-for-tat tariff retaliation.

British Treasury officials believe countries such as Brazil, which play a key role in the world trade liberalisation talks, are likely to be big losers from the proposed American Farm Bill. Recent currency turbulence is not officially on the agenda but the slump of the dollar is almost certain to be discussed.