EU expects no breakthrough on U.S. tariffs at G7 summit -EU official

(Combines stories, adds background, quotes)

By Jan Strupczewski

BRUSSELS, June 5 (Reuters) - The European Union does not expect any breakthrough on steel and aluminium tariffs imposed by the United States on the EU and Canada at talks of G7 leaders in Canada later this week, a senior EU official said on Tuesday.

Finance ministers of the United States' closest allies vented anger over the tariffs last Saturday (Shenzhen: 002291.SZ - news) , ending their meeting with a stern rebuke of Washington and setting up a heated fight at the G7 summit in Charlevoix on June 8-9. Some said the issue could be tackled by the leaders in direct talks.

But the EU official, involved in the preparation of the summit, said the issue was unlikely to be resolved there.

"We do not expect any breakthrough in the dispute with United States in Charlevoix," the official said. "The most likely outcome will be to find a way to agree to disagree."

The G7 are the United States, Canada, Japan, Britain, Germany, France and Italy.

"We have extremely low expectations that we will manage to convince President (Donald) Trump to change his policy both on steel and aluminium and on Iran," the official said.

"No doubt all the leaders around the table will present their views and their assessment of these decisions and they may not be nice to hear," the official said.

"But we don't have high expectations they will influence President Trump," he said.

"FUNDAMENTAL QUESTIONS"

The official said that the tariffs imposed last Thursday had significantly increased tensions before the meeting, adding to the strain caused by the U.S. withdrawal from the Paris accord on climate change and an agreement lifting sanctions on Iran.

The official said all these issues combined were "leading, at the end of the day, to fundamental questions about our common approach to a rules-based international order".

"The U.S. decision to apply tariffs on aluminium and steel to all G7 partners for national security reasons has left us with no other option but to recourse to launching a formal complaint at the World Trade Organization (WTO) and to introduce safeguarding and rebalancing measures," the official said.

The 25 percent steel and 10 percent aluminium tariffs were imposed this week on Mexico, Canada and the EU after temporary exemptions expired.

The official reiterated that the EU was ready to discuss with the United States an overhaul of the WTO.

"New (KOSDAQ: 160550.KQ - news) rules are needed to improve the protection of intellectual property rights, to eliminate trade-distorting subsidies and other forms of government support, including debt provided by state-owned enterprises," he added.

"We also want to work together on the enforcement of the existing international rules and speeding up the development of a new set of guidelines for government-supported export credit."

(Reporting By Jan Strupczewski; editing by Robert-Jan Bartunek and Gareth Jones)