Tension Mounts in Bitter Trade Row over US Steel Action

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Last updated at: (Beijing Time) Thursday, March 21, 2002

Tension Mounts in Bitter Trade Row over US Steel Action

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Pressure mounted on the United States Wednesday as Japan and South Korea lodged a protest at the World Trade Organisation about US protectionist measures on steel imports on the day the measures took effect.

The European Union has already launched a similar bid for the WTO to rule on the legality of a US move to slap up to 30 percent tariffs on some imported steel.

Japanese and South Korean officials said they had now also officially lodged their own objections to the three-year US "safeguards" announced by US President George W. Bush on March 5.

"The US measures do not meet what the WTO rules require," Japan's Chief Cabinet Secretary Yasuo Fukuda told a news conference.

A Japanese diplomat in Geneva said no decision had yet been taken on whether Tokyo would team up with Brussels to make a joint complaint to the WTO but the diplomat said it was a possibility.

The European Commission will be ready "within a few days" to implement its own safeguard measures against the US tariffs, a commission spokesman said Wednesday.

"The American measures take effect today, that's been confirmed, and we therefore will be ready in a few days," said the spokesman for European Trade Commissioner Pascal Lamy.

The safeguard measures aimed at warding off an influx of steel imports into the European Union that would have otherwise gone to the United States will be applied immediately, he said.

Japanese exports of steel to the United States fell last year to 1.86 million tons, or 6.8 percent of the total imported into the US, compared to 1.93 million tons a year earlier.

The US measures will cause potential losses to Japanese steel-makers of US$168.94 million dollars (192 million euros), with the tariffs affecting roughly 1.4 million tonnes of their US-bound exports, according to Kyodo News Agency.

South Korean steel exports to the United States totaled 2.01 million tons worth US$940 million last year.

South Korean steel firms predict some 60 percent of their US exports would be affected by the US decision.

For its part, the European Union claims exports by its steel industry to the United States market, which came to about four million tons in 2000, will suffer from the US move to the tune of up to 2.4 billion euros.

US and EU officials held initial closed-door consultations in Geneva on Tuesday on EU demands for compensation for the harm caused by the US tariffs and quotas under the WTO's safeguards agreement.

But little progress appears to have been made. The US delegation declined to commit itself, even in principle to compensation, diplomatic sources said, and no other talks have been scheduled.

On Wednesday, the commission spokesman said: "It is our position that we have a right to 2.5 billion euros per year based on the American measures."

"At the WTO, a presumption of risk is sufficient for these (EU safeguard) measures to be applied, and that's what we intend to do," he added. The measures, under WTO rules, can be applied for up to 200 days, he noted, adding that they "will not be protectionist" and "will maintain the access level to our markets."

A source close to the affair said the European Union would be preparing a "gloal quota" based on recent steel import levels into the EU, beyond which supplementary customs duties will be imposed.

Brussels contests US claims of a recent sudden increase in imports, and asserts that since 1998 US imports have fallen by 33 percent. But Washington argues that it is justified in applying temporary safeguards to protect its ailing steel industry.

Brazilian officials asked a US delegation on Tuesday to consider alternative measures for Brazilian steel imports, such as increasing certain quotas, a Brazilian diplomat said.

Its industry claims exports would sustain between US$350 and US$400 million of damage a year, while Brazil also points out it is the developing country the most affected by the US move.

China is due to discuss the steel move with the United States this week. Under the Geneva-based WTO's system for settling disputes, the EU, Japan and South Korea have an initial 60-day period to hold bilateral talks with Washington.

If they fail to resolve the crisis, they can then ask for a panel to be set up to examine their complaint.

It can take up to a year for the process to lead to a ruling by a three-member panel, although appeals against that ruling are then possible.

US raises tariffs on several imported steel

The United States was at loggerheads with its key war allies Tuesday, May 5, after imposing tariffs of up to 30 per cent on steel imports, threatening a damaging trade dispute.

The Bush Administration said that it was justified in acting to protect the ailing US steel industry. Thirty-one American steel firms have gone bankrupt in the past four years. The industry blames the decline on the unchecked influx of cheap foreign steel.

European Union leaders vowed swift retaliation and gave warning that the global economy would suffer. Romano Prodi, President of the European Commission, told President Bush before the announcement Tuesday that steps would have to be taken in response.>>details

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