EU, Asia urge US to end steel tariffs

Europe and Asia piled pressure on the United States yesterday to scrap steel tariffs outlawed by the World Trade Organisation (WTO), with the EU threatening sanctions by mid December.

The European Union has said it will slap retaliatory duties on $2.2 billion of US goods if the steel duties, approved by President George W. Bush in March 2002, remain in place after a final confirmation of the WTO ruling early next month.

The goods targeted by the EU sanctions plan are designed to have a political as well as economic impact as Mr Bush seeks a second presidential term next year. One group is citrus products from Florida, where Mr Bush's brother is governor and which was the key to the president's 2000 election win.

"We hope, in light of this (WTO) decision, that President Bush will act quickly to remove the 201 (import) restrictions, so that we can get on with supplying our US customers on a fair and equitable basis," said Anglo-Dutch group Corus, Europe's third-largest steel maker.

French Finance Minister Francis Mer, a former steel industry baron, said the WTO's highest court had no option but to rule that Washington's so-called "safeguard" measures were inconsistent with WTO requirements.

"I welcome it with a certain smile," said Mr Mer. "Because everyone knew that there could be no other conclusion for an initiative that didn't necessarily have just commercial dimensions."

The world trade body's highest court ruled on Monday that the US duties violated international trade laws, raising the prospect of retaliation from the EU and other complainants if they remain.

Japan and South Korea said they would delay any retaliatory action pending a formal response from the Bush administration to the final verdict in the case by the WTO's Appellate Body.

"The verdict is out and we have already sent out a message that we want them to go by the book. We are waiting to see how they will respond," Japanese Trade Minister Shoichi Nakagawa said.

The United States reaffirmed on Monday that it considered the duties were "fully consistent" with trade rules and said it would study the WTO report.

The EU sanctions will come into play by December 15 at the latest, after the WTO has adopted its appeal panel ruling.

"Countermeasures by the EU can only be held off if the United States implements the WTO ruling rapidly," said Ludolf von Wartenberg, director of the German BDI industry federation.

Japan will hold talks over the next 30 days with the EU and the six other states that filed against the tariffs, Nakagawa said. He declined to comment on possible counter-measures but did not rule out Japanese tariffs on items other than steel.

China welcomed the WTO ruling. "We hope...the United States will carry out its international obligations as soon as possible and withdraw the measures protecting steel," said Ministry of Commerce spokesman Chong Quan in a statement.

The row between the EU and the United States, two of the world's major trade players, comes just as the WTO is trying to resurrect trade talks which stalled in Cancun in September.

The EU has insisted there is no link between the trade rows. "I suspect it is partly on a separate track," said former Canadian ambassador to the WTO John Weekes.

But he added: "EU and US trade relations are possibly at their worst point since the WTO was launched (in January 1995).

"It has always been easier to resist protectionism or the taking of defensive action if actively engaged in a process of trade liberalisation."