US steel tariffs panned by WTO

Tariffs imposed by the United States on steel imports in March last year and bitterly opposed by the European Union break global trading rules, the World Trade Organisation (WTO) said yesterday.

The formal finding, which came five months after an interim ruling also went against the US, followed the nine-month examination of a complaint filed by the EU, Japan and six other countries.

The three-man panel said the tariffs and the way they were imposed were inconsistent with the WTO's overall rulebook - the General Agreement on Tariffs and Trade - and with its Agreement on Safeguards.

The 1,000-page report recommended that the US be asked to bring the measures - which President George Bush said were vital to save the ailing US steel industry - "into conformity with its obligations" under those two accords.

The EU's executive Commission immediately hailed the ruling as "a full victory", but the US, where Bush is under heavy pressure from steel manufacturers and labour unions to keep the controversial tariffs in place for as long as possible, said it would appeal.

The announcement from Washington came soon after EU Commission spokeswoman Arancha Gonzalez said the EU was ready with a list of US goods worth around $2.0 billion that could face sanctions - or retaliatory tariffs.

These could be put into action if the appeal - which would mean a final ruling could be postponed almost to the end of the year - was not filed within five days, she said.

The EU slapped anti-dumping duties on silicon from companies belonging to Russian metals giants RusAL and SUAL, provoking an angry reaction from one of the firms.

The European Commission said in a regulation published in the bloc's Official Journal that RusAL company imports would attract a duty of 24 per cent and those from SUAL 25.2 per cent. The EU already has import duties against silicon imports from China of 49 per cent.

"The Community industry has been suffering as a result of low priced dumped imports of silicon from Russia," said the regulation, which comes into force the day after publication.

It found that Russian imports of the metal had increased over the period under consideration - from October 2001 to September 2002 - by 67 per cent while the market share rose by nearly a third. At the same time, import prices fell 11 per cent.

RusAL and SUAL are Russia's first and second largest aluminium companies respectively. The plants hit by the anti-dumping duties are RusAL's Bratsk and the Sual-Kremny-Ural and ZAO Kremny factories belonging to SUAL.

"We see this as a preliminary decision. We will do our best to prove to the European Union that this decision should be withdrawn," a source in RusAL told Reuters in Moscow.

Silicon is the second most abundant element in the earth's crust. Silicon is used to make solid-state electronic devices, or silicon chips. It is also used as an abrasive, in the production of soaps and is an important ingredient in silicone, used in lubricants, polishing compounds, and surgical implants.