WTO declares U.S. steel tariffs illegal

By Paul Meller

New York Times News Service

BRUSSELS, Belgium -- The World Trade Organization on Friday issued its formal finding that steel tariffs imposed by the United States last year were illegal. The ruling could lead the European Union and other nations to retaliate later this year with sanctions on U.S. exports.

The United States will appeal the decision, said Richard Mills, a spokesman for the office of the U.S. trade representative. "In the meantime, the steel safeguard measures will remain in place," he said in a statement.

Friday's ruling came after an interim ruling in March also went against the United States. The ruling now goes to an appellate body of seven judges within the WTO that is expected to give its final word in late November or early December.


If Washington's appeal fails, the European Union will impose sanctions on American imports worth as much as $2.2 billion almost immediately, said Arancha Gonzalez, the European Commission spokeswoman on trade issues.

Although the United States had granted many European steel makers exemptions from the import tariffs, Europe would still push for the maximum sanctions allowed by the World Trade Organization, she said.

"The exemptions were granted to help U.S. steel users, not to give European steel makers a present," she said, adding "There is no reason to modify the $2.2 billion sanctions list."

Trade lawyers, however, said they expected the Europeans would ultimately have to pare back their list. "The WTO would call for a reduction in the amount of U.S. products to be targeted," said Richard Weiner, a trade specialist in the Brussels office of the law firm of Hogan &; Hartson.

In March 2002, the Bush administration imposed tariffs of nearly 30 percent on most types of steel imported from Europe, Asia and South America, in an effort to protect the troubled U.S. industry. The administration subsequently scaled back the tariffs, exempting a further 178 steel products and largely defusing the dispute with Europe.

The WTO panel, which was set up to consider complaints by the European Union, Japan, South Korea, China, Switzerland, Norway, New Zealand and Brazil, concluded that the United States did not have grounds to impose the tariffs as a way of safeguarding the U.S. steel industry from a flood of imports.

The United States was wrong to assert that imports were rising in many steel categories, the panel said on Friday in a 1,000-page-long report.

It also failed to prove a causal link between an increase in imports in some sectors, and any serious injury suffered by U.S. steel makers as a result of those increases.


The U.S. trade representative's office argued on Friday that the tariffs had ignited an "unprecedented level of consolidation and restructuring" within the U.S. steel industry. It defended its right to use measures like tariffs to safeguard domestic industry.

"The administration has demonstrated its willingness to both defend and use these laws, and other trade remedy laws," the office said in its statement. "We will continue to consider requests for safeguard measures from domestic producers."

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