EU Calls US Steel Tariff Exemptions 'Insufficient'

by Ulrika Lomas, Tax-News.com, Brussels

18 July 2002

Reporting yesterday to Coreper (the body that unites the ambassadors of the EU's member states) the European Commission said the exemptions so far granted by Washington from its tariffs on steel imports were insufficient, but said it was too soon to recommend whether to retaliate immediately against the US.

The US administration has announced 247 product exclusions so far, which the Commission says cover only 330,000 tonnes of steel, representing barely 10% of the EU's exports which are affected by the tariffs of up to 30%. The US says it will need until August 31 to decide on all the requests from foreign steel producers for exclusions.

The 15-nation bloc has drawn up two lists of US products to be targeted by import tariffs in response to President George Bush's 'protectionist' steel tax, and had set Friday as the date on which it would decide on the first list of punitive tariffs amounting to US$380m, but may now defer the decision until EU foreign ministers meet next Monday.

The Commission also said it would work towards a re-opening of international talks on curbing excess steel production capacity. Taking advantage of the fall in imports resulting from the Bush tariffs, US steel producers have increased their prices in some cases to as much as 80% above EU levels, encouraging marginal plants back into the market and increasing world-wide over-production. If the US tariffs are struck down by the WTO, as the EU expects, the result will then be a disastrous slump in prices.

The Commission wants an international agreement that would ban production subsidies and import restrictions, and would have an effective monitoring mechanism. "To be successful this will require a willingness on behalf of all participating governments, including that of the US, to contribute by making politically difficult choices," the Commission said. "The current exercise has been unsuccessful in doing so, largely because the US was seen as only paying lip service to it."

The WTO hearings into the US protectionist tariffs imposed in April, now taking place in Geneva, involve China, Switzerland, Norway, Japan and South Korea in addition to the EU.

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