EU Defers US Steel Sanctions Until September

by Ulrika Lomas, Tax-News.com, Brussels

26 July 2002

As expected, EU European foreign affairs ministers this week decided to postpone until the end of September any decision over sanctions to be applied to US exports in retaliation against the steel tariffs it imposed in March.

The 15-nation bloc had drawn up two lists of US products to be targeted by import tariffs in response to the 'protectionist' steel tax, with a first list of 100% tariffs totalling US$380m. The US duties tariffs affect about 2.3 billion euros' worth of EU exports.

The Commission said last week that the postponement was justified by exemptions granted by the United States, but warned that further US steps are necessary.

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 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.

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 now taking place in Geneva involve China, Switzerland, Norway, Japan and South Korea in addition to the EU.

Recommended