Exclusions May Placate EU Over Steel Tariffs

by Mike Godfrey, Tax-News.com, Washington

24 June 2002

Major parts of the US administration and many Congressional leaders have begun to understand how damaging it was to give in so readily to the steel producers' howls of anguish over foreign competition in March, when 30% tariffs were slapped on a range of imported steel products. Since the tariffs were imposed, steel prices have risen much further than the steel-makers had predicted, giving ammunition to steel users such as the automotive and construction industries.

In an attempt to halt the administration's plans to exclude as many as 400 types of imported steel from the tariffs, the American Iron and Steel Institute last week accused opponents of the tariffs of talking up the price rises through a costly lobbying campaign.

Visiting Washington on Friday, EU Trade Commissioner Pascal Lamy, said that as long as the US offers further tariff exclusions for more European steel products, the EU might hold off its retaliation against the tariffs even if the US does not agree to compensate the EU by reducing tariffs on other products, something the US is currently refusing to do. So far, the US has excluded 108 types of steel from the tariffs, and is set to decide by July 3 on requests for many more.

"The frontier between compensation and exclusions may become blurred if a good package of exclusions is put on the table," Mr Lamy said, adding that the EU would turn its attention to the case before the World Trade Organisation in which it has been joined by a number of other countries, all attempting to have the US tariffs declared illegal.

This week, China, Switzerland and Norway are due to join the European Union, Japan and South Korea in hearings at the WTO in Geneva. This will be China's first WTO dispute since joining the organisation in December.

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