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Further US Steel Exclusions May Ward Off EU Retaliation

by Mike Godfrey,, New York

23 August 2002

Continuing with the gradual process of weakening the protectionist steel tariffs it imposed last March to the dismay of many free-traders in the administration, the US yesterday announced a further 178 exclusions from the tariffs, bringing the total number so far granted to 727.

This sounds impressive, but in fact covers only a small proportion of the imports affected by the tariffs. Yesterday's exclusions applied mainly to the EU and Japan - the two most vociferous complainants in WTO hearings into the US tariffs now taking place in Geneva, which also involve China, Switzerland, Norway and South Korea.

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 EU has drawn up two lists of US products to be targeted by import tariffs in response to the tariffs, with a first list of 100% tariffs totalling US$380m, but in late July said it would postpone application of the counter-measures until September while the US considered further exclusions. The US tariffs affect about 2.3 billion euros' worth of EU exports. Japan has also said it would back away from imposing retaliatory tariffs in response to the lists of exclusions.

Japanese officials said they were backing off their threat to impose retaliatory tariffs. Some European Union steel companies said the exemptions so far shouldn't forestall a tough EU response.

Steel companies on both sides of the Atlantic however continued to issue bellicose statements, with US companies objecting to most of the exclusions and EU companies calling for the anti-tariff tariffs to go ahead.

The administration said that all the exclusions combined, under last year's import volumes, would have affected about 10% of the 30 million tons of steel products imported in 2001. Bizarrely, imports have actually increased this year in volume terms, as US producers have started making specialty steels which can now compete with foreign products.

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