Brussels, July 12 (RHC) - The European
Union and the United States were teetering on the brink of a transatlantic
trade war late Friday after Brussels threatened a 2.2 billion dollar package of
sanctions unless Washington scrapped steel tariffs ruled illegal by the World
Trade Organization. Brussels claimed victory in its fight to force President George
Bush to drop measures aimed at shoring up his political support in the US's
industrial heartlands, but Washington said it would appeal against the decision
and maintain the tariffs until the appeal process runs its course - which could
take months. The European commission said, however, that it would seek to hit
pre-selected US products with retaliatory tariffs worth up to 2.2 billion
dollars a year unless Washington dismantled its offending steel tariffs within
five days.
A WTO disputes panel said American import
tariffs of up to 30% on foreign steel could not be justified under global trade
rules and that they should be abandoned as soon as possible. Arancha González,
a spokeswoman for EU trade commissioner Pascal Lamy, urged the US to look at
the wider picture, saying all the world's steel exporters are telling
Washington to remove the tariffs. The WTO appeared to side with the EU and
fellow claimants Japan, Korea, China, Switzerland, Norway, New Zealand and
Brazil on every front. The trade watchdog said the US tariffs, announced by
President Bush last March, were in breach of global trade rules in every
category.
Washington had argued they were necessary to help the US steel industry recover from a wave of cheap Asian and European imports, but the WTO said it had found little evidence to show foreign imports had dramatically increased. Washington also contended that its hand had been forced by sudden and unforeseen circumstances, but again the WTO disagreed. Nor did it concur that US steel producers had suffered any major economic injury because of alleged floods of foreign imports. Leading up the US's implementation of the tariff, critics had argued that the move was essentially electoral and that it also responded to the US's failure to invest in the modernization of its steel industry - choosing instead to subsidize it.