EU prepares steel retaliation against US

The European Commission proposes sanctions against US products, worth 2.5 billion euro, in retaliation for US tariffs on imported steel.

The proposed sanctions, that the Commission is discussing with the 15 EU Member States, would hit around 300 US products, from steel and textile to furniture, paper and citrus fruit. The list is comprised of products for which the EU is not dependent on US imports.

The retaliation is designed to put pressure on the US to withdraw its steel tariffs against EU producers. The EU hopes the planned retaliatory action will convince the US to agree to give compensation for lost trade in steel.

The sanctions would mostly hit the US states where the EU believes President George W. Bush will be particularly vulnerable in congressional elections later this year. Orange juice from Florida and Harley-Davidson based in Wisconsin would be hit by retaliatory action, but textiles are the biggest item on the list.

 

The world steel market faces significant overcapacity and the US has been slow to introduce the necessary restructuring measures. More than 30 US steel producers have gone bankrupt over the last four years.

The US International Trade Commission (ITC) ruled at the end of 2001 that foreign producers have been flooding the US market with cheap imports, and recommended that the US administration should introduce import tariffs for steel. On 5 March, President George Bush announced the imposition of tariffs of between 8% and 30% on a range of products from Europe, Asia and Latin America.

 

The EU must notify its retaliatory measures to the World Trade Organisation (WTO) by 20 May 2002. If the measures are approved by the WTO dispute settlement panel, the EU would be able to apply the sanctions as from 18 June.

The EU is also planning to announce safeguard tariffs in the next few days in order to protect its steel industry from cheap Asian and Latin American imports.

 

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