US urges the EU to postpone its retaliation on steel tariffs

On 19 April, the Commission proposed that the EU should introduce trade sanctions worth 300m dollar, in retaliation to the tariffs introduced by the US on steel. The retaliation measures would target sensitive export products such as fruits, textiles and steel.

On 19 April, the Commission revealed its planned retaliatory measures against the US. The US reacted by urging the EU to delay taking action until the WTO panel has ruled on the US tariffs. So far, the EU has not responded to the request for a delay and the sanctions are still expected to commence on 18 June.

The retaliation is designed to put pressure on the US to withdraw its steel tariffs against EU producers. Another possible intermediate solution of the conflict would be for the US to lower duties on other products.

 

The USclaims that the EU is breaching WTO rules by seeking to impose unilateral retaliation measures before a WTO panel has ruled on the US tariffs. This is not expected to happen until next year.

European engineering companies have written to Trade Commissioner Lamy, urging the EU not to introduce import restrictions on steel as part of the trade conflict with the US. The industry associationOrgalimestates that trade restrictions would lead to large economic losses for European companies.

 

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 17 May 2002. The EU intends to apply the sanctions as from 18 June.

 

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