Agence France Presse | by ROBERT MACPHERSON | March 5, 2002
The European Union warned Tuesday of retaliation and "a major trade conflict" if US President George W. Bush, under pressure from ailing US steelmakers, slaps tariffs and quotas on imported steel.
"The EU will have little choice but to react if the US administration decides to take measures against imports, particularly tariff measures," warned European Commission President Romano Prodi in a letter to Bush.
Bush was expected to announce later Tuesday tariffs of up to 30 percent on most imported steel, except that from NAFTA partners Canada and Mexico or from minor exporting nations like Thailand.
In his letter, dated Monday but released the following day, Prodi wrote: "Mr. President, we understand and sympathise with the difficulties of the US steel industry. "But let us agree to turn away even at this late hour from trade restrictions in this vital sector," he said.
"And let us agree to work together to resolve this difficult problem for I fear the alternative is a major trade conflict."
Prodi's spokesman Jonathan Faull declined to say what action the 15-nation EU might take.
But EU Trade Commissioner Pascal Lamy has referred in the past to the possibility of retaliatory measures and of taking the issue to the World Trade Organization (WTO) in Geneva.
The European Union was itself a major steel producer until the 1990s when it restructured its industry, using government subsidies to cushion the blow but without imposing special tariff walls.
The bloc now imports about 15 percent of its steel needs, with all tariffs to disappear by 2004. Currently, the highest EU steel tariff is five percent, applicable to special products like pipes and tubes.
In an interview published Tuesday in the Paris newspaper Liberation, Lamy dismissed as "totally unfounded" US claims that its steel industry was being mauled by unfair competition from overseas.
"It's been 30 years that there have been problems with steel, and that the Americans have been using anti-dumping and anti-subsidy policies," the commissioner said.
"That said, US trade policy depends largely on Congress -- in other words, elected politicians who act as spokesmen for sectorial or geographic lobbies convinced that their problems come from the rest of the world." he said.
British Prime Minister Tony Blair -- one of the most trusted Europeans in American eyes -- also shot off a letter to Bush, urging him not to go ahead with tariffs, Blair's spokesman said Tuesday in London.
"We recognise that the US steel industry does have to restructure, but we do not believe it is in the interests of the world economy that it should impose tariffs," the spokesman told reporters.
The proposed US measures would affect just over half of the 300,000 tonnes of steel Britain exports to the United States, a government spokesman said.
In his letter, Prodi told Bush it was inappropriate to be taking restrictive trade action just as a new round of global talks got under way to liberalize trade across borders.
A wide range of options was available, including protective measures and a complaint to the WTO, he wrote.
"But in the circumstances, nor can I rule out considering other, and more immediate, retaliatory trade action," he said.
The European Union believed the United States had alternatives to import restrictions, he continued.
Options included a levy on all steel -- not just imports -- to help out retirees of failed steel companies who risk losing their health and life insurance benefits during bankruptcy proceedings.
Nations in the Organization for Economic Cooperation Development also should pursue an agreement to reduce a global production glut, he said.
"Trade restrictions on steel are not just unacceptable to the European Union and other trade partners," he warned.
"They would fly in the face of all you have done, all you are doing, to break down the barriers to trade across the world, and precisely at the moment when the world economy shows signs of emerging from its recent doldrums."
Finally, Prodi, said, the US tariffs risked inflicting serious economic and social damage on the restructuring efforts of countries now seeking membership of the European Union.Agence France Presse:
