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Bush Comes Under International Fire for Steel Tariffs - 2002-03-06

The European Union has said it will fight a U.S. decision to increase tariffs on imported steel products at the World Trade Organization.

EU Trade Commissioner Pascal Lamy, said President Bush is putting domestic politics above his responsibility to abide by international trade rules, despite preaching the virtues of open markets.

"We believe this is a political decision on the part of the Americans. There is no legal basis for it. Indeed, there is no economic basis for it," Mr. Lamy said.

Speaking at a news conference in Brussels, Mr. Lamy has said the U.S. decision flouts World Trade Organization rules on safeguards, which can only be imposed when there has been a sudden surge of imports. He argued that U.S. steel imports have fallen by 33 percent since 1998.

He said the real problem is that the United States has not come to grips with the need to restructure its steel industry, as Europe did in the 1970s and 1980s with a tremendous loss of jobs. The EU official has said the American steel industry is simply not competitive and that tariffs will not help revive it.

"The basic problem is clear. There needs to be restructuring in the American steel industry. And closing their markets is not going to be necessary to carry out such a restructuring," Mr. Lamy said.

Mr. Lamy said the 15 nation European Union is the biggest victim of the U.S. tariff hikes because it accounts for one-quarter of U.S. steel imports, and they are, for the most part, high added-value products. But he has said the European Union will not engage in retaliation because that would violate WTO procedures.

He said in contrast to the Americans, the European Union intends to play by the rules. "We will not deviate from these rules. The steel market worldwide is not the [Wild] West, where everybody just does what they like," Mr. Lamy said.

Mr. Lamy has said the European Union will not only rely on a WTO ruling, which could take up to 18 months. It is also prepared to draft WTO/compatible safeguard measures of its own to protect its market from a sudden surge in imports that can no longer enter the United States.

British Trade Secretary Patricia Hewitt said such a surge could hurt the European steel market. "The risk is that steel products from other parts of the world, particularly the Far East, will be diverted away from America and will flood Britain and Europe instead, and that would be hugely damaging," she said.

Ms. Hewitt said she and Prime Minister Tony Blair are bitterly disappointed at President Bush's move. Other EU countries have also reacted negatively. Germany said the U.S. action is unjustified. France calls it unacceptable. And Sweden described it as hypocritical.