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EU Plans 'Retaliation' Over US Steel Tariffs - 2002-03-22

The European Union has drafted a list of U.S. products to be hit with import taxes in retaliation for tariffs the United States has imposed on European steel. EU member governments will review the list before the EU submits it to the World Trade Organization, which arbitrates international trade disputes.

EU officials will not say which American products will be hit by the EU sanctions. But diplomats monitoring the most recent trans-Atlantic trade dispute say they include textiles, steel and citrus products.

Earlier this month, the Bush administration imposed tariffs of up to 30 percent on some steel imports, including European products.

The EU has appealed to the World Trade Organization to get those duties overturned. But a WTO decision on the matter could take up to a year or more.

EU officials say that, under WTO rules, the EU has the right to impose retaliatory measures in June. But they say the United States can avoid the EU's possible countermeasures if it pays more than two billion dollars in compensation to the EU for imposing the steel tariffs in the first place. The officials say Washington could also escape retaliation by lowering U.S. import duties on other EU products.

The Bush administration says it will not pay compensation.

The European edition of The Wall Street Journal reports that the EU's list of sanctions is targeted on goods produced by states that are politically crucial for President Bush, such as Florida, Pennsylvania, West Virginia and Wisconsin. They were among the states that helped Mr. Bush scratch out a narrow victory in the 2000 presidential election and, according to EU officials, are the areas that Mr. Bush sought to benefit by imposing the tariffs on imported steel.

The EU is also drawing up plans to protect the European market from steel products that are no longer allowed to enter the United States. The EU will impose quotas and tariffs known as safeguard measures on imports above the normal level. EU officials say excess steel from mainly Asian producers would flood the European market, depress prices and put jobs at risk.