The European Union is expected on Wednesday to approve new duties on imported steel following an earlier imposition of heavy U.S. tariffs on steel imports. The EU measures are aimed at protecting the European market from mainly Asian steel products that are now banned from entering the United States.
The EU fears big steel producers like China and South Korea, which are blocked from the U.S. market by tariffs of up to 30 percent imposed by the Bush administration, will try to unload their excess output on Europe, depressing local steel prices and putting jobs at risk.
So Brussels has decided to impose import tariffs of its own to shield the 15-nation bloc from a flood of cheap steel. The tariffs, ranging from nearly 15 percent to 26 percent, will apply starting next week to any imports that exceed current levels.
Under international trading rules, the European Union can impose temporary limits on imports if it can prove that a surge in imports threatens to hurt its own industry.
The EU measures do not stop at steel. Fears of a wider trans-Atlantic trade war have been heightened by EU threats of sanctions on a wide range of U.S. products if the United States refuses to compensate the European Union for U.S. steel tariffs by lowering duties on other European goods.
Although that list is still secret, it is known to include products from U.S. states that could be critical to President Bush's re-election prospects in 2004.
EU officials acknowledge that the list specifically mentions citrus fruit from Florida, steel from the Midwest, and textiles from North and South Carolina.
Analyst Steve Orava, of the London office of Baker and Mackenzie, an economic research firm, calls the tit-for-tat measures taken by Washington and Brussels strictly political and childish at that.
"It's sort of like two bullies at a playground arguing with one another, and, in this particular instance, it's the U.S. who has sort of instigated this particular situation," he said. "And the EU is basically saying 'oh, they started it.'"
This is not the first time the United States and the European Union have used trading sanctions as political weapons against each other. They battled for years over tariffs on bananas exported by U.S. companies from Central and South America. Washington won that fight.
The World Trade Organization also ruled against an EU ban on imports of U.S. hormone-treated beef. But it sided with Brussels in still another dispute about U.S. tax breaks for American exporters.