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US Trading Partners Against Punitive Tariffs on Steel Imports - 2002-03-06

U.S. trading partners in Asia are criticizing the Bush administration's decision to impose punitive tariffs on steel imports. Washington risks a trade fight with some of its closest friends in the region.

Asia's major steel-producing countries South Korea, China, Japan and Australia say they are gravely concerned about President Bush's decision to impose tariffs of up to 30 percent on imported steel for three years.

Mr. Bush says imports hurt domestic steel prices, which are at a 20-year low. More than 30 U.S. steel mills have filed for bankruptcy in the past four years.

Japanese government spokesman Yasuo Fukuda Wednesday said Tokyo is investigating whether international trade rules permit the United States to impose the tariffs. "We will examine and cooperate with European countries and Korea to discuss appropriate measures, including filing a complaint to the World Trade Organization," Mr. Fukuda said. Japan last year exported more than two million tons of steel to the United States. Shares in its top steel maker, Nippon Steel, fell sharply after the news of Washington's decision.

Shares in South Korea's Pohang Iron and Steel Company plummeted six percent in morning trading. But the world's biggest steel maker said later in the day that its shipments to its U.S. joint venture company would be exempt from the tariffs.

A trade ministry spokesman in Seoul, nonetheless, called the U.S. decision "an infringement of world free trade agreements". He said the government could take the issue to the WTO.

In Sydney, Trade Minister Mark Vaille told Australian Broadcasting Company that Canberra, too, is considering a WTO challenge. "Obviously, we are not happy with the decision and we will be analyzing the process and the decision very closely to see whether it is WTO compliant," Mr. Vaille said.

The United States insists the tariffs are legal because they are a temporary way to help the domestic steel industry survive.

South Korea, Japan and Australia are among the United States' closest allies and biggest trade partners, while relations between Beijing and Washington have been warming recently. Many critics of the tariffs say the U.S. steel industry's problem stem from inefficient operations and the strong dollar.