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EU Welcomes Easing of US Steel Tariffs

The European Union has welcomed a U.S. relaxation of tariffs on imported steel, but the 15-nation bloc says it still plans to lodge a complaint about the tariffs at the World Trade Organization in Geneva. The EU also says it will wait until next month to determine whether it should press ahead with retaliatory measures against the United States.

The trans-Atlantic spat over steel began in March, when the Bush administration imposed tariffs of up to 30 percent on foreign steel, in an effort to protect the embattled U.S. steel industry. The measure enraged Washington's top trading partners, and the EU, Japan and other major steel producers challenged the U.S. action at the World Trade Organization, saying it violated WTO rules.

The United States has always maintained that its duties on steel are legal under WTO rules that allow countries to restrict imports temporarily, so that battered industries can get back on their feet.

Over the past few months, Washington has been granting exemptions to different types of steel products that are not made in the United States. It has approved more than half of the requests from either foreign steel-makers or U.S. steel consumers for certain products to be excluded from the tariffs.

But the EU says that, although the latest batch of exemptions constitute good news, it wants Washington to get rid of the tariffs altogether or, face possible retaliation.

The European Commission, which handles the bloc's day-to-day affairs, says it will decide in September whether to recommend that the 15 member governments proceed with retaliatory action that would hit U.S. products, such as citrus fruits from Florida, with sanctions worth more than $300 million in duties.

Cliff Stevenson, a trade lawyer with the London firm of Mayer, Brown, Rowe and Maw, says the exclusions granted by Washington are now sufficient to forestall any immediate retaliation. But he thinks complaints to the WTO by U.S. trade partners will eventually bear fruit. "We shouldn't underestimate the vigor with which Japan, the EU and many other members of the WTO are still attacking the U.S. measure," he said. "And the WTO has now started up a panel proceeding that will report in March. ... I expect that that panel will find that the measures are not consistent with WTO rules and, then the Americans will be in a position where they will be told to withdraw the measures."

Mr. Stevenson says he believes President Bush has issued a signal to the U.S. steel industry that it must accelerate its restructuring program, in case the WTO panel rules that the U.S. tariffs should be removed.