EU threatens retaliation over US steel tariffs

The Financial Times UK ^ | March 16 2002 | Michael Mann in Brussels and Edward Alden in Washington

[Jordi]

The European Union on Friday threatened to target US steel and textile exports in retaliation for Washington's restrictions on steel imports, unless the Bush administration agree to its demands for compensation.

In an aggressive riposte to last week's White House decision to levy duties of up to 30 per cent on steel imports, the European Commission confirmed it was drawing up a list of US goods worth about $2bn which could face increased EU tariffs. The $2bn relates to the value of EU steel exports affected by the US tariffs.

"The overall amount we'll be looking for is close to $2bn," an EU official said on Friday. "This would include US steel exports worth around $600m. Textiles would be another area likely to be on the list."

Officials said the EU would only introduce sanctions if the US refused compensation for lost EU steel exports, but the choice of the sensitive textiles and steel sectors is likely to worsen an already tense situation. The US rejected the demand for compensation earlier this week.

The Commission said a list of products for potential sanctions would be drawn up and submitted by May 20, the deadline under WTO rules. "That is not to jump to the conclusion that we will necessarily will go down that route, but we have to protect our rights," said Anthony Gooch, spokesman for Pascal Lamy, the EU trade commissioner who has worked closely with Robert Zoellick, US trade representative, to push deeper trade liberalisation.

The US had hoped to isolate the EU in the dispute, but has failed to placate other countries hit by the action, including Japan, Korea, China, Brazil, Australia, New Zealand and Norway, which have also demanded US compensation. Besides the demand for compensation, the EU is preparing to introduce safeguard measures of its own, by early next month, to cushion its steel market against imports diverted from the US.

The Commission's threat to retaliate is widely regarded as politically risky, as it is based on its own untested reading of a provision of the WTO's "safeguards agreement". The US disagrees strongly with that interpretation.

[scholar]

FYI

[Free the USA]

Check the Bump List folders for articles related to and descriptions of the above topic(s) or for other topics of interest.

[Landru]

HA!!
The price of Porsche, Audi, Mercedes will go right through the roof.
Oh the horror... :o)

When the Chicoms & Japanese start making these kind of threats?
Lemme know.

It's overwhelmingly Asian steel being dumped here; and, it's been being dumped here since at least 1976.
When I first observed stenciled in white paint on every heavy steel support used building the Transalaskan Pipline:
"Made in Japan"

[LarryLied]

There is a better way for Europeans to handle this. They can ship their steel to a developing country which is exempt from the tariff (South Africa for instance), gin up some paperwork and ship it to the USA tax free.

Or they can sell it to manufacturers of cars,for instance and get the steel in the USA that way. Our mills have raised prices to what they think is just under the level which would make the tarrifs not effective. But there are always ways around taxes.

[INSENSITIVE GUY]

The EU,nothing but cry baby wussies!This is what was bound to happen with the passage of nafta&gatt.We were trading with other countries before all that free trade nonsense,all we did was STUPIDLY subject ourselves to a loss of sovereignty which in turn gave others to much power over us.A BAD TRADE FROM THE START!

[LaGrone]

Bush was wrong on the tariffs.

[RamsNo1]

I know that most of you are mad at Bush for putting tarriffs on steel but he has to think of our workers and our national interests now. I thought it was a good move by the President and I say, "frick" the EU who always want us the pay for everything.

[Jordi]

Well i hope this trade dispute will be a great benefit for software buyers across the EU.

Why?

Well ,the use of pitated software is widely tolerated , at least by consumer users. Most people have never spent a single cent for their Office suits, Windows, PC games etc. (apart the cost of Taiwanese blank CDs, of course, and the cost of Taiwanese CD writers

I suggest the EU officials, as a form of retaliaton, to let even the free coping of BUSINESS software.

I'm sorry for MR. Gates,Ellison & co. ,it would be a great damage for them.

[Willie Green]

Bush's action's are a step in the right direction, but still inadequate due to inconsistancy.

The optimal solution is a relatively low, across-the-board revenue tariff of 10-20% on ALL imported goods from ALL foreign countries.

"Targeted" tariffs have the disadvantage of providing loopholes and, as others will be quick to point out, the potential to hurt other domestic industries.

A prime example is our failed embargo on the importation of Cuban goods. Cuban sugar has been routinely imported to the U.S. through the back door: Canada. Cuban sugar is shipped to Canada where it is dissolved in molasass. "Canadian" molasass is then legally imported to the U.S. where the sugar is easily refined back out. The leftover molasass is then exported back to Canada where the cycle is repeated. Large sugar-users (such as candy makers) are also closing their domestic factories and moving to Canada where they can legally use Cuban sugar, then import it as candy to the U.S.

An across-the-board revenue tariff of 10-20% would circumvent this type of abuse. Additionally, the revenue could be used to offset a major reduction or elimination of the corporate income tax, providing domestic producers a more "level playing field". (A Proposal to Abolish the Corporate Income Tax)

From a historical perspective, a revenue tariff of 10-20% is NOT excessive:

[scouse]

the EU is preparing to introduce safeguard measures of its own

Does this mean no more 20 year old reruns of old British sit-coms?

[Jordi]

Perhaps it means no more Ralph Laurens on Paris and Milan outlets. By the way, Armani's shirts are more chic.