GENEVA, Aug 17: The World Trade Organization on Wednesday called on the United States to fall into line with an earlier ruling that criticized the way Washington applied penalties against privatized European steel companies.

A WTO compliance panel found that the US had failed in part to act on the global trade referee’s December 2002 ruling, which said Washington imposed so-called countervailing measures without proving adequately that American firms were suffering from unfair European competition.

Under an accord among the 148 governments in the WTO, members can use tariffs to punish trade partners if they believe they are breaching the rules of global commerce — but must stay within the rules when they use such penalties.

Washington respected the 2002 ruling with regard to French firm Usinor, but failed to play fair with British Steel, now the Anglo-Dutch group Corus, and Spain’s Aceralia, the WTO said in its report on Wednesday.

The spat, one of several involving steel at the WTO, has been running for almost five years.

In November 2000, the European Union filed a complaint against the US, which had decided to hit a handful of previously state-owned European steel firms with tariffs. Washington maintained that the companies had an unfair advantage because they had received state aid before being privatized between 1987 and 1998.

The dispute centred on whether “arm’s length, fair-market value” privatization always prevented the benefit from state aid from accruing to the new private firm. In its 2002 ruling, the WTO said that legislation in the United States did comply with the Geneva-based trade body’s accord on subsidies and countervailing measures.—AFP