BRUSSELS, June 1: The European Union said on Friday it may load the gun of retaliatory sanctions against US steel tariffs next month but hold fire to allow a final bid for compensation to avert a trans-Atlantic trade war.

We would cock the gun in June without firing it immediately, an EU official said.

A European Commission statement said the 15 member states gave unanimous backing to a proposal to adopt by June 18 a list of US goods liable to countervailing duties, but could leave a short time for negotiations before sanctions went into force.

It was agreed that, in the interests of the EU, we might be willing to envisage a limited delay in their actual application if this would contribute toward the early and successful resolution of this matter, Commission spokesman Anthony Gooch said in the statement.

The EU official said the move would preserve the EU’s right to retaliate under World Trade Organization rules while allowing up to the end of July at the latest for a deal.

A satisfactory package would have to include both exemptions for some EU steel products from the tariffs of up to 30 per cent imposed by President George W. Bush in March, and compensation in the form of lower US duties on other goods, Gooch said.

Washington has so far refused to discuss compensation and has argued the EU cannot legally retaliate against the United States unless it wins a case against the tariffs at the WTO.

From the start of the dispute over steel safeguards, we have urged the EU to consider its interest in both solving problems in global steel markets and relying on WTO rules to resolve disputes, Rich Mills, a spokesman for the US Trade Representative’s office told Reuters in Washington.

Unilateral trade retaliation will not benefit EU economic interests or the world trading system, Mills said.

The Commission statement came after EU national trade officials met to review the dispute over tariffs imposed to protect uncompetitive US steel producers, following a visit by US Undersecretary of Commerce Grant Aldonas to Brussels on Thursday.

Since he indicated tariff exemptions for some steel products might be granted in early July, it is useful and intelligent for us to keep all our options open whilst seeking all our rights and all our freedoms, the EU official said.

Aldonas said after talks with his EU counterpart in Brussels on Thursday that Washington could decide on some exclusions before June 18 for special steel products that do not rival US output, with more to come by July 3.

He ruled out negotiating on the EU’s demand for compensation in the form of reduced duties on other imports from Europe.

But Brussels officials said they did expect Washington to offer some compensation once it saw that the EU remained united.

The prospect of exemptions has prompted Washington’s closest EU allies — Britain, Germany, the Netherlands and Sweden — to lean toward delaying sanctions to avoid worsening trans-Atlantic relations.

Under the EU’s weighted voting system, those four countries would have enough votes to block immediate retaliation, but they have not yet taken a final position and are backing Commission efforts to negotiate for compensation.

Gooch said the US tariffs of up to 30 per cent affected two-thirds of European steel exports to the United States.

We would like the US to compensate us for that loss of exports, and we have said clearly that we would take account of any exemptions that they provided us from those tariffs, he said.

He played down US attempts to sway key European allies bilaterally, saying visits to capitals are not something we are at all concerned about.

Indeed, it’s an opportunity for them to hear from different member states what they hear when they come to Brussels.

Mills said he could not comment on whether the United States was trying to thwart EU retaliation by courting certain member states to vote against the action.

The Commission presented national trade officials with a draft regulation that would withdraw most favored nation trade status from a revised target list of US goods, taking into account member states’ comments.

Officials said the Commission would adopt the draft at its weekly meeting next Wednesday to be ready for ministers to take a decision at the latest on June 17.—Reuters