GENEVA: The United States has fuelled the steel trade debate by blocking the European Union’s legal moves at the World Trade Organisation (WTO) that challenge the tariff hikes Washington imposed on steel imports in March.
Many countries have joined the dispute — including Brazil, China, Japan, New Zealand, Norway, South Korea and Switzerland — because they, too, claim to have suffered as a result of the US protectionist measures for its inefficient steel industry and threaten to file similar measures with the WTO.
Some of the delegates from the complainant countries and from other WTO member states believe the row could jeopardise the new round of multilateral negotiations for greater liberalisation of the world trade system.
The European Union (EU) had requested the designation of a special panel to determine whether the steel import tariffs of more than 30 percent established by the United States in March are in compliance with WTO rules.
The consultations, the first step in the WTO dispute settlement process, held last month between Brussels and Washington (with the participation of China, Japan, Norway, South Korea and Switzerland) did not result in an amicable resolution, said the EU’s representative to the WTO, Carlo Trojan.
The United States argues that the tariff increase is a safeguard measure, which is accepted by the WTO in specific cases for protecting an industry threatened by imports of a certain product.
But commentaries heard in Washington and around the world have suggested that electoral motives lie behind the steel tariff decision and the subsequent increase in farm subsidies enacted by the George W. Bush administration.
The United States is in violation of the trade rules on safeguards, Trojan said Wednesday in his address before the Dispute Settlement Body, the WTO’s court.
The European delegate stated that the Appellate Body has already condemned all six US safeguards brought before the WTO.
Steven Fabri, US representative to the WTO, refuted the charge that the tariffs imposed by his country are illegal and announced that the United States cannot accept the establishment of a panel, which is the next step in the dispute process.
With the refusal, Washington blocked the immediate creation of the special panel, though it will be automatically set up at the next meeting of the Dispute Settlement Body, Jun 3.
According to WTO procedure, special panels have three months to prepare a verdict. In the case of an appeal or the need for mediation, another three-month period is established, such that a final ruling can take more than a year.
The United States simply makes the rest of the world pay for its failure to restructure its steel industry, stated the EU’s Trojan.
The steel trade crisis erupted earlier this year, and analysts have observed that the steel industry is one of the sectors hardest hit by the phenomenon of over-capacity that afflicts the global economy.
The over-capacity of the world steel industry is around 35 percent, according to experts.
The US tariff hike on steel imports won sharp criticism from numerous countries during Wednesday’s session of the Dispute Settlement Body.
Cuba charged that the US move distorts the international market, while Venezuela announced its support for the EU’s request for a special panel and warned against a spiral of protectionism that could be unleashed in the wake of Washington’s recent tariff decisions.
South Korea, meanwhile, stated that WTO members which have not yet taken their own restrictive measures on steel imports should refrain from doing so, and those which have already taken temporary safeguard measures should either withdraw them or abstain from moving forward to definitive ones.
We need to cut off the vicious cycle of protectionism begetting protectionism, said the South Korean delegation in a statement.
Brazil has requested an official consultation with the United States, thus initiating the WTO dispute process. Brazil exported 726 million dollars in steel products to the United States in 2001. The new US tariffs could cost the South American giant some 500 million dollars in export revenues.
Japan has announced a retaliatory increase in tariffs on steel imported from the United States. The measure, to enter into force Jun 18, will affect an estimated 4.88 billion dollars in steel products.
The EU, meanwhile, is considering increasing certain tariffs on US exports for a sum ranging from 342 to 583 million dollars.
Switzerland, which is not an EU member, is also studying the possibility of applying surcharges to its imports from the United States for a total of three million dollars.
China announced that its own safeguards against US steel imports will take effect Friday, with tariffs ranging from seven to 26 percent for nine different products.
The Chinese authorities are also considering imposing additional customs taxes — up to 24 percent — on recycled paper, soya oil and electric compressors imported from the United States.—Dawn/InterPress News Service.