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Bush faces steel backlash

Tokyo/Washington, Dec. 5 (Reuters): Japan, China and Europe dropped threats of trade retaliation after President George W. Bush scrapped controversial steel tariffs more than a year ahead of schedule, risking a political backlash at home.

Despite possible political damage ahead of next year’s presidential election, Bush offered little to cushion the blow to US steel makers and workers, who accused the Republican President of “capitulating to European blackmail”.

Announcing the decision yesterday, Bush did say he would keep in place an existing system to license and track steel imports so he could “quickly respond to future import surges that could unfairly damage the industry”.

Minutes after Bush’s about-face, the EU suspended plans for retaliatory sanctions against $2.2 billion in US goods, including politically sensitive products like citrus fruits from Florida.

Japan also said it would drop a threat to impose retaliatory tariffs on $458 million of US goods, but added that it wanted to make sure the US tracking system did not impair trade. “We hope the US will continue to abide by WTO rules and play a leading role in maintaining free trade,” Japanese chief cabinet secretary Yasuo Fukuda said today.

China, whose steel industry is booming, said it would not impose threatened tariffs on some US goods “if the US makes good on its promises” but did not say if it would roll back retaliatory tariffs on steel set in November 2002.

The tariffs, which Bush imposed in March 2002, officially ended at 0500 GMT, instead of March 2005 as initially planned. Bush said thanks to the tariffs, US steel companies were again well-positioned to compete both at home and globally. The decision should help improve trans-Atlantic ties marred by divisions over the Iraq war and averts a spat with Japan, Washington’s key Asian ally, at a time when the two need to cooperate on North Korea’s nuclear programme.

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