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US steel import duties violate laws, rules WTO

Geneva, Nov. 10 (Reuters): The World Trade Organisation’s highest court ruled today that US steel duties violated trade laws and the EU threatened Washington with heavy sanctions if they were not quickly removed.

Brussels says it is ready to retaliate with some $2.2 billion of its own duties on US goods, selected for the maximum political impact, and that these could be in force by early next month if Washington does not heed the WTO verdict.

But the US reaffirmed that it considered the duties, levied since March 2002 to protect its struggling steel industry, were “fully consistent” with trade rules and gave no indication of how it would react.

“We disagree with the overall WTO report. We are going to study it, look at its implications and go from there,” said White House spokesman Scott McClellan.

The US administration, which faces presidential elections in November 2004, is under attack from political opponents for allegedly pushing its free trade agenda to the detriment of US jobs and the domestic economy.

The WTO’s appellate body, in a final verdict in the case, upheld a decision in July by a panel of trade judges that the so-called “safeguard” measures were “inconsistent with the requirements (of the WTO).”

The 15-nation EU and seven countries — including Japan, Brazil, South Korea and Switzerland — complained to the Geneva-based WTO over the steel duties, initially levied at up to 30 per cent but subsequently slightly reduced. According to EU steel industry association Eurofer, European exports to the US market for products covered by the tariffs fell almost 37 per cent in the first year of their application.

The conflict is one of a number of high profile rows involving the US and the EU and which threaten to further sour the mood at troubled WTO talks on lowering barriers to world trade.

Brussels is already preparing a raft of sanctions against US exports after winning another multi-billion dollar WTO tussle with Washington over exporter tax breaks. The US has taken aim at the EU over its effective ban on genetically modified crops.

The EU and its allies in the steel case hailed today’s decision, saying in a joint statement it “leaves the US with no other choice but to terminate its WTO incompatible safeguard measures without delay”.

The EU says it could begin imposing sanctions within five days of the court decision being formally adopted by WTO countries in a meeting of the disputes settlement body (DSB) that must be held by early next month.

Approval is automatic as the ruling can only be rejected by the unanimous decision of all 146 member states. Brussels said this meant sanctions could come into force by December 15 at the latest.

The US argued the duties were needed to protect producers against a flood of cheap imports.

But the WTO declared it had failed to prove its industry was under real threat from imports of steel and steel products.

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