The World Trade Organization agreed Monday to step into the escalating global dispute over a US hike in duties on imported steel, agreeing to a European Union request for a panel to rule on the legality of Washington's decision, WTO officials said.
The EU wants an independent panel to overrule the March decision by the administration of US President George W. Bush to raise tariffs on steel imports by up to 30 percent. The United States says it needed the levies to give breathing space to the struggling US steel industry.
The Europeans are demanding compensation for damage they claim the tariffs are causing to their domestic industries. Last month the EU unveiled plans to impose retaliatory tariffs on US$341 million worth of US imports if it does not get compensation.
In a statement issued in Brussels, EU Trade Commissioner Pascal Lamy hailed the WTO move as "an important step forward in our response to the unjustified, highly protectionist US measures."
"I am in no doubt that the United States will lose this case, as it has lost all six previous safeguard cases," he said.
Under WTO rules, countries can impose temporary increases in tariffs, known as safeguards, to give time for a domestic industry to restructure to improve competitiveness.
But the EU claims the US action breaks WTO rules. It is particularly concerned that there was no overall increase in steel imports - a precondition for safeguards action - and that some of the moves target the wrong steel products.
An initial EU request to set up a panel was blocked last month by the United States under WTO rules. Requests normally cannot be blocked twice.
European trade officials said that the EU wanted immediately to start discussions on the membership of the panel.
The EU and United States have 20 days to agree on the composition of the three-member dispute panel. If they fail to decide, they can ask the WTO to name the members.
The panel could take up to a year to rule on the legality of the US tariffs and either side can appeal the ruling, but a decision by the appellate body would then be final.
US trade officials said Washington stood by its position that the tariffs are consistent with WTO rules and believed the dispute settlement panel would find in its favor.
Japan and South Korea, which like the EU oppose the US tariff hike, also requested the establishment of a panel Monday. But the United States used the same WTO rule to block the move. The WTO is expected to reconsider the request next week.
South Korean Ambassador Chung Eui-yong said his country opposed the US tariffs because it believed WTO members "should resolutely stand up for the open market principles on which this organization was founded."
Last week the United States launched a counter strike in the steel dispute by filing its own complaint against the European Union.
Washington said it wanted to hold consultations with the EU to discuss Europe's decision in March to impose its own steel tariffs, following the US tariff hike. Such a notice is often a first sign of a formal challenge to be filed later under WTO rules.
The EU has until the end of this week to respond to the US request for consultations, which must be completed within a month of that deadline. The United States still has the option of requesting the establishment of a WTO panel to rule on the legality of the EU tariffs.
The EU said its steel tariffs of up to 26 percent were meant to prevent a feared flood of cheap imports from countries hit by the US protective measures. EU officials said they were forced to respond in kind to safeguard Europe's own shaky steel industry.
(China Daily June 4, 2002)
