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Wednesday, 6 June, 2001, 11:21 GMT 12:21 UK
EU opens attack on US steel probe
Pascal Lamy, EU trade commissioner
Pascal Lamy: steel market probe is "bad news"
European Union trade chief Pascal Lamy has fired the opening salvos in an attack, expected to be joined by steelmaking countries around the world, on a US probe into steel imports.

Mr Lamy, the EU's trade commissioner, has condemned as "bad news" the decision by US president George Bush to order an investigation which could prompt America to impose punitive quotas on foreign steel.

"The cost of restructuring in the US steel industry should not be shifted onto the rest of the world," Mr Lamy said.

His concerns are expected to be echoed, privately or in public statements, by leading steelmaking states such as China, Japan and Taiwan.

A source from Tokyo's ministry of economy, trade and industry said: "We are still gathering information. But we do not welcome the probe, that's for sure.

"Whatever the US decides to do, Japan hopes it acts in accordance with World Trade Organisation rules."

Japan is set to make an official statement later on Wednesday.

Domestic condemnation

In Washington, steel users have also condemned the move, which one analyst has said would prompt increases in American steel prices sufficient to add $100 to the price of new cars in the US.

"[The probe] is a real dislocation," said Lewis Leibowitz, lawyer for Consuming Industries Trade Action Coalition, which represents steel users.

"It is going to cost us jobs downstream."

There are 50 jobs in industries that use steel for every post in the steel industry itself, Mr Leibowitz said.

'The right thing'

But Mr Bush has been supported by representatives from the US's beleaguered steelmakers, who unsuccessfully lobbied Bill Clinton for such an investigation during his terms as president.

"Today, President Bush has kept a promise that his administration made to steelworkers in the Ohio Valley," said Wheeling-Pittsburgh Steel president James Bradley.

"I want to thank President Bush for listening and doing the right thing."

The probe is also being interpreted as a concession to the Democratic party, which has traditionally had strong ties with union labour and factory towns

President acts

Mr Bush, in a speech on Tuesday demanding the probe, said he was concerned "about unfair trade practices that may be affecting the economics of the steel industry.

"It's in our nation's interest to make sure that if there are unfair trade practices in the steel industry, we address them in an aggressive way."

The probe will be undertaken by International Trade Commission, a government agency that oversees import protections.

And Mr Bush ordered the investigation under a trade law known as Section 201, which allows for protections against import surges.

The ITC has six months to finalise its report, after which the White House retains the freedom to come up with its own set of trade barriers, which could last for three years.

Long-running decline

The US steel industry has undergone a long-running decline, which was accelerated in 1998 when the Asian crisis cut global demand for steel.

Eighteen US steel firms have filed for bankruptcy in the last three years, and 20,000 steelworkers have been laid off.

But while the industry blames unfair trade practices for much of the decline, Mr Lamy said: "The imposition of protectionist safeguard measures in response to the U.S. steel industry's domestic problems would constitute an inappropriate response."

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See also:

05 Jun 01 | Business
Bush seeks steel probe
29 Jan 01 | Business
Europe's core of steel
19 Apr 01 | Wales
Steel giant rescue bid fails
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