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Tuesday, 5 March, 2002, 18:21 GMT
Bush warned off steel tariffs
Steel protestors
Steel workers are demanding help for their industry
The European Union, the UK and Russia have warned President Bush against slapping punishing tariffs on steel imports.

Mr Bush is to make an announcement on whether to impose a levy, expected to be around 30% on most imports, later on Tuesday.

The move is designed to protect the ailing US steel industry, but has provoked anger from key trading partners.

President Bush is risking a trade war
President Bush is risking a trade war
Thousands of US workers have lost their jobs as a result of numerous US steel firms going bust over the last few years.

They argue that, without the protectionist measures, the whole US steel industry could become obsolete.

But European steel-makers, including Britain's Corus, fear that US tariffs could limit access for their product in the lucrative American market as well as diverting exports from other countries to Europe, harming local industry.

Let us agree to turn away even at this late hour from trade restrictions in this vital sector

Romano Prodi
The European Union said on Tuesday it would have "no choice but to react" if the United States went ahead with its plans.

European Commission President Romano Prodi warned of a "major trade conflict" in a letter to President Bush released in Brussels on Tuesday.

The US ambassador in Moscow was summoned to the Russian foreign ministry to be told that relations could be damaged if the move went ahead.

'Painful process'

Downing Street said that Mr Blair had written to Mr Bush to warn him that tariffs would be bad not only for the world economy, but also for American consumers, who would be forced to pay more for steel products.

Tony Blair has written to Mr Bush and spoken to him on the phone about steel tariffs
Tony Blair has written to Mr Bush and spoken to him on the phone
"We recognise the US steel industry has to restructure, but we do not believe it is in the interests of the world economy that it should impose tariffs," the spokesman said.

"We have gone through the painful process of restructuring in this country, unfortunately the United States has not yet done that."

Mr Blair's intervention comes amid claims that the Prime Minister had damaged Britain's steel industry with his support for Indian tycoon Lakshmi Mittal in his purchase of Romanian company Sidex.

Plaid Cymru's Elfyn Llwyd - concerned about losses at Corus' plants in Wales - urged the government to act to offset the effects of the raised US tariffs, rather than wait to raise the matter at the World Trade Organisation.

"If it is going to happen we need a package of measures immediately to assist the ailing steel industry," he said.

If that did not happen "there will be nothing left to save", he warned.

Global impact

The import restrictions will most heavily penalise China, Germany, Japan, South Korea and Taiwan.

A senior Japanese official also said that it may file a complaint to the WTO if the tariffs are imposed.

There is also some feeling against the levies within the US. American steel consumers, such as car makers, say that level of tariff will increase their costs dramatically at a time when they are fighting to be competitive.

David Phelps, president of the American Institute for International Steel, says that the US steel industry cannot make sufficient quality and quantity of steel for US consumers.

"We believe any additional tariff on imports would simply squeeze the US consumers of steel to a point where they are rendered internationally non-competitive," he told the BBC's World Business Report.

The BBC's Darshini David
"Bush has imposed tariffs on steel imports on those who have stood by him in the Afghan war"
See also:

01 Mar 02 | Business
US steel workers stage mass protest
07 Jun 01 | Business
Slowdown fuels US steel aid
27 Dec 00 | Business
EU-US trade dispute looms
26 Nov 00 | Business
US faces $4bn trade threat
05 Jun 01 | Business
Bush seeks steel probe
06 Jun 01 | Business
EU opens attack on US steel probe
04 Mar 02 | Business
Steel trade war looms
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