US tariffs cloud steel talks

The EU fears a wave of diverted Asian steel imports

Preparatory talks on curbing global steel production could be soured by the US's controversial decision last week to impose tariffs on steel imports.

The talks, pencilled in for 14 and 15 March, are aimed at paving the way for high-level negotiations between the world's leading steel producers next month.

But the Paris-based Organisation for Economic Cooperation and Development, which is hosting the talks, said the US tariffs have cast doubt over their outcome.

"The situation has changed dramatically since last week," said Wolfgang Huebner, the OECD's head of steel policy.

"We don't know what is going to happen any more."

Steel spat

The US government last week announced plans to slap tariffs of up to 30% on most steel imports for three years starting on 20 March.

Japan and the European Union were quick to file complaints with the World Trade Organisation.

The EU fears that it could be hit by a wave of cheap far eastern steel displaced from the US market.

But the US argues that the tariffs, aimed at shielding ailing steelmakers from cheap imports long enough to allow them to restructure, are permitted under WTO rules.

The dispute threatens to dwarf in scale previous high-profile transatlantic trade disputes over bananas and hormone-treated beef.

EU stance

The outcome of this week's talks depends largely on the stance of the European Commission, which is representing all 15 EU nations.

Some observers fear that the EU side could pull out of the talks in order to put the US under pressure to scrap its import tariffs.

"The OECD's position is that it would be economically wrong to stop negotiations on cutting production...but we don't know how the Europeans will react," said Mr Huebner.

The US says its steel trade policy does not affect its commitment to reducing global production.

Talks aimed at securing agreement on cutting global steel output by 100 million tonnes, or 10% of total production, kicked off last year, with about 40 countries taking part.

The formal talks scheduled for April would be the fourth round of high-level negotiations.

Global steel production has surged in recent years, partly because of increased capacity in the former Soviet Union and Asia.