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Thursday, 11 April, 2002, 21:33 GMT 22:33 UK
Global steel trade war hots up
Takeo Hiranuma and Robert Zoellick
This must stop, Mr Hiranuma tells Mr Zoellick
The international trade war over American tariffs on steel has stepped up a gear.

The European Union and five countries including Japan and China said they had reached a "very high degree of understanding" about the illegality of the duties.

The statement followed a meeting between the protesters and US representatives in a disputes settlement procedure administered by the World Trade Organisation.

Earlier on Thursday Japanese Trade Minister Takeo Hiranuma told US Trade Representative Robert Zoellick that Japan may prepare retaliatory action.

Tokyo is demanding that the US provide compensation for its new steel tariffs of up to 30%, a trade ministry official said.

Bankruptcy fears

Mr Zoellick, coming to the end of a lengthy tour around Asia, has so far refused to budge, or even comment publicly.

The US government has remained rock-solid in its support for import tariffs, which it says are essential to prevent mass bankruptcies in its domestic steel industry.

There is concern that the US tariffs could spark a wave of countermeasures around the world, possibly disrupting the steel market for years.

WTO complaint

The WTO has yet to approve the US tariffs.

Japan last month filed a petition with the organisation over the tariffs, adding its voice to a growing chorus of international protest over what is seen as a purely protectionist step.

The European Union has approved plans to impose its own steel import tariffs, and has drawn up a list of other products - including $2bn in planned levies on US textiles and citrus fruit - for punitive action.

Japan so far has tried only persuasion, worrying that straight retaliation in the manner of the EU will only trigger a worldwide domino effect.

"I told him that the US decision is not in line with WTO rules and US steel imports are not rapidly increasing," Mr Hiranuma said.

"I asked him to withdraw the decision."

Poor timing

As far as Tokyo is concerned, the US tariffs came at a bad time.

Japanese steel makers have seen domestic demand slump as the economy struggles with its deepest recession since World War II, and the vital construction market grinds to a halt.

Mr Hiranuma said he would continue his talks with Mr Zoellick by telephone, since their session in Tokyo ran out of time.

The 25-country meeting, which started on Thursday in Geneva, is the biggest concerted protest so far against the policy.

So far, only six WTO members have filed a formal complaint against the tariffs through the dispute settlement system.

No date for consultations under that system has yet been set.

The BBC's Mark Gregory
"So far no resolution is in sight, and the sides at the moment are trading insults."
See also:

09 Apr 02 | UK Politics
Blair 'seeks steel tariff deal'
03 Apr 02 | Business
US targets trade partners
27 Mar 02 | Business
EU agrees steel fightback
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