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Last Updated: Thursday, 27 March, 2003, 15:03 GMT
WTO steel ruling praised
Steel piping
The steel industry is suffering from over-capacity
European and Asian steelmakers have welcomed the World Trade Organisation's decision that the US broke the rules by imposing steel tariffs on imports a year ago.

But they are resigned to at least another six months of the sanctions - and even more if, as US officials have indicated, Washington lodges an appeal.

Governments are as yet unprepared to comment officially, since the terms of the ruling are kept private for a month till both the US and its accusers - including the European Union, Japan, Korea, Russia and Brazil - have had time to comment.

Even so, diplomats from Korea, Japan and the EU have all privately pointed out that no dispute resolution decision has ever been reversed in the comment period.

UK Steel, the trade body for the industry in the UK, said there was no chance the decision could be reversed, and urged the US not to waste time with an appeal when - it believes - far from protecting US steel producers, the tariffs are hurting them.

Overcapacity

If during the review the US looks properly, they will see that it's not doing a lot of good even to their own steel producers
Ian Rodgers
UK Steel
According to UK Steel, the restructuring of the US steel industry to cope with massive overcapacity has actually slowed as a result of the tariffs.

Idled plants have come back onstream, pushing capacity utilisation down from 95% in September 2002 to 88% three months later.

"The main impact has been to allow Nafta producers (those based in Mexico and Canada) and developing countries to fill the gaps left by the exclusion of traditional suppliers such as the EU," said UK Steel's deputy director, Ian Rodgers.

The face-saving solution, he said, was for the US not to wait for the appeal - which will probably take till November - and instead use the mid-term review of the three-year tariff period which is due in September.

"If during the review they look properly, they will see that it's not doing a lot of good even to their own steel producers," he told BBC News Online.

Safeguards

The US tariffs, of between 8% and 30%, were imposed in March 2002 in response to what the US said was unfair competition from foreign steelmakers.

In the face of concerted outrage from around the world, it later introduced a raft of bilateral exemptions, but left the main thrust of the tariffs intact.

But its reason - the right under trade rules to "safeguard" domestic industry under certain circumstances - was dismissed by UK Steel.

The WTO says imports must be increasing to justify safeguards, but steel imports had actually been dropping in the three years before the tariffs were imposed, Mr Rogers said.


SEE ALSO:
US steel tariffs 'broke rules'
26 Mar 03  |  Business
ISG to buy Bethlehem Steel
06 Jan 03  |  Business


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