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Last Updated: Tuesday, 2 December, 2003, 02:15 GMT
US set to back down in steel row
Steelworkers at a Bethlehem Steel plant in Maryland
US President George W Bush is preparing to repeal American steel tariffs to avoid a trade war with the European Union, US media is reporting.

Mr Bush is expected to announce the move this week following his visit on Tuesday to the steel town of Pittsburgh to raise election funds.

The US duties, imposed on foreign steel in March 2002, have been ruled illegal by the World Trade Organisation.

The EU is threatening to impose retaliatory tariffs on some US goods.

The sanctions, due to come into effect in a few days' time, would hit US exports to Europe worth as much as $2.2bn a year, risking damage to the nascent economic recovery.

Waiting for a decision

The EU trade spokeswoman, Arancha Gonzalez, said Brussels was waiting to see the US make the "right decision" - but stressed that the US would have to remove all the tariffs to avoid the sanctions.

"The US knows this," she said.

The US move is expected to come later this week, the Washington Post reported.

According to the paper, White House sources said the move was "all but set in stone", since the sanctions were targeted at electorally important industries such as Florida's citrus farmers.

The White House insists that no decision has yet been made.

Electoral help

The steel tariffs themselves - ostensibly aimed at protecting US steelmakers from foreign competition - were widely seen by international rivals as an electoral tool to win over steel-producing states.

But despite the presidential visit to Pittsburgh for a $1m fund-raiser, economists said a repeal of the tariffs could work in his favour, since steel-using industries like the car business want the duties dumped.

Increasing US protectionism - recent import caps and tariff hikes have hit Chinese bras and TVs - was also a risk to the world recovery, they said.

The BBC's James Ingham
"The World Trade Organisation declared the tariffs illegal"

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