EU plans 'urgent' retaliation in steel row

The UK, with the EU, will complain to the WTO

Plans by the European Union to take retaliatory action against the US over steel tariffs have been confirmed by a British trade minister.

The move - in response to a US decision to impose tariffs of up to 30% on steel imports - risks fuelling a global trade war.

The EU is furious that the US seems prepared to break international agreements on trade barriers.

EU Trade Commissioner Pascal Lamy has already said he will formally challenge the US tariffs at the World Trade Organisation.

'Safeguarding jobs'

But British Trade Secretary Patricia Hewitt told MPs on Wednesday that the legal challenge could take up to two years.

She said Mr Lamy had confirmed to her that urgent action would be taken before then in an attempt to protect European jobs.

Mrs Hewitt told MPs: "Pascal Lamy is already considering urgent and appropriate action to safeguard British and European steel producers and workers against a flood of steel imports."

The action could take the form of steel tariffs against imports into the EU.

This would mostly impact on imports from the Far East and Japan, leading to possible reprisals.

'Dumping' problems

Mrs Hewitt said this would be the first time in eight years that this protectionist legislation had been used - and it was a matter of regret to her that it was in response to US action.

She said the US should not be allowed to "dump" problems in its domestic steel industry on the rest of the world.

She told MPs in a statement that she was "extremely disappointed" with US President George W. Bush's decision to impose tariffs on steel imports.

The decision was a "clear breach" of World Trade Organisation obligations and was "wholly unjustified".

Painful decisions

Mrs Hewitt said 4% of British steel production would be affected by the US tariffs and Britain could be flooded with cheap steel products from other countries.

The tariffs would have a "devastating" effect on many steel companies, she said.

Tariffs were being imposed because the US steel industry had failed to take the "painful" decision to restructure.

"We know how difficult that has been for the (British) workers who have lost their jobs, their families and their communities too.

"But the outcome is an efficient and productive British steel industry able to compete effectively in world markets.

"And we are not prepared to allow the US trying to dump their problems on the rest of the world instead of facing up to the challenge of modernising and restructuring their own industry."

Earlier, Prime Minister Tony Blair said retaliatory action would be taken with the aim of reversing the US tariffs on steel imports "as soon as possible".