Blair 'seeks steel tariff deal'

The UK produces highly-refined engineering grade steel

Tony Blair is believed to have used his close relationship with US President George Bush to push for a special deal exempting British steel from potentially crippling trade tariffs.

The prime minister raised the issue of tariffs during his weekend meeting at President Bush's Texas ranch, Downing Street has confirmed.

A spokeswoman refused to comment on the details of the discussions.

But she said it was accepted as "a matter of routine" by the European Union that member countries would want to pursue "some bilateral contact on this matter."

Last month's decision by President Bush to slap surcharges of up to 30% on most steel coming into the US, to protect domestic producers, risked sparking a global trade war.

Blanket support

The EU has already drawn up a list of US exports it plans to target with tariffs in retaliation.

British jobs are threatened by the tariffs

Downing Street is insisting that Mr Blair remains committed to this EU-wide campaign.

But according to press reports Mr Blair believes Britain should be exempt from the tariffs because it produces highly-refined engineering grade steel, which is not a direct threat to the US market.

The prime minister has faced repeated criticism from his own backbenchers that the UK is receiving little in return for its blanket support of the US "war on terror" and possible military action in Iraq.

Last month, the EU adopted temporary "safeguards" to prevent its market being flooded with cheap foreign steel, redirected from the US market.

Other retaliatory measures are in the pipeline, including about $2bn in planned levies on US textiles and citrus fruit.

Trade barriers

These measures are designed to impact most heavily on Florida, the US state whose governor is President Bush's brother Jeb.

But the growing row over steel tariffs has not prevented Chancellor Gordon Brown pushing for the relaxation of transatlantic trade barriers to be added to the agenda at next month's EU-US summit.

The move is part of Mr Brown's desire for a more liberal trading relationship between the EU and the US.

But according to the Financial Times newspaper the move is being opposed by EU trade commissioner Pascal Lamy, who believes it will reignite rows about the Common Agricultural Policy and EU restrictions on audio-visual services.

Mr Lamy has reportedly told his officials to study specific liberalisation opportunities - such as a transatlantic "open skies" plan for the air industry - rather than anything that could be interpreted as a move towards an EU-US free trade area.