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EU: European Commission Calls U.S. Steel Tariffs 'Unjust, Unfounded'

Brussels, 6 March 2002 (RFE/RL) -- The European Commission says yesterday's decision by the U.S. to apply tariffs on steel imports is "unjust and unfounded."

Speaking after this morning's commission meeting in Brussels, EU Trade Commissioner Pascal Lamy said the EU will immediately challenge the decision in the World Trade Organization (WTO).

"The American decision is a political decision, without any legal or economic foundation. Legally speaking, the decision directly flouts WTO rules on safeguards [to protect domestic steel markets], as such measures can only be taken if imports increase, which is not the case with the United States."

Lamy said the U.S. decision was taken to appease domestic interests, but he warned that the tariffs will impede the necessary restructuring of what he called the "largely uncompetitive" U.S. steel sector. He said U.S. trade representative Robert Zoellick's remarks yesterday to the effect that the U.S. steel sector is being swamped by increasingly subsidized imports are "simply not true."

He said the U.S. appears unwilling to address what he called "the burden of the past" that is affecting its steel sector, which he said is significantly less competitive than its EU counterpart.

Speaking alongside Lamy, the EU's enterprise commissioner, Erkki Liikanen, described an EU steel sector restructuring effort launched in the 1970s that had reduced production by one-third, as well as brought down steel sector employment from about 700,000 workers to 200,000 in 2001.

Liikanen said the restructuring effort and the EU's "open-markets policy" have led to the EU becoming a net importer of steel. He said the EU's steel exports to the U.S. have decreased steadily since 1998.

The EU Trade Commissioner Lamy said the EU is studying ways of protecting its own steel markets from imports rediverted from the United States, as well as compensating for the losses brought about by the tariffs. He said the EU will be the foremost victim of the U.S. tariffs. He said the announced tariffs -- of 30 percent for three years -- are directed against added-value "semi-finished" products mostly originating from the EU.

Lamy said the EU accounts for about one-quarter of all U.S. steel imports, amounting to 4 million tons in 2001. Lamy added that EU steel producers are going to suffer considerably as a result of the decision.

He said the EU is going to do "everything" it can to protect its own industry and jobs but will do so by sticking to multilaterally agreed global rules. Adding that the world steel market is not the "Far West" where everybody can do what they want, Lamy said it is in the interest of the EU's "strong and competitive" steel industry to fully apply WTO rules. He said the EU had won all five of the steel-related cases against the United States that it has brought before the WTO since 2000.

Acknowledging that recourse to the WTO could be a drawn-out procedure, Lamy said the EU is examining whether it should retaliate with immediate sanctions against non-steel U.S products.