EU Requests WTO Consultations Over U.S. Steel Import Restrictions

Wall Street Journal 1dec00

BRUSSELS -- The European Union Friday asked the World Trade Organization for consultations with the U.S. to resolve a dispute over U.S. import restrictions on two steel products.

The European Commission, the EU's executive body, said the U.S. "safeguard measures" on steel wire rod and welded line pipe have caused "substantial economic damage" to EU industry.

The EU said the two measures affect 170 million euros ($198.4 million) of EU exports, meaning EU industries are being denied or have restricted access to "a very substantial market."

The EU is contesting safeguard measures the U.S. introduced March 1, which are due to last three years.

Under WTO rules, members can impose safeguard measures as "emergency" actions when they believe that imports of a particular product have or will hurt their domestic industry. The measures can involve quotas or additional import duties. But the measures must be temporary and they must apply to all WTO members.

"The EU believes that the U.S. was wrong to conclude that increased imports of these two products in the U.S. caused or threatened to cause serious injury to U.S. producers," the EU said.

In November, the EU asked the WTO to overturn the steel measures.

The European Commission said the U.S. duties affect a host of companies, including Ilva SpA in Italy, Usinor SA in France, Corus Group PLC in Britain, and Aceralia Corporacion Siderugica SA in Spain.

The EU's request for WTO talks doesn't mean that the EU will ask the WTO to establish a dispute-settlement panel, which could ultimately decide that the U.S. measures break trade rules, allowing the EU to impose trade sanctions. "The request for consultations at WTO level is a further attempt by the EU to resolve this matter amicably," the EU said.

South Korea has already requested a WTO dispute panel against the U.S. on the measure affecting welded steel pipe, with the EU participating as a third party.

The EU's move reflects a degree of frustration with U.S. efforts to protect its steel industry in the past two years, when the U.S. says it was flooded with steel imports. It says that has resulted in U.S. steel companies being pushed into bankruptcy and thousands of layoffs.

Under the March 1 safeguard measures, U.S. set up a quota on steel wire rod imports of 1.58 million metric tons. Imports exceeding this quota will be subject to an additional import duty of 10% in the first year, 7.5% in the second year and 5% in the third year.

On welded line pipe, the measure consists of an additional import duty of 19% in the first year, 15% in the second year and 11% in the third year. The duty won't apply to the first 9,000 tons of line pipe originating in each exporting country.

The U.S. restrictions on steel imports will be brought up during an EU-U.S. summit this month in Washington.