The world's top steel producers blasted the United States on Wednesday for slapping hefty tariffs on steel imports, threatening to fight back through law suits and trade reprisals.
The European Union swiftly condemned the decision, which is aimed at protecting the ailing US steel industry, and said it would take its case to the World Trade Organisation (WTO).
"The US decision to go down the route of protectionism is a major setback for the world trading system," EU Trade Commissioner Pascal Lamy said in a statement.
"The EU will of course launch an immediate complaint in Geneva (at the WTO) against this clear violation of WTO rules and we will take whatever measures are necessary to safeguard our own market."
Other top producers -- including Japan, Russia, South Korea and Brazil -- vowed to fight the new barriers erected by Washington, which preaches free trade.
Japanese Trade Minister Takeo Hiranuma called the move "deeply regrettable" and said he doubted the plight of the US steel industry justified the tariffs.
"Japan will work closely with Europe, Korea and related nations to consider appropriate measures, including seeking arbitration by the World Trade Organisation," he said in a statement.
Japan, the world's second-biggest steel producer after China, exported 2.2 million tonnes of steel to the United States in 2001. Shares in its top steelmaker, Nippon Steel Corp, tumbled after the news.
US Trade Representative Robert Zoellick said those two countries plus China's Taiwan, South Korea and the European Union stood to lose most by the measures.
TARIFFS NO SOLUTION
Earlier, Bush announced tariffs of up to 30 percent on a range of steel imports. They will take effect on March 20 and will stay in place for three years.
US steel firms and labour unions blame cheap imports for 31 bankruptcies in the past four years and had demanded a 40 percent tariff to protect the domestic industry.
Countries opposing the tariffs say the US woes are due to years of failure to restructure the steel sector and a strong dollar, which has risen 23 percent against the euro in two years.
Bush exempted imports from Canada and Mexico from the protection because of their partnership with the United States in the North American Free Trade Agreement. Following WTO rules, he also spared imports from developing countries.
The EU's Lamy said he feared the US move would end any hope of finding an internationally agreed solution at the Organisation for Economic Cooperation and Development (OECD) to overcapacity in the world steel industry.
The European Commission said in a statement the EU might be forced to take trade measures of its own to protect itself from a wave of steel imports from other producers it fears may now be diverted from the United States.
But the Commission, the EU's executive arm, added that any such measures would fully comply with WTO rules.
The EU and the United States have the world's biggest trade relationship. Total bilateral trade in 2000 was 430 billion euros ($373 billion).
European steel stocks suffered heavy losses on Tuesday ahead of the US decision. Shares in Arcelor, the world's biggest steel maker, fell by more than five percent and Anglo-Dutch group Corus dropped more than six percent.
ASIAN ANGER
The Korean steel industry, which exported 2.1 million tonnes to the United States last year, said the tariff would affect 80 percent of all US steel imports.
"The US decision is an infringement of world free trade agreements," Park Sang-ki, a director general at the South Korean Foreign and Trade Ministry told reporters. "We are considering taking the issue to the WTO."
Shares in South Korea's Pohang Iron and Steel Co (POSCO) KS> , the world's biggest steelmaker, fell almost six percent in the morning as investors digested the implications of the tariffs.
Elsewhere, a government source said Brazil would challenge the tariffs at the WTO while steelmakers in South Africa and Turkey forecast a devastating effect on the world market even if their own countries were exempted.
Australia said it was considering a WTO challenge.
Australia's top steel exporter, BHP Bilton Ltd/Plc, called the US restrictions an "affront" to efficient producers, but said its biggest single category of exports, steel slabs, had escaped the tariffs.
(China Daily March 7, 2002)
