US imposes sanctions on EC steel imports: Ruling less severe than expected

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THE UNITED STATES yesterday ruled that 16 countries were guilty of unfair trading practices, triggering the imposition of sanctions against European Community steel imports.

However, the 877,000 tonnes of affected imports, worth dollars 433m, was half what had been expected and a row that risked jeopardising conclusion of the stalled round of the General Agreement on Tariffs and Trade has been defused.

The independent International Trade Commission exempted Argentina, Austria, Italy and New Zealand but otherwise upheld complaints from US steel producers that their business had been 'unfairly injured' by subsidised steel dumped on the American market.

US tariffs of between 19 and 109 per cent will now be triggered on hot- rolled, cold-rolled plate and corrosion-resistant steels of the kind widely used in construction and engineering. But not all countries were found guilty in all sectors and while British Steel will face duties of up to 109 per cent, it does very little trade with the US in the products affected.

Sir Leon Brittan, the EC commissioner responsible for external trade, called the decision 'most encouraging and likely to improve prospects for the Gatt round'. The French producer Usinor-Sacilor, which had stood to be hit hard, will now be penalised only for its exports in the corrosion-resistant market. Germany will face duties in three sectors.

This should defuse some of the political tension in Paris, where the French Prime Minister, Edouard Balladur, has linked the steel row to the Gatt talks on trade liberalisation.

The Community has always said it would regard a negative ruling as overt protectionism. For 10 years, a bilateral trade deal ensured that EC producers voluntarily restricted steel exports to the US.

The EC, meanwhile, is struggling to limit its own steel production, urging industry to make its own cuts. Tomorrow, the Commission is expected to agree a loan scheme to help the industry to restructure in an attempt to cut output by 30 million tonnes.

The scheme got a fillip yesterday when the Italian government abandoned controversial plans to erase the debts of the loss-making producer Ilva.