Bush ready to lift tariffs on European steel

Leo Lewis
Sunday 12 January 2003 01:00

The Bush administration is on the verge of dropping most of the crippling steel tariffs that brought Europe to the brink of an outright trade war with the US.

Washington sources say the Commerce Department, which imposed150 per cent duties on steel imports to the US last year, is now prepared to "significantly soften" its stance. Industry observers on this side of the Atlantic believe that could mean as much as 90 per cent of EU steel exports being exempted from the tariffs. US insiders say the move arises from White House efforts to shore up US/EU relations as war looms in Iraq.

When they were introduced in March last year, the tariffs delivered a major blow to US/EU relations. President Bush's move was seen as openly protectionist of the ailing US steel industry, which had not yet been through the painful modernising processes endured in Europe. EU rhetoric included warnings of big duties on US goods ranging from orange juice to Harley-Davidson motorbikes.

The climbdown is expected to take the form of wholesale duty exemptions granted to European steel-makers. Britain's Corus, which has already squeezed some concessions out of the US, is expected to emerge as one beneficiary of the policy shift, along with big European producers such as ThyssenKrupp and Arcelor.

Since March, Corus has worked withDepartment of Trade and Industry backing to gain exemptions on about a quarter of its products. A Corus spokesman indicated it was optimistic about gaining many more. The EU has in any case pursued its claim through the World Trade Organisation and last month moved closer to gaining a dramatic reduction of the taxes.

Last month, the US duties, aimed at formerly state-owned steel-makers, were ruled illegal because of the way they had been calculated. The Commerce Department now has the task of determining fair market value for European steel companies that used to run on state subsidies.

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