Trade fight escalates as WTO targets US steel tariff

The World Trade Organisation (WTO) has launched an investigation into whether United States tariffs on steel imports violate international trade agreements. However, a decision is not expected for at least six months.

Countries in the 144-member organisation have approved the creation of a three-person expert panel at a meeting of the WTO's "dispute settlement body" in Geneva. The request was made by the European Union, with support from other major steel producing nations, such as Japan, China and South Korea.

The United States insists the measures imposed in March are in line with WTO rules and says it will defend its case vigorously. The US has already blocked one request from the EU at a meeting of the WTO's settlement body on 22 May.

But under the trade watchdog's dispute regulations, it could not do so a second time and yesterday's decision to set up the panel was automatic and taken without debate.

The steel row – which has set the United States against most other producer countries – has stoked accusations that the administration of President George Bush is pursuing a unilateralist course to serve his own domestic political aims.

Those charges have been intensified with Mr Bush's approval of a farm bill pumping huge new subsidies into US agro-businesses active on global markets and with American refusal to commit to new targets aimed at reducing global warming and others on promoting world sustainable development.

Members of the WTO panel are likely to be selected within the next month and would normally have up to six months to issue a ruling.

But this timeframe can be extended, and diplomats say they doubt that the panel could stick to the deadline in such a complicated – and politically sensitive – dispute.

Even when it is handed down, the panel's ruling can be challenged by either side, moving the case to the WTO's quasi-judicial "appellate body".

Appeals hearings and other procedures would mean that it could be late next year before there is a final decision.

The EU and several other countries, which also include Brazil, Norway and Switzerland, argue that the tariffs of up to 30 per cent on a wide range of steel products are in violation of a range of WTO pacts. These include the Safeguards Agreement invoked by Mr Bush when he imposed the tariffs in March.

Brussels and Tokyo say that the agreement allows them to impose retaliatory tariffs on other US goods from 18 June unless Washington offers them compensation for their losses on steel sales to the Uni- ted States.

But they have indicated that they may hold off to allow more time for a US move in that direction.