The European Union and the U.S. moved a step closer to a commerce conflict after a World Trade Organization appellate body in Geneva upheld a previous ruling deeming U.S. duties on imported steel illegal. It comes at the same time that the Bush administration is trying to avert a U.S.-EU trade dispute involving U.S. export tax subsidies also deemed illegal by the WTO.
The ruling on Monday sets the stage for a final WTO decision by the middle of next month, which could then trigger EU retaliatory tariffs of up to 30 percent on $2.2 billion worth of U.S. products. These include domestically produced T-shirts, coats, hosiery, suits, jackets, blazers, dresses, skirts and shorts.
The looming trade battle centers around the Bush administration’s actions in March 2002 to impose three-year duties of up to 30 percent on imported steel products. The administration justified the use of punitive tariffs as a way to protect domestic steel producers and allow them to restructure.
In response, the EU and seven other countries, including Japan, Brazil, China and South Korea, filed a complaint with the WTO. The EU also drafted a retaliatory sanctions list targeting U.S.-made products, many of which are made in Southern and Western swing states that would be crucial to Bush’s reelection campaign next year.
The latest WTO ruling turned up the pressure on the Bush administration, which is already facing heavy political pressure from steel-producing states, such as Ohio and Pennsylvania, to keep the tariffs in place.
Some groups representing U.S. automakers, on the other hand, claim the steel tariffs on foreign imports have increased their prices for materials and will cause job losses in the industry.
In a joint statement Monday, the EU and seven other countries welcomed the appellate ruling and said it “leaves the United States with no other choice but to terminate its WTO incompatible safeguard measures without delay.”
The EU said it will automatically begin imposing sanctions, including on several U.S.-made apparel products, five days after a final WTO decision in mid-December, unless the U.S. removes the punitive tariffs on steel. The EU would impose tariffs ranging from 30 to 100 percent on such U.S.-made apparel as T-shirts, suits, jackets, blazers, dresses, skirts, shirts, blouses, overcoats, car coats, anoraks, windbreakers and cloaks.