WASHINGTON, March 27 (UPI) -- Tension over the U.S. decision to introduce hefty duties against imported steel products is mounting, and opposition to the Bush administration's policy is coming from across the globe, and not just from the European Union.
"There is no economic justification to the (Republican administration's) decision," said the European Commission delegation's chief trade counselor to the United States, Petros Sourmelis, Wednesday at a steel dispute forum hosted by the Global Business Dialogue.
Sourmelis added that the U.S. decision to protect steel makers was solely a political one, rather than one based on economics, noting that Congress is now eyeing the mid-term November elections and means to muster political support from key constituencies.
In retaliation against the U.S. move to slap tariffs of up to 30 percent on a range of foreign steel imports to protect its domestic market, the EU will be imposing levies of up to 26 percent on steel products next week.
While the EU does not necessarily want to take such drastic measures to counter U.S. actions, "we do need to convince the U.S. to remove the tariffs," Sourmelis said. He added that putting up trade barriers would not only hurt the European economy, but also discourage U.S. steel makers from restructuring their operations and grow in the longer-term.
Moreover, the Europeans are not alone in their disgruntlement with the U.S. protectionist measures.
New Zealand's Prime Minister Helen Clark -- who met with President Bush Tuesday and who will be meeting with U.S. Trade Representative Robert Zoellick later Wednesday -- also voiced her concern about the levies.
"New Zealand's steel mills are unsubsidized, but the (administration's) decision is affecting all steel makers, who are being lumped together," Clark told reporters following a speech at the U.S. Chamber of Commerce Wednesday.
As a result, while New Zealand would "not like taking action ... it has been known to do so in the past," Clark said, suggesting that the country too could take similarly retaliatory measures.
Other steel-producing countries have also been vocal in their opposition against the U.S. decision to put up trade barriers, including Japan, South Korea and Switzerland.
"We intend to work closely with Europe ... and we would welcome the participation of other concerned countries to actively argue this problem," stated Japan's Economy Minister Takeo Hiranuma, shortly after the U.S. decision to levy tariffs on steel products not only when the country's steel imports are actually dropping, but also as it has excluded Canada and Mexico from the tariff hikes as part of the North Atlantic Free Trade Agreement.
Meanwhile, South Korea's government made clear that it would continue to press Washington to lift the levies both through official and unofficial channels.
As for China, it is seeking compensation for the $350 million in steel sales it is expected to lose as a result of the higher U.S. steel import tariffs, which would become still steeper if the EU also discriminates against its products as a result of the European dispute with the United States. The Chinese government has also threatened to file a complaint with the WTO, which would be the first action it would pursue with the global entity since China became a member last December.
Another country that could suffer a double blow as a result of the latest international trade dispute is Brazil, one of the world's biggest steel producers.
Earlier Wednesday, Brazilian Trade Minister Sergio Amaral said that the government could adopt its own measures to protect the country's steelmakers, pointing out that there was already an noticeable increase in steel exports to Brazil since March 20, when the United States first introduced its tariffs. That could increase still further when the EU also introduces levies on steel imports.
Nearly 12 percent of Brazil's steel exports are destined for the United States, and the government foresees a loss of at least $90 million in export revenue as a result of the U.S. actions. Amaral estimated a further loss of $48 million in revenue this year from exports to the EU if the bloc's tariffs kick in.
But while global opposition against the U.S. protectionist action increases, the Bush administration has challenged the European tit-for-tat reaction.
"The EU is levying tariffs without analyzing how much the (U.S. import tariffs) could cost to European steel makers," said Kevin Demsey, an attorney at Dewey Ballantine LLP who represents U.S. flat-roll steel producers. He added that the EU should first take their complaint to the WTO, then decide whether to impose levies or not.
Demsey also defended the U.S. decision to impose tariffs in the first place by pointing out that global steel-producing capacity is excessive, and countries have been eager to export their products to the United States particularly since the East Asian economies began to sour in the mid-1990s.
Given that many other steel-producing countries heavily subsidize their manufacturers, Demsey said that it was only fair for U.S. steel makers to be similarly protected through the tariffs.
The WTO is expected to give its final ruling on the steel dispute between the United States and the EU by June 2003. In the meantime, countries heavily dependent on exporting steel -- which ironically applies to neither the United States nor the EU -- are likely to suffer the consequences the most.
