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WTO says steel tariff wrong; U.S to appeal

By JOHN ZAROCOSTAS

GENEVA, Switzerland, March 26 (UPI) -- A World Trade Organization dispute panel found in an interim ruling Wednesday that punitive U.S. steel tariffs slapped on imports by President George W. Bush breach global rules -- a decision in favor of 22 countries, senior diplomatic sources said.

But a U.S. trade official asked to respond to comments on the confidential finding said, "We will appeal the panel report if it's finalized without change."

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The official said many countries have used safeguard measures, which are allowed under WTO rules, and added the United States believes the measures "comply with our international obligations."

Bush imposed the measure in March 2002 following recommendations by the International Trade Commission after a detailed investigation of the surge in imports on domestic steel companies. Over 30 had gone into bankruptcy and tens of thousands of U.S. steel workers lost their jobs.

U.S. critics said the industry had failed to consolidate and enhance its competitiveness like many of its foreign competitors.

The final ruling is slated to be issued in late April and the WTO appellate body to present its ruling in late September.

The interim ruling is the latest in a sting of high-profile and politically sensitive cases to find the United States at fault. Washington insiders say such findings could erode backing for the global oversight body among influential congressional leaders.

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Thomas J. Usher, chairman and chief executive officer of United States Steel Corporation, said in a statement the panel decision appears to be "based on bias, not fact."

In contrast, Christian Mari, a spokesman for the European steel industry umbrella grouping Eurofer, asserted the finding will strengthen the industry in Europe. But he cautioned it remains to be seen "whether the U.S. will terminate the measures."

Similarly, top trade diplomats from the 22 countries -- Japan, Korea, Brazil, China, Switzerland, Norway and New Zealand as well as those of the European Union -- praised the outcome. They consider the U.S. steel tariffs protectionist.

"It's a victory of right over might," said one top trade envoy who asked United Press International not to publish his name.

Kevin Dempsey, partner at the Washington office of the international law firm Dewey Ballantine, told UPI the adverse ruling is going to confirm in the minds of many that the WTO dispute settlement body process is "fundamentally broken." He argued it "will increase support by many members of Congress for the administration to maintain its (steel safeguard) measures."

Dempsey, whose firm is counsel to some of America's largest integrated steel companies, said, "I hope the (WTO) appellate body can bring some sanity to the process."

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