Brussels, 07/01/2000 (Agence Europe) - The European Commission welcomes the verdict of a World Trade Organisation (WTO) panel in the dispute that opposes the Union to the United States over American countervailing duties against British Steel - now Corus plc (steel). The report by the group of experts, which concludes there is American infringement of the multilateral Subsidies Agreement, should be adopted by the WTO Dispute Settlement Body this month or next month, unless the United States decides to appeal.
"We are pleased at this outcome, which will be a great help to the company concerned and may have wider benefits for other privatised EC steel producers which are currently subject to US countervailing duties", commented Trade Commissioner Pascal Lamy. The Commission considers that the conclusions of the panel encourage the fully transparent privatisation of state-owned companies, following offers made and for a fair market value, an aim that is shared not only by the Union but also by the United States, said the spokesman's service. He went on to recall that the declaration made by the Clinton Administration, last August, when it revealed its action plan for the steel industry, in which it stressed its determination to encourage the "privatisation and restructuring of government-owned steel enterprises along market principles". More specifically, the panel establishes that the "privatisation of a state-owned company in an arm's length sale for fair market value eliminates the benefit of previous subsidisation and rules out the imposition of further countervailing duties". This reasoning, says the Commission, endorses the fact that "the new companies operate on private non-subsidised capital and compete in international markets on purely commercial terms".
If there is no appeal against this verdict, the United States will modify its practice by no longer collecting countervailing duties from British Steel. It should also, according to the Brussels interpretation, re-examine its practice against other privatised European steel industries. "The Report necessarily calls into question the continued imposition of US countervailing duties, particularly on steel products, against several privatised companies in the EU", stated the Commission in a press release published on Friday.
EUROPE recalls that this matter was referred to the WTO in 1998, when the Union called for consultation on countervailing duties applied by the United States. These consultations proved unsuccessful and, in January 1999, at the request of the EU, the special group or "panel" was formed. The subsidies targeted by countervailing duties had been granted before 1985 to British Steel Corporation, which was privatised for a fair market value in 1988, and recast into a new independent and private company called British Steel plc. Since then, British Steel has always worked with private capital and without any subsidies. Despite this, the United States considered that the privatised companies continue to benefit from subsidies granted to the former national company, and decided in March 1993 to impose on this company countervailing duties for subsidies that its predecessor, BSC, had received before 1985. The WTO panel did not share this position, confirming on the other hand the arguments put forward by the Union, mainly with regard to fair market price paid by British Steel for the purchase of BSC, as British Steel did not benefit from aid granted to the previously state-owned company BSC.