Brussels, 12/03/2002 (Agence Europe) - Safeguard mechanisms aimed to protect the Community steel industry against a probable wave of imports diverted from the US market, should be ready by around 20 March, the date on which the USA begins to put tariffs on foreign steel. The European Commission is continuing its efforts of internal consultation, begun a little after the announcement of George Bush. On Tuesday it was still waiting the official response from Washington to its request to discuss the issue amiably and of trade compensation under the auspices of the World Trade Organisation (EUROPE 7 March page 6). Meanwhile President Prodi has expressed his wish that "the trade war will be confined to steel" and the US Administration expressed fears of an extension of this divergence to other sectors and a generalisation of counter-safeguards at the expense of the world economic recovery. The USA described the response of the Union as profoundly wrong.
After the exchange of views between Mr Lamy, Mr Liikanen and steel company directors on Monday afternoon, the Commission demonstrated its defensive strategic measures to representatives from Member States who were meeting at a high level 133 Committee meeting, the following session of which will be held on 22 March. The proposal of the Commission does not aim to close off the European market but rather maintain the normal flows of steel imports with the application of quotas and/or tariffs. This safeguard measure will be defined in full transparency and applied in a "non discriminatory" and "reasonable" manner, the spokesperson assured. Measures, for which specific arrangements are still under discussion, will be applied to products that are directly affected by American surtax. The level considered as normal, or "reasonable", should however be defined. This largely depends on the reference period finally selected by the Union. It has also been proposed that customs duties should be established in order to discourage exporters that no longer have access to the US market to dump their unsold goods on the European market. The provisional regulation, that the European Commission is finalising in accord with those concerned, will be valid for 200 days, during which time the Commission will carry out formal procedure in parallel, intended to analyse the evolution of import influx and the impact that this will have on European industry. It will then be necessary to obtain clearance from the Council, enacting by qualified majority, in order to extend these measures.
Regarding transatlantic consultation, the Commission affirms that it still awaits Washington's official response. In a letter to the Director General of the WTO, George Bush's Administration is obviously seeking to convince everyone that the safeguard measures the President has chosen are perfectly legitimate and lawful, while warning that the kind of response received from the Union, as well as Japan, could plunge the world into a dangerous spiral. The calls for immediate compensation supported by threats of unilateral trade retaliatory measures are a great mistake and could reduce to nothing the economic growth that is taking shape in the United States and also in the rest of the world, writes the Deputy Trade Representative, Linney Deily. Such a reaction, she insists, is likely to trigger off retaliatory measures throughout the world just at a time when the American economy seems to be taking the world towards recovery, whereas this "expansion and high value of the dollar" will doubtless allow for "demand for steel imports in the United States to remain high". What is more, she further pleaded, Washington only adopted "punitive" measures after having consulted and vainly tried to persuade other countries producers of steel to reduce world over-capacities by putting an end to subsidies paid to their industries. And "we did our best to mitigate the effects of the safeguard measures, in part excluding as many developing and transition countries as possible, and in part too by limiting the safeguard to three years, as well as taking as much account as possible of the particular interests of certain countries". She then said more or less the opposite of what is being said in Brussels, that the Administration had shown that there had been a "rise both absolute and relative" in imports on the other side of the Atlantic. An yet, Washington considers that the "WTO is the appropriate place to settle the differences" and is pleased to "hold additional consultations with our trading partners", while calling on them to "refrain from any precipitated, unilateral action". "We will only manage to render the world steel market healthy and sustainable if we work together", she added. The injury that the American measure could inflict on European trade could amount to up to 2.5 billion euro year, sources in Brussels add. The transatlantic consultation period opened on 7 March and will end 30 days later, from when the Union will have a month to notify Geneva of any retaliatory measures.