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U.S. Disagrees With WTO On Steel Duties


USTR to Review Final WTO Ruling Against U.S. Steel Duties

Temporary safeguard measures justified under WTO rules, USTR spokesman says

The United States disagrees with a decision of a World Trade Organization (WTO) appellate body dismissing a U.S. appeal and upholding an earlier ruling against temporary U.S. duties on steel imports, an Office of the U.S. Trade Representative (USTR) spokesman says.

In a November 10 statement issued shortly after the WTO Appellate Body announced its decision, Richard Mills said the Bush administration will review the panel's report "carefully."

He said that the steel safeguard measures imposed by President Bush in March 2002 under Section 201 of U.S. trade law were intended to give the domestic steel industry the breathing space needed to restructure and consolidate, and as such they are consistent with WTO rules that allow for the imposition of safeguards "for just this purpose."

In July the WTO panel ruled that the additional U.S. tariffs on steel imports violate international trade rules. USTR has appealed that decision.

The WTO agreement allows temporary safeguard duties to protect an industry from a surge of fairly traded imports but establishes certain restrictions on their imposition. The United States argued that the financial crises in East Asia and Russia in the late 1990s combined with a strong U.S. dollar produced an unexpected import surge that had hurt the U.S. steel industry. However, the panel found neither that the argument was proved nor that the presence of a surge was established.

As a result of the ruling, the European Union (EU), Japan and other countries that brought the challenge have now a right to impose retaliatory duties on imports from the United States. The sanctions may amount to more than $2 billion, according to news reports.

Under U.S. trade law, the president may reduce, modify, or terminate safeguards if the domestic industry has not made adequate efforts to become more competitive or if the effectiveness of the measures has been weakened by changed economic circumstances.

USTR is reviewing two reports on the effects of the relief released by the independent U.S. International Trade Commission September 19, half way through the three years of the measures.

The reports concluded that while the temporary tariffs helped the U.S. steel industry and hurt the overall economy, their impact in both respects was rather limited.

In October, an U.S. trade official reportedly said the Bush administration has no deadline for making any decision concerning the remaining period of the safeguards.

Following is the text of the USTR news release:

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Washington, D.C.

November 10, 2003

Statement of Richard Mills, USTR Spokesman
Re: WTO Appellate Body Report in the Steel Safeguard Case:

"The temporary steel safeguard measures the President imposed over a year and a half ago were intended to provide the domestic industry with the breathing space needed to restructure and consolidate, thereby becoming stronger and more competitive. WTO rules specifically allow for the imposition of safeguards for just this purpose, and we believe that the steel safeguard measures are consistent with those rules. An integral part of our commitment to free trade is our commitment to enforcing our trade laws.

"While we are pleased to see the Appellate Body upheld the Panel's rejection of some of the arguments raised by the complainants, we disagree with the overall Appellate Body findings. We will be reviewing the WTO report carefully."


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