EU, Asian Countries Threaten Steel-Tariff Retaliation

Emboldened by a World Trade Organization (search) ruling, Japan, South Korea and the European Union (search) on Tuesday demanded the United States immediately drop its duties on imported steel or face the possibility of billions of dollars in retaliation.

China also welcomed the ruling, and indicated it, too, was considering action if Washington doesn't comply.

The EU said it will impose retaliatory sanctions of up to $2.2 billion by introducing 100 percent duties on some U.S. imports, effectively pricing those goods out of the EU market. Tokyo, meanwhile, said it was ready to retaliate by the end of the month unless Washington backs down.

EU officials said they plan to target tariffs at goods produced in important swing states in the 2004 presidential election, and will act if the U.S. steel duties are still in place five days after the report has been formally adopted by the WTO, which must happen within 30 days.

In a 170-page report, a three-member WTO panel on Monday rejected the bulk of the U.S. appeal of an earlier ruling that said duties of up to 30 percent introduced in March 2002 by the Bush administration breached trade rules.

The United States criticized the ruling, and insisted it was right to impose the "safeguard" tariffs for three years.

But while WTO director-general Supachai Panitchpakdi (search) said he hopes the countries will be able to solve the problem without resorting to sanctions, the ruling bolstered the position of countries threatening retaliation.

"Should the United States refuse to terminate its illegal practice, we will notify the WTO of our retaliatory measures based on the overall losses," Japan's Economy, Trade and Industry Minister Shoichi Nakagawa said in a statement. "We do hope the United States will accept the ruling and terminate the measures immediately."

Nakagawa did not specify the size of Japan's retaliatory sanctions, but the Mainichi newspaper said they could reach $91.7 million.

China and South Korea said Tuesday they welcomed the WTO ruling, and indicated they would also consider retaliation.

"With respect to the further measures taken by various parties, it will depend on the attitude that the U.S. will take," Chinese Ministry of Foreign Affairs spokesman Liu Jianchao told a news briefing.

"We will urge the United States to lift the tariffs, and we hope for the best," said Sung Yoon-mo, an official at the Ministry of Commerce, Industry and Energy. "It's too early to say what we will do if they refuse. We will study various options we can take."

He confirmed that imposing retaliatory sanctions was one option.

South Korea exported $874 million worth of steel products to the United States last year. It expects that it will sell more in the U.S. market if Washington removes the import barrier.

In New Zealand, which has also filed a complaint, Trade Minister Jim Sutton said that while the domestic steel industry was small, but made an important contribution to the economy.

"New Zealand, along with the other countries involved, would encourage the U.S. to remove the safeguards without delay," he said.

Complaints against the U.S. duties have also been filed by Norway, Switzerland and Brazil.