EU foreign ministers postpone possible retaliation against US steel tariffs, July 2002

Foreign ministers from the 15 EU Member States agreed, in Brussels on 22 July 2002, to endorse a decision to postpone the possible application of sanctions against the United States in retaliation for the tariffs imposed on steel imports. Ministers agreed to delay the possible sanctions until the end of September following an offer of certain concessions on EU steel imports by the US government.

The 'last minute' announcement of 14 new exemptions for EU products on 19 July 2002 led the European Commission to recommend to the Council that the EU should postpone any retaliatory action until further requests for exemptions have been considered. The latest package, contained exclusions requested by European steel firms or their American customers, with an estimated value of over $60 million.

On 17 July 2002, the European Commission had said that the exemptions granted up to that date by the United States had been 'manifestly insufficient' but the US, keen to avoid retaliatory action from the EU, announced the latest exemptions ahead of the European Commission's meeting and also made it clear that they would decide on the further 1,200 requests for product exemptions by 31 August 2002. As part of the US safeguard proceedings, EU firms have been able to request that certain products be excluded from the import tariffs. The list of products to date is calculated to be worth $230 million for EU firms.

The decision by EU foreign ministers to postpone retaliatory action also took account of the fact that it is the US economy itself which is suffering the most from the negative impact of the US steel import tariffs. Moreover, the EU believes that the World Trade Organisation will condemn the US measures and therefore the US will be forced to lift the tariffs immediately following the WTO decision. The EU believes that this could spark a further price collapse during 2003 because the US has still not taken the necessary measures to restructure its domestic steel industry.

Speaking during a tour to New Zealand EU Trade Commissioner, Pascal Lamy, said:

'Our job is to defend EU interests in the most effective way in order to achieve our objectives. On balance, right now the EU interest is best served by maintaining maximum pressure on the US to deliver a meaningful rebalancing package. The US has taken useful steps in this direction and have told us there is more to come, but there is much more to do. They know that we need to see substantial additional exclusions between now and September to avoid the adoption of countermeasures'.

The Council has called on the European Commission to continue negotiating further product exclusions with the US on the basis that it will revisit the issue at the end of September. By that time, the US should have considered all the requests for product exclusions and the Council will therefore decide on whether retaliatory action remains necessary. The European Union had been considering imposing $380m (£240m) worth of sanctions against US products, such as orange juice, rice, T-shirts, spectacles and pinball machines from 1 August 2002.

Links:

European Commission:

• 19.07.02: Press Release: Last minute US steel concessions persuade EU to hold fire on sanctions [IP/02/1108]
• Commission considers US exclusions from protectionist steel measures granted to date 'manifestly insufficient' [IP/02/1083]

Council of the European Union

• 22.07.02: Press Release: General Affairs and External Relations Council [PRES/02/210]

BBC News Online

• 19.07.02: Europe delays steel retaliation

European Sources Online: Financial Times

• 20.07.02: Brussels delays decision on steel duties

United States International Trade Commission

• Steel Global Safeguard Investigation

European Sources Online: In Focus

• EU foreign ministers back European Commission proposal to retaliate against US steel import tariffs, June 2002
• US imposes steel import tariffs

Helen Bower
Compiled: Tuesday, 23 July 2002

EU Foreign ministers have agreed to endorse a decision to postpone the possible application of sanctions against the United States in retaliation for the tariffs imposed on steel imports until the end of September 2002 following an offer of certain concessions on EU steel imports by the US government.