WTO issues final ruling on steel dispute over US safeguard measures

WTO issues final ruling on steel dispute over US safeguard measures

As a result of the complaints made to the WTO by Brazil, China, EU, Japan, Korea, New Zealand Norway and Switzerland against the definitive safeguard measures on imports of certain steel products implemented by the Bush administration in March 2002, WTO on October 10, 2003 confirmed its previous ruling that the measures are inconsistent with WTO safeguards agreement and GATT 1994 the international trading rules. EU, preparing to hit back US tariffs with retaliatory sanctions worth $2.2 billion covering a large variety of US export goods is pushing for immediate termination of the US S201 measures. Otherwise the community will bring the retaliatory tariffs in force in December. In case the report is adopted by the WTO by the end of November, the EU sanctions would become effective by December 6, 2003 or on December 15, 2003, at the latest. The European Commission defends that the US, lacking to provide reaonable and adequate explanation to prove that unforeseen developments increased imports and caused serious injury to the domestic steel industy, has no other choice than removing the tariffs with immediate effect. Besides pressure from the EU, Japan together with South Korea, China and New Zealand also calls the US authorities to cancel the trade restrictions and warn that they could take retaliatory measures in case Washington rejects the decision. Japan is intending to inform the WTO by end November of their rebalancing measures equivalent to the adverse effects imposed on it by the US steel safeguard measures. All these countries are looking forward to a revival of their exports to the US. Australia earlier backed form this multilateral action after securing exemptions for its steel imports into the region. Nearly 85% of Australian steel imports were exempted from US safeguard tariffs. However, we understand that US is still discussing the WTO ruling and apparently disagrees with the overall report. The US Trade Representative Office stated on Monday that it is still reviewing the situation and that it believes the tariffs imposed in March 2002 are in accordance with the WTO rules. Furthermore, International Steel Group, a US steel making company, expressed that the US could still respond to the Appallate Body's ruling by providing additional explanation about its findings, thereby eliminating the basis for the WTO's initial ruling. ISG stated that under the US trade law, implementation of an adverse decision from the WTO Appallate Body requires the Administration to follow a statutorily prescribed process and cannot directly be terminated by the President outside the congressionally-mandated process. When it comes to Weirton Steel of the US, the ruling includes some good news for the company as it did not find fault with the tariffs on tin mill products. Weirton Steel's 50% revenue is coming from tin products. However, Japan, being the largesttin exporter is still expected to put pressure to take the material out of the tariff list, even the S201 measures remain in force. One alterative the US is considering other than removing the tariffs in force, is to extend the exemption list further. Still, with this final ruling President Bush is left in a difficult position when we consider the adverse affect of cancelling his own ruling on his policies ahead of next year's elections, particularly in steel producing states like Pennysylvania, West Virgina and Ohio. Meanwhile the Consuming Industries Trade Action Coalition Steel Task Force (CITAC STF) urges the Bush administration to terminate the steel tariffs immediately. CITAC STF points out to the continuing damage and job lossess caused by the S201 tariffs, the billion dollar retaliatory threat is more than what the steel consuming industries in the US could tolerate. The manufacturing industry in the US believes that the domestic steel sector has had the benefits of the S201 tariffs so far and this should be their turn now to receive some positive news to recover the damage they have been through since March 2002. The decision on the future of the US S201 tariffs is shortly expected. Yet, another possible step to be taken by the Bush administration at this stage could be to ask for more time from its major trading partners, to eliminate these tariffs.