March 7, 2002
The looming battle over US steel tariffs poses a crucial challenge to the WTO, as governments from around the globe vowed to resist a decision by President George W. Bush to protect US steelmakers from foreign competition.
The European Union announced in Brussels on Wednesday that it would take steps to safeguard its own steel industry and was coordinating its position with other steel producing interests.
Analysts said Bush's announcement of up to 30 percent tariffs on most US steel imports for three years came at an awkward moment for the World Trade Organisation, which has begun navigating the world toward a new round of tariff-cutting talks.
The imposition of hefty tariffs sends a negative signal, particularly to developing countries that make up three quarters of the WTO membership at the start of the Doha Development Round, analysts said.
Developing countries had to be reassured their concerns would be taken into account in the Doha cycle of trade talks after complaining they had failed to taste the fruits of trade liberalization from a previous round, said WTO analyst David Woods, who also heads World Trade Agenda Consultants.
"Here we have a message which says basically when the chips are down the only thing that counts is domestic politics," he added.The confidence, albeit shaky, built up by the WTO's success in launching a new round at its Doha ministerial conference last November could be undermined by the latest trade dispute, he warned.
"I think the challenge for the WTO is a political one, not really a legal one," Woods said, adding that he doubted it would be difficult legally for the WTO's dispute settlement body to rule on the case.
The EU's complaint had not yet reached WTO headquarters here on Wednesday but EU Trade Commissioner Pascal Lamy said in Brussels earlier that the action was imminent.The letter will be addressed to the US mission but a copy would be sent to the global trade body, sources said.
Lamy said the 15-nation bloc was already coordinating with other steel producers, including China, Japan and South Korea, to seek WTO condemnation."This is not particularly new and not something that is going to phase a dispute settlement panel or the appellate body," Woods commented."It attracts a lot of headlines but it isn't something that is going to challenge the credibility of the dispute settlement body nor really challenge the powers of panels to analyze," he added.
But a diplomat who spoke on condition of anonymity said he believed the case risked setting a precedent that could overload the WTO's dispute settlement body with work and would put the system to the test.
Under the WTO agreement, a member may restrict imports of a product temporarily by using safeguards if its domestic industry is injured or threatened with injury from a surge in imports.
The agreement states that if no settlement is found through consultations the exporting country can retaliate by taking equivalent action.
The diplomat said that while the trend among developed countries is to reduce the usage of subsidies and safeguards, the United States was going it alone within the western camp.
"It is going to underline the contradiction between what the developing countries reproach the developed countries for, " the diplomat added."They ask them to liberalize their trade while when it comes to their own sacred cows like steel, textiles and agriculture, (but) they maintain obsolete protectionary measures and in contradiction to the rules," the diplomat said.
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