Bad news in Bethlehem?

The EU has forcefully condemned the recommendations issued by the US International Trade Commission to hike tariffs on steel products by up to 40%.

The EU has forcefully condemned the recommendations issued by the US International Trade Commission (ITC) to hike tariffs on steel products by up to 40%, which could, if implemented, virtually close the US market for imports of steel from the rest of the world.

On hearing the news, EU Trade Commissioner Pascal Lamy said: ‘On the day after the US House of Representatives voted to give the President Trade Promotion Authority in order to open markets and update the WTO rule-book, the ITC is recommending that the exact opposite be done in steel. This is a worryingly negative signal to send the rest of the world,’ he said.

‘The EU calls on the US Administration to reject this call for the protection of an industry that is already sheltering behind numerous defensive measures. The US steel industry needs to put its own house in order. This should not be done at the expense of those who have already done so,’ he added.

The EU claimed that the measures recommended by the ITC today were totally unjustified. It said that if the approach was accepted and implemented, it would constitute a violation of WTO rules.

According to a statement from the EU, the US has already been condemned a number of times by the WTO as its anti-dumping, anti-subsidy and safeguard procedures do not conform to its international commitments. This is another case where the ITC has found injury despite the absence of any recent surge in imports.

US legislation gives the US President a wide margin of manoeuvre to adopt any action which he considers ‘appropriate and feasible’ in response to an ITC recommendation. The EU calls on the President to choose measures which favour market adjustment and restructuring – not market closure.

Furthermore, the EU seems to believe that no action of any kind is warranted from the US. It cites the fact that the US steel market is already over-protected with 123 anti dumping and 31 anti subsidy measures of which 30 and 16 respectively restrict or block European exports.

In the first ten months of this year, US imported steel to the value of just over $9½ billion, 25% down on the corresponding figure last year. This reduction makes the ITC findings even harder to understand. If adopted, the actions recommended to the President would virtually end US steel imports with severe implications for the world market affecting both the European Union and other countries.

The EU said that it recognises that some sectors of the US steel industry (notably the traditional integrated mills) face real difficulties as a result of pension and health costs for retired and laid off workers. This has prevented consolidation into larger, more streamlined enterprises. Unlike European firms, the US did not use the nineties to complete the restructuring process started in the 1980s. As a result there are no US companies amongst the world’s largest steel firms.