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Tuesday, November 11, 2003

Showdown at the OK Corral: or Amicable Exit Stage Left?

Given the state of US-France relations this will be an interesting one to watch. But there is just one interesting detail: as reported here earlier in the week, world steel prices are rising significantly as a result of the increase in demand from China. Does this mean that the US will be able to find a dignified way out?

Europe and Asia piled pressure on the United States on Tuesday to scrap steel tariffs outlawed by the World Trade Organization (WTO), with the EU threatening sanctions by mid December. The European Union has said it will slap retaliatory duties on $2.2 billion of U.S. goods if the steel duties, approved by President Bush in March 2002, remain in place after a final confirmation of the WTO ruling early next month. The goods targeted by the EU sanctions plan are designed to have a political as well as economic impact as Bush seeks a second presidential term next year. One group is citrus products from Florida, where Bush's brother is governor and which was the key to the president's 2000 election win.

"We hope, in light of this (WTO) decision, that President Bush will act quickly to remove the 201 (import) restrictions, so that we can get on with supplying our U.S. customers on a fair and equitable basis," said Anglo-Dutch group Corus, Europe's third-largest steel maker. French Finance Minister Francis Mer, a former steel industry baron, said the WTO's highest court had no option but to rule that Washington's so-called "safeguard" measures were inconsistent with WTO requirements. "I welcome it with a certain smile," said Mer. "Because everyone knew that there could be no other conclusion for an initiative that didn't necessarily have just commercial dimensions."

The world trade body's highest court ruled on Monday that the U.S. duties violated international trade laws, raising the prospect of retaliation from the EU and other complainants if they remain. Japan and South Korea said they would delay any retaliatory action pending a formal response from the Bush administration to the final verdict in the case by the WTO's Appellate Body. "The verdict is out and we have already sent out a message that we want them to go by the book. We are waiting to see how they will respond," Japanese Trade Minister Shoichi Nakagawa said. The United States reaffirmed on Monday that it considered the duties were "fully consistent" with trade rules and said it would study the WTO report.
Source: Yahoo News

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