EU responds to U.S. with higher steel tariffs

BRUSSELS, Belgium -- The European Union's head office formally adopted tariffs of up to 26 percent on steel Wednesday to prevent a feared flood of cheap imports from countries hit by U.S. protective measures.

Labeling the U.S. tariffs, which took effect last week, "unfounded, unnecessary and unfair," EU officials said they were forced to respond in kind to safeguard Europe's own shaky steel industry.

Warning against "over-dramatization," however, they also appealed for a truce to avert a trans-Atlantic war.

"The EU is not seeking confrontation," European Commission President Romano Prodi said. "We are quite simply defending, as we have to do, our natural interests."

In Washington, the Bush administration said it would ask for consultations with the EU over the higher tariffs, the first step in bringing a case against the EU at the World Trade Organization.

"How can the EU demonstrate injury under the WTO rules when the United States hasn't even started collecting the new tariffs and there hasn't been time for an import surge," asked Richard Mills, a spokesman for U.S. Trade Representative Robert Zoellick.

The United States exports on an annual basis more than $1 billion in steel products to Europe.

Trade commissioner Pascal Lamy insisted the EU was acting "in strict respect" for World Trade Organization rules, which allow countries facing a potentially harmful increase in imports to protect its own industry temporarily.

EU steel imports have gone up 18 percent since 1998, he said.

The EU charges the U.S. tariffs, which range up to 30 percent, are unjustified because U.S. imports have actually declined by 33 percent during the same period.

Washington, however, looked at imports of 10 steel products between 1996 and 2000, the last year for which full-year data was available.

It showed imports were at their highest levels for seven of those products in 2000, and at their second-highest levels for the other three, a U.S. trade official said.

"I think it's a more accurate picture to include a larger swath of time," he said, noting that WTO rules do not specify the time period.

Looking at the broader business cycle, the EU's statistics reflect more the "back end of a big surge," he added.

The European steel industry group Eurofer welcomed the EU actions, which it said would "provide the domestic industry with the necessary security from a sudden surge of steel imports."

The EU measures are to take effect next week and last for at least six months -- unless U.S. President George W. Bush changes U.S. policy before that.