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US Faces Steel Tariff Ultimatum

China will take retaliatory measures if the United States fails to lift its illegal tariffs on steel products, a senior official said yesterday.

"We will raise tariffs on some US imports and are studying the details of how to do so," said Vice-Minister of Commerce Ma Xiuhong when asked how China would respond if the United States did not abide by a recent World Trade Organization (WTO) ruling.

The WTO Appellate Body ruled last Monday that US safeguards for its steel industry are inconsistent with WTO rules, upholding the major findings of a July ruling.

China, along with the European Union, Japan, the Republic of Korea, Switzerland, Norway, New Zealand and Brazil, complained to the Geneva-based WTO over the steel duties. The duties were initially levied at up to 30 per cent from March 2002 but subsequently reduced slightly.

It was the first panel request by China since it joined the WTO in late 2001.

Members affected by the US measures will be entitled to apply for redress and take other appropriate action in accordance with WTO rules, unless the safeguards are withdrawn.

The European Commission has drawn up a hit list of US imports worth about US$2.2 billion a year -- including motorcycles, citrus fruits and textiles -- which will be targeted with retaliatory sanctions.

EC Trade Commissioner Pascal Lamy has said the retaliatory import tariffs could be in place as soon as early December if the United States does not back down now.

Japan is also considering raising duties on at least five products in retaliation against import tariffs protecting the US steel industry, the daily Nihon Keizai Shimbun (Nikkei) said earlier this week.

Quoting Japanese Trade Ministry sources, the Nikkei said the products Japan was considering as targets for the retaliatory tariffs included coal, chemicals, steel, textiles and electrical machinery.

If introduced, the tariffs would cost US exporters 10 billion yen (US$91 million) a year, the paper said.

US Secretary of State Colin Powell said on Wednesday President George W. Bush will decide in a "short period of time" whether to rollback disputed steel tariffs that have threatened a new transatlantic trade war.

Ma said the United States should withdraw the safeguard measures without delay since the WTO has made a ruling against them.

The US safeguard measures have triggered a new round of trade protectionism in the global steel industry, with the European Union, Canada and Japan rushing to protect domestic markets from steel exports that might be diverted from the United States.

(China Daily November 21, 2003)

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