US Treasury Secretary Paul O'Neill yesterday denied claims by the President of the European Central Bank that there was a link between a US decision to impose tariffs on imported steel and the dollar's strength.
Washington said this week it was imposing tariffs of up to 30 percent on imported steel, sparking the EU on Thursday to become the latest party to launch a formal case against the US at the WTO.
O'Neill, on the final stop of a Gulf tour to push a US-led drive to stop financing of terrorism, said the tariffs were aimed at giving the US steel industry breathing room to restructure.
The strong dollar and the need for them were entirely different issues, he added. "They just live in a different world. The fact that the steel industry now has, and has had for a long time a huge over-capacity is the overwhelming issue about the steel case."
Reporters had asked O'Neill about comments by ECB chief Wim Duisenberg on Thursday that the dollar was the driving force behind the US tariff decision.
At a news conference in Frankfurt, Duisenberg said: "I'm rather inclined to say this deplorable action by the United States' authorities to protect its steel industry may have something to do with the exchange rate of the dollar as it is being experienced by the American steel industry."
O'Neill said there was bound to be controversy after major policy changes and he expected steel tariffs row to subside. He said the Bush administration had to balance the impact of high unemployment due to restructuring in the US steel industry against a global steel over-capacity that it sees as stemming partly from subsidies by foreign steel makers.
US Federal Reserve chairman Alan Greenspan said Thursday he disagreed with the decision. "I understand the difficulties any president has in trying to come to grips with our trade laws and conditions such as exist in our steel industry," he told a Senate panel.
"I happen not to agree with the particular judgment. But I recognize that it is a very, very tough judgment that the president had to make," Greenspan said. He said the US had benefited "more than anybody" from the fruits of the international free trading system.