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US considers steel tariff exemptions

Applications by European companies for exemption from US steel tariffs would be considered carefully, US Treasury Secretary Paul O'Neill said yesterday.

O'Neill, who is in Britain for talks with Britain's Treasury chief Gordon Brown about the financing of terrorism, said many of the 1,000 applications that had already been made would be "favorably decided."

"So far I think there are 1,000 being considered now and I think all of them, exemptions or exclusions that are requested, will be carefully considered," O'Neill told BBC radio.

"I suspect that a significant proportion of them will be favorably decided," he said.

Announcement of the US tariffs March 20 angered many of the US' trading partners, who feared their steel exports would be severely affected.

Britain said the measures were unjustified.

The new duties are designed to give a breathing space to the embattled US steel industry, but other countries claim they are illegal under WTO rules.

The EU is one of six members of the trade organization to request consultations with Washington under the body's dispute settlement procedure.

The EU, China, Japan, South Korea, Norway and Switzerland all have launched dispute proceedings, while 10 countries have joined Brussels in seeking compensation under a different rule for damage to their own industries.

O'Neill defended the tariffs, and said other countries had failed to understand that exemptions could be applied for.

"I don't think people had taken the time to understand the application [of the tariffs] and what it would mean for individual companies and individual countries," he told the BBC.

"People had overlooked the fact that there is a process for requesting exemptions and exclusions that is going on," he added.

The EU and five countries staged a united front on Thursday against recently adopted US tariffs on steel imports and said they were seeking a rapid US termination of the measures, diplomats said.

An EU source said after a first afternoon of talks with the US under the WTO's disputes settlement procedure that the EU, China, Japan, Norway, South Korea and Switzerland had a "very high degree of understanding" about the illegality of US tariffs.

They also made it clear that they would move swiftly to the next stage of the WTO's disputes procedure, the establishment of a panel to examine the dispute, if they saw little sign of movement by Washington.

EU sources said they had not found a satisfactory response from the US so far.

They said they were "hoping against hope" that the US would opt for an early termination of its safeguards policy on steel.

The US regards the 30 percent tariffs it slapped on some imported steel last month as legal under the WTO's safeguards agreement.

The US has called the tariffs a temporary measure, lasting three years, to protect the ailing US steel industry.

The group of six -- which is mounting a rare common offensive against the US at the WTO -- said they would issue a joint statement at the end of the consultations at WTO headquarters on Friday.

Some of the countries are also pursuing separate consultations with the US on possible compensation for the US tariffs.
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