US, UK May Cut A Deal On Steel

By Mike Wendling | July 7, 2008 | 8:11 PM EDT

London ( - British officials are negotiating with the U.S. government in an attempt to secure an exemption to steel tariffs approved last month by President Bush, according to officials and reports published Tuesday.

Bush and British Prime Minister Tony Blair discussed the tariffs during a weekend summit in Texas. Britain is currently part of a European Union complaint about the duties lodged with the World Trade Organization (WTO), but officials are looking for exemptions for certain types of steel products made in the U.K.

The Bush administration is now considering requests for exemptions from the tariffs by major steel consuming companies. A review of the requests is expected to be complete by early July.

In response to last month's announcement, the EU slapped tariffs of its own on 15 types of steel products. In addition to the WTO complaint, the EU is also demanding compensation for business lost to the tariffs and has drawn up a list of $2.2 billion of American export goods that could be taxed by Europe.

The list includes goods such as textiles and citrus fruit. While officials denied the threats were politically motivated, commentators have pointed out that the several of the goods listed are produced in swing states such as Florida.

U.K. officials denied that a negotiated exemption for British-made steel would undermine the EU efforts.

Producer complaint

Ian Goldsmith, a spokesman for Corus, Britain's largest steel producer, said the company was taking a two-pronged approach to the U.S. tariffs.

"We're urging our customers to make representations to U.S. trade officials while at the same time talking with the British government and urging them to negotiate," Goldsmith said. "So we welcome the news of talks between Britain and the United States on this matter."

Goldsmith said the main area of Corus production affected by the tariffs is high-quality steel used in engineering. The company has also filed a complaint with the Court of International Trade challenging one particular tariff on tin mill steel. The company produces tin mill steel at plants in the U.K., Norway and the Netherlands.

Import increase

Surprisingly, some experts are predicting an increase in American steel imports during 2002, even with the tariffs.

"We expect the steel market itself to show a slight upward trend this year," said Wilfried von Bulow, chairman of the American Institute for International Steel.

Von Bulow called the imposition of tariffs "the wrong decision at the wrong time" and said would provide scant help to weak steel-producing companies while damaging steel consumers.

According to the AIIS, the price wars that threw the American steel industry into crisis were over by early this year.

"The real solution to the never-ending steel import problem is contained in the first two elements of the Bush Steel Program," Von Bulow said. "These are the efforts to eliminate excess inefficient steelmaking capacity in the U.S. and around the world and prohibit, via an international discipline, subsidies and trade-distorting practices.

"Without subsidies, many of the weak U.S. mills would have been shut down, eliminating the inefficient capacity and saving the efficient," he said.

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