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EU retaliates on steel tariffs

The steel issue isn't the first time the U.S. and EU have used trading sanctions as political weapons  

BRUSSELS, Belgium (CNN) -- The European Union on Wednesday approved tariffs on steel imports in response to a similar move by the United States earlier this month.

The EU said the tariffs would range from 14.9 percent to a maximum of 26 percent on 15 steel products for a provisional six-month period. The tariffs will come into force in a matter of days.

Brussels was responding to U.S. tariffs of up to 30 percent imposed on March 20.

Announcing the tariffs, European Commission President Romano Prodi urged U.S. President George W. Bush not to pursue further protectionist measures.

"I would like to use this opportunity to appeal to President Bush and his administration -- do not proceed any further down this path," Prodi told a news conference.

"We all have our legitimate interests to conserve but we must not let short-term domestic interests dictate our policy, nor should they be allowed to jeopardise the functioning of the market."

Q&A Why U.S. tariffs? 

EU Trade Commissioner Pascal Lamy said in a statement that the U.S. decision to impose trariffs on steel imports from outside North America was "unfounded, unnecessary and unfair."

He said EU response was "limited and carefully crafted" and with one simple goal: "To prevent a flood of diverted steel coming into the EU market."

The tariffs cover 15 steel products, including rolled sheets, stainless steel wire, fittings and rebars. The EU said imports for developing countries would be excluded, in line with guidelines set by the World Trade Organisation.

"It is very imortant that we manage these disputes sensibily and not let them careen out of control," Stuart Eizenstat, of the European-American Business Council in Washington, told CNN.

He said the EU should take its complaints to the WTO and avoid the temptation of imposing "massive tariffs on unrelated goods."

This is not the first time the EU and the United States have used trading sanctions as political weapons.

They have been battling for years over tariffs on bananas from former French and UK colonies in the Caribbean. The United States eventually won that round.

The WTO ruled against the EU over banning imports of U.S. hormone-treated beef.

And EU complaints of unfair provisions for U.S. groups which they say are in effect illegal subsidies are still rumbling on.

But steel could become the biggest trade war of all.

Matthew Parry, co-chairman of the Economist Intelligence Unit, said: "This is much more serious, whereas (with) bananas or beef a consumer can simply choose to avoid them, you have no choice with steel. It's a bit like oil in that respect. It can lead the economy down."

The EU has until May to decide if it wants to go ahead with the additional retaliatory measures.




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