EU turns up heat in steel row

BRUSSELS, Belgium -- The European Commission has stepped up its fight against steel tariffs, saying it will slap sanctions on the U.S. if the World Trade Organisation fails to settle the dispute with Washington.

The EC formally notified the WTO of its plans on Tuesday in order to meet a June 18 deadline set under international trade rules.

"Effectively, what we are doing is freeing our hand to raise our tariff levels,'' Commission trade spokesman Anthony Gooch told a news conference in Brussels.

The EC, the governing body of the 15-nation European Union, has said it would impose about $300 million in duties on a range of U.S. goods, including fruit juice and textiles, in retaliation for tariffs of up to 30 percent on a range of steel products introduced in March by Washington.

To avoid sanctions, the EC wants the U.S. to offer European producers broad exemptions from steel duties introduced or provide compensation in the form of lower tariffs on other goods.

The U.S. has already granted some exemptions on steel products, although not enough to satisfy European producers.

A final decision on whether to go ahead with sanctions will be made on July 19 when the commission reports to EU states on its negotiations with the U.S.

The EU and several other countries -- including Japan, Brazil, Norway and Switzerland -- believe the U.S. tariffs contravene WTO regulations. They have filed complaints with the WTO concerning the U.S. steel duties, but the global trade group is not expected to rule on the matter until sometime next year.

The U.S. maintains it tariffs are in line with WTO rules and said it would defend its case before the international body.

Other countries, however, have complained that the U.S. duties are politically motivated and aimed at appeasing the American steel industry which has been suffering huge losses and plant closures due to increased foreign competition and the global economic downturn.