Asian anger grows over U.S. steel tariffs


US Trade Representative Robert Zoellick said the steel tariffs were a temporary safeguard to help the U.S. industry

CNN's Geoff Hiscock and wires

SYDNEY, Australia (CNN) -- Outrage over the U.S. decision to impose tariffs on steel imports is building among Asian producers with Japan, Korea and Australia saying they will likely seek action over the move from the World Trade Organization.

The European Union has already said it will seek WTO intervention. But U.S. Trade Representative Robert Zoellick told a Washington press briefing that the EU did not come to the steel issue "with clean hands".

U.S. President George W. Bush announced the tariffs of up to 30 percent late Tuesday. They will take effect from March 20 and last for three years.

The key steel producers affected include Japan, South Korea, China, Taiwan, Russia, Ukraine, Germany and Brazil, plus smaller makers like Sweden and Australia.

Australia's Trade Minister Mark Vaile told CNN Wednesday that for the U.S. to justify safeguards for its steel industry, it had to prove that imports alone were hurting its producers.

"That's questionable," Vaile said, noting that much of the U.S. steel industry had to modernize to compete effectively with other producers.

He said Australia probably would join a WTO challenge to the U.S. action, although he stressed no decision had yet been made.

Major setback, says EU

The European Union has already threatened retaliation.

"The U.S. decision to go down the route of protectionism is a major setback for the world trading system," EU Trade Commissioner Pascal Lamy said in a statement.

"The EU will of course launch an immediate complaint in Geneva (at the WTO) against this clear violation of WTO rules and we will take whatever measures are necessary to safeguard our own market," Lamy said.

Reuters news agency reported that South Korea exported 2.1 million metric tons of steel to the U.S. last year. Industry sources said the tariff would affect about 80 percent of this.

Japan, which exported 2.2 million metric tons of steel to America last year and is facing a slump in demand for steel, gave its support for moves to take the U.S. to the WTO.

Japanese minister of economy, trade and industry Takeo Hiranuma said Japan regretted the U.S. decision.

"We will closely review the content of the measure. We will keep close contacts with other affected nations, such as Europe and South Korea, to take appropriate actions, which could mean filing a complaint with the WTO," Hiranuma said in a statement.

About half of the $230 million in Australian steel products exported to the U.S. will be affected by the tariff, according to Australian Industry Minister Ian Macfarlane.

Bush's move is to help the struggling U.S. steel industry, but imports from some countries including NAFTA members Canada and Mexico are to be exempted.

Poorer developing nations are also excluded, as are Jordan and Israel, which have free trade agreements with the U.S.

Some countries exempted

"This relief will help steelworkers, communities that depend upon steel, and the steel industry adjust without harming our economy," said Bush.

But some American steel makers had pushed for a 40 percent tariff for four years to combat low prices and high labor costs.

U.S. Trade Representative Robert Zoellick told a press briefing in Washington on Tuesday afternoon that steel prices were at a 20-year low and there was over-capacity in a fragmented global industry.

Zoellick said the U.S. action was a "temporary process" to give its domestic steel industry "a chance to get back on its feet".

He said the European Union did not "really approach the issue of steel with clean hands", noting that European nations had subsidized the industry by $50 billion during its restructuring from the 1970s to the 1990s.

Zoellick also said China had given "another $6 billion to their steel industry last year in terms of subsidies".

Two big markets

The EU and the U.S. have the world's biggest trade relationship and are the only two major steel import markets.

According to Reuters, EU steel imports of 25.4 million tons exceeded exports by only 2.25 million tons. By contrast, U.S. steel imports of 38 million tons exceeded exports by 31.4 million tons.

Germany, the EU's biggest steel producer, and Sweden say the EU should take Washington to the World Trade Organization. Britain has also expressed concern.

"The United States is imposing prohibitive tariffs, which under WTO rules is not allowed," an EU official told Reuters.

Russia warned that a tariff "could have a serious impact on the atmosphere of Russian-American relations."