Asia Pacific nations seek deals on steel

By CNN's Alex Frew McMillan and Geoff Hiscock

HONG KONG, China -- Faced with imminent tariffs on steel, Asia Pacific nations are seeking bilateral deals with the United States.

Most say they would rather negotiate than take a drawn-out legal fight to the World Trade Organization (WTO).

The tariffs take effect on March 20 and last for three years. They have outraged many U.S. trading partners in Asia. Now those partners are deciding how to respond.

Supachai Panitchpakdi, the man who will succeed Mike Moore at the head of the WTO later this year, advised such a course immediately after U.S. President George W. Bush announced tariffs of up to 30 percent.

"I don't think the WTO can react outrightly," he told Reuters news agency at a conference in Indonesia on Wednesday.

Australia seeks waiver

Building on those remarks, Australian foreign minister Alexander Downer on Thursday told CNN that Australia will seek a tariff waiver from the U.S. for its hot and cold-rolled steel exports.

But he said he "did not want to hold out false expectations" of success.

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The U.S. president is backing the tariffs meant to reduce the influx of inexpensive steel that has devastated U.S. producers. CNNfn's Tim O'Brien reports (March 6)

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U.S. curbs on steel, farm goods, textiles and several other product categories regularly raise hackles in Asia.

Developing Asian countries such as India and China, the world's two most populous nations, have faulted the richest, the United States, Japan and the European Union, for protectionism.

On the flipside, the most-developed countries often fault developing nations for illegally "dumping" cut-price product in their market, to undermine competitors.

China has expressed "strong displeasure" at the U.S. steel tariffs. But for now, foreign-trade officials say that China "reserves the right" to appeal to the WTO, Chinese state media reports.

China just joined the WTO and appears loath to anger its new partners with such a move.

China already 'out of court'

In its own trade war with Japan over farm goods, both countries narrowly averted going to the WTO and have already decided to settle their differences "out of court."


In India, the main reaction to the tariffs has been a mild selloff in steel stocks

Though China and Japan both eye each other warily on many trade issues, they have decided to set up their own discussion group on farm produce, with representation from the private sector and government.

Anyway, China exports little steel to the United States, state-owned Xinhua news agency stated, adding that Chinese companies pose little threat to U.S. steelmakers.

Farm goods and textiles threatened to disrupt the last full meeting of the WTO in Doha, Qatar, in November. India was one of the last holdouts.

But the United States brokered agreement from Japan and France, and the three nations put their differences aside long enough to agree to a new round of talks.

Now the trade focus has switched to steel. Most Asia Pacific countries are looking for a one-on-deal with the United States rather than risk a falling out with the world's largest economy.

With Indian steelmakers able to sell to a vast domestic market, the main reaction in that country so far has been a mild selloff in steel stocks.

For instance, India's largest private-sector steel company, Tata Iron and Steel Co., shed 3.7 percent on Wednesday.

There has been little or no political response. An official told the Press Trust of India that the government is "analyzing" the impact of the situation.

Indian steelmakers said it was regretful other markets around the world would likely close to U.S. goods in retaliation.

'Good for U.S. companies'

Australia, also a critic of U.S. farm tariffs, exports about $230 million of steel a year to the United States.

But Downer said 40 percent of Australian exports took the form of slab steel, and so was already exempted.

The government's goal now was to get a waiver for the remaining exports, made up almost entirely of rolled steel.

He said a waiver was also in the best interest of the U.S. West Coast mills, which buy the Australian product.

If they are forced to pay for the 30 percent tariff, these mills will become uncompetitive, Downer said.

He added that the government would work through this process before making a decision about joining other countries in taking the U.S. to the WTO.

The most vociferous Asian critic of the U.S. tariffs is South Korea. Korea is home to the world's largest steel producer, Pohang Iron & Steel Co.

"We believe this action violates the steel industry and WTO's views of free trade and plan on dealing with the issue through the WTO, if we have to," Shin Kook-hwan, Korean minister of Commerce, Industry and Energy, said on Wednesday.

But Korea is making the most of the 120-day negotiation period that the Bush administration has earmarked.

"With this offer for talks, we can't consider the WTO lawsuit yet," Park explained.

Faced with an end to its 30-year monopoly on steel in Korea, Pohang, otherwise known as POSCO, has looked abroad for business. It has formed an alliance with Nippon Steel of Japan.