Korea to take U.S. to WTO over steel


Korea's stock market, a star performer so far in 2002, dipped Wednesday with steel shares faring worse

SEOUL, South Korea (Reuters) -- South Korea will take the United States to the World Trade Organization (WTO) on Thursday over the recent U.S. decision to impose up to 30 percent of tariffs on steel imports, a government official said on Wednesday.

"As our talks with Washington ended in failure, we've decided to take the case to the WTO," an official at South Korea's Ministry of Foreign Affairs and Trade said.

"But we will have to continue the talks with Washington for one more month," said the official, who declined to be named.

U.S. President George W. Bush announced the new import duties on March 5 to help the financially struggling U.S. steel industry get back on its feet.

The tariffs are scheduled to start on Wednesday and last three years.

"If the protracted talks fall through again, a WTO panel will be set up to deal with the case for six to nine months," the official said.

World's No. 6 producer

South Korea, the sixth-largest steel producer in the world, shipped 15 percent of its steel exports to the United States last year. In the first 11 months of 2001, U.S.-bound steel exports totaled $821 million.

However, South Korean steel giant Pohang Iron and Steel Co. (POSCO), the world's largest producer, said it would not be heavily affected by the new tariffs.

"Washington has informed our government that POSCO is excluded from the list of the affected, as we run a U.S.-based joint venture with the United States Steel Corp.," POSCO spokesman Kim Jin-won said.

POSCO provides 96 percent of its U.S.-bound exports to their U.S. joint venture. That company, USS-POSCO Industries, was established in 1986 to produce cold-rolled steel products.

POSCO, the world's largest steel maker in terms of output, produced 27.8 million metric tons of crude steel in 2001.

In an effort to counter the heavy U.S. duties, POSCO plans to expand output of high-margin products like coated steel in China, starting this month.

"China's demand for value-added steel products is increasing ahead of the 2008 Olympic Games," Kim said.

POSCO also plans to raise stainless steel prices in April, reflecting rising raw material prices.

POSCO shares fell 2.3 percent to 147,500 won on Wednesday, underperforming the broader market which closed 0.28 percent lower.