ECB president slams steel tariffs

The EU has vowed to fight U.S. tariffs

FRANKFURT, German -- The European Central Bank president has harshly criticised the U.S. move to slap tariffs on steel imports, linking the action directly to the exchange rate of the dollar.

"I'm rather inclined to say this deplorable action by the United States' authorities to protect its steel industry may have something to do with the exchange rate of the dollar, as it is being experienced by the American steel industry," ECB president Wim Duisenberg said.

The dollar is currently trading at 10-week lows against the yen and has dipped against the euro recently.

Duisenberg said the U.S. would be hit hard by the the move, but the eurozone growth would see only "negligible" damage.

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"Those who will suffer most are the American consumers who will have to pay more than they otherwise would have to do for certain products," he said.

"I'm thinking especially of the American car makers and their customers whose life will be more difficult than it otherwise would have been."

U.S. President George W. Bush announced the tariffs on Tuesday, prompting a swift, strong reaction from the European Union.

The EU lodged a formal complaint at the World Trade Organization on Thursday, making a request for consultations on the tariffs with the U.S. -- the first step in the WTO dispute settlement procedure.

Similar action had been taken by Australia, New Zealand and Japan.

EU Trade Commissioner Pascal Lamy said the EU was planning safeguards to protect its own steel industry, declaring: "We have to exercise our right to protect our industry and our jobs."

And in a rare move, British Prime Minister Tony Blair had joined a growing chorus of world anger following what is largely seen as a protectionist move by Bush.

"These are unacceptable and wrong," Blair told the UK parliament.

Blair has worked continuously to position Britain as Washington's closest ally following the September 11 terror attacks on U.S. cities, and his statement was a rare show of prime ministerial criticism of America.

Japanese Trade Minister Takeo Hiranuma called the U.S. move "deeply regrettable" and said he doubted the plight of the U.S. steel industry justified the tariffs.

Japan, the world's second-biggest steel producer after China, exported 2.2 million tonnes of steel to the U.S. in 2001.

The European Commission's Lamy accused the U.S. of violating WTO commitments and said the EU would avail itself of its right to seek compensation once the damage is quantified.

"The steel market worldwide is not the wild west where everybody just does what they like," he said. "There are disciplinary rules."

The measures will be discussed by ministers from the 15 EU countries next Tuesday.

The EU argues that the problems facing the U.S. steel industry come not from imports, which have been decreasing, but from its failure to make itself competitive during the 1990s.

By contrast, European steelmakers have been consolidating in recent years into global giants such as ThyssenKrupp, Corus and Arcelor.