EU steel talks with U.S. founder

The EU has vowed to fight U.S. tariffs of up to 30 percent on steel imports

GENEVA, Switzerland -- Controversial steel tariffs imposed by U.S. President George W. Bush are set to kick-in on Wednesday after talks between officials from Washington and the EU became deadlocked.

Representatives from the U.S. and the European Union met in Geneva under the aegis of the World Trade Organization on Tuesday in an attempt to hammer out an agreement.

But talks broke off after an hour when the only concession the EU could wrench from the U.S. was an agreement to look at possible compensation.

Bush announced the imposition of up to 30 percent in duties on a range of steel products from Europe, Latin American and Asia two weeks ago.

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They were announced in an effort to protect the domestic market against cheap imports, mainly from the Far East, the U.S. said.

Under world trade rules, countries are allowed to introduce so-called safeguard measures if they experience an unusual surge in imports.

But Europe immediately expressed its concern by saying the move would hurt its markets.

It argued there has been no surge of imports into the United States and that the measures are purely protectionist and violate WTO rules.

EU Trade Commissioner Pascal Lamy said on Tuesday it is to introduce within "a question of days" measures designed to prevent the European market from being flooded by steel diverted from the United States.

Diplomats, from different EU member countries, said U.S. officials had agreed that Washington would "consider" Brussels requests for compensation over the measure.

"But that amounted effectively to a rejection," one envoy present at the talks said. "We are clearly at an impasse."

The United States made no immediate comment on the meeting.