WTO launches steel tariffs inquiry

The US blocked a previous EU request for an expert panel

GENEVA, Switzerland -- The World Trade Organization (WTO) has agreed to a request from the EU to investigate whether U.S. steel tariffs violate international trade agreements.

The 144-member body approved the creation of a three-person expert panel -- requested by the European Union but backed by several countries, including Japan and China -- at a meeting on Monday.

The United States insists the measures imposed in March are in line with WTO rules and says it will defend its case vigorously.

The EU's first request for an investigation was blocked by the U.S. on May 22.

Under the trade watchdog's dispute regulations, the U.S. could not block it a second time, and Monday's decision to set up the panel was passed automatically.

European Union Trade Commissioner Pascal Lamy said: "This is an important step forward in our response to the unjustified, highly protectionist U.S. measures.

"Similar requests by other countries for panels will shortly be accepted as the rest of the world joins to press the United States to remove (the tariffs)," he said in a statement issued in Brussels.

The steel row -- which has set the United States against most other producer countries -- has prompted accusations that the administration of President George W. Bush is trying to serve its own domestic political aims.

There are also fears that the disputes over steel and farm subsidies could scupper attempts to hold a further round of trade liberalisation, which WTO members agreed to launch at a ministerial meeting last November.

Observers say the selection of the panel could be delayed as a significant number of countries are also bringing similar complaints, complicating the choice of the three trade jurists.

China, in its first use of the WTO complaints machinery since joining the world trade body at the start of the year, will make its first request for a similar panel on June 7, while Japan and South Korea already have requests pending.

When it is handed down, the panel's ruling can be challenged by either side.

Observers say appeals hearings and other procedures would mean that it could be late next year before there is a final decision.

The EU and several other countries including Brazil, Norway and Switzerland argue that the tariffs of up to 30 percent on a wide range of steel products contravene WTO pacts.

Brussels and Tokyo say that the agreement allows them to impose retaliatory tariffs on other U.S. goods from June 18 unless Washington offers them compensation for their losses on steel sales to the United States.

But they have indicated that they may hold off to allow more time for a U.S. move in that direction.