EC compiles U.S. tariff 'hit' list

The EC says the U.S. steel tariffs are unfair

BRUSSELS, Belgium -- The European Commission has approved a list of goods it is prepared to hit with retaliatory sanctions after the U.S. refused to relax its controversial steel tariffs.

The EC proposes recovering duties worth over $300 million on a range of U.S. goods including textiles, steel and orange juice.

It has deferred any immediate action to allow the U.S. time to compromise, but it will review the situation at a foreign ministers' meeting on Monday.

The commission had threatened to act on June 18 but has set a new deadline of July 3.

In March, the U.S. imposed tariffs of up to 30 percent on 15 steel products, including rolled sheets, stainless steel wire, fittings and rebars.

At the time, EC President Romano Prodi urged U.S. President George W. Bush not what he called protectionist measures intended to help the U.S. domestic market.

He said: "We all have our legitimate interests to conserve but we must not let short-term domestic interests dictate our policy, nor should they be allowed to jeopardise the functioning of the market."

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

The European Union and several other countries including Brazil, Norway and Switzerland argue that the tariffs contravene World Trade Organization pacts.

On Monday, the WTO agreed to a request from the EU to investigate whether the U.S. tariffs violate international trade agreements.

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

EU officials say the commission will seek to keep to its "cocked gun" approach to maintain pressure on Washington for more concessions, at least for a limited time.

U.S. Undersecretary of Commerce Grant Aldonas, during a visit to Brussels last week, said Washington would exclude a group of steel products from the duties, some by June 18 and the rest before U.S. Independence Day celebrations on July 4.

But he ruled out any compensation in the form of lower U.S. tariffs on other EU goods.

German Economy Minister Werner Mueller held talks with U.S. Trade Representative Robert Zoellick in Berlin on Wednesday.

Mueller, who was seeking exemptions for key German steel products, said afterwards: "There have been no concrete decisions taken with regard to steel today."