- The Washington Times - Friday, June 8, 2001

Europe's top trade official yesterday harshly criticized the Bush administration for taking the first steps toward massive import restrictions on steel.

Pascal Lamy, the European Union's commissioner for trade, charged that the United States is scapegoating steel imports when the real problem is an noncompetitive industry.

"We do not believe that imports are the cause of the problems currently experienced by the U.S. steel industry," Mr. Lamy said during a visit to Washington for meetings with congressional leaders.

He pointed out that Europe has seen massive retrenchment in its own steel industry over the past 20 years, with 50 million metric tons of capacity coming out of production, which cost 750,000 jobs.

The result was "a highly competitive industry which produces at significantly below U.S. costs," Mr. Lamy said.

European markets reacted adversely to the U.S. move, hammering stocks of leading steel producers. The import curbs would hit producers in Europe, Japan, Russia, Ukraine and Korea, among other countries.

Europe accounted for 25 percent of U.S. steel imports worth $1 billion in April, followed by Canada at 19 percent; Japan, 11 percent; Mexico, 8.2 percent; South Korea, 7.5 percent; and Russia, 3 percent.

The Bloomberg Europe 500 Steel Index, which tracks European steel makers, dropped almost 10 percent Wednesday to 75.28, reflecting a dip in the share prices of ThyssenKrupp AG, Usinor, Corus Group PLC and other European steel giants. The index edge up yesterday to 77.09.

On Tuesday, the Bush administration took the first steps to impose broad restrictions on steel imports in about eight months by initiating a Section 201 case before the International Trade Commission, an independent agency.

The administration announced other plans, which Mr. Lamy also criticized, for international negotiations to reduce excess steel capacity. If successful, such a move would boost sagging steel price for both producers and consumers.

"You will understand our sense of bafflement that the priority action by the U.S. is to set up bilateral negotiations, with the 201 sword of Damocles in the background, to force others to take out capacity," he said.

Rep. Sander M. Levin, a Michigan Democrat who backed the administration's action, disagreed.

"There's nothing inconsistent about our filing a 201 and having discussions with the European Community and others about excess steel capacity," he said. "In fact, I think they go well together."

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