- The Washington Times - Tuesday, June 4, 2002

The World Trade Organization yesterday set up an arbitration panel at the request of the European Union to decide whether American restrictions on steel imports violate international rules.
The United States faces up to $626 million in trade sanctions if arbitrators find for Europe in what has become the most serious trans-Atlantic trade dispute in years. The arbitration is expected to take at least 18 months.
"This is an important step forward in our response to the unjustified, highly protectionist U.S. measures," Europe's trade commissioner, Pascal Lamy, said yesterday.
U.S. Trade Representative Robert B. Zoellick has defended the restrictions as a response to years of government support for steel industries in Europe and elsewhere, and the distress of major U.S. steel companies that are in bankruptcy.
President Bush imposed three-year tariffs of up to 30 percent on steel imports in March. The move came amid strong pressure from the United Steelworkers of America, whose members are politically influential in states Mr. Bush either won or lost narrowly in 2000.
The restrictions have created a strong backlash abroad. In addition to the 15-nation European Union, Japan, Korea, China, Switzerland and Norway have also challenged the U.S. action in the WTO.
A loss at the WTO would not invalidate the curbs on steel imports. But the rules of the organization would authorize Europe to impose sanctions on the United States equivalent to the costs imposed by the American tariffs on European trade.
WTO arbitrators will have to decide whether the United States broke international-trade rules when it imposed the tariffs, known as a safeguard, in order to help the ailing steel industry. Countries that join the WTO are allowed to use safeguards under limited circumstances.
Robert Hudec, a professor of international law at Tufts University, said arbitrators are likely to concentrate on whether the various U.S. government agencies that made the decision the Commerce Department and the International Trade Commission followed WTO guidelines. It is unlikely to touch the politically sensitive question of whether steel companies need protection from imports.
"It's very difficult for any tribunal to say whether an industry is hurt," Mr. Hudec said. "They tend to focus on procedural issues."
The United States has already lost several similar WTO cases involving Europe, Korea and New Zealand, among others, said Mr. Lamy.
"I am in no doubt that the U.S. will lose this case," he said.

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