US tariffs trigger trade war fears


THE FIRST shots in a transatlantic trade war were fired today as Britain accused the US of breaking international rules by slapping massive tariffs on steel imports.

Downing Street accused President George Bush of ' protectionism ' and threatened counter-measures aimed at preventing European markets from being damaged by the US decision.

The row risked opening a damaging rift between Britain, its EU partners and the US - although No 10 insisted that the Anglo-American 'special relationship' was still in place.

The steel wars threatened to overshadow a key trip to Washington next month by Mr Blair during which he and Mr Bush are expected to discuss the next phase of the war against terrorism, including the build-up to possible military action against Iraq.

Downing Street said Britain was 'very disappointed' by the US steel decision and said urgent action was being taken to try to get the World Trade Organisation to order America to drop the 30% tariffs on imports.

In hard-hitting comments, the Prime Minister's official spokesman said: 'We believe in free trade. We do not believe in protectionism. This should not be taken as an excuse to go back into another round of protectionism.'

However, the spokesman also revealed that Britain and other EU nations were urgently studying plans to impose 'safeguards' - temporary barriers aimed at protecting markets from the effects of the US decision.

Downing Street did not go into details, but it is thought that the safeguards could only mean some sort of barriers protecting European markets from cheap Far Eastern imports. Britain's stance is that 'safeguards' are permitted by the WTO, while the unilateral imposition of tariffs is not.

Significantly, the spokesman did not rule out 'tit-for-tat' moves against US imports into Europe. saying this would be a matter for the EU.

The row represents an embarrassment for Mr Blair, who only last week wrote a letter to Mr Bush urging him not to impose tariffs. The two leaders also discussed the issue in a phone call last Thursday.

This afternoon Trade and Industry Secretary Patricia Hewitt condemned the US action as 'wholly unjustified' and in breach of obligations under WTO rules.

Some 4% of British steel production would be affected by the US tariffs and Britain could be flooded with cheap steel products from other countries, with a 'devastating' impact on the UK industry, she said.

Ms Hewitt pledged UK backing for the EU complaint to the WTO and promised: 'We will stand by our steel producers in combating this unjustifiable and deeply regrettable action.'

In the Welsh Assembly, economic development minister Andrew Davies said Wales will not be directly affected by the US tariffs. But he warned there could be indirect consequences with countries shut out of the US market looking to sell their steel in Europe.

Mr Davies is to meet steel unions in Wales and the local Allied Steel Wire company. He has also written to Patricia Hewitt in support of 'any actions the UK Government thinks are appropriate and necessary' to protect the industry.


Paul Armstrong writes: The US move raises the prospect of further job losses at Corus, where more than 6,000 workers have already been axed, more than half in Wales.

Steel analysts fear the tariffs will be a double whammy for UK jobs because other producers, particularly in Asia, are likely to win increased subsidies from their governments, making it even harder for Corus to compete.

Corus said it would demand the EU imposed huge tariffs on the region's steel imports as part of retaliatory moves. CBI director-general Digby Jones said the US should set an example of what free trade meant.

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US tariffs trigger trade war fears

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