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Business

German Fuels Transatlantic Steel Spat

The chairman of Germany's ThyssenKrupp lashed out the United States' intention to tax foreign steel imports, a move that could mean another tough year for the German steel giant.

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Should this man be smiling? Ekkehard Schulz, chairman of ThyssenKrupp

A few days after one transatlantic trade dispute seemed destined for resolution, another one flared up again.

The head of Germany’s giant steel producer lashed out against the United States steel industry for its intention to place import taxes on foreign steel in order to protect flagging domestic steel producers from European competitors.

The US "has lost its international competitiveness because it failed to restructure and modernize in time," Ekkehard Schulz, the executive board chairman of ThyssenKrupp said in a Financial Times interview. Instead of punishing foreign companies, the US should work on consolidating their fragmented industry and updating their equipment, Schulz said.

The comments came just days after the World Trade Organization ruled in favor of the European Union in a tax dispute with the United States. The EU has the opportunity to impose duties on $4.04 billion worth of US exports. But both sides said they want to work out the conflict before it gets that far.

America's protectionist attitude

Lurking behind the tax dispute was another long-standing spat between the EU and US. President George W. Bush's administration will decide in one month whether to impose special duties of between 5 and 40 percent on 16 categories of steel products.

The duties would hurt European steel makers like ThyssenKrupp, who deliver a lot of steel to American car manufacturer Chrysler.

"We have built up a great relationship with Chrysler for more than two decades," Schulz said in response to complaints Europeans were harming American steel makers, so, "you can’t talk about damage done to US industry."

Tough year for German steel giant

Schulz’s company is especially on edge after reporting year end profit losses, with more losses possible in the first quarter of this year. As of the end of September 2001, the before-tax profit slipped from 1.1 billion euro the year before to 875 million euro. The announcement dampened the steel sector and its stock lost 3.3 percent in trading on Tuesday. The Essen-based company has already said it will reduce investment in 2002 and institute a cost efficiency program.

The measures come as steel producers worldwide are struggling. A flood of products onto the market has pushed steel prices to 20-year lows. Producers worldwide are consolidating, most notaby the company Arcelor, a fusion of three of Europe’s biggest steel producers.

Schulz says that Arcelor, which combines Spain’s Aceralia, France’s Usinor and Arbed of Luzxembourg, should stabilized the market when it starts operation at the end of February.

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