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Japan Joins Europe in Steel Wars

Japan intends to join Europe in its brawl with the United States over steel tariffs. Tokyo will submit retaliatory measures against the U.S. for its protectionist policies to the World Trade Organization on Friday.

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Japan and Europe have lodged trade complaints against the United States over its heavy metal policies.

Japan, Europe and South Korea continue to be incensed over U.S. President George W. Bush’s decision in March to impose tariffs as high as 30 percent on steel imports.

The Japanese Trade Ministry said on Thursday it intends to impose 100 percent tariffs on $4.88 million (5.3 million euro) worth of American steel as of June 18. The tariffs are part of $123.43 million (135 million euro) package of penalty tariffs the Japanese are seeking to levy against American products if the World Trade Organization (WTO) rules in their favor in the trade dispute.

Banana wars 2.0?

The move comes three days after the European Commission lodged its own complaint with the WTO in Geneva seeking to impose 378 million euro ($345 million) in retaliatory annual tariffs on a lengthy list of goods.

In documents filed with the WTO on Tuesday, the European Commission said it planned to impose 100% tariffs on 18 product groups that mostly include cotton or steel as soon as June 18.

The move marks the most contentious transatlantic trade spat since the recently settled "banana wars," in which the U.S. accused Europe of favoring bananas from former Caribbean colonies over those grown in Latin American countries.

Tangerine scream

Among the laundry list of goods being targeted by the EU for hefty tariff hikes are citrus fruits, ready-to-wear fashion, rice, linens, pool tables and casino furniture. Tariff increases on these goods do not require the official approval of the WTO, and all that is required is majority backing from the 15 EU member states.

In other words: Gap jeans and Fruit of the Loom t-shirts could soon become twice as expensive in Germany and elsewhere in Europe as they are now.

Room for a compromise?

But European officials say they are still hoping to strike a deal with Washington. Brussels has left the door cracked open for the possibility of the U.S. lowering tariffs on other European exports in compensation for the steel penalties in order to avoid the planned sanctions.

The Commission estimates the U.S.-imposed tariffs will impact 2.4 billion euro ($2.182 billion) worth of European steel.

In addition to the planned June sanctions, the EU also submitted a second list on Tuesday of import goods with a combined value of 606 million euro ($553 million) upon which tariffs can only be increased with the WTO's approval.

A ruling by WTO arbitrators is expected by mid-2003.

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