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Business

U.S. Set to Avert Steel Trade War With Europe

One of the most enduring and inflammatory trade disputes between the U.S. and European Union will come to an end if President George W. Bush removes tariffs on imported steel this week.

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The steel duties targeted products from South America, Europe and Japan.

Both the Wall Street Journal and Washington Post have reported that U.S. President Bush is due to announce the decision following a campaign fundraising trip through the heart of steel country in Pennsylvania this week.

The elimination of the duties of up to 30 percent on steel imports from Europe, South America and Asia could cost him votes in November’s presidential election, but will avert a massive billion-dollar trade war with the European Union, according to analysts.

After a World Trade Organization appeals court ruled in favor of the EU’s case against the protectionist tariffs on Nov. 10, Brussels began upping the pressure on Bush to get rid of the illegal duties. The Union threatened to impose duties of up to $2.2 billion (€1.9 billion) on products like orange juice and farming equipment from states that will be

important to Bush in next year's presidential election.

Steelers protest

Wanting to avert the escalation of one of several trade disputes between the two partners, the administration appears ready to throw down the gauntlet despite the warnings and protest of major American steelmakers.

"To remove these (tariffs) and to buckle under to the Europeans would be a mistake," said Thomas J. Usher, chief executive officer and president of U.S. Steel , the nation's largest steelmaker said in the Wall Street Journal this week.

Steel industry representatives had hoped for a compromise in which the tariffs would be repealed six months before they ran out in March 2005. The industry, described by some analysts as a dinosaur in desperate need of modernization, has been slowly consolidating under the protection of the duties.

But critics say that by protecting the business of steelmakers in electorally-important states like West Virginia, Pennsylvania and Ohio, the Bush administration was hurting local steel producers who had to pay higher prices for their imported steel.

European leaders and EU officials have not commented on the possibility Bush will lift tariffs. But the move will be greeted, especially in Germany. Just two weeks ago, Chancellor Gerhard Schröder was in New York lobbying for a lifting of the sanctions.

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