WRITTEN QUESTION P-3099/01

by W.G. van Velzen (PPE-DE) to the Commission

(5 November 2001)

Subject: Steel industry, US state aid and import restrictions

Is the European Commission aware of a major import restriction, in the form of a special 30 % import duty, which the US intends to impose on steel imported into that country, and can the Commission state what adverse impact this import restriction will have on exports by the European steel industry to the US? What impact will this US import restriction have on imports of steel into the EU from third countries and what problems will this create for the European steel industry?

In a newspaper report of 23 October 2001 (US steel: EU expresses concern over US International Trade Commission findings) Commissioner Lamy stated the following:

We disagree with the ITC's findings. We shall continue to watch this matter closely. As I have said before, if the US decides to close its market as a result of this investigation, it should be in no doubt that we will take this matter up in the WTO.

What protective measures does the European Commission plan to take in order to forestall or offset this undesirable situation, and what practical steps, apart from watching developments closely, does the Commission intend to take vis-à-vis the WTO?

What steps does the European Commission plan to take in the WTO or in other fora should the US authorities decide to make large volumes of state aid available to the US steel industry, with the distortion of competition that implies, and when does the Commission plan to take practical steps to deal with the problems threatening the European steel industry?

Answer given by Mr Lamy on behalf of the Commission

(6 December 2001)

On 23 October 2001, the United States (US)' International Trade Commission (ITC) issued the results of the first stage of its investigation in the US steel industry. Following this report, the ITC now has two months to make recommendations on remedies to the US President. Under US legislation, it is for the President to determine whether and what type of relief to provide. At this stage, it would therefore be premature to respond to suggestions of an import duty or any other restrictive measure. However, any restrictions could have a very significant impact on the Community industry, as Community trade covered by the ITC determination amounts to some $ 2,5 billion.

The Commission has already played an active role in defending Community interests in the context of this procedure. It will continue to set out the case against unfair US restrictions which would have a damaging effect on American steel consuming industries, shift the cost of American steel industry restructuring to the rest of the world and risk provoking a spiral of restrictive trade measures. Unless and until measures are taken, however, it is not possible to begin World Trade Organisation (WTO) action. However, as the Commission has made clear, it would have no hesitation in challenging WTO incompatible actions whether they concerned restrictions on steel imports or subsidies to the US industry. Indeed, the Community has already taken action using WTO dispute settlement procedures against several existing US restrictions on steel imports, some of which have already been completed successfully.

In addition to bilateral contacts with the US, the Commission is playing its full part in the meetings organised by the Organisation for Economic Cooperation and Development (OECD) to address the problems faced by the world steel industry.

At the meeting held on 17-18 September 2001, it was agreed that each country would analyse the situation of its industry and consider:

- the technology and economics of the steel sector;

- the response of the industry to the changed economic situation following the South Asian crisis;

- those facilities which are largely non-competitive;

- the principal issues that could impede closure of uneconomic capacity.

The results of these studies will be discussed at a further OECD meeting on 17-18 December 2001.

The Commission is also holding bilateral discussions with other leading steel producers, including the candidate countries, Japan, Korea, Russia, Ukraine and Kazakhstan with a view to addressing problems faced by the world steel industry.