WTO rules against US

The World Trade Organisation's highest court ruled yesterday that US steel duties violated trade laws and the European Union threatened Washington with heavy sanctions if they were not quickly removed.

Brussels says it is ready to retaliate with some $2.2 billion of its own duties on US goods, selected for the maximum political impact, and that these could be in force by early next month if Washington does not heed the WTO verdict.

But the United States reaffirmed that it considered the duties, levied since March 2002 to protect its struggling steel industry, were "fully consistent" with trade rules and gave no indication of how it would react.

"We disagree with the overall WTO report. We are going to study it, look at its implications and go from there," said White House spokesman Scott McClellan.

The US administration, which faces presidential elections in November 2004, is under attack from political opponents for allegedly pushing its free trade agenda to the detriment of US jobs and the domestic economy.

The WTO's Appellate Body, in a final verdict in the case, upheld a decision in July by a panel of trade judges that the so-called "safeguard" measures were "inconsistent with the requirements (of the WTO)."

The 15-nation EU and seven countries - including Japan, Brazil, South Korea and Switzerland - complained to the Geneva-based WTO over the steel duties, initially levied at up to 30 percent but subsequently slightly reduced.