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US likely to lift protective duties
( 2003-11-13 09:27) (Agencies)

Under pressure from many of his top advisers to lift tariffs on steel imports, US President George W. Bush may be moving in that direction to avert a trade war with Europe, Japan, South Korea and China, sources said on Tuesday.

That could spark a political backlash from steel makers and workers in next year's presidential election.

The White House said no decisions have been made, and officials have not publicly ruled out the possibility that the administration could flout the World Trade Organization (WTO) by keeping the tariffs in place.

Administration sources said Bush, who came to office by championing free trade, has begun final deliberations and could make his decision as early as next week.

Republican sources and analysts say the administration appears to be leaning towards removing - or scaling back - protection for US steelmakers for a number of reasons, not the least of which is the threat of the European Union (EU) to retaliate on US$2.2 billion worth of US exports.

"I believe that's a distinct possibility, given what the WTO seems to be saying," said Vin Weber, an influential Republican lobbyist who was among those representing the US steel industry during the fight to impose the tariffs.

The WTO's highest court ruled on Monday that US steel duties violated international trade laws, and the EU has threatened to retaliate by mid-December if Washington refuses to back down.

A spokesman of the Chinese Ministry of Commerce said Tuesday that China welcomes such a WTO ruling and hopes the United States would carry out its responsibility to the international community and withdraw those measures once the WTO dispute settlement body passes the report.

The goods targetted for sanctions are designed to have a political and economic impact as Bush seeks a second term next year. One group is citrus products from Florida, where Bush's brother is governor and which was the key to the president's 2000 election win.

While Europe was preparing to quickly strike back at the United States, Japan and the Republic of Korea said they would delay any retaliatory action pending a formal response from the Bush administration to the final verdict in the case by the WTO's Appellate Body.

Some political advisers with close ties to the White House also questioned whether Bush would realize any political gain by defending the controversial March 2002 decision, which imposed tariffs of up to 30 per cent on imported steel and sparked an international backlash.

Bush could face a backlash no matter what decision he makes.

If he bows to pressure from the EU to lift the tariffs, he stands to lose support in the pivotal steel-producing states of Michigan, Ohio, Pennsylvania and West Virginia.

Keeping them in place would hurt small and medium-sized Midwestern manufacturers - another important constituency - and clear the way for the EU to retaliate against exports from key states.

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