Leading steel producers in Asia, including Japan and South Korea, yesterday vowed to fight controversial US 30 per cent tariffs on some imported steel products.
News of the crackdown on Tuesday sent shivers though Asian stock markets as share prices of steelmakers in Japan, South Korea, Taiwan and Australia tumbled.
Asia is the world's top steel-producing region, accounting for approximately 43 per cent of global output in January, according to the International Iron and Steel Institute.
China is at the top of the list, producing an estimated 14.5 million metric tons that month. Japan was second with 8.48 million metric tons.
The Japanese Trade Minister, Mr Takeo Hiranuma, described the move as "deeply regrettable" and said he doubted the plight of the US steel industry justified the tariffs.
"Japan will work closely with Europe, Korea and related nations to consider appropriate measures, including seeking arbitration by the World Trade Organisation," he said in a statement.
Japan exported 2.2 million tons of steel to the US in 2001. Shares in its top steelmaker, Nippon Steel, fell sharply after the news.
The US decision comes less than a month after President Bush toured East Asia - urging Japan to overhaul its long-cosseted economy and calling on China to live up to its pledges as a new member of the WTO and promote free trade.
China yesterday joined in criticising the US for its decision, saying it violated the rules of the WTO. The ministry was quoted as saying the US move would have a negative impact on normal steel exports by Chinese manufacturers to the US and would cause "great losses" to these companies.
It said its small quantity of exports to the United States posed no threat to US companies.
The Korean steel industry, which exported 2.1 million tons to the US last year, said the tariff would affect 80 per cent of all US steel imports.
"The US decision is an infringement of world free trade agreements," Mr Park Sang-ki, a director general at the South Korean Foreign and Trade Ministry, said. "We are considering taking the issue to the WTO."
Shares in South Korea's Pohang Iron and Steel, the world's biggest steelmaker, fell almost 6 per cent yesterday morning as investors digested the implications of the tariffs. South Korea is the world's sixth-biggest steel producer.
In Taiwan, steelmakers also expressed concern about knock-on effects about the tariffs.
"If other producers shift their focus to markets in south-east Asia or China after the US import tariffs, I think it will drive up competition," said Mr K.M. Chen, president of China Steel Global, which manages the overseas operations of top-ranked China Steel Corp.
Australia said it was considering a WTO challenge.
Australia's top steel exporter, BHP Billiton, called the US restrictions an "affront" to efficient producers, but said its biggest single category of exports - steel slabs - had escaped the tariffs.
