European Union Trade Commissioner Mr Pascal Lamy said yesterday that the EU may be entitled to retaliate against steel tariffs imposed by Washington this week. President Bush's decision to impose taxes of up to 30 per cent on steel imports to protect an ailing domestic industry has drawn widespread criticism and raised fears of a trade war.
"There is a reading (of the trade accords) that we may be entitled to compensation. If compensation is refused, we may be entitled to retaliate. We are investigating," Mr Lamy told a news conference in London.
"If it is a road that is open, then fine."
Some analysts and lawyers have said that the World Trade Organisation's (WTO) Safeguards Agreement could allow the EU to hit US imports with retaliatory sanctions by the middle of this year.
The 15-member EU says it will be the biggest victim of the US measures which are due to take effect from March 20th.
It says its steel producers, among the main suppliers to the US market, could lose $2 billion a year over the three-year term of the tariffs.
More than half of the EU's four million tonnes a year of steel exports to the United States will be affected and up to 16 million tonnes of world steel output could be diverted towards the European market.
The EU initiated its formal case against the United States over President Bush's steel tariffs on Thursday and signalled it had its eye on compensation or retaliation.
