"We believe that this is a political decision on the part of the Americans. It has no legal basis...It hurts the EU in an unjustified and unfounded way". Mr Pascal Lamy, the European Union's trade commissioner, directed these well-justified criticisms yesterday at President Bush's decision to impose heavy tariffs on steel imports.
Mr Lamy cautioned against too peremptory a response, but promised a firm one, based on multilateral action through the World Trade Organisation (WTO). His words carry authority, since the EU negotiates these issues on behalf of the 15 member-states and Mr Bush imposed the tariffs despite pleas from European leaders not to do so.
Not only is this a political decision primarily to do with maintaining support for the Republicans from key congressional districts in November's elections, it is bad for the US and world economies. It flies in the face of Mr Bush's repeated calls for free trade. It will damage the momentum of economic recovery associated with the new world trade round recently agreed at Doha. And it seems to confirm a basic pattern of unilateralism in the conduct of Mr Bush's foreign policy, which cuts right across the grain of the international coalition against terrorism.
The world steel industry has been suffering from substantial over-capacity during the last decade, which has led to wrenching corporate reorganisations, down-sizings and widespread loss of jobs. In Europe, employment has come down by a third and there has been drastic transnational rationalisation involving many companies. The industry's productivity and the output of higher-quality steel products have soared, giving it a real competive edge. In contrast, the US steel industry is in much worse shape. Despite widespread job losses and bankruptcies, it has failed to reorganise efficiently and has huge commitments to fund health and pension arrangements for hundreds of thousands of retirees.
Mr Bush says the tariffs are temporary and will enable the US industry reorganise without the additional threat of cheap imports. But it is just as likely to delay unpalatable change. It will also hit many other industries which rely on such imports, cancelling out the employment protection sought by steel workers. Retaliatory action by the EU and other producing countries will certainly affect US exports. So would the likely dampening effect of any more generalised trade war on the world economy, which badly needs more co-ordinated action to stimulate recovery.
The EU has a choice between pursuing the matter through the WTO disputes procedure - which could take 18 months - or taking more urgent action against US companies availing of a tax break condemned in a recent WTO ruling. A clear and determined response is called for, including efforts to convince the Bush administration to reconsider before the tariff decision is implemented in 29 days' time. Mr Lamy was quite correct to emphasise the importance of keeping within the agreed international rules. But he too, will come under pressure to protect steel producers in the EU which are vulnerable to cheaper products diverted from the US market. Such tit-for-tat logic will damage all concerned.