25 June 2002

New Zealand would pursue a legal challenge at the World Trade Organisation against the safeguard measure on steel imports imposed by the United States for a three-year period in March, Trade Negotiations Minister Jim Sutton announced today.

He said the United States safeguard measures meant that the vast bulk of New Zealand steel exports to the United States now incurred an additional 30% tariff.

"We don't believe that the imposition of this measure was justified by the relevant WTO rules that regulate use of safeguard measures.

"For several months now we have been engaged in a broad-ranging dialogue with the US both bilaterally and in the WTO on the steel safeguard. But we have not received any convincing answers to the very real questions we have about how the US can justify its action in terms of WTO rules. Accordingly, we are now requesting that a WTO dispute settlement panel be established to consider our complaint against the US measure."

Mr Sutton said New Zealand exports of steel to the United States last year amounted to around $70 million. The additional cost now faced by the 30% safeguard tariff put this important trade at risk.

"The New Zealand industry is an unsubsidised and efficient producer but it does not face a level playing field into the US market. Just as the government sought to protect the interests of the lamb industry in the face of unjustified US safeguards on lamb, we are concerned to protect the interests of our steel industry in the face of what we consider to be unjustified market access restrictions into the US market."

He said several WTO members had expressed strong concern about the US measure.

"New Zealand's concerns are by no means isolated ones. A number of other WTO members, including the European Communities, Japan, Korea, China, Switzerland, Norway and Brazil are pursuing dispute settlement action against the US. This underlines the strength of international concern about the US action."

Mr Sutton said the report of the United States International Trade Commission, which had provided the basis for the US action, was flawed in many key areas.

"There are a number of problems in the USITC analysis. In particular, in order to impose a safeguard, you need to show a sudden, recent, sharp and significant increase in imports. But in recent years steel imports into the US have significantly decreased and have dropped particularly sharply in the last year. It's therefore difficult to see how the US can make a case."

Mr Sutton said a WTO dispute settlement panel could take until early next year to arrive at a decision on the legality of the US measure, and that there might then be an appeal.

"Given the daily costs that the safeguard results in for New Zealand exporters, it's important that we start the process now. New Zealand will be working with others to ensure that in the event our challenge is successful, the US will take swift action to withdraw its measure."

Office of Hon Jim Sutton

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