WASHINGTON — In a move to avert a trade war, U.S. government officials said Thursday they were exempting another 178 foreign steel products from controversial duties the Bush administration imposed on imports in March to protect the flagging domestic steel industry.An "overwhelming majority" of this latest round of steel exclusions will benefit European and Japanese steel producers, according to two trade officials who briefed the press.This is the largest group of steel exclusions this year in a series that began in June and it could further ease tensions with EU nations, which have been threatening to slap sanctions on everything from citrus to apparel.In July, the EU Union delayed a decision to impose retaliatory tariffs on U.S. exports, including apparel, after the U.S. said some EU steel products would be exempt from the recently imposed tariffs.The EU has threatened to slap punitive duties on more than $300 million of U.S. goods. EU officials picked several women’s and men’s apparel categories to target because the garments are made in states that are expected to be key electoral battlegrounds this November.The World Trade Organization is expected to rule on the legality of the Bush administration’s steel tariffs in the second half of next year, at which time it will review formal complaints by several countries.In another trade dispute, as early as today the WTO is expected to rule on the amount of sanctions the EU can impose on U.S. products, including apparel, in a case involving tax breaks for U.S. corporations operating abroad. The WTO has deemed those breaks an "illegal subsidy" and the EU has been waiting for Congress to alter the system.

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