Byline: Kristi Ellis

WASHINGTON — The European Commission on Friday moved a step closer to following through with threats of retaliation for the Bush administration’s decision last month to slap punitive tariffs on global steel imports.
The EC released a proposed list of U.S. products on which it could impose retaliatory sanctions totaling about $335.6 million as early as June 18.
The hit list, which must still be approved by the 15 European Union states and filed with the World Trade Organization, contains dozens of apparel products but no textiles.
EU officials will meet next week to discuss the list. There is a possibility that apparel might not be on the final list for immediate sanctions. The EC must submit the final list to the WTO by May 17.
The WTO, the final arbiter on whether the U.S. violated rules governing global trade, is not expected to rule on the dispute until summer 2003.
EU officials are also still holding out the hope the U.S. will offer a compensation package for the punitive steel duties, which could avert a trade war, according to a spokeswoman from the EU delegation in Washington.
“If the U.S. comes up with a compensation package, we could avoid retaliation,” she said. “But we are not sure that is going to happen.”
As it stands now, several apparel products on the proposed list, including T-shirts, knitted and crocheted vests, suits, jackets, blazers, dresses, skirts, bib overalls and shorts could be slapped with 100 percent duties.
The proposed list also sets another round of retaliation beginning March 20, 2005, in which the EU would increase duties by 30 percent on such apparel categories as women’s and girls’ overcoats, blouses, shirts, slips, petticoats, panties, nightdresses and pajamas as well as men’s and boys’ shirts, underpants, briefs, nightshirts, pajamas and overcoats. That would result in another $557.2 million of tariffs.
The U.S. exported $255.8 million worth of apparel and $1.03 billion worth of textiles to the EU in 2001, according to the Commerce Department.
“The EC is contemplating taking unilateral action — if it takes such action, it would be deciding on its own whether the U.S. violated WTO obligations without a decision of a WTO dispute panel, and it would even determine on its own how big the retaliation amount should be,” said Josette Shiner, associate U.S. Trade Representative, in a statement. “It would be hypocritical for any nation to violate the rules and principles of the WTO in order to defend the WTO rules-based system.”
The Bush administration has argued that the tariffs are permitted because steel imports are being sold at below the cost of production.
Industry reaction was mixed.
Steve Lamar, vice president of the American Apparel & Footwear Association, said the proposed list presents “a big problem” for U.S. apparel manufacturers.
“We are glad our textile products have been removed from this list,” said Cass Johnson, associate vice president of trade at the American Textile Manufacturers Institute.

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