GENEVA — The World Trade Organisation agreed yesterday to step into the escalating global dispute over a US hike in tariffs on imported steel, agreeing to a European Union request for a panel to rule on the legality of Washington’s decision, WTO officials said.

The EU wants an independent panel to overrule the March decision by the administration of President George W Bush to raise tariffs on steel imports by up to 30 per cent. The United States says it needs the levies to help the embattled US steel industry recover from a flood of cheap imports.

The Europeans, who say there is no evidence of an increase in steel imports to the US, are demanding compensation for damage they claim the tariffs are causing to their domestic industries. Countries from other parts of the world, including Japan and South Korea, are also lining up to challenge the US tariffs.

Of the six million tonnes of steel that the 15-nation bloc exports to the US every year, four million tonnes, or two-thirds, are “adversely affected” by the tariffs, the EU has said.

They represent a trade value of 2.5 billion euros (US$2.3 billion), according to EU figures.

In a statement issued in Brussels, EU Trade Commissioner Pascal Lamy hailed the WTO move as “an important step forward in our response to the unjustified, highly protectionist US measures”.

“I am in no doubt that the United States will lose this case,” he said.

Under WTO rules, countries can impose temporary increases in tariffs, known as safeguards, to give time for domestic industries to restructure to improve competitiveness.

The EU claims the US move breaks WTO rules. EU officials are particularly concerned that there was no overall increase in steel imports — a precondition for enacting safeguards.

The Europeans are demanding compensation for damage they claim the tariffs are causing to their domestic industries.

Last month the EU unveiled plans to impose retaliatory tariffs on US$341-million worth of US imports if it does not get compensation.

An initial EU request to set up a panel was blocked last month by the United States under WTO rules.

The EU and United States have 20 days to agree on the composition of the three-member dispute panel. If they fail to decide, they can ask the WTO to name the members.

The panel could take up to a year to rule on the legality of the US tariffs. Either side can appeal the ruling, but a decision by the appellate body would be final.

US trade officials said Washington stood by its position that the tariffs are consistent with WTO rules — a claim argued in a Montego Bay speech on Friday by the US ambassador to Jamaica, Sue Cobb.

“The steel action only affected a particular kind of steel and it is a tiny fraction of all the steel imported into the US,” Cobb told members of the American Chamber of Commerce of Jamaica (Amcham). “It was, and is, a temporary measure. It affects few trading partners and it’s fully consistent with US obligations under the WTO.”

Japan and South Korea, which also oppose the US tariff increase, also requested the establishment of a panel Monday. But the United States blocked that move. The WTO is expected to reconsider the request next week.

Other requests for panels against the US tariffs are expected this month from China, Switzerland and Norway. Often the WTO considers complaints from a number of countries under a single panel, rather that creating parallel committees. A final decision will be made after all requests are received.

South Korean Ambassador Chung Eui-yong said yesterday that his country opposes the US tariffs because WTO members “should resolutely stand up for the open market principles on which this organisation was founded”.

Last week the United States launched a counter-strike in the steel dispute by filing its own complaint against the European Union.

Washington said it wanted to hold consultations with the EU to discuss Europe’s decision in March to impose its own steel tariffs, following the US tariff hike. Such a notice is often a first sign of a formal challenge to be filed later under WTO rules.

The EU has until the end of this week to respond to the US request for consultations, which must be then completed within a month. The United States still has the option of requesting the establishment of a WTO panel to rule on the legality of the EU tariffs.

The EU said its steel tariffs of up to 26 per cent would prevent a feared flood of cheap imports from countries hit by the US protective measures.

— Associated Press, Agence France Press, Observer reporters