GENEVA - An appellate panel of the World Trade Organization said yesterday that the United States may levy duties on imports from formerly state-owned European steelmakers, provided the U.S. Commerce Department changes the way it calculates the tariffs.
A WTO appellate panel overturned parts of an earlier WTO ruling, setting the stage for the United States to retain the taxes of as much as 37 percent by making a new calculation.
Under the panel's ruling, the duties can be imposed if the United States has determined that steelmakers including Arcelor of Luxembourg, the world's biggest, and Germany's ThyssenKrupp AG, weren't sold to the private sector for a fair price.
"That leaves open the prospect that the administration could find flaw with the way a privatization was conducted and allow the duties," said Richard L.A. Weiner, a lawyer with Hogan & Hartson LLP in Brussels, Belgium, who represented Acciai Speciali Terni SpA of Italy in its complaint against the U.S. duties.
Yesterday's appeals ruling, which says the duties are illegal as presently calculated, means taxes can't be imposed without determining the fair market value of the formerly state-owned companies, Weiner said.
"Commerce will go back now and make that assessment," Weiner said.
In July, the WTO rejected the U.S. argument that European steelmakers were still benefiting from government subsidies they received when they were state-owned. Without the subsidies, the companies would not have attracted private investors later, said Washington, which appealed the decision.
The Commerce Department has been imposing duties since 1993 on certain steel products made by the formerly state-owned European companies. The tax was intended to penalize the companies for the earlier government subsidies.
Richard Mills, a spokesman for U.S. Trade Representative Robert B. Zoellick, welcomed the appellate body's reversal of the earlier ruling against the underlying U.S. anti-subsidy law.
Weiner said he now expects the 15 percent duties paid by Acciai Speciali Terni since 1997 to be lifted, because the U.S. Commerce Department already has found that the Italian company was sold at a fair market price. He said he also expects Corus, formed by a merger between British Steel PLC and Dutch steelmaker KoninklijkeHoogovens NV, to have its duties dropped because the Commerce Department also has determined that transaction was fair.
"Privatization at arm's length and at fair market price will usually extinguish" earlier subsidies, said the WTO report. "However, we disagree [with the WTO's July ruling] that this result will necessarily and always follow from every privatization."
The EU filed complaints to the WTO last year on behalf of eight targeted companies: Corus, Italian stainless steel producers Cogne Accia Speciali SRL and Acciai Speciali Terni, Spain's Aceralia Corporacion Siderurgica SA, Germany's Dillinger Saarstahl AG, Italy's Ilva SpA, Sweden's SSAB Svenskt Stal AB and France's Usinor SA.
Aceralia and Usinor merged with Arbed SA of Luxembourg in February to form Arcelor SA, the world's biggest steelmaker. Acciai Speciali Terni is now owned by Germany's ThyssenKrupp.