"A new round of retaliatory protectionist measures in the global steel industry is looming and multilateral trade mechanisms should be instituted quickly to avoid the spread of protective barriers," said Liang Yanfeng, a senior researcher with the Chinese Academy of International Trade and Economic Co-operation, a think tank of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC).

The European Union (EU) threw up protective barriers for its steel industry on Wednesday in retaliation against a controversial US steel tariff of up to 30 per cent on imports, which took effect last week.

The EU decided to impose 14.9 percent to 26 percent safeguard tariffs on imports of 15 steel products which exceed certain quotas, from early April to October.

Brazil, Latin America's largest steelmaker, said yesterday it was also mulling over ways to protect its steel industry after being doubly hit by the EU's decision to slap tariffs on steel imports and the new US duties.

Yet the European Union has agreed to exclude most Chinese steel products from the list of its temporary safeguard measures, Xinhua quoted a senior official from MOFTEC said in Beijing yesterday.

The EU had decided to impose tariff quota limitations on 15 kinds of steel products, but it has now agreed to remove most Chinese steel products from the list in accordance with WTO rules which regard China as a developing country.

The EU made the decision after China expressed concerns and following relevant talks, said the official. MOFTEC chief Shi Guangsheng had written to his EU counterpart Pascal Lamy.

The rift comes as China and the EU join Japan, South Korea and Switzerland in filing complaints to the WTO against the controversial US steel tariffs.

Zhang Hanlin, a professor with the Beijing-based University of International Business and Economics, said China has grounds to ask the US to increase its imports of other products, such as textiles, from China or lower its tariffs on these products as compensation for losses incurred by Chinese iron and steel companies as a result of the US steel tariffs.

But he suggested that a more likely solution to the issue would be for the United States to lift its steel tariffs after several months.

Some analysts expect that China will retaliate by imposing safeguard tariffs on farm product imports from the United States if it is not granted satisfactory compensation.

US farm products are very competitive on the global market and are expected to flood into China now that the country is a member of the WTO, dealing a heavy blow to local farmers.

At a press conference during the fifth plenary session of the Ninth National People's Congress, Premier Zhu Rongji said farmers' incomes were a major concern of the Chinese Government and jokingly proposed a retaliative 30 percent tariff on soybean imports from the United States to protect Chinese farmers.

Although the premier made the remark jokingly, analysts are convinced senior Chinese officials are considering such a measure.

Liang said the most important thing for domestic iron and steel companies at present is to sell orders at hand and explore new markets while the government negotiates with other countries.

The United States imposed tariffs of 8 percent to 30 percent on steel imports on March 20, drawing complaints from its trading partners the world over.

The countries hardest hit by the US steel tariffs include Japan, the EU, South Korea, China, Ukraine, Brazil and Russia.

(China Daily March 30, 2002)