Japan and Europe have dropped threats of trade retaliation after US President George Bush scrapped controversial steel tariffs yesterday evening.
Despite possible political damage ahead of next year's presidential election, Bush offered little to cushion the blow to US steel makers and workers, who accused the Republican president of 'capitulating to European blackmail'.
In announcing the decision, Bush said he would keep in place an existing system to license and track steel imports so that he could 'quickly respond to future import surges that could unfairly damage the industry'.
Minutes after Bush's about-face, the EU suspended plans for retaliatory sanctions against $2.2 billion in US goods, including politically sensitive products such as citrus fruits from Florida.
Japan also said it would drop a threat to impose retaliatory tariffs on $458m of US goods, but added that it wanted to make sure the US tracking system did not impede trade.
The US steel tariffs, which Bush imposed in March 2002, officially ended at midnight instead of March 2005 as initially planned. Bush said that thanks to the tariffs, US steel companies were again well positioned to compete both at home and globally.
'These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances it is time to lift them,' Bush said in a statement read by a spokesman.
His reversal could, however, spark a backlash against Bush in the battleground steel-producing states of Ohio, Pennsylvania and West Virginia as he seeks re-election in 2004.
The decision came less than a month after the WTO ruled that the tariffs violated global trade laws.
The Irish Exporters' Association welcomed the US move, adding that it hoped that what it called other penal trade measures planned by the US would also be abandoned.
