Sanctions on hold as US signals steel concessions

Plans for tit-for-tat trade sanctions against the US have been put on hold by the European Union amid signs of a breakthrough in a row over steel.

The US has slapped hefty new tariffs on steel imports in a bid to prop up its struggling domestic sector.

In reply, EU foreign ministers were due on Monday to approve a package of retaliatory tariffs.

These were not just on US steel sales to the EU, but also on a range of equally sensitive US exports, including textiles and orange juice.

But late this afternoon US signalled concessions which could exclude crucial sectors of the steel industry from the hefty new 30% tariffs and offer compensation to others.

That prompted European trade commissioner Pascal Lamy to recommend postponing a decision on any EU moves until September 30.

EU governments have agreed, and EU and US negotiators now have the summer to attempt even more concessions to avert a full-blown trade war.

It has been simmering since March, when President George Bush first announced restrictions to the US steel market to give domestic producers a bigger competitive edge.

The legality of the move is already being challenged by the EU at the World Trade Organisation, with interim European trade retaliation for good measure.

But Mr Lamy believes more will be gained now by pulling back from a bitter clash.