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By Doug Palmer
WASHINGTON, Aug 22 (Reuters) - The United States on Thursday excluded another 178 foreign steel products from the disputed tariffs it imposed in March, whittling away at the scope of the duties and potentially easing tensions with the European Union, Japan and other trading partners.
U.S. trade officials said the seventh and final round of exclusions for 2002 brought the number of foreign steel products exempted from the tariffs to 727. Those were culled from more than 1,300 requests.
The overwhelming majority of those granted went to steel producers in the EU and Japan, which have led international opposition to the tariffs, the U.S. aides said.
The aides denied that threats of retaliation from the EU and Japan influenced their decision.
The EU said it was examining the new exclusions and would offer an "appraisal" on Friday. Japanese officials were not immediately available for comment.
President George W. Bush imposed duties ranging from 8 to 30 percent in March to help the domestic steel industry restructure after more than 30 bankruptcies.
The Bush administration has said the duties, which will be phased out over three years, are legal under international rules that let countries restrict imports temporarily to help battered industries get back on their feet.
The EU, Japan, China, Switzerland, Norway and New Zealand challenged the U.S. action at the World Trade Organization, saying it went beyond what was allowed under the WTO's so-called "safeguard" rules.
In addition, Brussels and Tokyo have brandished threats of retaliation unless the United States compensated them for lost trade by lowering tariffs on other goods.
Industry sources said previously announced exclusions covered 1.2 million metric tons of the 13.1 million tons initially covered by the tariffs. U.S. officials said they expected to have an estimate of the overall tonnage excluded this year later on Thursday.
RETALIATION THREATS DELAYED
Last month, the EU delayed until late September a decision to slap retaliatory duties on more than $300 million worth of goods to give member countries more time to assess the benefits of the exclusions announced by the United States.
Tokyo also put retaliation plans on hold after the Bush administration exempted some of its steel products from the tariffs earlier this summer.
At home, the White House has faced conflicting pressures. U.S. steel-consuming companies want product exclusions, saying the tariffs have boosted domestic steel prices far more than expected, while U.S. steel producers say too many exclusions will undermine the effectiveness of the tariffs.
Nancy Gravatt, a spokeswoman for the American Iron and Steel Institute, said U.S. producers were "disappointed at the large number of exclusions granted over industry objections."
But she conceded the remaining tariff coverage appears still strong enough to provide much-needed protection against low-priced imports from abroad.
The U.S. trade officials, who spoke on condition that they not be identified, also said they expected the protection left would be enough to help the steel industry regain its footing.
RESTRUCTURING PROGRESS
The U.S. steel industry must issue an initial report in September on the progress it has made toward restructuring.
The 727 product exclusions will be good for the three-year life of Bush's tariff order and foreign producers and U.S. companies will have an opportunity to submit new exclusion requests starting in November.
A decision on which to grant will be made next March. "But we wouldn't expect (the requests to be) nearly the magnitude" that were submitted after Bush's initial decision, one U.S. aide said.
The new product exclusions include several different types of cold finished bar, cold rolled flat steel, wire, welded pipe and tube, hot rolled bar and other steel products.
U.S. officials confirmed the exclusions included 80,000 tons of corrosion-resistant steel, in response to a request by automaker DaimlerChrysler . A full list can be found on the U.S. Trade Representative's Web site at http:// www.ustr.gov.
Meanwhile, in a separate case that could reignite steel trade tensions, the U.S. International Trade Commission will vote next Tuesday on whether to impose additional duties on cold rolled steel imports from five countries.