EU prepared to work with US as trade row grows

Despite the frictions with the United States, the European Union shares its criticism that China was dumping steel and aluminium goods

European Trade Commissioner Cecilia Malmstrom. The bloc says it wants to engage with the US even as its own tariffs on US goods are set to come into play on Friday. (AP Photo/Rod McGuirk)

The European Union is ready to engage with the United States to solve a trade row triggered by its decision to impose tariffs on European metals, EU Trade Commissioner Cecilia Malmstrom said on Thursday.

Describing the US tariffs as "illegal" and contravening World Trade Organisation (WTO) rules, Ms Malmstrom said there was no choice but to take retaliatory action to protect European interests and jobs.

"We think it is ridiculous to consider the EU as a threat to US national security," she told a seminar. "We are always open to talk with the US The whole EU is based on the idea that we talk."

The European Union will begin charging import duties of 25 per cent on a range of US products on Friday, in response to US tariffs put on EU steel and aluminium early this month, Ms Malmstrom said.

The United States, after imposing punitive tariffs on a number of its top trading partners, this week threatened China with further duties on $200 billion worth of trade, escalating a conflict that has already drawn retaliatory steps from around the world.

Visiting New Zealand to begin talks on a free-trade agreement, Ms Malmstrom sought its support to stand up for an open, rule-based trade system that she said was under threat from friction between the United States and other major economies.

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She said she was "very worried" about the situation, as it could escalate into a "full trade war" that would disrupt global supply chains and damage the world economy.

She also took a swipe at US President Donald Trump's protectionist policies, voicing concern that some countries were "acting outside" rules agreed upon jointly at the WTO.

"New Zealand is a friend, an ally. Together we stand up for common values ... of sustainable trade, open trade, transparent trade, and trade that is done in compliance with international rules in the multilateral system," she tsaid after meeting New Zealand trade minister David Parker.

Despite the frictions with the United States, the European Union did share its criticism that China was dumping steel and aluminium goods by subsidising state-owned companies, Ms Malmstrom said, adding that Beijing's move was causing "great instability" in global markets.

"We don't like that. Nobody likes that. We need to address this issue. But just throwing tariffs to the whole world is not the right way to address it."

New Zealand is a strong advocate of free trade, and pushed hard with Japan for renegotiating a Trans-Pacific Partnership (TPP) deal after Mr Trump's decision to pull the United States out.