U.S. urges EU to stop WTO steel spat, hopes for deal with Canada, Mexico

By Tom Miles

GENEVA (Reuters) - The United States urged European Union governments on Monday to reflect on whether it was really in their interest for the EU to go ahead with a trade dispute over U.S. metals tariffs, and said it was hopeful of settling the issue with Mexico and Canada.

U.S. Ambassador Dennis Shea told the WTO's monthly dispute settlement meeting, which was considering 12 requests for adjudication over U.S. tariffs and related retaliation, that Washington was "deeply disappointed" with the EU's stance.

"We would encourage the European countries to consider carefully their broader economic, political, and security interests," Shea said, according to a transcript of his remarks seen by Reuters.

But another U.S. trade official later told the same meeting that the United States had held constructive discussions on the tariffs with Canada and Mexico, the transcript showed.

"The United States is hopeful these discussions may be concluded satisfactorily," the official said.

China, Norway, Russia and Turkey had also asked the WTO to judge the legality of the U.S. tariffs, despite Washington's claim that they are based on national security and therefore outside WTO jurisdiction.

"We will not allow China's Party-State to fatally undermine the U.S. steel and aluminum industries, on which the U.S. military, and by extension global security, rely," Shea said.

National security claims were taboo for most of the WTO's 23-year history, because trade diplomats feared a domino effect as countries cited national security to get out of a wide range of obligations. But Shea suggested it would be even worse to try to challenge the U.S. national security claim.

"The United States wishes to be clear: if the WTO were to undertake to review an invocation of (the national security exemption), this would undermine the legitimacy of the WTO's dispute settlement system and even the viability of the WTO as a whole," he said.

(Reporting by Tom Miles; Editing by Edmund Blair and Mark Potter)