Europe will retaliate if hit by U.S. steel controls - EU trade chief

BRUSSELS, June 26 (Reuters) - The European Union would retaliate if European steelmakers suffered collateral damage from import restrictions the administration of U.S. President Donald Trump is considering, EU trade chief Cecilia Malmstrom said on Monday.

A U.S. investigation into whether foreign-made steel imports pose a rise to U.S. national security is nearly done.

The focus is mainly cheap imports from China, but EU Trade Commissioner Malmstrom said EU industry could be damaged in the process.

“We would have to see if that measure is in compliance with the WTO of course and if it hits us like it could we will of course retaliate. Exactly how and when I will not answer now, but we are making preparations,” EU Trade Commissioner Malmstrom told a news conference.

Section 232 of the Trade Expansion Act of 1962 allows the president to impose restrictions for reasons of national security and has only been used twice before, to investigate oil in 1999 and iron and steel in 2001.

The Trump administration has started a similar investigation into imports of aluminium.

“If worse comes to worse, that there would be a general inclusion of steel tariffs under this 232 provision, that would be very bad for Europe. We are a friend and ally of the United States and we feel we would be unjustifiably hit by this,” Malmstrom said.

The EU trade chief said she understood U.S. concerns about steel overcapacity in China and was prepared to work with the Americans to tackle this issue.

Malmstrom was speaking at the presentation of an EU report on barriers to trade and investment. It found that 36 new obstacles had been created by trading partners in 2016, an increase of about 10 percent, with the greatest increases due to measures in Russia, India, Switzerland and China.

Malmstrom said the EU would urge leaders at the upcoming G20 summit in Hamburg on July 7-8 to resist protectionism.

Financial leaders of the world’s biggest economies in March dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States. (Reporting By Philip Blenkinsop; Editing by Robin Pomeroy)