The U.S. Customs Court of Appeals has rejected a U.S. Steel Corp. request that the court bypass a trial and rule that producer taxes rebated on steel exports by the European Economic Community are illegal under U.S. laws.
The court, in a ruling several days ago that surfaced yesterday, said that the U.S. Steel suit will go to trial as scheduled in December.
The steel giant asked the court for a summary judgment without a trial after the court declared that similar rebates by Japan on electronics products were illegal and that the Treasury Department should levy countervailing duties equivalent to the rebated tax.
The government has appealed that decision and the Court of Customs and Patent Appeals is expected to rule shortly. Whether the government or Zenith Radio Corp., which brought the suit, wins, the decision will almost surely be appealed to the Supreme Court.
U.S. Special Trade Representative Robert S. Strauss was severely critical of U.S. Steel when it filed the request for summary judgment last month, accusing the giant steel maker of irresponsinly using the courts to settle difficult questions of international trade policy.
Strauss said that he had met with U.S. Steel in early June and asked them to "let it sit." Strauss said that while anybody has a right to go to court for redress of injury, "certain issues don't really lend themselves to judicial solutions . . . This decision could cause chaos in international trade."
Under the General Agreement on Tariffs and Trade, a multinational body the U.S. helped found, rebates of excise taxes - such as the value-added tax in Europe or the producer tax in Japan - are not trade subsidies, but rebates of income taxes are.
In its suit, U.S. Steel alleged that the nine-member Furopean Economic Community illegally subsidizes more than $2 billion in steel exports to the United States by rebating the tax.
Government officials said they were pleased that the court did not grant a summary judgment in the case - U.S. Steel has petitioned for a rehearing - but said that U.S. Steel is not precluded from filing again if the appeals court upholds the lower-court's Zenith ruling.
Technically, since a trial date had already been set, U.S. Steel did not actually file for a summary judgment, but asked the court's permission to file for one.
Government officials such as Strauss are not optimistic about winning the Zenith case and plan to go to Congress to ask for a change in the countervailing duty laws if the courts uphold Zenith and U.S. Steel.