Chances of a big trade war between the United States and Europe surfaced after the US rejected a final ruling from the World Trade Organisation denying that US steel tariffs violate global trading rules.

The world trade body had said that America's protectionist tariffs on foreign steel were illegal. However, US officials rejected the findings of the world trade body's committee when the European Union asked US to left tariffs of up to 30 per cent on steel imports.

The WTO decision, if the US accepts it, will lead to steel companies in Taiwan, Korea and Japan to resume exports aggressively to the US.

This may have some impact on Indian steel exports to America. However, Indian steel companies are unruffled over the development. They feel that even if tariffs are removed, Indian steel suppliers will not face any trouble.

Even if the US does not abide by the WTO decision, India firms are unlikely to be affected, as tariffs are already down to 24 per cent and may come up for review in March 2004.

Meanwhile, the EU said that the US faces sanctions worth $2.2 billion a year if it does not withdraw the hefty tariffs.

US President George W Bush has not yet made any decision in this regard, but US officials said that Washington was review the WTO decision.

However, no indications were given as to whether the US would roll back the tariffs that were imposed in March 2002.

The British steel industry has expressed fears that the US may try to dodge the WTO ruling by altering the manner in which anti-dumping duties are calculated, and would attempt to keep the stiff tariffs in place for three more years.

Welcoming the WTO decision, Ian Rodgers, director of trade body UK Steel, said: "It looks to us as if the US is preparing to cheat on its obligations. We are urging the [European] commission and British government that if this proposal is enacted, the EU must still proceed with its retaliation even if the tariffs are apparently withdrawn," reported The Guardian.

The WTO said the tariffs, imposed by President Bush in January 2002, were 'inconsistent' with free trade and quashed a last-ditch US appeal, said The Guardian.

America had said that the 'safeguard measures' of imposing high tariffs on US steel imports were needed to protect the American steel industry from a surge in cheap imports. But WTO said that the US failed to prove its case.

The decision is a victory for the EU as well as Japan, Brazil, South Korea, Norway, New Zealand and Switzerland.