There is clear delight in Brazil this morning after the WTO decision that US tariffs on steel imports are contrary to the rules of the agreement, and the economy pages of the papers are dominated by the news. Brazil's ambassador to the WTO is quoted in O Globo this morning as saying, "It's a great victory. It shows that the system of conflict resolution in the WTO is capable of giving solutions to certain important cases. This is a guarantee for all of us: to have a multilateral trade system that works."

Brazil will likely be the biggest winner in terms of the impact this will have on its steel industry. Even with the tariff, the US constituted 28.4% of Brazil's export market in 2002, worth US$733 million. Relieving the 30% tariff imposed by the US is likely to greatly improve Brazil's export competitiveness. Brazil estimates losses of US$1 bn since the protections came into place, with $300 million lost in 2002 alone.

O Globo notes that other beneficiaries will be China, the UE, South Korea, Japan, Norway, Switzerland and New Zealand.

My own impression (and I'm sure I'm not alone) is that the Bush administration, for all of its po-faced posturing, knew all along it was in the wrong, and was using the WTO process as a tactic to delay facing the inevitable, largely for political purposes. The US is hardly alone in this. However, the EU has promised an immediate punitive tariff of 100% on certain US exports: cigarettes, frozen vegetables and paper products. As O Globo reports, these tariffs will impact hard on key swing election states - a tactic by the EU to win quick compliance with the WTO decision. One can imagine US farm-belters boycotting French products in response. They are unlikely to respond well to sharing the burden of the US's industrial protectionism, although the real architect of their pain should be seen to sit rather closer to home. I'll be interested to see how the US spins this one.