EU ready to open talks with U.S. to fix trade row - Malmstrom

By Leika Kihara

WELLINGTON (Reuters) - The European Union is ready to engage with the United States to solve a trade row triggered by its decision to impose tariffs on European metals, E.U. Trade Commissioner Cecilia Malmstrom said on Thursday.

Describing the U.S. tariffs as "illegal" and contravening World Trade Organisation (WTO) rules, Malmstrom said there was no choice but to take retaliatory action to protect European interests and jobs.

"We think it is ridiculous to consider the EU as a threat to U.S. national security," she told a seminar. "We are always open to talk with the U.S. The whole EU is based on the idea that we talk."

The European Union will begin charging import duties of 25 percent on a range of U.S. products on Friday, in response to U.S tariffs put on EU steel and aluminium early this month, Malmstrom said.

The United States, after imposing punitive tariffs on a number of its top trading partners, this week threatened China with further duties on $200 billion worth of trade, escalating a conflict that has already drawn retaliatory steps from around the world.

Visiting New Zealand to begin talks on a free-trade agreement, Malmstrom sought its support to stand up for an open, rule-based trade system that she said was under threat from friction between the United States and other major economies.

Malmstrom said she was "very worried" about the situation, as it could escalate into a "full trade war" that would disrupt global supply chains and damage the world economy.

She also took a swipe at U.S. President Donald Trump's protectionist policies, voicing concern that some countries were "acting outside" rules agreed upon jointly at the WTO.

"New Zealand is a friend, an ally. Together we stand up for common values ... of sustainable trade, open trade, transparent trade, and trade that is done in compliance with international rules in the multilateral system," she told a news conference after meeting New Zealand trade minister David Parker.

Despite the frictions with the United States, the European Union did share its criticism that China was dumping steel and aluminium goods by subsidising state-owned companies, Malmstrom said, adding that Beijing's move was causing "great instability" in global markets.

"We don't like that. Nobody likes that. We need to address this issue. But just throwing tariffs to the whole world is not the right way to address it."

New Zealand is a strong advocate of free trade, and pushed hard with Japan for renegotiating a Trans-Pacific Partnership (TPP) deal after Trump's decision to pull the United States out.

(Reporting by Leika Kihara; Editing by Robert Birsel & Shri Navaratnam)