SANTA MARTA, Colombia -- The European Union is unlikely to expand a dispute over new U.S. steel import tariffs to other products, as to do so could harm the world economy, U.S. trade representative Robert Zoellick said on Thursday.

Zoellick said that EU Trade Commissioner Pascal Lamy had so far shown restraint, even during his stinging attacks on tariffs the European Union estimates will cost it $2.5 billion in the first year alone.

"If you read Mr. Lamy's comments carefully, while he's clearly very upset, he's focusing on the steel issue and keeping the issue in that context. And that's what we will do too," Zoellick told a small group of reporters in Colombia.

"There's too much at stake for both of our economies and the world economy."

President George W. Bush's announcement last week that the United States would impose import tariffs ranging from 8 percent to 30 percent on 10 different categories of steel triggered a storm of criticism from across the globe.

The 15-nation EU has started proceedings at the World Trade Organization that could allow it to take retaliatory steps by mid-2002.

Lamy said this week that retaliation could be in the form of unspecified "tariff quotas," while pressing the United States to compensate the EU for its trade losses.

The United States says it does not have to pay compensation since the tariffs -- which go into effect next Wednesday -- are legal under the WTO's "safeguard" rules, allowing temporary measures to protect industries harmed by a surge in imports.

--- EU Won't See Flood of Cheap Steel ---

A major concern in the EU is that it will be flooded by steel exports from other countries that might previously have gone to the United States.

Zoellick said the tariffs would not unleash a flood of cheap steel into Europe, since the budding U.S. economic recovery, the strong dollar and the tariff exemptions given to free-trade partners as well as to other countries, would keep a steady flow of steel reaching American shores.

Indeed, the Bush administration says U.S. steel imports could rise in 2003.

"I honestly believe that if you combine these exemptions with the fact that our economy is starting to grow again, that the European worry about the flood of imports of steel is unlikely to occur," Zoellick said.

The senior U.S. official further argued that European union safeguards were premature, and warned the EU against succumbing to political pressures that may force it to break WTO rules.

"I'm a little confused how Europeans are already putting safeguards in place when there hasn't even been time for an increase in imports, much less the seven months of analysis that we did and the two months of review by the president afterward," Zoellick said.

"But I understand that there is politics in Europe, and so I think that some of these actions are driven by politics in Europe," he added.

Under the WTO safeguards agreement, countries can protect industries for three years, if they can show damage from a surge in imports.

The day after the Bush Administration announced the safeguard restrictions, National Steel .n became the 32nd U.S. steel company since 1997 to file for bankruptcy.