SYDNEY -- Europe's trade supremo lashed out here at Australia's failure to back a World Trade Organization (WTO) challenge to a U.S. decision to impose steel tariffs.

European Trade Commissioner Pascal Lamy, here for talks with the government, said he was disappointed Australia had not joined Europe and seven WTO member nations in complaining about the raised U.S. trade barriers.

Lamy also accused Australia of putting its bilateral relationship with the United States ahead of important issues of principle in the world trading system.

Europe and virtually all steel producing countries were angered by U.S. President George W. Bush's announcement in March of tariffs up to 30 percent on imported steel.

Australia managed to negotiate important concessions from Washington to protect about 85 percent of its steel exports, worth more than $225 million year to the U.S., although the remaining 15 percent will still be affected.

The European Union, Lamy said, had reacted extremely strongly against the tariffs which the EU says breach WTO trade agreements, AFP reported.

"In this respect, I think it's a pity that Australia decided not to support the case in the WTO against the U.S. measures, supported by seven WTO members," he told a European Australian Business Council breakfast. "It is a pity because to make the multilateral system credible, we all have to defend its principles; also in cases where our respective trade interests may appear to be home and dry."

He said the EU had reacted to the U.S. tariffs given they were in clear breach of WTO rules.

"We must nip in the bud any attempt by other WTO members to follow a bad example," he said.

"Secondly, the European Union is likely to become a destination for much of the steel shut out of the U.S. market -- therefore, we decided to introduce our own safeguard measure at the end of March," he added.

Lamy said the EU's objective was not to reduce steel imports but rather to defend the EU market against large-scale trade diversion.

"The approach we take, therefore, in the face of what we consider to be protectionism, is to safeguard our interest, use the WTO process properly while ensuring that trade continues to flow," he said.