Bush Ends 201 Steel Tariffs

Jason Sandefur

Facing billions of dollars in retaliatory tariffs from the European Union and Japan, President Bush announced an end to Section 201 steel tariffs. \ The EU responded by immediately lifting its tariff warning which had threatened to plunge the two continents into a major trade dispute.
�These sanctions … were there as a tool for compliance,� EU Trade Commissioner Pascal Lamy stated. �They�ve complied and the sanctions will disappear.�
The tariffs were scheduled to remain in effect until 2005 to give U.S. steelmakers protection from foreign competition. But the Bush tariffs were ruled illegal by the World Trade Organization in November, opening the way for other countries to impose strategic tariffs of their own unless the White House lifted its sanctions. The steel industry hailed the tariffs when they began in March 2002. Since then steelmakers have invested more than $3 billion into streamlining the industry, with smaller companies seeking bankruptcy protection or being swallowed up by bigger firms.
During the same period many fastener manufacturers and other steel consumers have argued that tariffs on foreign steel allowed domestic providers to hike prices by 30% or more, costing thousands of U.S. manufacturing jobs.
White House Touts Tariffs� Benefits
U.S. Trade Representative Robert Zoellick claimed the tariffs greatly improved the situation for the U.S. steel industry. Sales of domestic steel and company profits rose dramatically during the 20 months the tariffs were in place.
�Not only is the industry much stronger today than it was 20 months ago but the economic circumstances … have changed,� Zoellick stated.
An industry insider told The New York Times that Bush attempted to put the best face on being forced to end his tariffs. �He�ll try to declare victory, as best we understand it,� the official stated. �But clearly, this could be politically costly.� Such steel states as Ohio, Pennsylvania and West Virginia will be disappointed by the news, while manufacturers in other states may still feel the sting of the tariffs come election time.
To soften the blow, the White House will continue an early-detection monitoring program to guard against a sudden flood of foreign steel coming into the country. The reporting program requires steel importers to apply for import licenses, providing quicker detection of possible import surges than would come from waiting for Customs Service data when the steel arrives at U.S. ports. The administration also pledged to continue pursuing global negotiations aimed at reducing subsidies.
Steel Consumers Satisfied
Steel consumers reacted warmly to the announcement. Consuming Industries Trade Action Coalition Steel Task Force chairman William Gaskin heralded the announcement as the �right decision for the 13 million workers in steel-consuming industries, for the manufacturing sector that is just beginning to recover from tough economic times, and the overall U.S. economy.�
But Gaskin made it clear that steel consumers will remain vigilant on international trade issues.
�The decision on steel has been made, but consuming industries will continue to be actively involved in the debate on trade issues to ensure that concerns of consuming manufacturers are heard in Washington. Working on the 201 became an extraordinary effort of U.S. steel consumers taking an active role in trade policy issues. That effort is here to stay,� Gaskin confirmed.
Steelworkers Vow to Vote Against Bush
Steelmakers responded with disappointment.
�While we are deeply disappointed in the president�s decision to abandon the tariffs, we thank the administration for their firm commitment to enforce U.S. trade law and we are encouraged by the president�s promise to work with Congress to achieve a long-term solution to illegal dumping and other unfair trade practices that necessitated the 201 in the first place,� stated Nucor Corp. CEO Dan DiMicco.
Steelworkers, however, were less constrained in their disapproval.
�Our union will now work very hard to make sure George W. Bush joins the ranks of the unemployed next year,� stated Mark Glyptis, president of the Independent Steelworkers Union at bankrupt Weirton Steel Corp. in West Virginia.
Brink Lindsey, a trade expert at the Cato Institute, declared Bush�s promises little more than a fig leaf for the domestic industry.
�The existence or nonexistence of an import monitoring system is not going to make that much difference,� Lindsey noted. �And the pledge on more international talks is lip service as well. The talks haven�t gone very far and they are not likely to go very far.� �2003 FastenerNews.com