Jason Sandefur

Denying a White House appeal, the World Trade Organization reaffirmed its earlier ruling that Bush�s steel tariffs violate global trade rules. The final decision by the WTO clears the way for the European Union to impose billions of dollars in sanctions on imported goods from the U.S., according to the New York Times. The issue has become a political liability for Bush.
�As an election looms, he must choose between continuing to help the steel industry � which could bolster his electoral prospects in crucial industrial states � or respecting international trade laws and increasing his chances of winning new regional and global trade agreements. Lifting the tariffs would also please American automakers and other steel-consuming industries,� Times reporter Elizabeth Becker wrote.
The E.U. sanctions would be targeted towards products from states considered crucial to winning the 2004 election, including Florida�s citrus fruit. Steel and metal products, including Harley-Davidson motorcycles, also made the list.

Administration officials say Bush has not decided whether to lift the three-year trade remedy he imposed in March 2002. The tariffs increased the cost of imported steel by as much as 30% to give the ailing steel industry a chance to restructure. According to the Times, the steel producers have invested more than $3 billion into streamlining the industry, with smaller companies seeking bankruptcy protection or being swallowed up by bigger firms.
Nucor Corp. and other steelmakers urged Bush to maintain the tariffs.
“Section 201 is a critical component of U.S. trade law. Failure to uphold the steel safeguards would have a devastating impact, not only on the steel industry, but on all industries that depend on American trade law,” said Nucor CEO Dan DiMicco. “Safeguards provide a safety net for American workers and industries against the predatory pricing of some trading ‘partners.’ The Bush Administration should not buckle to the WTO’s decision to undermine the president. This is a manufacturing industry issue and a services industry issue, not just a steel issue.”

However, fastener makers and other steel consumers, including automakers, have urged Bush lift the tariffs, blaming the trade remedy for increased costs, lost profits, and reductions in the workforce. More than two million U.S. manufacturing jobs have been lost since 2001.
If those consequences were not reason enough to lift the tariffs, the threatened retaliation completes the argument, said William Gaskin of the Consuming Industries Trade Action Coalition Steel Task Force.
“The U.S. now faces billions of dollars in retaliatory tariffs by our trading partners,” Gaskin told the Times. “For the sake of the U.S. manufacturing sector, it’s time to end the tariffs now.”

Even without the tariffs, some experts said, global shortages of steel as soon as early next year could raise prices, benefiting the American steel industry. Trade experts predict that a growing demand for steel in China could lead to shortages in the first quarter of 2004.
“It is my judgment we are going to have a price spike, perhaps a severe one, as steel buyers worry about the availability of raw materials for the steel industry,” said Peter Marcus of World Steel Dynamics. �2003 FastenerNews.com