Associated Press | By Martin Crutsinger | Dec. 4, 2003
WASHINGTON - Facing the threat of a trade war, President Bush has decided to lift steep tariffs he imposed on foreign steel 20 months ago, Republican and industry officials said Thursday.
But he will soften the blow on the domestic steel industry by announcing new measures designed to protect against unfair foreign competition, the officials said Thursday.
An administration official, who spoke on condition of anonymity, said that Bush had made a decision and it would be announced later in the day.
While this official refused to disclose details, steel industry officials, also speaking on condition of anonymity, said the administration would announce that Bush was lifting the tariffs on foreign steel imposed in March 2002 and originally scheduled to be in effect for three years.
Bush's decision was also confirmed by Republican officials.
The administration was acting to avert a threatened trade war with Europe and other big trading partners. Those nations had vowed to retaliate with punitive tariffs on American products unless the steel tariffs were removed.
The White House asked key lawmakers on the steel issue to return to Washington for a steel briefing Thursday morning so they could be informed before the White House made Bush's decision public.
The 15-nation European Union has vowed to retaliate against $2.2 billion of American products by mid-December unless the United States removes the steel tariffs, which were ruled illegal by the World Trade Organization. Japan and South Korea have also said they were considering retaliation.
The EU carefully chose its target list to cover a range of products from oranges to pajamas that would inflict maximum political pain in key swing states that Bush is hoping to win in next year's presidential race.
Bush was put in the difficult position of being forced to choose between angering businesses in those states or steelmakers in West Virginia, Pennsylvania and Ohio, also considered crucial to Bush's re-election chances.
Bush's original tariff decision in March 2002 had unleashed a barrage of criticism from steel-consuming industries that claimed the higher prices they were forced to pay cost more jobs than were saved at U.S. steel plants.
Steel industry officials said the administration was reviewing a number of proposals to soften the blow of lifting the tariffs, which Bush had imposed at a time when the domestic industry was staggering from a string of bankruptcies and thousands of lost jobs that the industry blamed on a surge of foreign imports.
Among the proposals being considered by the administration was making permanent early reporting requirements to detect any big influx of steel into the United States.
The reporting program requires steel importers to apply for import licenses, giving the government a quicker way to detect possible import surges than waiting for Customs Service data when the steel arrives at U.S. ports.
The administration also was expected to pledge an aggressive use of U.S. antidumping laws to impose tariffs on specific steel products should imports surge once the tariffs are lifted.
The administration package also was expected to include pledges to continue pursuing global negotiations aimed at getting other countries to limit government subsidies for their domestic steel producers and to curb overcapacity in the steel industry.
Those talks, under way since 2002, so far have yielded little, and many trade experts don't hold out much hope that other countries will agree to U.S. demands in this area, given the political power their own steel industries wield.
A key discussion on the steel issue occurred Tuesday night when Bush met in the Oval Office with Vice President Dick Cheney, Commerce Secretary Don Evans and U.S. Trade Representative Robert Zoellick after returning from a fund-raising trip to Pittsburgh where he encountered last-minute lobbying from the steel industry urging him not to lift the tariffs.
Bush raised $850,000 for his re-election campaign at the Pittsburgh fund-raiser where one of his hosts was Thomas J. Usher, chief executive of U.S. Steel Corp., the nation's largest steel producer. Usher met with Bush to urge him to retain the tariffs.
Brink Lindsey, a trade expert at the Cato Institute, a Washington think tank, said the package the administration was assembling to replace the tariffs amounted to 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," he said. "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."Associated Press:
