Presidential Advisers Urge Bush to Drop Steel Tariffs

AP ^ | 12/1/03 | Lara Jakes Jordan

[Jean S]

WASHINGTON (AP) - White House advisers are urging President Bush to head off a global trade war by rolling back steep tariffs on imported steel, administration and industry officials said Monday.

If he concurs - he is still reviewing the matter, the White House spokesman said - Bush risks alienating steel companies and workers in states that are important for his re-election. If he doesn't, a broad range of U.S. products could face retaliatory sanctions from Europe and elsewhere, angering other voters.

A senior Bush adviser, speaking on condition of anonymity, said several key aides and agencies, including the office of the U.S. trade representative, have urged the president to drop the tariffs, imposed in March 2002 to ease foreign competition while the beleaguered U.S. steel industry consolidates and restructures.

"The EU gets what it wanted," said a steel industry official on Monday, even as the European Union renewed its threat to slap $2.2 billion in retaliatory sanctions on U.S. exports if the tariffs are not eliminated by Dec. 10.

But White House spokesman Scott McClellan said the president had not made a final decision on the tariffs, which range from 8 percent to 30 percent on certain kinds of foreign-made steel and are currently set to expire in March 2005.

The administration is still reviewing various options, said Richard Mills, spokesman for U.S. Trade Representative Robert Zoellick.

"We feel it's got to come from the president. It's unofficial until it does," said Rep. Joe Knollenberg, R-Mich., a leading voice on Capitol Hill to repeal the tariffs.

Since they were enacted last year, the tariffs have served as a flashpoint for global trade tensions that also had unintended consequences in this country, for steel consumers in key political states.

Bush imposed the tariffs and fulfilled a 2000 campaign promise to traditionally Democratic voters in West Virginia, Ohio and Pennsylvania - three states the White House hopes to win in 2004. But foreign trading partners almost immediately protested, leading the World Trade Organization earlier this year to declare that the sanctions violate global trade rules.

At the same time, the auto industry and other steel consumers in Michigan, Minnesota and Wisconsin complained the tariffs hiked steel prices just as small manufacturing companies were being hit by the slumping economy.

"The last thing our economy needs right now is a trade war, and that's exactly what we would have gotten had the steel tariffs remained in place," Rep. Jeff Flake, R-Ariz., a free-trade advocate, said Monday.

"We shouldn't set aside our free trade principles to satisfy a small political constituency," Flake said.

Bush is expected to announce his decision later this week, after he completes a fund-raising swing to Michigan and to Pittsburgh - America's "Steel City." The anticipated $1 million Pittsburgh fund-raiser Tuesday is being co-hosted by U.S. Steel Corp. Chairman and CEO Thomas J. Usher, who said Monday he remained hopeful the tariffs would remain in place.

"To remove these and to buckle under to the Europeans would be a mistake - not only for steel but for manufacturing in general," Usher said. "In my opinion, the president has done an awful lot of right things, and my expectation is that he will see the right of this."

"I'm a natural optimist - that's what you have to be in the steel business," Usher added.

Industry insiders believed a small number of tariffs might be left in place on specialty steel products. But even that was beginning to look less likely Monday.

European Union spokeswoman Arancha Gonzalez in Brussels, Belgium, said the 15-nation trading bloc would retaliate if the tariffs were not completely abolished, as demanded by the WTO.

"The U.S. knows this," Gonzalez said.

Yet rolling back the tariffs could also incite a backlash from Republican lawmakers - including Senate Steel Caucus Chairman Arlen Specter of Pennsylvania and House Administration Committee Chairman Bob Ney of Ohio - who urged Bush to stay the course on the three-year tariffs program. Without the tariffs, they said, low-priced foreign steel will again flood the U.S. market, potentially eliminating thousands of steel jobs. Forty-one steel companies have declared bankruptcy since 1997, erasing more than 50,000 jobs.

"And if George W. Bush decides to roll back the tariffs, this union will work very hard in West Virginia, eastern Ohio and western Pennsylvania to make sure George W. Bush joins the thousands of steelworkers on the unemployment line come 2004," said Dave Gossett of the Weirton, W.Va.-based Independent Steelworkers Union.

But if the tariffs remain in place, steel consumers are likely to face a supply shortage, said Lew Leibowitz, attorney for the Consuming Industries Trade Action Coalition. CITAC opposes the tariffs.

"I can't find anyone who believes that the tariffs are going to be continued," said Leibowitz. "We're beginning to get a little optimistic."

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Associated Press Writers Ron Fournier and Martin Crutsinger contributed to this report.

AP-ES-12-01-03 1720EST

[RJCogburn]

And if George W. Bush decides to roll back the tariffs, this union will work very hard in West Virginia, eastern Ohio and western Pennsylvania to make sure George W. Bush joins the thousands of steelworkers on the unemployment line come 2004

Uh,oh. The reason the tariffs were imposed in the first place.

[Askel5]

=== White House advisers are urging President Bush to head off a global trade war by rolling back steep tariffs on imported steel,


Screw 'em ... we'll roll our own!

Oh wait ... we can't.

[Pubbie]

Down with the fat, lazy, inefficient, Union Worshipping US Steel Industry.

AFL CIO Delanda est.

[MNlurker]

As I've said before I am a rep in this industry and Bush is doing the right thing. The mom and pop fab shops, not the big steel guys were the ones getting hammered on the tariff. The EU can take this as a victory for themselves which is fine. With the dollar still being low we won't see an influx like the steel guys says there will be. There will be a stabilization in pricing and most important more material available.

There was already talk of allotment for next quarter and beyond so the industry can't bitch about business getting taken away.

[harpseal]

Maybe just maybe Bush did it becuase it was the right thing to do? I am sick and tired of liberals imputing GWB's motives on every correct action he takes.

[harpseal]

Down with the fat, lazy, inefficient, Union Worshipping US Steel Industry.

AFL CIO Delanda est.

Since the USA needs a steel industry in order to remain the USA I suggest you rethink or are you just another anti-American supporting dumping of foreign goods in the USA. Do you hate the AFL-CIO so much that you would destroy this nation to destroy it? In that case then you are an enemy of liberty. If not then think.

[Pubbie]

"Do you hate the AFL-CIO so much that you would destroy this nation to destroy it?"

If the Steel Industry can't compete with cheep foreign steel, then they should go bankrupt and let other Steel Industrys that specialize in High Tech Stainless Steel replace them - ie - I support the Brutality of Capitalism, not the Velvet Glove of Protectionism.

[RJCogburn]

Maybe just maybe Bush did it becuase it was the right thing to do?

Possible, I suppose.

[Principled]

IMO if steel companies die due to competition, other more efficient companies will start up. I don't know why one would think that Americans will fail to think of a better way - if forced to do so.

But, and I stress IMO, it does not help any individual or industry to be protected from competition. Why would a monopoly company perform as well as a competitive company???

I'm no expert... but I did stay at a Holiday Inn Express last night.

[JNB]

And the Brutality of Capitalism, if unchecked will lead to the even more brutal hand of govrenmnet reaching even more deeply in your pockets when displaced workers vote for those who vow to protect their standard of living. I honestly think too many conservative are only conservative because of economics, and care less of about how the US is now bending over to foreign intrests. If Bush backs down completely, any chance of me voting for him is gone, and I will do what I can to get others to either stay home next year or vote 3rd party.

[JNB]

The problem is the WTO is very stacked against the US. The foreign steel makers have unfair advantages in that they are often very heavily subsidised by their govrenmnets, US steel makers do not have that luxury, and foreign steel makers because of those subsidies(and on the part of Asian countries in addition to those blatant currency minipulations) have eaten American steel makers lunch. If this was really a free market where US steel makers dont have to compete against susbidised steel and currency minipulations, that would be one thing, but this is not a free market, and sadly it looks like Bush is going to cave in to non American intrests. Bush is going to look very weak after this, despite what trash like the WSJ says.

[Principled]

I see. It would make sense then to tariff in the exact amount of the alleged gov't subsidy. That would make sense.

If, however, no subsidies exist then no tariff should either.

What do you mean by the WTO is stacked against the US?

[Principled]

steel tariffs are the determining factor in your deciding your vote for president?

[ServesURight]

So according to you, President Reagan should have let Harley-Davidson die, and allow the crappy Japanese motorcycles flood the market.

[Pubbie]

If the Japanese motorcycles were crappy then they wouldn't have taken down Harley Davidson.

[JNB]

To awnser both, if Bush backs down on this, then I will have lost complete faith on his ability to stand up to other issues. Bush took alot of heat from Limbaugh and the likes of the WSJ editoral board for this, but he stood up to them and put the tariffs in place, if he backs down in the face of EU pressue, especially considering how arrogant they are in insisting all tariffs must be removed, then I will have lost complete faith in his ability to lead on any issue, He has allready made hundreds of billions of dollars worth of compromises on spending.

As for the WTO itself, it is dominated by EU and Asian intrests, and has yet to rule in favor of the US in any cases before it. Yes, the foreign steel has a large number of subsidies, but the WTO threw out these facts in the case. The WTO is another UN type deal that harms rather than helps US intrests.

[LanaTurnerOverdrive]

There has to be another reason for these tariffs other than votes. We knew these tariffs were illegal under WTO guidelines and that we would eventually have to abandon them or face massive penalties. And any claim that the WTO is stacked against us are frivolous....We designed the architecture of the WTO. We signed on, and We promote it at every given chance. Something smells fishy.

[RightWhale]

The news this morning said Bush had already rolled back the tariff. Did he?

[JNB]

What the dogmatic free traders do not realise, that while Reagan did not enact many large tariffs, he and then tresury Sec Baker set in motion the Plaza Accord, a accord that dropped the dollar by 50% in value against the yen and about a thrid against the German mark, these were de facto tariffs, and by the time the weak dollar policy ended in 95, American steel companies and other industrial firms had a big revival. To be fair, Bush is pushing a weak dollar policy again(Though Japan still minipulated its currecny like no tomorrow not to mention what China does), and the WTO is now blocking the US from protecting its own intrests. If Bush is too weak of a leader to even see this, then I will not vote for him, even if he runs against Hillary, I rather "waste" my vote on a 3rd party canidate or stay home than vote for someone who has no spine what so ever.