- The Washington Times - Thursday, March 27, 2003

The World Trade Organization has issued a preliminary ruling that steel tariffs implemented by the Bush administration last year violate international rules.
A U.S. official yesterday confirmed that the WTO report, provided to governments and slated for release next month, finds against the steel safeguards. The officials said the administration would appeal the ruling.
An appeal would push a final decision back several months. A final ruling against the United States would allow the 15-nation European Union, Japan and other governments that brought the case against the United States to target U.S. products with sanctions.
The preliminary report is circulated among governments for comment before the final version is released publicly. The decision could be changed, but that is unlikely.
The expected WTO decision drew immediate criticism from Congress and added fuel to a domestic debate about the future of the tariffs, which were implemented in March 2002.
The safeguards are popular with U.S. steel producers, but companies that use their products to manufacture goods say higher prices have resulted, making them less competitive in the world market.
The two sides lobbied Congress yesterday during a hearing on the trade protections.
The opposing U.S. camps, producers and users, want to frame the debate as the administration studies the tariffs' effect and decides whether to continue them.
Top House Ways and Means Committee Republicans have asked the Bush administration to consider the effect of the tariffs on producers and consumers. A report, originally slated to consider effects only on producers, is due in September and will help the president determine whether to continue the tariffs.
The two sides, and their congressional allies, are working hard to be heard in the run-up to that decision.
"The best way to facilitate consolidation, restructuring and investment is to ensure that the president's program remains in place for its full three-year period. The U.S. steel industry will suffer if this process does not continue," said Dan DiMicco, chief executive officer of Nucor Corp., one of the country's biggest producers.
The steel makers point to industrywide consolidation several bankrupt companies are being purchased by surviving manufacturers and a return to profitability.
Without the tariffs, foreign companies use government subsidies to sell steel below the cost of manufacturing it, undercutting U.S. competitors, the producers say.
Steel consumers counter that the higher prices resulting from tariffs have cost competitiveness, forcing U.S. companies to lose ground to foreign competitors when manufacturing containers, metal hardware, auto transmissions and other products that are made from steel.
Some companies are moving production or purchasing overseas to stay competitive.
"More of our investment dollars and facility locations are ear-tagged for overseas as a direct result of the steel tariffs," said Timothy Leuliette, president of Metaldyne Corp., a Detroit-area company that makes metal-based components for the auto industry.
The company is buying steel from Turkey and Brazil countries not covered by the tariffs purchasing components overseas that had been made by U.S. operations, and investing in facilities in the Czech Republic, South Korea and China.
"I do not believe for one minute that these were the intended consequences of the administration," Mr. Leuliette said.

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