- The Washington Times - Wednesday, March 6, 2002

President Bush yesterday buckled under pressure from the steel industry, placing political calculations above the overall well-being of the economy and America's leadership in global trade. With an eye on congressional races in November, Mr. Bush decided to erect U.S. tariffs as high as 30 percent for three years on steel imports. The president's failure to show a steelier resolve is unfortunate, since America now risks alienating key allies at a critical time and faces a costly trade dispute at the World Trade Organization (WTO).

"Our focus is to allow an industry that's been experiencing a 20-year low in prices to catch its breath," U.S. Trade Representative Robert Zoellick told the editorial page in an interview. However, it appears that the decision to increase steel tariffs was politically driven, since steel-producing states are expected to be particularly important in November's elections. Other industries that use steel for their production have lobbied hard against an increase in tariffs, but don't carry as much political clout.

The rise in tariffs will trigger price increases that could cause companies across the country to lay off workers. Consumers could also face higher prices on a range of products that contain steel or that use steel in some stage of production. Sen. John McCain of Arizona wrote Mr. Bush a letter opposing a rise in tariffs, citing a study that found that such a move would probably cost 13 times the number of jobs it would save.

But a number of Republicans are backing the president's decision and are now poised to seek special protections for industries in their home states. Senate Minority Leader Trent Lott, for example, is asking for trade protection for the timber industry. And unsurprisingly, Democrats are lining up, too, with Senate Majority Leader Tom Daschle of South Dakota requesting protections for farmers. Clearly, the administration has set a protectionist precedent that could gain unfortunate momentum. In terms of foreign policy, Mr. Bush's decision hardly seems strategic. Many of America's chief counter-terrorist allies such as South Korea, Russia, China, Japan and European countries will be particularly affected by yesterday's decision and have already voiced bitter opposition to a rise in tariffs. "Steps will have to be taken if the Americans impede our trade in steel," Romano Prodi, European Commission president, said ominously. Japan was more direct. "We may ask the WTO to rule on the U.S. decision," said Yoshikazu Hasunuma of the Ministry of Economic Trade and Industry.

If Mr. Bush wanted to demonstrate his commitment to compassionate conservatism, he should have been more mindful of the jobs that will be lost as a result of a tariff increase. Rather than protect the steel industry, the White House also could have engaged the private sector in, say, discussions regarding retraining programs to benefit workers in ailing industries. Mr. Bush faced a test yesterday and failed to display a steely mettle.


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