- The Washington Times - Tuesday, November 11, 2003

Some of the United States’ biggest trade partners yesterday continued pushing the Bush administration to eliminate steel tariffs by threatening a war against American exports.

President Bush remained silent on the tariffs as foreign pressure to eliminate duties on foreign steel mounted. The measures, ruled illegal Monday by the World Trade Organization, were designed to protect U.S. steel manufacturers from overseas competition.

Europe and Asia’s biggest economies yesterday united in a call to end the tariffs immediately. The 15-nation European Union restated a plan to strategically target $2.2 billion in U.S. products with sanctions, effectively making them too expensive to compete in Europe.

“I don’t want Europe getting into a trade war with the U.S., but the ball is now in Washington’s court,” British Trade Secretary Patricia Hewitt told reporters in London.

Japan is giving the United States more time but also plans to retaliate if the tariffs are not repealed, officials in Tokyo said. Other nations that brought the case also said they eventually would seek to retaliate if the United States does not heed the WTO decision.

South Korea, China, Brazil, New Zealand, Switzerland and Norway also filed at the WTO and won the right to raise tariffs against U.S. products. Two of the United States’ biggest trade partners, Canada and Mexico, were exempted from the tariffs.

While companies, not national governments, buy the U.S. goods, the foreign duties, which could affect $3.1 billion in trade, would price U.S. goods out of markets.

U.S. manufacturers that turn steel into parts or goods, and have been hurt by the tariffs, echoed the European and Asian demands.

But U.S. steel companies and unions are fighting to keep the tariffs.

“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 Dan DiMicco, president and CEO of Nucor Corp., one of the country’s biggest steel producers.

The Bush administration continued to guard it’s decision-making process. Richard Mills, spokesman for the U.S. Trade Representative’s Office, said, “We are studying the report, we are studying its implications and considering all options.”

But he declined to discuss the decision-making process in detail or timing for any action.

The tariffs are part of a larger effort to help steel companies that had been going bankrupt by the dozen. The Bush administration also is participating in international talks to reduce subsidies and production.

The government, through the Pension Benefit Guaranty Corp., also has taken over thousands of retirement plans that had saddled the industry with debilitating legacy costs.

Economists, companies and government officials do not agree whether the tariffs have helped or hindered U.S. steel firms as they consolidate.

A U.S. International Trade Commission report indicates they assisted, but some independent analysts said that new contracts with unions, and a reduction in labor costs, actually spurred takeovers and closeouts.

While the Bush administration weighs the economic and political costs of defending or retreating from the tariffs, the WTO decision also has sparked a backlash against the global trade body.

The United States helped create the WTO to maintain a rules-based trade system, and supporters maintain that the body benefits the U.S. economy.

Sen. Charles E. Grassley, Iowa Republican, said the WTO has been an effective platform “to gain restitution for trade grievances and to defend our practices. So, if we want other nations to comply with decisions that go in our favor, we need to set the right example when decisions don’t go our way.”

But some critics have grown agitated with several high-profile setbacks.

“This decision shows once again that the administration needs to do something about the badly flawed WTO dispute settlement process,” said Sen. Max Baucus, Montana Democrat, a party leader on trade issues.

“The dispute resolution is not working and has been guided by politics rather than law,” said Rep. Phil English, Pennsylvania Republican and a staunch supporter of the tariffs.

Mr. English said that the Unted States should tighten the tariffs against Europe if the bloc retaliates.

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