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| Steel
Tariffs Spark International Trade Battle |
Posted:
11.17.03 | |
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A dispute between the United States and Europe, Japan and several other countries
could result in a trade war over steel, oranges and clothing that would force
President Bush to make tough political choices going into the 2004 election. Printer-friendly
versions: HTML / PDF | |
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Last week, the World Trade Organization (WTO), an international governing body
that works towards promoting free and fair trading practices between countries,
ruled that U.S. tariffs on steel imports were illegal
under global trade laws. European
Union officials warned that if the United States didn't lift the controversial
taxes on steel purchased from abroad, they would start imposing up to $2.2 billion
worth of countertariffs on U.S. imports. Several other countries, including big
trade partners like China and Japan, made similar threats. "Should
the U.S. make no improvement, we will simply take the necessary steps," Japanese
trade official Seiji Murata said at a news conference. The trade dispute
forces President Bush to decide whether to continue protecting America's steel
industry and risk alienating other industries that will be affected by the countertariffs,
or change course and face backlash from the powerful steel companies. | |
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| The
Case | |
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The U.S. steel industry has been struggling since the early 1990s: 41 U.S.
steel companies have declared bankruptcy since 1997. Officials blamed their troubles
on competition with cheap imported steel. In March of 2002, President Bush
agreed to place steel tariffs, from 8 percent to 30 percent, on imported steel
for the next three years and let U.S. steel catch up with the foreign competition.
The tariffs forced importers to raise the price of their steel and encouraged
industries to purchase the now cheaper U.S. steel.  In
response, the 15-member European Union and seven other nations complained to the
WTO. The WTO ruled against the U.S. in July of 2003 and the U.S. appealed. Last
week, the WTO upheld its decision.
"The appellate
body recommends ... the United States to bring its safeguard measures ... into
conformity with its obligations under WTO rules," the 186-page ruling said. The
WTO ruled that the United States had not sufficiently proven that cheap imports
from overseas were the reason for the U.S. steel companies' problems. It also
said it was illegal that countries that had a free trade agreement with the United
States - Canada, Mexico, Israel and Jordan - didn't have to pay the tariffs. | |
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| Political
Consequences | |
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The tariffs protected steel production in states that could be vital in the
2004 presidential election: Pennsylvania, Ohio  and
West Virginia. To punish President Bush, Europe says it will put taxes
on goods from states that are equally important to his reelection bid - like oranges
from Florida, textiles from North and South Carolina, and apples from Washington
State. "It was very clear," explained Neil King, a reporter for
the Wall Street Journal. "If you do this for political reasons, you're going
to regret it for political reasons." | |
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| Between
Steel and a Hard Place | |
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The EU and other countries that complained to the WTO aren't the only ones
bitter about the steel tariffs. Many U.S. manufacturing industries need steel
to make their products, and they say the raised prices have hurt them. A
study by the U.S. International Trade Commission
found that these industries paid $680 million more for steel during the first
year of tariffs. Some industry officials even claim that the number of jobs lost
from factories that use steel, because of the higher prices, is greater than the
number of jobs that have been saved in steel production. These industries - groups
like the automobile industry and appliance industry - have a lot of political
power in states such as Michigan, Minnesota and Wisconsin and could hurt the president's
chances of reelection come November.  "For
the sake of the U.S. manufacturing sector, it's time to end the tariffs now,"
William Gaskin, a manufacturing industry representative, told the Associated Press.
"A quick end to the steel tariffs will help send a message that the president
supports American manufacturers."
Meanwhile, steel industry officials
continue to pressure Bush to keep the tariffs in place for the remaining year
and a half of the three years he promised. "The decision undoubtedly
confronts Mr. Bush with a test of wills," Leo Gerard, president of the United
Steelworkers of America, told the Associated Press. "Will he exercise
his sovereign right as president to protect the jobs and survival of the entire
American steel industry, or will he knuckle under the threat of economic blackmail
being leveled by the European Union?" The countertariffs could be put
in place as soon as December if the president chooses to ignore the WTO and keep
the tariffs in place. --
Chris Nammour, Online NewsHour | |
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| Vocabulary | |
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Tariffs - a schedule of duties or taxes
imposed by a government on goods imported from another country European
Union - economic and political organization consisting of Belgium, France,
Italy, Luxembourg, Netherlands, Germany, Denmark, Greece, Ireland, United Kingdom,
Spain, Portugal, Austria, Finland, & Sweden Appellate
- a court that has the power to review the judgment of another judicial body U.S.
International Trade Commission - an independent, nonpartisan, quasi-judicial
federal agency that provides trade expertise to both the legislative and executive
branches of government, determines the impact of imports on U.S. industries, and
directs actions against certain unfair trade practices, such as patent, trademark,
and copyright infringement. (from http://www.usitc.gov/) Source:
http://www.merriamwebster.com/ | |
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