The tariffs, covering a wide range of steel products from several Asian and European nations, were originally scheduled to remain in effect for three years, until 2005, to give U.S. steel makers time to modernize their facilities to better compete against intense foreign competitors.
President Bush’s decision comes less than a month after the World Trade Organization’s highest court ruled that the U.S. steel tariffs violated global trade laws, opening the way for member nations to retaliate with billions of dollars in punitive tariffs against U.S. products.
The European Union warned it would slap $2.2 billion in sanctions on American products, starting in mid-December, unless the United States ended the duties on steel imports. Japan and South Korea – other major steel exporting nations targeted by the U.S. tariffs — also said they were considering retaliation.
Mr. Bush, speaking briefly to reporters before the formal announcement was made, said his decision would “be based upon my strong belief that America’s consumers, the American economy is better off with a world that trades freely and a world that trades fairly.”
The president said he initially imposed the tariffs 20 months ago based on an International Trade Commission report that said the U.S. steel industry was being hurt unfairly by a flood of cheaper foreign imports.
“I listened to an International Trade Commission report about the effects that steel imports were having upon our important industry. … I acted to give the steel industry time to adjust,” President Bush said Thursday morning.
The temporary protection of those tariffs had given U.S. steel makers the time needed to modernize and to better compete against their intense foreign competitors, he said.
“These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances, it is time to lift them,” President Bush said in a statement read by White House spokesman Scott McClellan Thursday afternoon.
To soften the impact on the struggling U.S. steel industry, Mr. Bush pledged several measures designed to protect American manufacturers from a flood of cheaper imports. Those measures included expanding an import licensing and monitoring system to help head off surges in shipments of foreign steel into the United States. Furthermore, the administration pledged an aggressive application of U.S. antidumping laws to impose tariffs on specific steel products should those imports surge once the tariffs are lifted.
The administration also vowed to continue pressing America’s trading partners to reduce government subsidies for their domestic steel producers and to curb overcapacity and overproduction of steel manufacturers overseas.
“I strongly believe that America’s workers can compete with anyone in the world as long as we have a fair and level playing field,” Mr. Bush said in the statement.
But Brink Lindsey, a trade expert at the Cato Institute, a Washington-based think tank, voiced skepticism that the president’s proposals to mollify U.S. steel producers would actually protect the industry.
“The existence or nonexistence of an import monitoring system is not going to make that much difference,” he told Reuters. “And the pledge on more international talks is lip service as well. The talks haven’t gone very far and they are not likely to go very far.”
U.S. Trade Representative Robert Zoellick, standing with McClellan at the press conference, emphasized that the economic challenges facing the U.S. steel industry have lessened since the president initially imposed the tariffs.
“Not only is the industry much stronger today than it was 20 months ago, but the economic circumstances … have changed,” Zoellick said.