Bush Lifts Steel Tariffs, But . . .

ByJohn S. McClenahen The four women steelworkers who, in mid-November newspaper advertisements, said they were counting on U.S. President George W. Bush to keep his promise on protective import tariffs may be disappointed. And so, too, must be the steel industry executives who were urging that tariffs be continued until mid-March 2005, their slated expiration date. But the White House, facing trade retaliation from the 15-nation European Union (EU) following a World Trade Organization (WTO) ruling that the levies were illegal, announced Dec. 4 that the controversial tariffs on a variety of products, including flat steel, hot-rolled bar, cold-finished bar, tin mill products and stainless steel wire, were being lifted at 12:01 a.m. (EST) this morning, Dec. 5. The tariffs ranged as high as 30% and were imposed on March 5, 2002. "These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances it is time to lift them," Bush said in a statement. Although the tariffs are history, the administration intends to maintain a steel import licensing system to collect data on steel imports, keep an eye out for "harmful" import surges of steel, enforce anti-dumping and other U.S. trade laws "vigorously," and renew efforts within the Organization for Economic Cooperation & Development (OECD) to reduce national steel subsidies and cut back on inefficient global overcapacity. Bush also vowed to "pursue economic policies that create the conditions for steel producers, steel consumers -- who rely on steel to produce goods ranging from refrigerators to auto parts -- and other U.S. manufacturers to succeed." A "deeply disappointed" Dan DiMicco, vice chairman, president and CEO of Nucor Corp., the Charlotte, N.C.-based steelmaker that ran mid-November steelworker newspaper ads urging continuation of the tariffs, nevertheless thanked the Bush administration for its pledge to enforce U.S. trade laws. "We also look forward to swift administration action to ensure the immediate dismantling of all safeguard actions by EU and WTO member countries," he said. Not surprisingly, companies that consume steel and contended with large raw material cost increases quickly welcomed the White House move to eliminate the levies. "The president's decision provides U.S. steel consumers and other businesses with the renewed opportunity to compete on a level playing field," said J.T. Battenberg III, chairman, president and CEO of Delphi Corp., Troy, Mich. "American automotive parts manufacturers and our workers are very pleased by the President's decision," said Scott Meyer, president and COO of Ken-Tool and chairman of the Automotive Coalition on Steel Tariffs. On the other side of the Atlantic Ocean, EU Trade Commissioner Pascal Lamy also welcomed the Bush Administration's decision but not without taking a dig at the U.S. "I am pleased to see that after nearly two years of litigation, the U.S. has decided to abide by their international obligations by lifting the illegal safeguards. EU steel producers and workers will be relieved, as will those in the seven other countries which stood together with the EU in contesting these measures." Lamy is now counting on the OECD to deal with steel. "We should now concentrate our efforts in the OECD steel talks to cut down trade-distorting subsidies and global excess capacity, which is at the root of the problems [of] the U.S. steel industry," he said. However, it's not certain that the OECD will be any more successful in resolving steel subsidy and capacity issues in the next several months than it has been during the past relatively unproductive two years. Nor is it clear what the U.S. political fallout of the decision to end steel tariffs will be in presidential and congressional election year 2004, especially if economic recovery from the 2001 recession falters.