ITC Report Reopens Debate On Steel Tariffs

By Agence France-Presse The debate over tariffs to protect the struggling U.S. steel industry was back in focus on Sept. 22 after a government report showed the duties had a modestly negative impact on the overall economy. The tariffs of up to 30% on most foreign steel products -- which prompted an outcry from U.S. trading partners after being announced in March 2002 -- has helped the steel industry consolidate but has hurt steel-consuming industries, the report concluded. Friday's report by the quasi-judicial U.S. International Trade Commission sparked a fresh debate over the tariffs imposed by President George W. Bush ahead of the midpoint review of the temporary three-year measure. The ITC said that the overall economic impact of the tariffs was a loss of $30.4 million in gross domestic product, a relatively small amount in the multitrillion-dollar U.S. economy. Although the impact was mixed, steel-consuming industries opposed to the tariffs seized on the report as evidence that the measure should be rescinded. "The report confirms what we have been saying for a year and a half: Small steel-consuming manufacturers are being forced to lay off workers and move production out of the U.S. because of the higher cost and reduced availability of steel," said William Gaskin, chairman of the Consuming Industries Trade Action Coalition Steel Task Force. "Many thousands of jobs have been lost, and the economy as a whole has been damaged." But Wilbur Ross, chairman of Cleveland-based International Steel Group, a steel producer, said the report "documents the significant progress being made by the domestic steel industry to consolidate, restructure and become more competitive in the global marketplace." Bush imposed the tariffs under the controversial section 201 of U.S. trade law last year, which does not require evidence of "dumping" at unfair prices or with unfair subsidies. The three-year tariffs were reduced from 30% in the first year to 24% in the second year, and if maintained, would be cut to 18% in the third year. In addition to domestic political considerations, Washington faces a World Trade Organization ruling calling the tariffs illegal -- which is being appealed -- that could lead to trade sanctions by Europe and other countries. White House spokesman Scott McClellan said the administration would do "a thorough and detailed review" of the report "and continue to have a dialogue with steel producers, consumers, and members of Congress and other interested parties as we move forward." "But at this point, the president hasn't made a decision because we're still in that review process," he said. However, 98 members of the "steel caucus" in Congress sent a letter recently to Bush urging the administration to keep the section 201 tariffs. "America's steel industry and its steelworkers have accomplished a dramatic restructuring in a remarkably short period of time, but that recovery is only in its infancy," the letter said. "It is essential that the 201 relief remain in place for the full term, not only for the industry and its workers to continue the consolidation process they have begun, but for the problems of excess capacity and government subsidies you are addressing through multilateral negotiations to be resolved." But Republican Representative Joe Knollenberg of Michigan said the report should give Bush the justification to halt the tariffs. "The steel tariffs are a tremendous burden to steel consumers, the companies that comprise the bulk of American manufacturing," he said. "The president has demonstrated how concerned he is about the state of manufacturing in this country. The cost of continuing the tariffs far outweighs any benefit." Copyright Agence France-Presse, 2003

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