Canton Repository

March 27, 2003

WTO rules against U.S. steel tariffs

By Paul M. Krawzak
Copley Washington correspondent

WASHINGTON — Tariffs that President Bush imposed a year ago to help save the U.S. steel industry could be in trouble after a preliminary ruling from the World Trade Organization that they violate global trade rules.

The WTO decision will not be final for another month. But if it stands, it could imperil the “safeguard” tariffs, which many believe are crucial to the survival of U.S. steel makers.

The United States will appeal the final ruling if it does not change, said a U.S. trade official who spoke on condition he not be identified.

“The administration has demonstrated its willingness to both defend and use these laws and other trade remedy laws,” said the official, who complained that the preliminary ruling had been leaked. “We will continue to consider requests for safeguard measures from domestic producers. In the meantime, the steel safeguard measures will remain in place.”

Bush ordered the tariffs after a long campaign from steel companies and union officials and an investigation by the U.S. International Trade Commission. The tariffs of up to 24 percent raise the cost of a wide range of steel imports, including sheet and bar steel. They are part of the administration’s program to reduce excess global steel production.

Congressional supporters of the tariffs reacted swiftly to the WTO decision. Lawmakers from Ohio said the decision troubled them.

“I’m very concerned about it,” said Rep. Ralph Regula, R-Bethlehem Township. “I think historically the appeals are not very successful.” Regula is former chairman of the Congressional Steel Caucus.

Rep. Bob Ney, R-St. Clairsville, called the decision “outrageous” and issued a warning to steel-producing nations that brought the WTO case against the United States.

“Between the failure of the U.N. to stand with us against Saddam Hussein and today’s decision by the WTO, we are seeing the repeated failure of many in the international community to stand with the United States, and that is something that many of us in the Congress will not soon forget,” he said in a prepared statement.

Sen. Mike DeWine, R-Cedarville, said he was deeply disappointed, since the tariffs have given the steel industry “time to take the necessary steps to remain competitive. Our nation’s steel industry is vitally important to our nation’s economic and military security.”

Both the Timken Co., a maker of specialty steel in Canton, Ohio, and Republic Engineered Products in Fairlawn, Ohio, have benefited from the tariffs and support them. Officials at those companies were unprepared to react to the decision late Wednesday.

Opponents of the tariffs said the WTO decision could lead to their repeal, something increasingly sought by opponents who say the higher steel prices have cost jobs among steel-using manufacturers.

“I think this will make it further difficult for the administration to continue the tariffs,” said Jon Jenson, president of the Consuming Industries Trade Action Coalition, which opposes the tariffs.

The tariffs already have cost the economy 200,000 jobs outside the steel industry, he said, citing studies. “The damage has only begun.”

Unlike antidumping tariffs, which punish foreign steel producers for unfair trade, the safeguard tariffs are designed to help companies that have been hurt by large quantities of imports, whether they were traded illegally or not.

“Many counties have used them,” said the trade official who supports their use. “We believe the steel safeguard measures comply with our international obligations.” He said 60 counties have used safeguard tariffs since the WTO was founded in the mid 1990s.

A coalition of steel companies and union officials accused the WTO of exceeding its authority.

“The problem is a systematic WTO bias against the use of trade law measures by any country,” a statement from the American Iron and Steel Institute said. “Insofar as WTO panels have struck down every safeguard measure to come before them, the issue is a broken WTO dispute-settlement process, not the” tariffs.