Canton Repository

July 12, 2003

Tariffs on steel in U.S. illegal

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — In a widely expected blow to U.S. steel makers, the World Trade Organization ruled Friday that steel tariffs imposed by President Bush 15 months ago are “inconsistent” with international treaties and trade laws.

Area lawmakers urged the Bush administration to appeal the WTO ruling, which the administration said it would.

“The United States must not allow the international community, especially nations such as France, to dictate policies that could virtually destroy the U.S. steel industry and put thousands of American workers out on the streets,” Rep. Bob Ney, R-St. Clairsville, said.

“What we’re doing is perfectly legitimate,” Rep. Ralph Regula, R-Bethlehem Township, said of the tariffs, designed to help rejuvenate the flagging U.S. steel industry.

Europeans, Regula said, “are not in a position to complain. They make it very difficult for U.S. products going into Europe.”

The European Community and seven other steel-producing countries, including Brazil and China, brought the complaint that led to the WTO decision.

Although promising to appeal the ruling, administration officials did not say what they would do if the WTO denies the appeal, as many expect it will.

Keeping the tariffs in place for a full three years in violation of a final WTO decision could lead to a trade war, harming a wide range of U.S. exports, from agricultural to manufactured products.

“We believe the steel safeguard measures comply with our international obligations,” said Richard Mills, a spokesman for U.S. Trade Representative Robert Zoellick.

Mills said the tariffs would remain in place during the appeal. He added that the administration “will continue to consider requests for safeguard measures from domestic producers.” The administration has exempted more than 1,000 types of steel that are not available in the United States from the duties.

William Barringer, a trade attorney who opposes the tariff program, praised the ruling.

“It’s a very well-reasoned, very conservative decision,” said Barringer, who represents steel makers in Brazil, Japan and Thailand.

Bush imposed the tariffs in March 2002 based on a recommendation from the U.S. International Trade Commission. After an investigation, the commission concluded that struggling domestic steel makers had been seriously hurt by steel imports and needed temporary relief to adjust to foreign competition.

By raising the price of certain steel products from large steel-producing nations, the tariffs have prevented a surge in imports and contributed to higher steel prices, benefiting the industry, defenders of the program said.

The WTO said the United States failed to prove that the safeguard tariffs were justified and did not comply with other tariff requirements.

Rep. Ted Strickland, D-Lucasville, urged the administration to maintain the tariffs for a full three years even if it means leaving the WTO, an organization established to encourage international commerce.

“I just don’t know how we can take our own decision-making processes and subjugate them to the will of the WTO,” said Strickland. “This issue ultimately has to be faced and dealt with, and maybe this is the time.”

If the administration defies the WTO and keeps the tariffs in place after losing an appeal, the countries that filed the complaint will be able to retaliate by slapping their own duties on U.S. exports.

Barringer said the administration might try to head off such retaliation by negotiating changes in the tariffs or additional exemptions with the complaining countries.

Other reaction came from the United Steelworkers, whose president, Leo W. Gerard, blasted the ruling as “the latest example of unelected trade bureaucrats undermining national sovereignty.”

William Gaskin, a leader in the Consuming Industries Trade Action Coalition, called the ruling a victory for steel consumers, who have paid higher prices for steel partly as a result of the tariffs.