Canton Repository

July 20, 2002

Europe holds off on decision to hike tariffs on U.S. exports 

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — European trade officials have put off a decision on whether to retaliate against the steel tariffs imposed by
President Bush, delaying an action that could spark a wider trade conflict.

Instead of acting Monday as planned, the European Union is expected to wait until Sept. 30 to decide whether to slap its own tariffs
on more than $300 million worth of U.S. exports, including citrus from Florida and textiles from the Carolinas.

Higher tariffs would make American exports more expensive in Europe, leading to reduced sales for U.S. farmers and
manufacturers.

In March, Bush ordered tariffs of up to 30 percent on a wide range of foreign steel to help the struggling domestic steel industry. By
raising the price of imports, the three-year tariffs are designed to reduce imports. They are meant to give U.S. companies room to
restructure and become more competitive.

Partially as a result of the protection, steel prices have risen to the benefit of U.S. steel makers.

In announcing the delay, the European Commission applauded the administration for announcing Friday that the United States is
excluding a fifth set of steel imports from the tariffs.

“We welcome the cooperative attitude that our American counterparts have shown on this matter,” said Peter Mogens Carl, director
general for trade with the commission. “It is not our intention to make decisions more difficult by recommending to the (European
Council) at this time to take countermeasures here and now.”

The commission urged its council of ministers to wait until Sept. 30 to decide on sanctions. Wilfried Schneider, a spokesman for the
commission, said it virtually is certain the ministers will go along with the request.

Up to now, the administration has excluded 261 types of steel from the tariffs after determining they are unavailable from U.S. steel
makers. The government will continue to review exclusion requests until Aug. 31.

In announcing the latest set of exclusions, the Bush administration said, “This is part of the administration’s objective of providing
relief only where needed in the steel industry and to avoid burdening U.S. steel consumers.”

The U.S. steel industry has agreed that many of the exclusions are reasonable. But steel executives and union leaders also have
warned that too many could weaken the tariff.

U.S. Steel, the largest U.S. steel maker, had no objection to any of the steel products in the latest round of exclusions.

“We have had objections to some exclusions, but overall the (tariff plan) is working,” said Mike Dixon, a spokesman for U.S. Steel.

Gary Hufbauer, an economist who specializes in trade, believes the administration is attempting to keep Steelworkers satisfied while
avoiding European retaliation. If Bush can accomplish both, it will improve Republican prospects to maintain control of the House in
the November election, he said.

“They’re walking along this knife edge, trying to stave off these two bad events, and I’ve likened it to a magic circus,” Hufbauer said.
“It’s all illusions. Can he really keep this thing going through November? So far, they’ve kept it going. It’s going to be hard.”