Steel-state legislators launch attempt to revive 201 tariffs
Tom Stundza -- Purchasing, 1/15/2004 2:00:00 AM
Lawmakers from steel-producing West Virginia and Indiana aren't accepting President Bush's decision to roll back tariffs on imported steel without a fight. Sen. Robert C. Byrd, D-W.Va., and Rep. Pete Visclosky, D-Ind., have introduced bills that would reinstate the tariffs, while West Virginia's other Democratic senator, Jay Rockefeller, has challenged the Bush administration to explain the legal grounds for its decision.
Steel companies and their workers fought hard to persuade Bush to keep the 20-month-old tariffs. Bush revoked the tariffs in early December, however, after being forced to choose between the threat of a global trade war and the possibility of losing votes in key election states next year. Keeping the tariffs for another 16 months could have triggered some $2.2 billion in retaliatory tariffs from the European Union, Japan, South Korea and China against U.S. products. Among those affected would have been citrus growers from Florida, the bitterly contested state in the 2000 election that is rich in electoral votes.
Still, Ohio, West Virginia and Pennsylvania are all states with big steel-making constituencies, which have suffered heavy job losses in recent years. They are also expected to be key battlegrounds in the November 2004 presidential race. Bush won Ohio and West Virginia in 2000 but Democrat Al Gore carried Pennsylvania.
The legislators say Bush lacks power to unilaterally lift tariffs unless certain criteria defined in the World Trade Organization's Safeguards Act have been met. "Which leaves his decision as completely politically motivated," Visclosky said. Byrd says the tariffs were giving the domestic steel industry time to recover from unfair foreign competition and consolidate, and Bush should have kept them. "But this administration chose to back down, to lose face, to sit back and watch, once more, while thousands of additional U.S. steel jobs are destroyed by wave after wave of foreign imports," he says. "The Bush White House has absolutely failed the working families across this country."
The repeal of the tariffs has been met by strong criticism from the nation's largest steelworkers' union, which has declared that repealing the tariffs provided "clear evidence of capitulating to European blackmail, and a sorry betrayal of American steelworkers and steel communities." United Steelworkers of America President Leo W. Gerard has denounced the repeal as being politically motivated. "In his rush to appease the Europeans and Japanese, Mr. Bush willfully ignored the fact that damage to the American steel industry and American steel communities continues to this day, even with the tariffs in place," says Gerard, whose union represents roughly 1.2 million working and retired steelworkers in the U.S. and Canada.
Legislators representing states with steel-consuming companies, of course, aren't accepting this view. They point out that automotive and metal-stamping companies in their territories were harmed by higher prices and blunted supply of imported steel that cost more jobs than the steel industry has saved. Groups representing U.S. steel users have argued that keeping the tariffs would have exposed other areas of the economy to debilitating tariffs.
These critics say the actions by the steel-state lawmakers' are as politically motivated as those of the president, and the bills will likely go nowhere. "It's a nice symbolic gesture, but it won't have any effect," predicts Donald Coffin, associate professor of economics at Indiana University Northwest in Gary. Industry analyst Charles Bradford, an outspoken opponent of the tariffs since their inception, also believes there is little chance the legislation will succeed.
Like some trade lawyers, Byrd and Rockefeller argue the president could have invoked WTO provisions to stop the threatened retaliation. Instead, in an attempt to mollify the steel industry, the White House has pledged to enforce antidumping laws and says it will press U.S. trading partners to cut subsidies for steel producers in their nations. This isn't enough for the senators.
The WTO's Safeguards Agreement and Dispute Settlement Understanding policy outlines a process that includes giving the U.S. a reasonable amount of time—defined as up to 15 months—to comply with any adverse WTO rulings such as the one that declared the steel tariffs illegal. "But this president has so far lacked the foresight or the fortitude to take that step," Byrd says "Confronted with real threats of economic retaliation by determined competitors, the president folds like a house of cards astride the San Andreas fault."
In a letter to U.S. Trade Representative Robert Zoellick, Rockefeller has demanded an explanation of the administration's legal foundation for repealing the tariffs. He also has warned that Bush's choice may empower the European Union to pressure the administration on other fronts in the future.
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