Posted on 11/11/2003 5:47:49 PM PST by demlosers
WASHINGTON (Reuters) - Under pressure from many of his top advisers to lift tariffs on steel imports, U.S. President George W. Bush may be moving in that direction to avert a trade war with Europe, Republican sources and analysts say.
That could spark a political backlash from steel makers and workers in next year's presidential election.
The White House said no decisions have been made and officials have not publicly ruled out the possibility that the administration could flout the World Trade Organisation by keeping the tariffs in place.
Administration sources said Bush, who came to office championing free trade, has begun final deliberations and could make his decision as early as next week.
Republican sources and analysts say the administration appears to be leaning toward removing -- or at a minimum scaling back -- protections for U.S. steelmakers for a host of reasons, not the least of which is the EU's threat to retaliate on $2.2 billion (1.3 billion pounds) of American exports.
"I believe that's a distinct possibility given what the WTO seems to be saying," said Vin Weber, an influential Republican lobbyist who was among those representing the U.S. steel industry during the fight to impose the tariffs.
The WTO's highest court ruled on Monday that U.S. steel duties violated international trade laws, and the European Union has threatened to retaliate by mid-December if Washington refuses to back down.
The goods targeted for sanctions are designed to have a political as well as economic impact as Bush seeks a second presidential term next year. One group is citrus products from Florida, where Bush's brother is governor and which was the key to the president's 2000 election win.
While Europe was preparing to quickly strike back at the United States, Japan and South Korea said they would delay any retaliatory action pending a formal response from the Bush administration to the final verdict in the case by the WTO's Appellate Body.
"The verdict is out and we have already sent out a message that we want them to go by the book," Japanese Trade Minister Shoichi Nakagawa said.
BUSH ADVISERS WANT TO PULL TARIFFS BACK
Even before the final WTO decision, Bush's economic team and some of his political advisers had privately warned him the tariffs may be doing more harm than good, though the president has had a mixed record of following their advice.
Administration sources point to signs that the tariffs have served much of their stated economic purpose -- giving steel makers time to consolidate operations and become more competitive after a string of bankruptcies.
Some political advisers with close ties to the White House also questioned whether Bush would realise any political gain by defending the controversial March 2002 decision, which imposed tariffs of up to 30 percent on imported steel and sparked an international backlash.
"It's kind of the classic case of, 'Where's the beef?'" said Republican consultant Scott Reed. "There weren't a lot of new jobs created and I'm not sure there was much political benefit in those targeted states."
Bush could face a backlash whatever the decision.
If he bows to pressure from the European Union to lift the tariffs, he stands to lose support in the pivotal steel-producing states of Michigan, Ohio, Pennsylvania and West Virginia.
Keeping them in place would hurt small- and medium-sized Midwestern manufacturers -- another important constituency -- and clear the way for the EU to retaliate against exports from key states.
Some members of Bush's own Republican party, including Senate Finance Committee Chairman Charles Grassley, have urged him to back down.
They say it would be inconsistent for the United States to flout the WTO's decision while pushing forward with a full slate of free trade negotiations around the world and chiding China to meet its WTO obligations.
But heading into next year's election, political considerations could tempt Bush to try to find some way of softening the blow on steel companies of removing the tariffs.
One option the Commerce Department is considering is a technical adjustment of U.S. anti-dumping rules that could increase duties on steel imports it determines are being sold at less than fair value.
Louis Leibowitz, an attorney for the Consuming Industries Trade Action Coalition, said the White House could offer that "as a sop to the steel industry" but it would probably violate WTO rules and might not have much long-term impact.
Dubya crapped in his (our) pants on this one, it's about changed them.
His political pandering on this issue - its just like lying - you get caught with your pants down (to kinda borrow your analogy).
Gee whiz, the article says "the Bush Kid" has a mixed record of "oding what his advisors tell him." I thought he was just a schlep puppet? Is it possible that he's weighing the advice from the "Bush Elder" crowd and then making his own decisions.
Well which is it cynics, either he's a sock puppet or he's making his own decisions, for better or for worse.
The steel industry domestically needs to become competitive, or it SHOULD die.
Competition makes us strong. Protectionism makes us weak. Adam Smith at work.
You mean he might lose votes from people who would never have voted for him anyway?
I would guess sock puppet. If it were not so we would likely see some consistency in actions taken instead of the politically opportunistic vacillations.
This whole charade is actually being choreographed by the global Automotive Cartel, including "The Big Three": Daimler-Chrysler, Ford and General Motors.
U.S. Steelmaking technology remains among the most productive in the world.
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In some instances, state of the art mini-mill operators, such as Nucor, are capable of producing in excess of 1000 tons/employee. Overall, our national average is skewed slightly downward due to the necessity of operating large integrated mills to process steel from ore. The high-tech minimills are primarily scrap recyclers.
The problem is, the globo-weenies label some antiquated, Soviet-era pollution belcher in Belarus as being "more efficient" simply because the workers receive a weekly wage consisting of a couple bushels of cabbage and beets, and maybe a bottle of vodka. They can produce steel "cheaper" that way. Then in the same breath, the globo-weenies demonize American technology as "buggy whips". What a pile of horse manure!
If that were true, any slave state would be an economic superpower.
Granted, other countries are subsidizing there steel, and dumping here, we could have retaliated that way. Though I loathe subsidies.
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