March 5, 2002
Bush Edging Toward Decision on Steel Imports
By RICHARD W. STEVENSON
ASHINGTON, March 4 — The White House edged toward a final decision today to impose tariffs on imported steel, as President Bush weighed recommendations from his advisers and last-minute pleas from an array of competing interests.
Ari Fleischer, the White House press secretary, said Mr. Bush intended to make his decision by Wednesday but had not yet signed off on all the elements of a plan. Administration officials have signaled that Mr. Bush is leaning toward a combination of tariffs and quotas that would vary with the specific type of steel involved and that would probably exempt some developing nations as well as Mexico and Canada. "It's not a settled matter at this time," Mr. Fleischer said.
People involved in the debate over how far the United States should go in protecting the industry — and the jobs it provides in political battleground states like West Virginia, Pennsylvania and Ohio — said the issue's complexity was underscored for Mr. Bush last week when Prime Minister Tony Blair of Britain raised it with him in a phone call.
Mr. Blair, who has made Britain perhaps the staunchest ally of the United States in the war on terrorism, suggested to Mr. Bush that restricting imports would not be the right response to the problems facing the steel industry in the United States, people who have been briefed on the discussion said.
Today, the British Trade Secretary, Patricia Hewitt, said Britain would support trade retaliation by the European Union if the United States imposed tariffs on steel.
Trade officials on both sides of the Atlantic — as well as those in China and Russia — are already bracing for a knockdown fight over steel, one that they are concerned could slow the already halting progress toward a new round of world trade liberalization talks.
But the most immediate calculations facing Mr. Bush are domestic.
Having floated the outlines of its approach recently, the administration heard today from steel makers, unions, users of steel and other groups with an interest in the outcome. The general message was that any effort to find a middle ground would leave all sides unhappy.
Mr. Fleischer acknowledged as much, likening the issue to a Rubik's Cube, where any move to help one side causes problems with another. "The president understands how very many sides there are on this issue," he said.
The nation's remaining big steel makers, which have seen their ranks mowed down by a succession of bankruptcies, are pushing the administration to impose tariffs of up to 40 percent on most types of steel imports from all over the world.
The big companies, led by U.S. Steel, say a period of protection from what they consider unfair foreign competition would allow them to regroup, consolidate and invest in more efficient equipment that would enable them to survive. Without the help, they say, most of the industry will wither away, along with tens of thousands of jobs.
Users of steel, however, say that steep tariffs and the ensuing rise in steel prices would drive up their costs, leading to job losses across a wide swath of industry.
Representatives of the big steel companies said the administration would be making a mistake if it exempted developing countries from the tariffs and allowed some portion of the steel from other countries to come in free of tariffs. They said the practical effect of such a compromise would be to set tariff levels so low that they would be ineffectual.
If developing nations are exempted and if a portion of the unfinished slab steel coming into the United States is not subject to the tariffs, the domestic industry "would get close to no relief," said Robert Lighthizer, a Washington trade lawyer who represents U.S. Steel and some of the other steel makers.
Leo Gerard, president of the steel workers' union, said exemption of developing countries would have to be accompanied by a strict program to guard against a surge of imports from them and to keep developed countries from evading the tariffs by shipping their steel through the developing nations.
But representatives of groups lobbying the administration not to impose heavy tariffs said the compromise floated by the White House would still extract much too heavy a price from the economy.
