Posted on 09/19/2003 8:16:06 PM PDT by Brian S
Fri September 19, 2003 10:34 PM ET
WASHINGTON (Reuters) - Hefty steel tariffs imposed by President Bush 18 months ago have had a slightly negative impact on U.S. economic growth, the U.S.
International Trade Commission said on Friday. In a pair of reports sent to the White House and key congressional committees, the ITC estimated the steel tariffs had cost the United States about $30.4 million annually in lost economic growth, a tiny fraction compared to the overall economy which totals about $10 trillion.
The reports set the stage for Bush to decide whether to end the tariffs early or let them remain in place for the full three years he originally planned. He could also decide to modify the tariffs as a result of the mid-term review.
Heading into next year's presidential election, Bush is under pressure to scrap the tariffs to help the manufacturing sector which has lost 2.5 million jobs on his watch.
Administration officials said Bush had not decided what, if any, action to take on the tariffs.
Both critics and supporters of the steel tariffs found something to cheer in the ITC reports.
Bill Klinefelter, director of legislative affairs for the United Steelworkers of America, called the studies a complete vindication of the president's program. "It clearly demonstrates that the other side has little or no case."
But Lewis Leibowitz, an attorney with the Consuming Industries Trade Action Coalition, which has fought hard to have the tariffs lifted, also declared victory.
"The numbers are there the way we thought they would be. It's clear that the economy is worse off with the tariffs than it would be without them," Leibowitz said.
Well, duh.
The Wall Street Journal has published several studies which imply it has destroyed more jobs than it has preserved.
If tariffs magically enhance economic activity why not apply them at the state and city level as well?
I agree.
Placing tariffs on steel may protect American steel workers, but it doesn't protect American workers. Buyers of the more expensive steel, faced with increasing costs, end up laying off some of their workers. You may save 10,000 steel jobs, but you lose 10,000 jobs in other manufacturing industries.
Given its 294 pages long, but it seems to me that this report didn't answer any questions.
The way that this report was conducted was at least somewhat via sending out (subjective) questionaires to companies.
In other words, half of the respondents decided their answers like a bunch of little kids...
"I don't like spinach..."
"Have you ever had spinach before?"
"No, but I know I hate it..."
The auto industry is the main ideologue whiner.
This report merely reflects the ideological split. Thats about it.
Quotes from the executive summary of the report:
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"Publicly available data and hearing testimony indicate that, for most products subject to the safeguards, prices paid by steel-consuming industries initially increased after the safeguards were implemented. However, prices for some of these products then declined after the initial increase."
"most steel-consuming firms (332 of 456 or 71 percent) reported that steel suppliers had not modified or abrogated any contracts with their firms since the implementation of the safeguard measures."
"Almost one-half of steel-consuming firms (219 of 467 or 47 percent) shifted some of their purchases to domestically produced steel from imported steel after the safeguard measures were implemented. Overall, direct purchases of steel products from domestic producers increased from 65 percent to 73 percent of all purchases, while direct purchases from importers fell from 32 to 23 percent of all purchases."
"A large number of steel-consuming firms (399 of 450 or 89 percent) reported that they did not shift to sourcing finished parts from overseas and most (399 of 445 or 76 percent) reported that their customers did not shift to sourcing from foreign plants or facilities since implementation of the safeguard measures. With regard to relocation of production facilities, 93 percent of steel-consuming firms (432 of 465) reported that they have not relocated or shifted U.S. production to foreign plants or facilities. Almost two-thirds of responding steel-consuming firms (270 of 430 or 63 percent) reported that they or other steel-consuming firms did not relocate or shift production to foreign plants or facilities after the implementation of the safeguards."
"Overall sales and profits increased, while capital investment fell, for most steel-consuming industries in 2002/03 (the year following the imposition of the safeguard measures) compared with 2001/02 (the year preceding the safeguard measures)."
"Overall employment of steel-consuming industries generally fell or remained flat in 2002/03 compared with both 2000/01 and 2001/02, while productivity and wages increased over the three year period. In many cases, employment fell by a greater amount (and percentage) in the year before the safeguard measures were implemented than in the first year after they were implemented."
Filed at 11:50 p.m. ET
WASHINGTON (AP) -- Steep tariffs on imported steel imposed 18 months ago have not significantly hurt small steel-consuming businesses, a federal trade panel concluded in a report released Friday that could reinforce President Bush's re-election strategy.
Many steel consumers ``had difficulty distinguishing between the effects of the (tariff) safeguard measures and other changes in market conditions,'' the U.S. International Trade Commission stated in its report.
Steel distributors and product producers ``generally reported that they expected no change or positive results from continuation of the safeguards and no change or negative results from termination of the safeguard measures,'' the report said.
The review outlines the tariffs' impact on domestic steel industry and steel consumers halfway through the three-year program. It will be critical in resolving a White House debate pitting the president's political interests against economic realities over whether to keep or eliminate the tariffs.
Bush imposed the tariffs, from 8 percent to 30 percent on certain kinds of foreign-made steel, in March 2002 to give the domestic industry respite from foreign competition to regroup and consolidate. Thirty-one steel producers have declared bankruptcy since January 1999, eliminating more than 50,000 jobs.
Bush's economic team has been pushing to drop the tariffs in the face of a July ruling by the World Trade Organization that they violate global trade laws. The European Union is threatening to impose $2.2 billion in retaliatory sanctions on U.S. exports.
Presidential political advisers, however, believe rolling back the sanctions would harm Bush's 2004 goal of winning key Rust Belt swing states, mainly Pennsylvania, West Virginia, Ohio, Indiana and Illinois, where steelmaking remains an important industry.
The Bush administration declined to comment specifically on the findings, which were made public shortly before 9 p.m. EDT -- hours after the report was promised. Within minutes of its release, tariff supporters hailed its conclusions.
``To turn back now would be to snatch defeat from the jaws of victory,'' said Terrence Straub, vice president of Pittsburgh-based U.S. Steel.
``This is a vindication of the president's program,'' said Steelworkers legislative director Bill Klinefelter. ``It clearly says that we should continue on the course that was laid down by this administration.''
The ITC concluded that demand for most steel products has been weak since the tariffs were enacted but that raw production is beginning to rise. In the last 18 months, the report found, steel producers have undergone major restructuring and the United Steelworkers of America labor union negotiated ``groundbreaking'' collective bargaining agreements that were, according to the ITC, ``designed to reduce fixed costs, improve productivity and protect retiree welfare.''
While steel consumers have charged that the tariffs contributed to 200,000 job losses, the ITC found that ``in many cases, employment fell by a greater amount (and percentage) in the year before the safeguard measures were implemented than in the first year after.''
But the review also said that the tariffs resulted in a $680 million net loss to U.S. businesses and that nearly half the consumers surveyed by the ITC reported significant declines in the availability of steel, said Lewis Leibowitz, an attorney for the Consuming Industries Trade Action Coalition.
``This indicates (consumers) were hurt a lot more than the steel industry was helped -- which is what we've been saying all along,'' Leibowitz said.
``As these reports make clear, the steel tariffs are a tremendous burden to steel consumers, the companies that comprise the bulk of American manufacturing,'' said Rep. Joe Knollenberg, R-Mich. ``Now is the time to take the foot of the steel tariffs off steel consumers' throats.''
The ITC review is only a fact-finding report and does not recommend any course of action. The president is not expected to make a decision on the tariffs' fate any time soon and could wait until November, when the WTO will decide on a U.S. appeal to its July ruling.
They tariffs are set to expire March 6, 2005.
``We will begin a thorough review and analysis of these reports today, and will use them as a part of our ongoing review of developments in the steel industry, and the economy more generally,'' said Richard Mills, spokesman for U.S. Trade Representative Robert Zoellick.
Said U.S. Sen. Robert C. Byrd, D-W.Va.: ``With such progress, I hope that the president will not short-circuit this effort.''
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On the Net:
U.S. International Trade Commission: http://www.usitc.gov/
Public data indicate that prices for steel in the U.S. market fell relative to prices in foreign markets since the imposition of the safeguard measures. However, based on these public data, prices for some steel products in some U.S. markets remained higher than those in foreign markets in May 2003.
So in other words prices in the US market dropped after we implemented tarriffs. Even after that drop though some foreign producers and markets had slightly lower prices that SOME parts of the US market.
That is NOT saying that with the tarriffs the foreign steel is still cheaper...Its a head to head comparison to foreign prices, ie the going rate (apparently in US dollars) (without tarriffs) as they are sold overseas.
It is saying that right now a US producer can sell Unit X of steel product A for $100 in Ohio, and a foreign company can sell that same unit for what equates to $99. At the same time that same Unit in Alabama would be $98...while it is still $99 in foreign markets...
The price discrepancy could be a result of MANY things.
Yeah, auto makers are known holders of exotic philosophical opinions or maybe they just noticed they were losing money because they lost their freedom to buy material from where they see fit.
Even now no one is forcing them to buy American steel.
Case and point is that with or without the tarriffs they are not materially harmed.
They just bitch and whine out of their ideologies. They want things done THEIR way, and they want everyone else to do things THEIR way too. Its nothing more than snobbery.
They do things the way they do them and don't want to change.
It just shows their lack of ability to adapt to changing market conditions.
No one is guaranteed a job.
They should be out of a job if they rock the boat. If they can't adapt, its not my problem. Screw them. I could care less if they work or not.
They are so...1990's in their thinking.
If they can't keep up, screw them all. I hope they all burn. It would be poetic justice.
It's requires the consent of the US Congress. See Article I, Section 10 of the US Constitution.
Plus, your </sarcasm> is noted ;-0
The tariff is on raw steel, but not on produts manufactored with steel. The net result is to cause more manufactoring companies to go offshore
A large number of steel-consuming firms (399 of 450 or 89 percent) reported that they did not shift to sourcing finished parts from overseas and most (399 of 445 or 76 percent) reported that their customers did not shift to sourcing from foreign plants or facilities since implementation of the safeguard measures. With regard to relocation of production facilities, 93 percent of steel-consuming firms (432 of 465) reported that they have not relocated or shifted U.S. production to foreign plants or facilities. Almost two-thirds of responding steel-consuming firms (270 of 430 or 63 percent) reported that they or other steel-consuming firms did not relocate or shift production to foreign plants or facilities after the implementation of the safeguards.
(Copied and pasted from the executive summary of the actual report mentioned above)
Please elaborate.
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