Bush administration to lift steel tariffs imposed in '02

President likely to pledge other relief for industry

December 04, 2003|By David L. Greene, Julie Hirschfeld Davis and Stacey Hirsh | David L. Greene, Julie Hirschfeld Davis and Stacey Hirsh,SUN NATIONAL STAFF

WASHINGTON - In a politically risky move, President Bush is expected to lift the tariffs today on steel imports that he imposed last year to boost the ailing U.S. steel industry, an administration official said last night.

To ease the pain for American steelmakers, Bush is expected to promise the industry targeted relief if other nations flood the U.S. market with steel.

Bush administration officials said last night that the president is not likely to announce the decision himself. Instead, the decision is expected to be explained by Commerce Secretary Donald L. Evans at a news conference. U.S. Trade Representative Robert B. Zoellick is reportedly planning to offer details of the decision in a separate briefing.

The president has been under pressure to remove the tariffs since November, when the World Trade Organization ruled them in violation of international trade laws and the European Union and Japan vowed retaliatory moves if they remained in effect.

The retaliatory measures were scheduled to go into effect Dec. 15 if Bush failed to act.

For the president, the decision is a significant political gamble. He imposed the tariffs for three years, beginning in March 2002, largely to satisfy United States Steel Corp. and other struggling steel producers in industrial states such as Pennsylvania, Ohio and West Virginia - likely crucial battlegrounds in the 2004 presidential election.

During a visit to Pittsburgh, Bush got an earful Tuesday from Thomas J. Usher, the chairman and chief executive of United States Steel, and from Sen. Arlen Specter, a Pennsylvania Republican, both of whom had lobbied to keep the tariffs in place.

Mikulski backs tariffs

Sen. Barbara A. Mikulski, a Maryland Democrat, called on Bush last night to retain the tariffs, saying that lifting them "is bad economic policy, bad trade policy and bad foreign policy."

"The president should not back down in the face of unwarranted European threats," Mikulski said in a statement. "America's steelworkers are counting on President Bush to keep his commitment to helping the American steel industry become the most efficient in the world."

But a decision to scrap the tariffs stands to please voters in other presidential battlegrounds, such as Michigan and Florida. Auto plants and other steel-buying industries in Michigan suffered from the tariffs, which increased the price of foreign steel. Florida orange growers faced the threat of retaliatory tariffs by the European Union against U.S.-made orange juice.

Bush sweeteners

Sources said the Bush administration is expected to justify its decision by arguing that the tariffs, in place for 20 months, had helped domestic steel companies that were crippled by job losses and bankruptcies.

Roger Schagrin, a steel industry attorney, said he expects the Bush administration to characterize the tariffs as "a fabulous success" and pledge to take action to stem the flow of steel if too much is coming into the United States from a given country and competing with domestic producers.

Schagrin said that was the "only sweetener I've heard of" to be included in the administration's announcement to offset the impact on the domestic steel industry.

However, news accounts yesterday said Bush was considering pension relief for steelworkers hurt by the decision.

Steel manufacturers, who were counting on the tariffs lasting for three years, said American companies had begun to recover, but need more time to build enough momentum to become a healthy industry.

"What we're going to lose is the opportunity to really make it hum," said Tom Sneeringer, a lobbyist for U.S. Steel. "We're still letting blood all over the headquarters and the office buildings."

Sneeringer said administration promises to enforce trade laws more strictly to prevent foreign dumping ring hollow.

"That's what they said in West Virginia to get elected," Sneeringer said, referring to a visit by Dick Cheney during the 2000 campaign to Weirton Steel Corp., where he pledged that a Bush administration would respond "swiftly and firmly" if foreign countries broke trade laws.

"We feel the president made a commitment for a three-year tariff. We were very appreciative, and we did the things that he expected us to do," said Gary Hubbard, a spokesman for the United Steelworkers of America. "Despite the fact that imports are presently low, the fundamental problem is still there. There's too much steel in the world."

Concerns in Maryland

Baltimore-area steelworkers said yesterday that a decision to lift the tariffs would be devastating.

"We thought we had a president, even though he is a Republican, that stepped up and did something for the steel industry, and now he's reneging on that," said Joe Rosel, who works at the International Steel Group Inc. plant at Sparrows Point in Baltimore County.

The steel industry agreed to consolidate and restructure with the safeguards of tariffs in place, said Jim Strong, a sub-district director for the United Steelworkers of America in Baltimore.

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