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Bush dropping steel tariffs avert trade war { December 1 2003 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A23899-2003Nov30.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A23899-2003Nov30.html
Bush Dropping Steel Tariffs to Avert Trade War
Mixed Reaction Likely at Home
By Mike Allen
Washington Post Staff Writer
Monday, December 1, 2003; Page A01
The Bush administration has decided to repeal its 20-month-old tariffs on imported steel to head off a trade war that would have included foreign retaliation against products from politically crucial states, administration and industry sources said yesterday.
The officials would not say when President Bush will announce the decision but said it is likely to be this week. The officials said they had to allow for the possibility that he would make some change in the plan, but a source close to the White House said it was "all but set in stone."
European countries had vowed to respond to the tariffs, which were ruled illegal by the World Trade Organization, by imposing sanctions on up to $2.2 billion in imports from the United States, beginning as soon as Dec. 15. Japan issued a similar threat Wednesday. The sources said Bush's aides concluded they could not run the risk that the European Union would carry out its threat to impose sanctions on citrus fruit from Florida, farm machinery, textiles and other products.
Bush advisers said they were aware the reversal could produce a backlash against him in several steel-producing states of the Rust Belt -- including Pennsylvania, West Virginia and Ohio. That arc of states has been hit severely by losses in manufacturing jobs and will be among the most closely contested in his reelection race.
The sources said that Bush's aides agonized over the options to present to the president and that they considered it one of the diciest political calculations of this term. A source involved in the negotiations said White House aides looked for some step short of a full repeal that would satisfy the European Union but concluded that it was "technically possible but practically impossible."
Bush decided in March 2002 to impose tariffs of 8 to 30 percent on most steel imports from Europe, Asia and South America for three years. Officials acknowledged at the time that the decision was heavily influenced by the desire to help the Rust Belt states, but the departure from Bush's free-trade principles drew fierce criticism from his conservative supporters. After a blast of international opposition, the administration began approving exemptions.
The duties were ruled illegal by the WTO in a decision that was finalized three weeks ago, and Bush's economic team concluded unanimously that the tariffs should be scrapped. The source involved in the negotiations said the consensus in the White House was that "keeping the tariffs in place would cause more economic disruption and pain for the broader economy than repealing them would for the steel industry."
Officials said the repeal could help Bush in Michigan, where automakers are heavy consumers of steel and were hurt by the tariffs, but they said that was not the reason for the decision. In 2000, Bush won Ohio and West Virginia, a traditionally Democratic state. He lost Pennsylvania and Michigan, and they are among his top targets in 2004.
A White House spokesman would not comment beyond saying that it is "still a matter under review by the president, and we'll make announcements when we have announcements to make." Bush travels to Michigan today and Pennsylvania tomorrow.
© 2003 The Washington Post Company
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