WASHINGTON, Aug. 22 — The Bush administration today excluded more than 178 imported steel products from steep tariffs it imposed in the spring, chipping away at an effort to protect the ailing United States steel industry.þþThe decision, which infuriated American producers and was applauded by European governments, means that nearly one-quarter of all foreign imports are now free to enter the country under normal rules.þþThe action was the latest twist in President Bush's off-again-on-again commitment to free trade. Though administration officials justified their action on dry and technical grounds, it showed that the White House has been forced to backpedal on its protection efforts, for both domestic and international reasons. Domestically, companies that use steel were complaining that they could not obtain the specialty products they needed. Internationally, the administration had been fiercely attacked by almost all of its largest trading partners.þþBut the retreat also reflected the president's struggle to balance political demands from electorally important steel-producing states like Pennsylvania, Ohio and West Virginia with his international goal of opening world markets.þþRepublicans fighting to hold on to control of the House in the midterm elections in November may find that the exclusions have greatly endangered whatever political support Mr. Bush had built up in those states, but imposing the tariffs to begin with eroded his stance as a free-market advocate.þþMr. Bush carried Ohio and West Virginia in the 2000 election and would like to add Pennsylvania in his re-election bid in 2004. þþIn March, Mr. Bush stunned leaders in Europe and Asia by imposing special ÿsafeguardÿ tariffs of up to 30 percent on most steel imports. At the time, 31 United States steel companies were in bankruptcy proceedings and scores of others were running huge losses.þþThe European Union, Japan and other countries denounced the new barriers as a violation of international trade treaties and filed legal complaints at the World Trade Organization, which acts as an international court in such disputes. The European Union has also threatened to strike back with retaliatory tariffs on American products like orange juice and motorcycles.þþLargely unnoticed, however, the Bush administration has been issuing hundreds of ÿexclusionsÿ in recent months for particular categories of steel that are difficult or impossible to obtain from American suppliers.þþToday's was the biggest and most controversial decision on exclusion, and it quickly provoked a chorus of protest from steel producers, union leaders and politicians from steel-producing states.þþAmerican steel companies had argued that 104 of the 178 steel products named today should not be excluded from the tariffs because they are being made — or at least could be — in the United States.þThe products included a form of galvanized plate used by Chrysler and other automakers, wide-width plate used in high-pressure underground tanks and about 100,000 tons of large-diameter pipe.þþAll told, the administration has now waived the tariffs on 727 imported steel products. Of 13 million tons in annual steel imports, about 3.2 million tons are now exempt.þþSteel executives reacted swiftly and angrily to today's decision.þþÿWe are disappointed by a number of the exclusions announced today,ÿ said Thomas J. Usher, the chairman and chief executive of United States Steel in Pittsburgh. ÿUnfortunately, pressure by foreign governments for unjustified exclusions from the Section 201 remedy has been very strong,ÿ he added, referring to the law that covers ÿsafeguardÿ measures to protect a domestic market from being flooded by imports.þþJohn H. Walker, the chief executive of the Weirton Steel Corporation in West Virginia, said his company would not be hurt directly but would be affected as other American mills scrambled to make up for lost business by entering Weirton's market.þþÿWe are very, very disappointed,ÿ Mr. Walker said in a statement. Weirton lost $217 million last year. Despite the tariffs, the company lost nearly $36 million in the three months ended in June.þþSteel-state politicians echoed those criticisms.þÿIt is a major step toward undermining whatever good was coming from the tariffs,ÿ said Representative Ted Strickland, an Ohio Democrat whose district includes thousands of workers from Wheeling-Pittsburgh Steel, which is in bankruptcy proceedings, and Weirton, which is just across the state line in West Virginia.þþBut for all the howls of protest from steel companies, today's action appeared to help defuse anger in the European Union, which is one of the United States' biggest trading partners and an ally in coming global trade talks intended to reduce barriers in areas like financial services, investment and telecommunications.þþÿThis is a positive development, which of course we welcome,ÿ said a senior official at the European Commission in Brussels. Pascal Lamy, the commission's top trade negotiator, is expected to issue a statement on Friday that strongly implies he will not press for retaliatory measures until at least the time that the World Trade Organization issues a preliminary ruling next spring on whether the steel duties are legal.þþMany trade experts, including a large number in the United States, have long argued that the March steel tariffs were an unfortunate capitulation to protectionist pressures. The administration argued that American steel makers were threatened by a flood of imports, even though it did not argue that the imports were being unfairly subsidized.þþRather, it argued that foreign imports were flooding into the United States at such a pace that the industry was threatened. International trade law does allow countries to impose safeguards in such cases. The American case was weak, though, because foreign imports had actually been declining over the last several years.þþThe real problem, both American and foreign steel executives agree, is that the old integrated American steel producers have huge costs that stem from pension obligations to older workers from the days before steel companies eliminated tens of thousands of jobs.þþC. Fred Bergsten, director of the Institute for International Economics, a research group in Washington, said President Bush's zigzag approach toward steel fitted into a long-term pattern of American political behavior. Mr. Bergsten argues that Mr. Bush capitulated to protectionism on American steel to generate enough support in Congress for enhanced authority to negotiate much broader free-trade agreements over the next several years.þþAfter a long battle in Congress, Mr. Bush did in fact win passage of what is called Trade Promotion Authority — by a razor-thin margin of just three votes in the House.þþÿIt's one step backward for every two steps forward,ÿ said Mr. Bergsten, an outspoken supporter of lower trade barriers.þþNot surprisingly, labor leaders in the steel industry see things differently. After cheering Mr. Bush for imposing the steel tariffs in March, they now accuse him of reversing himself.þþÿThe tariffs adopted last March gave a ray of hope,ÿ said Leo Gerard, president of the United Steelworkers of America. ÿNow that goal is threatened. The administration cannot give with one hand while taking it away with another.ÿþþþ
Source: NY Times
