President George Bush yesterday lifted the tariffs imposed last year by the US government on steel imports, to head off a potentially damaging trade war with Europe and Asia.
The decision to scrap the tariffs 16 months ahead of schedule came days before the European Union planned to hit back with $2,2-billion of tariffs on American imports. Japan had threatened duties of $458-million on US goods.
In Brussels, EU trade commissioner Pascal Lamy welcomed the US move and confirmed that Europe would scrap its retaliatory measures with immediate effect.
Calling the steel tariffs the ”tropical disease of US trade policy”, he said the case proved that the EU could hold its own on the international stage. ”The EU can play a role in world affairs that corresponds to its weight and can ensure its interests are defended.”
Exports to the US by the European steel industry have fallen 15% since the tariffs were introduced.
British trade secretary Patricia Hewitt described the decision as a victory for Europe. ”We in Europe, by standing together, by using the World Trade Organisation and saying ‘we’re going to uphold the rules of world trade’, we’ve played our hand very, very effectively indeed.”
The reversal follows a ruling by the WTO last month that the tariffs of up to 30% introduced in March 2002 violated global trade regulations. The WTO had authorised retaliatory action by Europe, Asia and Latin America.
Bush, who is about to enter an election year, is risking a political backlash in steel-producing states but faced the prospect of worse among other states where voters could have been affected in a tit-for-tat trade war.
He was also facing pressure from American manufacturers which are heavy users of steel and had argued that the higher prices were hurting their businesses and costing jobs.
On a fundraising trip to Pittsburgh, the heart of America’s steel industry, the president this week studiously avoided the subject of the tariffs.
Ian Rodgers, director of UK Steel, which represents British producers, welcomed the outcome but remained critical of the White House.
”The president has at last bowed to the inevitable, as the tariffs were neither legal nor necessary and were extremely destructive, provoking a wave of protectionism in other countries.”
Confederation of British Industry director-general Digby Jones said Bush had been deluding himself. ”I know the US has fears about foreign competition, in particular from China. We in the UK have similar concerns. But hiding behind artificial barriers will never provide more than a temporary respite.
”Politicians who believe they can immunise the voter from globalisation are not living in the real world.”
In an attempt to cushion the blow to the US steel industry, and bolster his own re-election chances, Bush announced plans to tighten up monitoring of imports and to act more aggressively against ”dumping” — foreign countries shipping steel at artificially low prices.
The White House would continue to press trading partners about subsidies given to steel firms by their governments.
Bush insisted that the decision to drop the tariffs was not a climbdown. The tariffs had done their job and given the ailing US steel industry breathing space to restructure and cut costs.
”These safeguard measures have now achieved their purpose and, as a result of changed economic circumstances, it is time to lift them,” he said in a statement. – Guardian Unlimited Â