Fear of trade war after US rejects WTO ruling steel tariffs illegal

My favourite part of this article is the way the EU is planning counter sanctions to hit the administration where it hurts: with key voters.

It's a reminder that the EU has thousands of years of wisdom from in-fighting between themselves (before they became the EU); by comparison, the US are mere children in the game of foreign policy.

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http://www.guardian.co.uk/usa/story/...082149,00.html

A trade war between Europe and America threatened to reignite last night after the US rejected a final ruling from the World Trade Organisation that its protectionist tariffs on foreign steel are illegal and industry accused it of planning fresh measures. US officials said they rejected the findings of the WTO appeal body as the EU urged Washington to lift tariffs of up to 30% on some foreign steel imports or face EU sanctions worth €2.2bn (£1.5bn) a year, from as early as next month. The UK steel industry warned that Washington was planning to get round the WTO ruling by changing the way anti-dumping duties are calculated, thus extending the tariffs for up to three more years. Welcoming the WTO decision, Ian Rodgers, director of trade body UK Steel, said: "It looks to us as if the US is preparing to cheat on its obligations. We are urging the [European] commission and British government that if this proposal is enacted, the EU must still proceed with its retaliation even if the tariffs are apparently withdrawn." The WTO said the tariffs, imposed by President Bush in January 2002, were "inconsistent" with free trade and quashed a last-ditch US appeal. Washington had claimed the "safeguard measures" were necessary to protect the US steel industry from an unexpected surge in cheap imports but the WTO concluded that America had comprehensively failed to prove its case. The decision is a victory for the EU as well as Japan, Brazil, South Korea, Norway, New Zealand and Switzerland, which had all contested the US measures. EU sanctions will come in the form of higher import tariffs on a range of US goods such as Harley-Davidson motorcycles and Ray-Ban sunglasses. They will see many US goods priced out of the European market and have been calculated to inflict maximum pain upon US manufacturers based in "swing states" whose support will be crucial for Mr Bush's re-election campaign next year. "The measures are not there to punish the US but to focus the minds of the US administration," said a commission spokeswoman. "The sooner they terminate the measures the better, and we won't need to use these sanctions." The EU and the other victorious parties said, however, that the US now had "no choice" but to scrap the tariffs and demanded Washington act "as quickly as possible". In Britain the CBI said America should abandon the "mutually damaging" tariffs. "These illegal tariffs are not only damaging to industry outside the US," said CBI leader Digby Jones. "They are actually harming America's reputation and American industry, which is paying above the odds for steel both from home and abroad." Anglo-Dutch group Corus, which negotiated exemptions, also welcomed the ruling and urged President Bush to remove the tariffs swiftly. It said its sales to the US in the first half of this year were down 10% because of the tariffs and currency movements, with exports from Holland down 30%.

[Timber Loftis]

Related Thread.

Modifying the dumping laws may be appropriate. If other countries are selling steel here below their cost, then they are "dumping," which is unfair because they are simply taking a loss now merely to destroy the US steel industry, only to come back in later (after its demise) and raise prices.

But, the whole tack is more likely just a knee-jerk protectionist reacation. As I mention on the related thread, the whole game is stalling.

And, oh, surely you recognize that the Harley tarriffs are to make up for the Ducati tarriffs the US put in place when the EU flipped the big middle finger at the US over the beef-hormone case it lost.

Again, sometimes countries just decide to take the penalty and keep the protectionist measure. When the EU did this regarding beef-hormone and GMO soy, no one ran around yelling "fear of trade war" then. It *is* a trade war, and has been since I began studying it in 1997.

[ 11-11-2003, 05:36 PM: Message edited by: Timber Loftis ]

[jkhunterid]

I sure used to know a lot of people with good jobs before NAFTA was signed in to law. Sure seems a lot of these people are still unemployed or barely making ends meet after being forced into low paying jobs. Most of these people will tell you that the market was flooded with low cost products, some from countries with government subsidized industries. I believe risking our jobs to make the WTO happy would be bad policy. In trying to strong arm the U.S. it seems that a lot of these other countries will certainly harm their own econimic health? I could be wrong but thats the way I see it.

[Timber Loftis]

Originally posted by jkhunterid: I sure used to know a lot of people with good jobs before NAFTA was signed in to law. Sure seems a lot of these people are still unemployed or barely making ends meet after being forced into low paying jobs. Most of these people will tell you that the market was flooded with low cost products, some from countries with government subsidized industries. I believe risking our jobs to make the WTO happy would be bad policy. In trying to strong arm the U.S. it seems that a lot of these other countries will certainly harm their own econimic health? I could be wrong but thats the way I see it.

Read my discussion on the "Related Thread" about "Externalities." Labor costs and the environment are the 2 biggest ones. When we are not allowed to account for the costs added to First World industries by the labor and enviro laws, we in effect put the costs of those externalities on the companies, and then ask them to compete against nations without such protections in their laws on an equal price basis. This is not "equality" of trade -- we are, in effect, taxing our companies. The solution is not to remove these things from our laws, but rather ensure other countries enact them in their laws -- or impose tarrifs to make up the economic imbalance.

update

japan wading in. apparently this is momentous as they've never issued punitive trade sanctions previously.

[ZaRos]

EU sanctions will come in the form of higher import tariffs on a range of US goods such as Harley-Davidson motorcycles and Ray-Ban sunglasses. They will see many US goods priced out of the European market and have been calculated to inflict maximum pain upon US manufacturers based in "swing states" whose support will be crucial for Mr Bush's re-election campaign next year.


OMG we are good at this s... [img]smile.gif[/img]
That is pure mean, we are not fighting fair at all...

[ 11-27-2003, 06:42 PM: Message edited by: ZaRos ]

damn straight, zaros. and it looks like the little oil monkey blinked first

By Mike Allen THE WASHINGTON POST Dec. 1 - 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."

[skywalker]

I hear Mr. Bush will not make his final official decision to remove the the steel tariffs until after he makes his fund raising swing through Michigan and Pennsylvania.

Mark

[Timber Loftis]

Well, I guess it's about time. Lookit, he got to use 20 months of the 3-year tarriff, and now he can end it, without taking any trade hit at all. As I mentioned back then, these things amount to a stalling tactic.

Anyway, the steel industry got a 20 month breather. For the plants that couldn't turn things around in that time, I'm glad to see them go. Actually, I'm currently working on a deal where a foreign company is buying a small defunct steel company and hauling all the equipment out of the US. Good, I guess -- take our blight and dump it on someone else.

The steel industry is suffering the "damned union" problem. If it can't figure out how to deal with the damned unions, it will end up extinct like the seamsters' industry. We should spend a few tax dollar funding unions in other countries to bring up labor standards. And, we should start busting unions here because at some point, they become a behemoth that prevents a company from firing crappy/lazy workers and props up stupid wages (I'll be kind and not mention what a senior ironworker makes). Yes, I know this sounds like conflicting advice, but once you've got minimum wage laws, overtime pay laws, and OSHA in place, unions become a largely-superfluous construct that just sends big bucks to political parties and gives high-paid union execs. an excuse to exist.

Originally posted by Timber Loftis: ...once you've got minimum wage laws, overtime pay laws, and OSHA in place, unions become a largely-superfluous construct that just sends big bucks to political parties and gives high-paid union execs. an excuse to exist.

yes, but doesnt that make them good for the economy (GDP)? [img]tongue.gif[/img] [img]graemlins/biglaugh.gif[/img]