Steel tariffs removed, union criticizes

With economic pressure mounting from foreign interests, the Bush administration has… With economic pressure mounting from foreign interests, the Bush administration has repealed tariffs on foreign steel 16 months before they were supposed to end, dealing another blow to Western Pennsylvania’s already hurting steel industry.

The World Trade Organization, which was prepared to ratify a decision by their high court declaring such tariffs illegal, granted a U.S.-requested delay on its final decision two weeks ago.

The European Union, a key U.S. trade partner, had already declared that it was ready to impose about $2.2 billion worth of sanctions on imported American goods within a week of a decision from the WTO high court, if the U.S. did not relent. Japan and Norway had also announced similar planned sanctions.

With the Bush administration’s decision last Thursday to do away with the tariffs, the EU retracted its threat of sanctions, which EU Trade Commissioner Pascal Lamy described as a “tool for compliance,” according to CNN.

The repeal was met by strong criticism from the nation’s largest steelworkers’ union, which declared that repealing the tariffs provided “clear evidence of capitulating to European blackmail, and a sorry betrayal of American steelworkers and steel communities.”

Since the evolution of railroads in the middle of the 19th century, steel has been one of America’s symbols of industrial strength. Over the decades, however, technological advances and globalization have opened up the market to worldwide competition and resulted in the economic downturn of the industry – and the loss of many workers’ jobs.

United Steelworkers of America President Leo W. Gerard denounced the repeal as being politically motivated.

“In his rush to appease the Europeans and Japanese, Mr. Bush willfully ignored the fact that damage to the American steel industry and American steel communities continues to this day, even with the tariffs in place,” Gerard said

Frank Giarratani is the director of Pitt’s Center for Industry Studies, which is an industry research group housed in the Department of Economics. According to Giarratani, steel tariffs were meant to help U.S. steel manufacturers compete in the global market.

“The U.S. steel industry was very fragmented compared to, say, the European steel industry,” he said. “In Europe, there are a small number of large firms, while in the U.S., there are a large number of small firms.”

Tariffs of as much as 30 percent were imposed on foreign-made steel imports in March 2000. The tariffs were meant to stay for a three-year period, giving the flagging American steel industry time to consolidate and compete with inexpensive foreign steel makers, according to the Bush Administration.

The USW, a union representing roughly 1.2 million working and retired steelworkers in the United States and Canada, is based in Pittsburgh. USW spokesman John Duray said the repeal of tariffs sends a bad message to workers.

“Bush has no problem standing up to Europe when it comes to going to war in Iraq, but he doesn’t seem to have any backbone when it comes to protecting American steelworkers,” Duray said.

Some people had speculated that products made from steel would become more expensive as a result of the tariffs, but Duray disagreed.

“All these ‘doom and gloom’ accusations by steel importers against tariffs have no substance to them,” Duray said. “There were people who said there would be steel shortages, which never happened, and that tariffs would break steel-consuming industries, which it hasn’t.”

Giarratani says the tariffs helped create a necessary strategy for the competitive survival of the U.S. steel industry.

“The industry has been through major restructuring in the last 18 months, which has been necessary progress for it to stay competitive,” he said. “If steel tariffs are repealed, that’s not going to slow that progress, though it may hurt the profits of the large steel firms.”

The result of all this is a contentious economic issue that President Bush remained notably quiet about during his fundraising visit to the city last week.

The goods chosen by the EU for possible sanctions come from key electoral states like Florida, North and South Carolina, and Pennsylvania. Sen. Rick Santorum, R-Pa, responded to the choice of goods in a press release last week.

“What the international community is doing is playing politics with how they’re retaliating by picking industries in states that are important to this president,” he said. “That just tells you how political this whole dynamic is from the international community’s perspective, and why we believe we need to stand up and do what’s right on behalf of the steel industry.”

With the presidential election less than 11 months away, the decision to repeal the tariffs is seen by some political pundits as a possible decisive issue for key steel-producing states like Pennsylvania, Ohio and West Virginia.

“The decision by the Bush administration to impose tariffs was, in my opinion, a political one, rather than an economic one,” said Giarratani. “So the decision to repeal them will probably be a political decision, rather than an economic one.”

Steel-consuming, metal-fabricating industries like automobile, appliance and construction, which have strong voting constituencies of their own, stand to gain the most from the repeal of tariffs and cheaper steel prices, he said.