August 31, 2002


Bush, the man of steel, is humbled by a $4bn battering from the WTO (Leo Lewis, 01 September 2002, The Independent uk)
In 1908, Andrew Carnegie, the Scot who was then America's biggest steel tycoon, was facing a tense Senate hearing on hefty US import tariffs and the prospect of a trade war with Europe. "Take back your protection; we are now men and we can beat the world at the manufacture of steel," he thundered.

Nearly a century later, the biggest names in US steel appear to find themselves on rather shakier ground. Despite having spent decades extolling the glories of globalisation, the US has suddenly found its steel industry the simultaneous victim and abuser of free trade. The US is swamped with cheap eastern European imports, and as a last resort the Bush administration has fallen back on the blunt instrument of protectionist tariffs.

In keeping with tradition, the US steel industry maintains its access to Washington's ear. With a move that stunned those who had not read the story in The Independent on Sunday predicting it, President Bush clearly demonstrated that fact in March when he announced a series of tariffs on steel imports – some as high as 150 per cent. The motive was obvious: nearly 30 US steel companies had filed for Chapter 11 bankruptcy protection since 1998, and more would surely follow unless something were done. With mid-term elections looming in November, the steel industry did not have to work hard to remind Mr Bush of the dangers of mass lay-offs in Ohio and New Jersey.

But over the last 10 days, Mr Bush has been forced into some serious backtracking. As the official complaints and threats of retaliation have rained in from around the world, Washington has grudgingly exempted around a quarter of steel imports from the tariffs. Sniffing victory, some of the larger European producers optimistically believe that a complete reversal could now be close.

This is a well deserved butt-whipping of a column aimed at US protectionism. The only two things to point out are that the European steel industry is in fact illegally subsidized and that the tax break in question was not implemented on the watch of the current administration. Other than that, Mr. Lewis gets in a number of shots that I'm afraid we just have to take. Hopefully now that the steel tariffs have served their purpose by helping him win Fast Track Trade Authority, Mr. Bush will have sense enough to discard them. Posted by Orrin Judd at August 31, 2002 3:45 PM
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