The World Trade Organization ruled that the President Bush had broken international law by imposing tariffs on imported steel. We host a debate with the president of the Steel Manufacturers Association and a member of the Institute for International Economics. [Includes transcript]
Click here to read to full transcript The World Trade Organization ruled Monday that President Bush had broken international law by imposing tariffs on imported steel.
The White House is now under pressure to either remove the tariffs by Dec. 15th or face up to $2.2 billion in punitive taxes on U.S. exports on a range of products from key states, including Florida oranges as well as tobacco and sporting goods. $2.2 billion the largest sanctions ever handed down by the WTO.
The office of the U.S. Trade Representative said it disagreed with the WTO decision and would study its report. They had argued that the tariffs were needed to help its struggling steel industry to consolidate and remain competitive in the face of cheap imports.
The steel tariffs have proved controversial in the U.S., where they dented President Bush’s credentials as an advocate of free trade and angered American-based car-makers who say the tariffs increased the price of their raw materials.
But the White House is also facing heavy political pressure to keep the tariffs, which are due to continue until 2005. A bipartisan group of Ohio lawmakers called on President Bush to fight the WTO ruling. Republican Rep. Bob Ney said "our country needs to stand up to these foreign bullies and keep the tariffs in place."
- Gary Clyde Hufbauer, Reginald Jones Senior Fellow at the Institute for International Economics. A study by the IIE calculated the duties cost steel users more in lost jobs because of tariff inflated steel prices than steel producers gained.
- Tom Danjczek, president of the Steel Manufacturers Association.
AMY GOODMAN: We’re joined right now by Gary Clyde Hufbauer, who is the Reginald Jones Senior Fellow at the Institute for International Economics and Tom Danjczek, the president of the Steel Manufacturers Association. Tom Danjczek, your response to the WTO ruling?
TOM DANJCZEK: Thank you. We were obviously disappointed, but not surprised. The WTO has never ruled in favor of any safeguards since they are around. I don’t know what the numbers are but Gary probably knows the number better than I do but well over a hundred and they have never been [inaudible] once successful, so we were not surprised but disappointed.
AMY GOODMAN: Let me ask you, Gary Clyde Hufbauer, you have done a study at the Institute for International Economics calculating the duties — what the duties — would the duties steel users cost more in lost jobs? Can you talk about that?
GARY CLYDE HUFBAUER: Thanks very much for having we on. We calculated that the safeguard tariffs may have saved between 3,000 and 5,000 jobs in the steel producing industry. We also calculate they may have cost between 20,000 and 40,000 jobs in steel using industries. Now, our number on the steel using industries is lower than some others floating around, and it has to be emphasized that the steel-using industries are very dispersed around the United States where the steel producing industries are very concentrated in a handful of states, Ohio, Pennsylvania, West Virginia being prominent.
TOM DANJCZEK: I represent the steel —
GARY CLYDE HUFBAUER: I know you do.
TOM DANJCZEK: Where steel is made today, I represent the U.S. mini mills. Today in the United States, half of the steel we made is out of scrap. We have eight plants in Texas, we have five in Alabama, we have four in South Carolina. While the rust belt still produces a considerable amount it is less than half of the steel today. So, that’s a misnomer, if I might correct it.
GARY CLYDE HUFBAUER: I don’t think it is a misnomer in political terms at all. The heavy concentration of steel in the three states that I mentioned is a political fact. Yes, there are mini mills are dispersed very much like the steel users are dispersed because they are very closely — they closely correspond with the steel users.
TOM DANJCZEK: I agree with that, Sir.
AMY GOODMAN: Was it surprising to you, Tom Danjczek to be working side by side with the steel workers’ union on this issue?
TOM DANJCZEK: We were part of a coalition when this started to take place. May I just take a moment in history, between 1998 and, say, 2001 we were hit with a surge, a flood of both, fairly and unfairly traded steel. For example in 1998, we got hit with an 11 million ton surge in a five month period which is like a magnitude of half our imports in a year above normal levels. Our reaction was to go to the ITC with a 201, it was initiated by the President, but it would have been done by Senate Finance also to show, we are injured. We were found to have been injured 6-0. While working half of our membership is probably members of the U.S. W.A., we had the same objective, and that objective was to show that we were injured. So, I’m not surprised, or whatever the question was, please.
AMY GOODMAN: Gary Clyde Hufbauer, your group, the Institute for International Economics is a pro-NAFTA, pro-so-called free trade group and usually George Bush is on your side. What are the politics of this? Why in this case did he side with the steelworkers’ union, the steel manufacturers and how does he justify that to the rest of the world and whom their taking countries to the World Trade Organizations, so called to court when they impose tariffs just like these?
GARY CLYDE HUFBAUER: There are a couple of factors, which were strongly at work as Thomas said. The steel industry has had a very rough period between about the late 1990’s and the time when this ITC — the International Trade Commission said its hears were held. And the President in the 2000 campaign had indicated to the steel industry that he would take attention of their problems. Now, my view is that the problems were not principally due to imports. I could go into that in more length, but I certainly agree that the steel industry was in a rough patch during this period. So, that was one of the reasons. The other reason is that the President had a forward look to the so-called Trade Promotion Authority Bill, which was then in the Congress, then — that was in 2001 — it was finally voted in 2002, and he needed the support of congressman who had an important steel component in their district, and he got that support for TPA.
AMY GOODMAN: But I mean in order to protect the steel industry, that does make a lot of sense. But that’s what countries do around the world. They want to protect their industries and that’s why they talk about fair trade, and not corporate managed trade.
GARY CLYDE HUFBAUER: Well, I’m just trying to point out that there was tough times in the steel industry and yet an important vote on Trade Promotion Authority to further liberalize trade and those were the two, I think, decisive political reasons why President Bush put on safeguard tariffs in March of 2002.
AMY GOODMAN: Tom Damjczek, the Steel Manufacturers Association, where do you go from here? The World Trade Organization now ruling against George Bush’s protection of the steel industry here.
TOM DANJCZEK: Well, we have expressed our disappointment to the administration. We continue to urge the President to stay the course for the reasons that he did what he did in March of 2002. We wish him to continue it, but we also do recognize the international pressures that he is under, and to be very clear, and maybe Mr. Hufbauer has a different view, we do not know what the president is going to do. We urge the President to vigorously defend the steel safeguards. We hope he will continue it.
AMY GOODMAN: On that note, I want to thank you both for being with us. Tom Danjczek, the president of the Steel Manufacturers Association and Gary Clyde Hufbauer Reginald Jones Senior Fellow at the Institute for International Economics. You are listening to Democracy Now!. We’ll be back in a minute.