WTO Rules Against U.S. in Steel Tariffs

The World Trade Organization, in a final verdict, confirmed hefty U.S. steel import duties violate trade rules

The WTO's Appellate Body had upheld the main thrust of an earlier decision in July by a panel of trade judges, although they made some changes.

The EU was among countries -- including Japan, Brazil, South Korea and Switzerland -- to file a complaint with the WTO over the steel duties, introduced in March 2002 to protect the struggling U.S. steel industry.

The United States argued the steel duties, which were initially for up to 30 percent but which have been lowered, were needed to protect producers against a flood of cheap imports.

But a panel of WTO judges declared in July that Washington had failed to prove its industry was under real threat from imports of steel and steel products.

According to news ports, the EU will impose $2.2 billion in sanctions in sanctions unless Washington withdraws its tariffs in 35 days. Other countries also could join in.

As well as provoking an outcry among Washington's trading partners, the steel duties have been heavily criticized by some groups within the U.S., especially auto makers. They claim the move has increased the price of their materials, causing job losses in the industry and making vehicles more expensive for consumers.

Bank lenders and financial analysts say the steel industry is finally strong enough to attract capital on its own even if the import levies are eliminated. But U.S. steel producers say the tariffs are still needed to complete much-needed industry consolidation. The producers fear that sources of capital could dry up if the tariffs are eliminated.

William Gaskin, chairman of the Consuming Industries Trade Action Steel Task Force, urged President Bush to terminate the steel tariffs immediately.

Gaskin stated, "In addition to the continuing damage and job losses that the tariffs are causing U.S. steel consumers, the U.S. now faces billions of dollars in retaliatory tariffs by our trading partners. For the sake of the U.S. manufacturing sector, it's time to end the tariffs now. Manufacturers need some positive news and a quick end to the steel tariffs will help send a message that the President supports American manufacturers and understands the requirement that they be globally competitive."

Gaskin further stated, "The steel tariffs should be rescinded for several reasons. First, they have already helped domestic steel producers as much as they possibly could. More tariffs will only hurt U.S. steel consumers more. Second, terminating the steel tariffs immediately would work to avoid retaliation from our trading partners. Third, terminating the tariffs would help the overall U.S. manufacturing economy, and give hope to American steel consuming companies that have been badly damaged since the tariffs were imposed in March 2002 and will continue to be damaged every day the tariffs stay in place."

The WTO Appellate Body decision will become official in early December. The European Union has announced that it will retaliate on U.S. exports to the EU worth $2.2 billion five days after the decision is official unless President Bush ends the tariffs. Other U.S. trading partners are expected to announce retaliatory measures as well.

According to the CITASTF two months ago the U.S. International Trade Commission's midpoint review of the steel tariffs showed that the tariffs have cost the U.S. economy $987.2 million and thousands of U.S. jobs. Numerous economic studies have also found that the tariffs caused far more damage to the U.S. economy than helped the domestic steel industry.