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US Lifts Steel Tariffs - 2003-12-04

President Bush is lifting U.S. tariffs on foreign steel. The United States was facing more than $2 billion worth of European trade sanctions later this month if the president did not end those protectionist duties.

White House spokesman Scott McClellan read a statement from the president announcing an end to 20 months of steel tariffs that were designed to protect American producers from foreign competition.

"I took action to give the industry a chance to adjust to the surge in foreign imports and to give relief to the workers and communities that depend on steel for their jobs and livelihoods," he said. "These safeguard measures have now achieved their purpose. And as a result of changed economic circumstances, it is time to lift them."

The president's statement says U.S. steel producers wisely used this breathing space to increase productivity, lower production costs, and negotiate new labor contracts.

The World Trade Organization ruled those duties of up to 30 percent on foreign imports violated international trade laws. The European Union this month was threatening retaliatory measures against more than $2 billion of American products with Japan, South Korea, and Norway considering similar responses.

U.S. Trade Representative Robert Zoellick says the president's decision to lift the tariffs was based on progress in the U.S. steel industry and an improving economy, not in reaction to European threats.

"You see a much stronger industry, and given the president's inclinations where he wants to try to open markets and have fewer tariffs, he thought it was time to lift the safeguards," said Robert Zoellick.

While the tariffs were lifted two years ahead of schedule, the Bush administration will continue to require American steel users to apply for import licenses. That allows Washington to better monitor steel imports to protect domestic producers from foreign firms dumping steel on American markets at prices below production.

Mr. McClellan says the president reserves the right to use anti-dumping laws to impose tariffs on specific merchandise if steel imports rise dramatically once the tariffs are officially lifted.

The federal government also softened the blow for steel mills by assuming responsibility for covering the pension costs of retired steel workers.

The president imposed the duties after pleas from steel-producing states that were losing jobs to cheaper imports. Industry leaders and union officials in the important political swing states of Pennsylvania and Ohio were lobbying to keep those duties.

But the tariffs also brought complaints from American manufacturers who say higher prices for U.S. steel made their products less competitive on world markets. Lifting the tariffs may bring the president a political windfall in states including Michigan and Wisconsin where automakers complained the duties caused more job losses in manufacturing than they saved in steel mills.