From www.ev1.net

In a stinging rebuke to the United States, the World Trade Organization ruled Friday that heavy duties on steel imports imposed by the Bush administration violate global trade rules.


Washington immediately said it would appeal, and would keep in place the tariffs that President Bush had justified as necessary to protect domestic steel producers against a flood of cheap imports during a restructuring period.


In response, the European Union stepped up plans to impose $2.2 billion in retaliatory duties on U.S. imports, ranging from footwear to fruit and vegetables
possibly pricing them out of the market.


Once again it looks like the US against much of the world.

Should we repeal the steel tariffs?

Yes we should. Not because of the WTO but because these tariffs hurt our economy. Inefficient businesses should not be subsidized nor propped up.

Nothing kills debate like total agreement.

I'm gonna jump on here and thump the dead horse some more.

Yes, we should drop the steel tariffs.

Why is it the same people who complain when the USA ignores the UN are quiet when the US ignores the WTO?

I think the tariff is another symptom of the go-it-alone strategy the United States has embarked on. It looks like a favor that you would try to hand to a fledgling industry or some cronies who are going to lose money. We should especially be internationalists when it comes to trade. We are in the catbird seat in trade and we should encourage free trade whenever and wherever possible. Ignoring the WTO would threaten to undermine perhaps the most important achievement of World War II in the Bretton Woods agreements.

In this time of rising rancor, it would be an international tragedy to start down the path of economic nationalism.

Other than that, Hugo, I don't have a very clear grasp of tariff policy and I am not as well read as a need to be on this topic. But I thought I'd chime in since I fit into the category of person from your above post.

What my point is that the UN is basically a socialist organization. The WTO, with it's attempts to remove barriers to trade, is a libertarian force. The pushing toward free trade limits what governments can do. A country that protects it's employees, rather it be US steelworkers or European computer techs, finds itself at a disadvantage.

I don't really follow the logic of right-leaning Americans (in this case excluding neo-cons, who are prepared to subsidise American business in defiance of their own ideas on what other countries should do) who are willing to be bound by international agreements arrived at in an undemocratic supranational forum when it suits their own political opinion - as with the steel tariffs issue - yet do NOT agree that they should be bound by an international agreement arrived at in an undemocratic supranational forum when it doesn't suit them - as with the Kyoto accords, ICC, UNSC opposition to the Iraq War, etc.

I can sort of see Gray Seal's point, where he excludes the WTO from the discussion, but most US commentary from the right that opposes the steel tariffs does so by saying the WTO judgement is correct and the US government should abide by it.

Surely a country doesn't get to pick and choose the international organisations it will pay attention to, any more than individuals can pick and choose the laws they will follow domestically?

This statement isn't true, Eeyore. The US has arguably the lowest trade barrier than in any point in our history. Some specific instances defy the "free market" ideal (lumber, steel), but that does not imply that it is the rule.

One argument FOR tariffs in the case of steel is the national defense argument. Let's say that American steel companies can never be competitive with their overseas rivals (I am not sure if this is the case or not). Would it be in the US's best interest to allow the US steel industry to go the way of the dodo?

I think not. Propping up an industry in this case has rational beyond the simple economics of the situation.

In general, I am against the "propping up" of ineffecient (or non-viable) businesses. In this case, I think we have a national priority to keep a steel industry.

EDIT:
Julian:

Of course a country has that perogative. ANY country. When the international body continually harms the interests of one country (or a group of countries), it is the DUTY of the government to reform or withdraw from said organization. Bending to international will can only go so far...

well, if america or the world holds the desire to move towards a free market model, stuff like this is going to happen i would think. Not trying to be a smart-butt here. Any forms of nationalism in a free market world i think is a gamble, its a learning process

Who cares? The important comparison is not to ourselves in the past, but to others in the present. Here's some data for you: http://oldfraser.lexi.net/publications/boo...1/3EFW01ch3.pdf. According to this source, and others I've looked at, we are well behind most of the other "advanced" nations in terms of trade freedom. We even managed to rank behind China. The author provides a pretty good rationale and explanation for the measurements, which people should probably read before the next time they claim the US is particularly strong on free trade.

Yes, those graphs are really interesting to say the least. The african parts of it were of interest to me the most, i wait and hope for africa to try and unite fully its economics and such like the EU, but i dont think it can really afford to do that as some countries find it difficult to maintain a stable group in the politics areana. That study must have many varibles to it to say the least. I would like to see what all varibles it used in detial, as i am about half way through and i can only get the larger ones, like gdp and so forth. I will try to find more of this on the net. So then would it be a conservitive tone to the free markets that drove this response from the u.s. Something along the lines of pnac.

Wow, Hugo will have a field day with that link:


OK, so the US ranks 10th over the entire period. We were much lower in 1998 (I don't recall Clinton espousing free market theories). We do have protectionist policies in some industries, as I have stated.

10th doesn't seem so bad.

Another quote to tickle the libertarian fancy:


These statistics do not refute my claim that trade restrictions CAN be beneficial (beyond simple economics). In general, however, they are not beneficial.

...except that according to Exhibit 3-1 (the most current data) we're not tenth. More like thirtieth, or thereabouts. That's dismal, and on a downward trend relative to other nations. Claiming that we're tenth is a little disingenuous, to say the very least, and still leads one to wonder why we're not first.

I don't want us to be a truly free trade country in part because of some reasons posted previously by Amlord. But I do not want to prop up bad industries that could become competitive. I do agree with the logic of needing to protect certain industries. If our steel industries actually are in danger of being driven out of the market we need to do something. But I think we should work with the WTO because it seems to be in our best interest. From what I gather, Bush was going for a three year break for the industry to reorganize and by going through an appeal at the WTO he will stall any retaliation and get most of his time and technically abiding by the rules.

I have no idea whether this is common and acceptable behavior with WTO countries.

Platypus, that data ended in 1998, which was 5 years ago. We were 10th over the entire period, which is most statistically significant. Of course, the data is lacking in determining a trend, which would be at least as significant. But one data point in a set does not tell the whole picture.

Quote from the article:


We aren't first because we choose not to be. We have markets which we have a strategic interest in protecting. Part of the answer also goes to who is above us : Hong Kong and Singapore lead the list. Both unadulterated free markets with no "strategic industries": they import everything.

Also, the measurement method comes into play, somewhat.


Also, the report is missing the appendices, which contain the actual scores for the individual categories. Without this piece of information, it is tough to tell exactly where the US's lower score comes from.

Julian, I think that you are mischaracterizing the arguments in opposition. The core of the argument is that the tariffs are wrong, THAT is why we should drop them. The fact that the WTO reached the same conclusion (whether they used the same reasoning is another matter) has little bearing on the basis of opposition.

"We should stop the tariffs because they are wrong."
vs.
"We should stop the tariffs because the WTO says they are wrong."

btw, do you have any idea why the price gap between Triumph and BMW motorcycles INCREASES from the British market to the US market?

(Yes, they both use steel, and both are subject to some sort of tariffs, so I can sneak them into the topic! )

Grace and peace, BD

Why? If they are uncompetitive, they either need to become competitive, or they need to lose (there is no better way to learn the benefits of being uncompetitive, after all).

That is the logic that America applies to the rest of the world, anyway. Your foreign aid is conditional on market reform to remove state subsidies, andnmost of the trade spats with developed world trading partners (such as the EU) are predicated on America's demands that the other party remove their state subsidies or tariffs while at the same time refusing to contemplate removing American subsidies and tariffs. (edited to add: Needless to say, the EU are doing much the same thing, largely driven by the French refusal to contemplate the idea of allowing a single French farmer to go out of business.)

If you recognise that some industries need subsidies and state protection from time to time, why are other countries not allowed to think the same way? And, if you believe in free markets, they must be free to fail as well as to succeed, surely?

It's a good thing i bothered to make sure this topic existed/was out of the archive before i made a new one. Thank God for google!

Well, as some may know already, the WTO has turned down our appeal over the steel tariffs and the EU and many other countries are threatening sanctions if we do not get rid of them. The WTO, which has never liked us, has played the pawn of the EU(along with others) basically.

Article

BUT....the 1974 US trade act, section 201, says that these Tariffs are legal

I feel sorry for Bush (And i am sure even the left does too) because no matter what he does, it's Catch-22. If he repeals the tariffs, jobs might be lost and the steel industry (and steel states) will not vote for him. If he does keep the tariffs, the economy will sinken from the sanctions. This was a bad political thing to do to begin with.

The EU and everyone else are concerned because we aren't buying their cheap sorry excuse for steel and we are TRYING to protect AMERICAN jobs.

Eeyore @ Jul 18 2003, 01:34 AM


Wrong and see my last paragraph on why.

Do you have any evidence of this? Or is this just your opinion? How is the WTO being a pawn when Bush had to put these tariffs on to help the steel industry that's woefully out of touch with manufacturing realities?

GoAmerica @ Nov 10 2003, 05:14 PM


Yes, they are indeed legal. To us. But if we want to be a fair trading partner with the rest of the world, which is what the WTO is telling us. And other countries will tell us as they put tariffs in place to boost local markets where we dominate from here. And then everything spirals out of control, which isn't good for the world economy.

GoAmerica @ Nov 10 2003, 05:14 PM


And jobs in the industry SHOULD be lost. In fact, the steel industry has been consolidating for years and shedding jobs. More need to be shed; it's a commodity industry, so either they learn to cut costs (and labor and pension costs are a large part of that) to maintain market share... OR they learn how to make it NOT a commodity product.

Politically, it seems like it was a bad idea now, but I actually agree that he did a good thing by buying a little over a year for the steel makers to get their acts together.

GoAmerica @ Nov 10 2003, 05:14 PM


Do you have any specifics on how the quality of EU steel matches to ours? Or are you just venting?

Fine. Then the economies of many states will go down the toilet because that is basically what their economy relies on: The steel industry.

So you're saying that the government should use our tax dollars to interfere with the economics of an entire industry, whose output has been commoditized to the point where price is the only differentiator? You're saying that global competition is something to be fought because of the economic disruption it can cause? I just want to be perfectly clear on this, because you've never seemed quite so liberal before.

If the domestic steel industry cannot compete in an open international market, the best thing to do in the long term is allow it to shake itself out. Bailouts and protectionism only postpone the inevitable, and exact a huge economic cost that's borne by every taxpayer. If we shouldn't be paying welfare to individuals who can't compete on a (supposedly) level playing field, why should we be paying it to entire industries that can't compete on one already tilted in their favor?

I'm guessing that your facts and figures for that assertion come from the 1960's and not anything in the past 5 years. Please indicate exactly which you mean by "many states" and the proportion of money that the steel industry provides to those states' economies. Sources would be nice as well.

I will grant that the economies of several small towns will be irrevocably changed, but that's happened in lots of places. When the mill closes down, the WalMart closes, etc. Small towns based on a single reason to exist won't exist after that reason is removed. It sucks, but the town had more than enough time to do something different than rely on a single steel factory.

So much for anyone thinking me a liberal

In the long run, free trade benefits the economies of everyone who participates. In the short term, sectors of society are invariably affected. By ignoring WTO rules, Bush risks undermining the importance of the WTO.

The long term economic problems with proctectionism vastly outwiegh the short-term gains. However, given the impending elections, Bush may disagree...

What bugs me is the tack that the EU is taking:
US goods set to double in price as Europe plans huge trade war



So, they specifically chose products which would damage Bush personally?

It seems strange that the retaliation for unfair practices is more unfair practices.

As I said earlier, there is a strategic need here in the short term. I agree that long term tariffs are harmful to both innovation and the economy in general.

Tariffs set by the EU in this case will harm EU consumers far more than US businesses. We already run a sizable trade deficit, meaning we import much more than we export. A trade war will probably harm those imposing the tariffs, rather than US businesses.

No, they MAY have specifically chosen products which would damage Bush POLITICALLY. It's not PERSONAL. And it's not proven that it's POLITICAL either, just one off-beat newsrag's opinion.

Do you have some other kind of retaliation in mind that would be "fair"? It's THEIR steel suppliers that we're taxing with this tariff. What would you have them do, roll over and play dead? Put tariffs on things we DON'T produce? Put tariffs only on products in states that Bush can't win?

This is definetly somthing of a political matter because there is no doubt that there is little respect for Bush in Europe. Europe sees this as a ploy to tackle Bush politically so he will fail.

If someone champions policies with which one disagrees, is it not valid to seek their removal? Have we not tried to oust ambassadors, trade representatives, and others who are perceived as inimical to our interests? Are we so sure our own trade policies have not been affected by politics? Weren't there moves to ban French products when they opposed the Iraq war? Haven't we tried to bribe other countries with trade deals so that they'll support our controversial position?

I'm not trying to say we do it too so it's OK. I'm saying that this has always been part of the game. After playing the game that way so aggressively for so long ourselves, it would be both hypocritical and counterproductive for us to complain about it.

The steel tariffs were a bad idea. Retaliation was inevitable. It is now time to give in to common sense and eliminate the steel tariffs. Bush can tell the rust belt he tried.

Hugo's right. (I'm saying that more and more recently...)

The fact is that the EU is acting well withing the auspices of International Trade agreements and the U.S. isn't; so I fail to see how EUROPE gets the bulk of the criticism.

The price of steel has risen to a point where the US steel industry can compete.

If the original tariffs were bad for Americans (and I agree that they were, on an economic level, although there are other reasons for the tariffs) then these upcoming tariffs will be bad for EU citizens. Why would the EU punish its citizens? I already saw an article from the UK Independent that says the EU will lose any "trade war" with the US. The US is a big IMPORTER. Keep that in mind.

The tariffs were meant to save the steel industry. It has been done, get rid of the tariffs. I think that if i was in Bush's shoes, i'd say "fine" and ditch the tariffs (i'd have to tell the EU to wait because the idiots in congress are acting like immature children currently, especially in the Senate), be damned of the political consequences because sanctions will just kill the recovery the US economy is having

Tariffs (and subsidies) hurt both the citizens within the country and those trying to import to it. However, the EU can be less concerned about harming its own citizens because, unlike Bush, the EU bureacrats who decide which tariffs to put in place do not have to worry about elections..

In fact, most EU citizens would find it difficult to name their country's representative on the various EU councils that decide EU wide matters such as trade sanctions.

The EU can hurt (in theory) Bush's popularity with the US public, Bush cannot return the favour to EU individuals, because each country in the EU identifies primarily with its own national government and wider EU supranational officials enjoy a fair degree of unaccountability.

That's right Nikachu. And it's quite unfortunate that the decisions being made in Brussels and the European representatives seem so far away from us. How can our leaders think that we can be interested in a European Union which has become so impersonal?

I will vote in favor the European constitution when the referendum takes place, but with much regret I'm afraid.

I agree that the EU will be harmed more by a trade war than the US. However, no one wins a trade war.

One thing that's been missed from this debate so far is that the steel tariffs that have raised steel prices to the point where steel production jobs have been protected have actually damaged jobs in the industries that use steel to make other things (cars, for example).

So, in terms of supporting American jobs, they've been, at the very least, less successful than is being claimed by those speaking out in favour of them. (If anyone has any figures that support or defeat this line of argument, I'd be interested to see it.)

Tending to cycnism, I wonder if the states where steel production jobs have been protected by the tariffs are swing states the GWB needs to go his way, and the steel use states are either solid Republican or solid Democrat that he is unlikely to want, or be able to swing one way or another?

Good point, Julian. Pennsylvania and Ohio are both states that are in play in Presidential elections. Bush narrowly lost Pennsylvania in the last election.

Let me add that people seldom recognize the indirect costs of a government action. A steelworker will recognize that steel tariffs benefit himself. A assembly line worker at an auto plant may not recognize the reason he loses his job is due to higher prices for steel.

(Source: The Guardian newspaper, UK, Monday Nov 17th, 2003)

These are the sanctions that the UK govt will propose - (Mr Byers is a former govt minister with a lot of support within the ruling Labour party)

Most other proposals for sanctions follow the same pattern. Rather than using broad sanctions that would affect large sections of US imports, the proposed tactic is to attack the most 'vocal' groups in heavily contested states. This will have a less damaging effect on the EU economy as they will be quite specific....for instance, singling out Florida oranges whilst allowing imports of citrus fruits from other states or other non-EU countries.

Well this is just a piece of the ongoing trade war that has in fact been occurring between Europe and the US for a few years now. The steel tarrifs Bush enacted were in fact America's own retaliation to Europe and their last big win at the WTO regarding US' tax cut that is granted to offshore corps. <---believe me that is the BIG one. This steel stuff is nothing compared to that dispute.

Who cares tho honestly...in my opinion the WTO is now DEAD. And if Bush had been smart...which he often isn't. He would have joined in on the burial ceremony they had down in Mexico and championed himself to be a man who may actually cares about something other than campaign contributors. If I was president I would have more than welcomed that opportunity to rid myself of the pesky WTO and you could not have missed a better chance than the one he was offered. That imo was a great missed opportunity by the Bush admin.

No one here bothers to mention that the European steel ind. receives massive gov subsidies. Subsidies the US' has complained and whinged about countless times. The EU is one to talk or in this instance...complain.

I am actually a little surprised by the EU's aggressive demands re: all of this. Trade is a reflection of your country's own desires, needs and beliefs. How can Europe expect to treat America in such a isolationist manner re: Iraq and what most Americans perceive as the war on terrorism and in return expect America to want anything but a more protectionist approach in trade.
Bush will have no problem selling his stance on this in or out of election time because European's needs, desires and beliefs have become very unpopular here in America. Even tho the steel tariffs harm our own economy (altho the tax cuts to US exports would harm us A LOT more and after all this is what thios fuss is all about.) Bush can and will have no trouble standing his ground on this one. I just think it would have gone down a lot better if he would have done this back in Cancun....would have been a much bigger party...and made the proper impact it deserved.

Personally I believe the steel tariffs have caused more harm than good and should be dismantled...is a very bad bad policy. Yet at the same time I understand this is only a piece of a much larger picture.

Firstly, Europe was divided on the issue of Iraq, between the individual countries which make up the continent. Britain, Spain, Italy and Poland supported the war and have sent troops to assist the US. So have they treated the US in an isolationist manner? Europe is NOT one political entity, (even though certain members of the EU might want it to be one). Protectionism harms everyone who exports to the US, not just those countries who may treat it badly.


I agree that the EU also has shocking levels of subsidies too though. Personally I think we need to get rid of them all, as I believe that free trade is in the long term, highly beneficial to everyone. The WTO never really achieves its aims, because everyone wants to be able to EXPORT their goods without penalty but at the same time be able block IMPORTED goods to protect sections of their industry. The theoretical arguments against tariffs are well understood and the benefits of free trade have worked well - the EU does not allow tariffs between its member countries and this has had a highly beneficial effect on trade therein.

Tariffs are short-termist but understandable and everyone does it. That doesn't mean they are the right thing to do.

I agree. The WTO is a dead stick. All people do is protest it's presence. The US should sit down with ALL of the nations who are members of the WTO, vote to ditch it, then to create a new set of trade rules that apply to all member states so we don't have this same confusing garbage we had over the Steel Tariffs. In other words, say if the US trade rules say tariffs are legal, yet WTO says no, then we need to ditch WTO, create ruesl that apply to all nations, stick to one set of rules.

GoAmerica

But who would enforce it? And who makes the rules? The US would argue for tariffs it liked (say steel and cotton), the EU for various farm products and probably steel as well. In the end everyone would argue just as much and trade would dry up, to everyone's cost.

Being British myself I completely understand why you feel the need to distinguish yourself from the others. Yet this is the EU we are discussing and the EU is Europe united...and why? Mostly for trade reasons..to have the strength and leverage to take on such battles with the US.

The EU was not a supporter of the Iraq war and the support of it from member countries such as Britain...Spain and Italy (Poland is NOT part of the EU...yet.) caused quite a bit of a rift. The EU has been pushing the US (and I am not saying the Bush admin is not pointed in that direction to begin with) towards an isolationist stance.

I find the current trends the world over..because the EU is taking issue with others..such as Japan..on this same issue.... worrying. We seem to be entering an era of global trade, economy and reliance and at the same time seeing a resurrection of isolationist views, cultural animosity and national protectionism. Each can not exist with the other.

The point I was wanting to make with my comments tho is that many Americans view the EU as enemies...and a trade war and their threats to escalate it will come as NO surprise and will not shock or garner support for the Bush admin to end this terrible policy..in fact I fear the opposite..I worry this may in fact cause many to rally behind Bush. The only way Bush will end the steel tariffs is when it is proven to be unpopular and unwelcomed and a threat to domestic interests.

As far as the UK goes..Britain has the knack..and it is probably mostly due to their own determination..to not be classified in with Europe or Europeans as a whole. I believe most Americans do see, view and perceive the UK as it's own separate entity. I also believe that Bush during his visit will strike some kind of separate deal with the UK on this issue. I believe will will see a cozying up re: trade relations to only specific countries in Europe. It is to the US' best interest to help keep Europe's disagreements and rifts on issues at the forefront.

Fair enough - although we should start thinking of Poland as EU, as they are pretty determined to be vocal members!

The EU though has not yet got any joint policy on defence or military affairs. It is still very much a solely economic union and would should try as much as possible to divorce politics from economics (and yes, I know that is a difficult thing to do - but, increasingly, we are starting to take some economic policies for granted and
they no longer impinge the political sphere - we accept that communist economies don't work as well as free market ones for example).

Although I would be happier if people didn't keep referring to 'Europe' as if it was one country.....

Anyway, the world should clearly be run by economists and scientists who would all say that tariffs are wrong

The Economist, Nov 15th , 2003

Steel users (for example car manufacturers in Detroit) have suffered much more from the tariffs than steel producers have gained. Is this economically justifiable?

nikachu....

reports of the steel tariffs harm to American interests have been out and about for 2 mos. now. I am just amazed how little political harm so far this has seemed to cause Bush. ..truly amazed... and I have no idea why the dems are not riding him for this. In fact to me it appears he receives much more criticism from his own party members on this issue than from anyone else.

Now with Europe entering the picture with this aggressive trade war stance...I honestly think Bush might get away with this HORRIBLE policy. Thanks EU

And, to continue with dumb economic policy laced with North Carolina politics, Bush wants to limit clothing imports from China.

Dumb. Dumb. Dumb.

It may seem dumb to you, but not to American workers who's factory jobs are going to China for cheaper costs.

So... Bush takes 3 years to notice the 2+ million jobs that have gone away and now he thinks this will help? China is also losing manufacturing jobs. So are most developing countries. Why? Productivity gains. What's the best way to hinder productivity gains? Remove the incentive for them via protectionism. Simple as that. Bad idea.

Amazing that a "Republican" thinks that protectionism is a good idea.

The concept of free trade is that with open borders economic benefits are accrued by BOTH SIDES of a trading partner. That is why countries enter into FTA's. The U.S. cannot simply decide when and when not to follow agreements that they enter into willingly.