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Background

Bush Steel Tariffs Case Presented By: Kultara Vongsumedh Rob Miller Michelle Vine Brendan Gibbons. Background. What are tariffs? What events triggered the dispute over imported steel? Why impose tariffs on foreign steel producers?. Industry Concerns.

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Background

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  1. Bush Steel Tariffs CasePresented By:Kultara Vongsumedh Rob Miller Michelle Vine Brendan Gibbons

  2. Background • What are tariffs? • What events triggered the dispute over imported steel? • Why impose tariffs on foreign steel producers?

  3. Industry Concerns • 25 Steel Companies bankrupt or out of business • Cheap imports • Losses in the billions • Worldwide drop in steel prices

  4. Section 201 Investigation Background • Lobbying • Industry wanted President to initiate Investigation • Politics • President formed cabinet • Cabinet skeptical about grounds for 201 Investigation • Senate Finance Committee-Controlled by Democrats • President acts

  5. Steel Section 201 Goes Public • On June 5, 2001, President Bush announces comprehensive initiative • Initiative includes: 201 Investigation and multilateral negotiations to follow • Real search for a solution

  6. 22 June, 2001 USTR Zoellick officially requests ITC to start investigation of 4 steel product groups Says there is a 50 Year problem Says U.S. Steel industry hurt Goals of 201 Investigation: Give producers temporary relief. Ultimately restore market forces and free trade Evaluation would give U.S. ammo in negotiations w/ trading partners USTR Letter

  7. ITC Investigation Results • 4 Product groups subdivided into 33 sub-groups • 12 Product categories found to produce injury to U.S. • Commission divided over 4 categories • 17 categories found not to produce injury to U.S.

  8. President Bush’s Actions • Proclamation on March 5, 2002 imposed tariffs • Tariff rates from 13-30% • Excludes NAFTA Countries

  9. Reactions • U.S. Steel Industry-CEO’s, Unions, and Representatives of Steel States • E.U.

  10. Prices of Hot-Rolled Steel as Example: $270/ton now $400/ton immediately post tariff implementation $220/ton previous to tariffs Supporters of Tariffs: Claim 1.1 million jobs preserved Non-Supporters of Tariffs: Estimate 200,000 jobs lost Prices for almost anything with steel are going up Economic Impact

  11. The Bush Steel Tariffs Case before the WTO Here’s what happened... • 3 June 2002: EU submitted complaint • 14 June - 29 July 2002: other countries filed complaints • 11 July 2003: Panels ruling submitted

  12. WTO DSP The Panel found that... • the US was in violation of several articles of the WTO • was inconsistent with the Agreement on Safeguards and the GATT 1994

  13. Aftermath of WTO decision US appeals ruling • The WTO Appellate Body rules that the US is in violation of the WTO rules which means... • EU and others can now impose sanctions

  14. What does the future hold?

  15. Expectations • The Bush steel tariffs have given the U.S. steel industry much needed relief, which has allowed it to re-structure. • There will be further consolidation within the domestic steel industry in the United States. • A new Federal guarantee of steelworkers pensions has removed the major impediment to earlier efforts to improve its competitive position.

  16. Political Fallout • Bush is clearly in a difficult position if he lifts the steel tariffs before 2005. • Pennsylvania, Ohio, Indiana and West Virginia are very much in play for the 2004 election. • The electorate in these states, as well as the politicians, are sounding increasingly protectionist.

  17. International Implications • The US faces an estimated $2.2 billion in economic sanctions from EU alone. • Japan, Korea and Brazil are also exploring whether or not to impose economic sanctions on the United States. • Is the WTO capable of insuring that countries both implement and comply with its rulings?

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