The WTO steel decision
Monday's stories
Paul Blustein and Jonathan Weisman wrote the story for the Washington Post on Monday: "U.S. Loses Appeal On Steel Tariffs".
"The World Trade Organization issued a final ruling yesterday that the steel tariffs imposed by President Bush violate international trade rules, raising expectations that the White House will soon repeal the tariffs to avoid imminent European retaliation.
"The WTO decision gives the European Union and several other countries the right to impose retaliatory tariffs on billions of dollars worth of American exports unless Bush reverses the decision he made in March 2002 to give American steelmakers protection from imports. Such sanctions could be the largest ever applied in a WTO case..."
The
New York Times carried a story by Elizabeth Becker, here:
"U.S. Tariffs on Steel Are Illegal, World Trade Organization Says".
"WASHINGTON, Nov. 10 �‚— The World Trade Organization ruled on Monday that steel tariffs imposed by President Bush last year were illegal, clearing the way for the European Union to impose more than $2 billion of sanctions on imports from the United States unless Washington quickly drops the duties.
"The final decision by a W.T.O. panel, which was widely anticipated and has been discussed for weeks at the White House, puts Mr. Bush in a difficult spot. As an election looms, he must choose between continuing to help the steel industry �‚— which could bolster his electoral prospects in crucial industrial states �‚— or respecting international trade laws and increasing his chances of winning new regional and global trade agreements...
"The European Union has made the president's decision more difficult by aiming its proposed sanctions at products in states considered pivotal in the 2004 election �‚— threatening, for example, to impose tariffs on citrus fruit imported from Florida."
Tuesday's stories on foreign reaction
Paul Blustein and Jonathan Weisman at the Washington Post survey foreign reaction, here: "Nations Demand U.S. Drop Steel Duties".
"The WTO decision gives the European Union and several other countries the right to impose retaliatory tariffs on billions of dollars worth of American exports unless Bush reverses the decision he made in March 2002 to give American steelmakers protection from imports. Such sanctions could be the largest ever applied in a WTO case...
"If the steel tariffs remain in place, the EU would add to many American exporters' woes by imposing punitive duties ranging from 8 to 30 percent, starting in mid-December, on $2.2 billion worth of American goods, including motorcycles, citrus fruit, textiles and farm equipment. Seven other countries backing the EU case -- Japan, South Korea, China, Brazil, Switzerland, Norway and New Zealand -- could impose additional sanctions..."
The
New York Times has a story on responses by Asian countries, here:
"Japan and E.U. Threaten U.S. on Import Sanctions".
"HONG KONG, Nov. 11 �‚— A day after the World Trade Organization ruled that American steel tariffs are illegal, Japan and the European Union threatened the United States today with billions of dollars' worth of sanctions. China and South Korea threatened similar action if Washington retained the tariffs on imported steel."
Blogger commentary
Trade expert Peter Gallagher links to the actual WTO decision, and explains the WTO's Appellate Body decision, here: "Why the USA 'lost' the steel case ".
Daniel Drezner points to a Financial Times story suggesting that "The US is considering a radical change to its laws on unfair trade that would severely penalise importers even if Washington bows to the World Trade Organisation's demands that it remove tariffs on foreign steel." Drezner links to the story (which is on line), quotes from it, and comments on it, here: "The battle over trade policy: it keeps going and going and going.....". Drezner thinks the Times story confirms his theory of Bush Administration trade policy: "hypocritical liberalization." Drezner links to this New Republic column from September, which sets out his theory: "Protection Racket". Drezner even manages to squeeze in "other depressing trade news."
John Quiggen thinks this may be it for the WTO: "The end of the line for the WTO". Peter Gallagher disagrees with Quiggin, here: "Quiggin predicts the 'end for WTO' ".
"...The big countries back the WTO because they believe it's in their own interests to do so: the foreign policy costs of returning to more traditional forms of settling trade conflicts (remember WWII?) are too big. They much prefer dispute settlement.
What's the evidence on disputes? Over and over, in the 8 years of WTO's existence, the US, EU and Japan have complied with decisions against them (see the scorecard in my earlier story). Even in multibillion-dollar cases such as the EU 'bananas' case (a $50 billion industry at EU wholesale prices) which the EU lost. Comprehensively. Three times. To developing countries..."
Kash, at
Angry Bear, reports on the ruling and wonders what the administration will do in response:
"Bush�’s Steely Dilemma: The tariffs are illegal".
Stephen Karlson posts some useful links at Cold Springs Shops. These include a link to an Institute for International Economics policy brief by Gary Clyde Hufbauer and Ben Goodrich on the issues surrounding the tariffs. The policy brief was produced in October, so it was done weeks before the appeal was decided on Monday. "MORE ON THE STEEL TARIFF". You can link to the policy brief through Karlson's posting. Hubauer and Goodrich describe their purpose:
"In this policy brief, our fourth since steel safe-guards first appeared on the horizon, we review the safeguard saga to October 2003 in box 1, speculate on the possible extent of trade retaliation or tariff
rebalancing in the highly likely event that the WTO Appellate Body affirms the decision of the WTO panel, and consider the impact of steel tariffs on US steel producers and steel users. Our speculation on retaliation or rebalancing presumes, of course, that the administration does not revoke the steel safeguards or offer alternative tariff concessions as compensation once the WTO Appellate Body has issued an unfavorable ruling."
I don't have access to the electronic
Wall Street Journal, but Brad DeLong quotes some paragraphs from their story in this posting:
"Why Oh Why Are We Ruled by These Fools? Part CCCXXVII".
At CalPundit, Kevin Drum points to another instance where the WTO declared a U.S. action, a tax action, illegal. Some in Congress are in the process of using the ruling as an excuse for a tax bill that repeals the action, but provides businesses with additional tax cuts that more than compensate for the revenue loss, her: "THANKS A LOT, WTO....".
Will the President lift the tariffs in response to the WTO ruling, or will he keep the tariffs and accept the retaliation? Jane Galt is too depressed over the way trade issues are going to assume he will comply with the WTO ruling: "Strike a blow for free trade".
Earlier related postings
July 11: "WTO rules agains U.S. on steel tariffs"
August 28: "Steel tariffs back on the table?"
September 22: ""What a revolting development this is!""
Updated on 11-12-03.
