Is America in the right on the steel tarrifs fight with the EU?

[astro]

Per this story. Is the US's imposition of a 30% duty on EU steel imports morally and logically justified, or is it pure political pandering?

US goods set to double in price as Europe plans huge trade war (http://news.independent.co.uk/world/politics/story.jsp?story=462607)

American jeans, Florida orange juice and dozens of other US products could double in price from next month because of a growing transatlantic trade war.

The World Trade Organisation gave the European Union permission yesterday to impose huge import tariffs, which will allow price increases of between 8 and 100 per cent on a range of goods.

The row, which began when America imposed special duties of up to 30 per cent on European steel last year, reached a climax yesterday when the trade watchdog gave a final decision in favour of the EU. It said the US action was "inconsistent" with free trade commitments. Europe can now impose duties on products ranging from T-shirts and lavatory paper, to bras, pantyhose, suspenders, ballpoint pens, ski suits and bowling alley equipment. Harley Davidson motorcycles were included in an early draft of the sanctions list, but were not included yesterday.

The EU says its sanctions, amounting to ¤2.2bn (£1.5bn) a year, will come into force on 15 December unless Washington drops its steel duties. The sanctions would be the biggest in the history of the WTO.

Most of the affected imports face tariffs of 30 per cent on top of existing duties, though a small number will be set at 8 or 15 per cent and some at 100 per cent.

President George Bush now faces a dilemma over whether to back down and remove the steel tariffs. The American government issued a statement yesterday saying that it disagreed with the ruling but would study it carefully.

[London_Calling]

Here’s a couple more views. Quite interesting stuff:


http://news.bbc.co.uk/1/hi/business/3212311.stm

The imposition of tariffs on imported steel was supposed to gain President Bush support in the Midwest. But now it might appear to be backfiring.

Nobody has ever quite defined the "The Law of Unintended Consequences", or at least not with any precision.

<snip>

Jim Zawacki, the president of GR Spring and Stamping in Grand Rapids, Michigan, says his costs went up by 40%.

"My prices have gone up. My profits have gone down. In my industry, people are closing. We've had four stampers close their doors since the start of the tariffs," he said.

Or take the case of the Morgal Machine Tool Company in Springfield, Ohio which has laid off workers because of the tariffs.

It makes pulleys and sprockets - though not like it used to.

Before the tariffs, it would import steel to the US, then process it. Now it imports to Canada and processes there, according to Jim McGregor who runs the company:

"What happens is that the steel lands in Canada instead of America. They blank the part out in Canada, and ship the parts to the United States. When the part comes across the border there's no 30% tariff on the steel," he explains.

http://news.bbc.co.uk/1/hi/business/3256197.stm

The World Trade Organisation (WTO) has confirmed that US tariffs on steel imports are illegal.
The WTO's announcement is a victory for the European Union (EU), and puts fresh pressure on Washington to withdraw import duties on steel.

<snip>

Speaking on the BBC's Newsnight programme, British Trade Minsister Mike O'Brien, said: "We hope the Americans will lift these tariffs, which the WTO have said are unlawful.

"If not then we (the European Union) will have to impose retaliatory measures. I hope the Americans will now comply with the WTO ruling."

The European Commission has drawn up a hit list of US imports worth about $2.2bn a year - including Harley Davidson motorcycles, citrus fruits and textiles - which will be targeted with retaliatory sanctions.


Bush has to back down, doesn't he ?

[John Mace]

This was blatant political pandering to the steel industry. That was a good quote, L.C., about the law of unintended consequences. Yeah, you can bolster one industry, but it's always at the expense of other industries and consumers as a whole.

I'm pretty much in favor of eliminating all tarrifs, even if it means doing so unilaterally. I don't know if Bush will change his policy, but I think he should. If the economy continues to improves, he probably will feel like he doesn't need to.

[Sam Stone]

Yes, I think Bush has to back down. And he should. The steel tariffs were a huge mistake.

[Airman Doors, USAF]

No. The steel tariffs have demonstrably been a bad idea from the get-go. I've not seen a single positive thing result from them.

[Askance]

But what argument does Bush have that they are justified? I assume not just pure protectionism.

Funny that while doing this and upping subsidies to US agriculture, he wants Australia to remove all barriers to imported films, TV, change our copyright laws, etc etc.

[ralph124c]

I don't understand why the US Steel industry is so powerful in Congress..For one thing, the US Steel industryis pretty small these days. Also, most US steeli mports come from Korea, China, etc., not europe. Its not like Bush has a lot of votes in West Virginia anyway.

[Brutus]

Originally posted by ralph124c
I don't understand why the US Steel industry is so powerful in Congress..For one thing, the US Steel industryis pretty small these days. Also, most US steeli mports come from Korea, China, etc., not europe. Its not like Bush has a lot of votes in West Virginia anyway.

Methinks that GW carried WV in '00...

[jjimm]

Damn, this probably means that the Reeses Peanut Butter Cups in my local convenience store are going to rocket in price. *Shakes fist* Curse, you, steel tariffs!

[Pjen]

According to news reports yesterday, the tariffs are due to take effect from early next year and are aimed at swing states in the 2004 election.

[Early Out]

Just to clarify Pjen's post, if I may be so presumptious: the EU's rataliatory tariffs are due to take effect next year. From what I've heard, they do seem to be targeted at swing states. The fact that Florida citrus is first on the list speaks volumes. Well done, EU!

[ruadh]

Yep. The report I heard on Irish radio this morning started off with "Well, there's good news for those opposed to George Bush ..."

[smiling bandit]

I also think it may be a deliberate trade war. Its entirely possible that Bush will use this as an excuse to force certain European nations to drop their own tariffs in exchange. And yes, they do have them, the bastards.

So, it may wind up being that we both win and lose.

Its what I'd do.

[London_Calling]

Originally posted by smiling bandit
I also think it may be a deliberate trade war. Its entirely possible that Bush will use this as an excuse to force certain European nations to drop their own tariffs in exchange. And yes, they do have them, the bastards.

This I didn't know; cite please for "certain European nations" having tariffs not permitted by the normally US friendly WTO ?

[Jonathan Chance]

Holy cow! They're really aiming them at the swing states?

Man, that could get ugly.

The steel industry does have one large item to hold over the federal government: their pension liability. There's an enormous amount of pensioners out there due an awful lot of money due to previous contracts. If the steel industry folds it'll be the federal government (and therefore the taxpayers) stuck holding the bag.

[Neurotik]

Originally posted by jjimm
Damn, this probably means that the Reeses Peanut Butter Cups in my local convenience store are going to rocket in price. *Shakes fist* Curse, you, steel tariffs!
I thought Euros didn't like the peanut butter/chocolate combo.

And it should never have gotten this far since the steel tariffs never should have been enacted in the first place.

[ruadh]

Never mind that, I just want jjimm to tell me where in Cabra you can get Reese's Peanut Butter Cups :eek:

[China Guy]

Pure political pandering. Remember the US slapped steel tariffs on China what 12-24 months ago. Again unintended consequences. May have helped the US steel industry remain uncompetitive, but hurt manufacturers in the US dependant on the high priced US steel. A buddy of mine that manufactures gearboxes and trailor hitches in China for export, suddenly became by far the low cost producer and US exports quadrupled. So, saved a couple of uncompetitive steel industry jobs and put a lot more people making gearboxes out of work.

I have zero sympathy for the US steel industry. They have had chance after chance in the past decades to get competitive and didn't. It's a lot more socialist than the steel industry in China.

[John Mace]

Further on the law of unintended consequences, from this morning's SJ Merc:

One study by the Institute for International Economics, a non-partisan center in Washingto, D.C., concluded that Bush's action had saved 3.500 jobs in the steel industry, but had cost U.S. steel users 12,000 to 43,000 jobs.

This should probably fall under the law of blindingly obvious consequences since it's really just Econ 101.

[Magiver]

hmmm. French wine, vs Florida orange juice. If Europe is exporting more to the US than they are importing then which side wins in a tariff war? Answer: China


Tariffs can be hidden in the form of government subsidies so it is difficult to compare tariff laws without also acknowledging subsidies (both of which are bad in the long term). I don’t think they are completely evil but they should be tied to a specific need such as national defense. It is natural to keep the high tech stuff local. You could extend that to steel industries if you can prove a need (beyond just financial). I personally don't like to see all manufacturing jobs disappear because there is a need in any society for good paying low-skill jobs. I'm not adverse to an agreed upon tariff system between countries.

I don’t think it is kosher that EU would deliberately interfere in US politics by targeting swing states. I say this because I don’t think France or Germany would appreciate US attempts to influence their elections.

[XT]

Everyone loses in this kind of situation IMO...at least everyone directly involved. Economies are too interwoven today to do this....its like shooting yourself in the foot (or the dick as the case may be). The US is way wrong to be catering to their steel industry...and the EU is wrong to try and punish them without trying whatever it takes to avoid such measure first. Mark my word, nothing good will come of this for anyone. (Sorry, I just always wanted to say "Mark my word". :)).

-XT

[London_Calling]

Originally posted by Magiver
I don’t think it is kosher that EU would deliberately interfere in US politics by targeting swing states. I say this because I don’t think France or Germany would appreciate US attempts to influence their elections.


Finally! After 50 years the first green shoots of a ethical US foreign policy.

Lets club together and send magiver to Iraq to preach the SDMB 'Non-Interference Doctrine’ to the ‘Provisional American Authority’ and then . . . how about a world tour to all those old friends of the CIA in Central America, Asia, Africa, South America. It’s all a little ex post facto but I’m sure the folks would welcome him with open arms!

[Mr2001]

It's good to see our European brethren joining forces to help defeat Bush. If only they'd done it 4 years earlier...

[SenorBeef]

Excuse my ignorance if I'm completely off, but I'd read that the whole reason behind the tarriffs was because the EU was using subsidies and market saturation to artificially lower the price of EU steel to drive out US competition.

The government subsidized the manufacturing, so they were able to make a profit by building up a lot of steel and then introducing it all to the US market at once, driving prices down - and the US made steel couldn't compete. So it was sold as government protection against foreign government interference in the market.

[jjimm]

Originally posted by neurotik
I thought Euros didn't like the peanut butter/chocolate combo.It's growing on us - we have the UK-produced Star Bar, which is sorta kinda like a Reeses Nutrageous.Originally posted by ruadh
Never mind that, I just want jjimm to tell me where in Cabra you can get Reese's Peanut Butter Cups :eek: Alas not Cabra - local to my office I mean - the Spar on College Green. My local convenience store in Cabra got burned down by some $%&^s with fireworks. :mad:

Apologies for hijack. Here's my contribution to the debate.

Steel tariffs: protectionist, anticompetitive, anti free-market, leading to trade war with erstwhile allies = bad. However, SenorBeef, I'd be interested to see the details of what you're saying. I thought it was caused by Eastern European steel, but that doesn't explain why they're targeting the EU, so maybe there's something in what you say.

[Neurotik]

Originally posted by London_Calling
Finally! After 50 years the first green shoots of a ethical US foreign policy.

Lets club together and send magiver to Iraq to preach the SDMB 'Non-Interference Doctrine’ to the ‘Provisional American Authority’ and then . . . how about a world tour to all those old friends of the CIA in Central America, Asia, Africa, South America. It’s all a little ex post facto but I’m sure the folks would welcome him with open arms!
Because no European government has ever interfered with a third world nation's politics in the last 50 years.:rolleyes:

[jjimm]

Originally posted by Neurotik
Because no European government has ever interfered with a third world nation's politics in the last 50 years.:rolleyes: Tu coque (http://seercom.com/bcs/resources/criticalthinking/irf.tucoque.html).

[hawthorne]

smiling bandit
I also think it may be a deliberate trade war. Its entirely possible that Bush will use this as an excuse to force certain European nations to drop their own tariffs in exchange. Maybe. Another (still unlikely IMHO but highly undesireable) possiblity is that the multilateralism that has underpinned the whole thinking of the WTO and before it the GATT will fall apart and be replaced by bilateralism and regional blocs.

There is some evidence of this in the US going after preferential trade deals and the abject failure at Cancun (not that the US is solely to blame for that).

[smiling bandit]

This I didn't know; cite please for "certain European nations" having tariffs not permitted by the normally US friendly WTO ?

Oh, they are *legal* tariffs, particularly on food products, and the US businesses hate them. But we've never had any leverage to get them eliminated. Actually, not too long ago, the US put an offer on the table to eliminate certain American subsidies if the Euros dropped their advantages. The Euros backed out at the last minute when they realized we weren't bluffing, or least didn't consider it an important bluff. So, I rather enjoy free trade, but I would think this is a nice way of getting it. Ironic, but perhaps effective.

And of course, its not like Bush could get the Euros to like him even if he pledged his support to ANSWER and proposed a three-way between himself, Chirac, and Schroeder.

And of course, if they start a trade war now, they'll be sinking their economy rather painfully.

[sailor]

Originally posted by SenorBeef
Excuse my ignorance if I'm completely off, but I'd read that the whole reason behind the tarriffs was because the EU was using subsidies and market saturation to artificially lower the price of EU steel to drive out US competition.

The government subsidized the manufacturing, so they were able to make a profit by building up a lot of steel and then introducing it all to the US market at once, driving prices down - and the US made steel couldn't compete. So it was sold as government protection against foreign government interference in the market. Something along those lines is what the USA might have aduced in its defense but the WTO wasn't buying it and ruled against the USA.

I do not understand the notion that the USA implemented the tariffs in order to get concessions from the Europeans and it sounds more like ignorance of how WTO works. The WTO ruled against the USA and authorized Europe and other countries to put tariffs on American products. The USA is not getting any concessions from Europe nor can it by doing this.

[TwistofFate]

Originally posted by Neurotik
Because no European government has ever interfered with a third world nation's politics in the last 50 years.:rolleyes:

of course they have, and any right thinking person has slated them for it.

just like the US is being slated for this tariff.

It's raised 650 million dollars for the federal coffers and created 5000 jobs in the Steel industry. However its going to hurt steel using industries to the tune of 25,000 jobs and increased prices passed on to the consumer. If its not removed before the election, lets see how that Pans out in Ohio and Michigan.

[Neurotik]

Originally posted by jjimm
Tu coque (http://seercom.com/bcs/resources/criticalthinking/irf.tucoque.html).
Doesn't apply to my comment, except superficially. If you're going to make snotty comments in a my-country-is-holier-than-yours tone, expect to get called on it and have your country's skeletons pulled out of the same closet. I never justified nor excused US participation in various coups around the globe during the Cold War, on the basis that other states did it, too. Merely a comment on L_C's typical sanctimonious and off-topic anti-US sniping.

But congratulations on putting on a pretense of being learned.
Originally posted by TwistofFate
just like the US is being slated for this tariff.
As I've already stated a few posts up, I agree that the US is being rightly knocked for the tariff - that's not the issue my comment was in response to. (See above).

[Magiver]

Originally posted by London_Calling
Finally! After 50 years the first green shoots of a ethical US foreign policy.

Lets club together and send magiver to Iraq to preach the SDMB 'Non-Interference Doctrine’ to the ‘Provisional American Authority’ and then . . . how about a world tour to all those old friends of the CIA in Central America, Asia, Africa, South America. It’s all a little ex post facto but I’m sure the folks would welcome him with open arms!

Nice! Are you comparing Europe with Iraq? Would you really like to walk down the road of European imperialism and colonization? There isn’t a country in the Mid-East that doesn’t have a history of Euro flags stuck in every crack and crevice. Every border that is marked off is a European fabrication. When you speak of non-interference doctrines you do not speak from historic experience.

[Gorsnak]

Originally posted by Magiver
Nice! Are you comparing Europe with Iraq? Would you really like to walk down the road of European imperialism and colonization? There isn’t a country in the Mid-East that doesn’t have a history of Euro flags stuck in every crack and crevice. Every border that is marked off is a European fabrication. When you speak of non-interference doctrines you do not speak from historic experience.
On the contrary, LC does speak from historic experience, coming from a place which has a long interventionist (if that's really the term for British colonialism) policies. If Americans (and here I speak institutionally, as it were, and not referring to individual Americans) were wiser, they'd take the lesson the Europeans have from that interventionist past, instead of repeating all the same old mistakes.

[jjimm]

Originally posted by Neurotik
Doesn't apply to my comment, except superficially. If you're going to make snotty comments in a my-country-is-holier-than-yours tone, expect to get called on it and have your country's skeletons pulled out of the same closet. Sorry, could you quote where London_Calling did this? I can't see it in this thread.

Us Brits are perfectly aware of the sins committed in the name of our country. Where's their relevance to this discussion?But congratulations on putting on a pretense of being learned.I'm quite happy to tell you only learned the phrase and its definition through this board about a year ago. However, I find its use entirely appropriate in this instance. If you call that "pretense of being learned" then it appears you're assuming motivations that aren't there - a bit like your response to London_Calling.

[Neurotik]

Originally posted by jjimm
Sorry, could you quote where London_Calling did this? I can't see it in this thread.
I quoted it.
Us Brits are perfectly aware of the sins committed in the name of our country. Where's their relevance to this discussion?
Where's the relevance to the CIA in this discussion?
I'm quite happy to tell you only learned the phrase and its definition through this board about a year ago. However, I find its use entirely appropriate in this instance. If you call that "pretense of being learned" then it appears you're assuming motivations that aren't there - a bit like your response to London_Calling.
My assumption is dead on with regards to L_C.

[Donovan]

Doesn't apply to my comment, except superficially. If you're going to make snotty comments in a my-country-is-holier-than-yours tone, expect to get called on it and have your country's skeletons pulled out of the same closet. I never justified nor excused US participation in various coups around the globe during the Cold War, on the basis that other states did it, too. Merely a comment on L_C's typical sanctimonious and off-topic anti-US sniping.

hrmm.. reread the London Calling Post three times now, and I keep missing the part where he said 'unlike my country' or 'my country has an impeccable foreign relations record', or something of that sort. Could you point it out to me?

[Blown & Injected]

Originally posted by China Guy
Pure political pandering. Remember the US slapped steel tariffs on China what 12-24 months ago. Again unintended consequences. May have helped the US steel industry remain uncompetitive, but hurt manufacturers in the US dependant on the high priced US steel. A buddy of mine that manufactures gearboxes and trailor hitches in China for export, suddenly became by far the low cost producer and US exports quadrupled. So, saved a couple of uncompetitive steel industry jobs and put a lot more people making gearboxes out of work.

I have zero sympathy for the US steel industry. They have had chance after chance in the past decades to get competitive and didn't. It's a lot more socialist than the steel industry in China.

How much are the labor costs in China? It is my impression that the workers get next to nothing; no savings plans, health, and very low wages.

[London_Calling]

Everyone knows the ‘Irish Troubles’ have nothing to do with the Bits. In just the same way Belgium had nothing to do with that nasty little business in the Congo, or the French in North Africa, etc, etc, etc. What any of that has to do with this, I have no idea.

My pretty uncomplicated point is, if you dish out the shit for decades, it’s a little rich to start whining (“it’s not kosher”) at the mere suggestion that someone might just do something infinitely less significant in your backyard. Big boys don’t cry, big-girls-blouse and all that; especially when the world body (you’re signed up to as arbitrator) says you’re well out of order - and on which, just about everyone in this thread is in agreement.