Presentation on theme: "Bush Steel Tariffs Case Presented By: Kultara Vongsumedh Rob Miller Michelle Vine Brendan Gibbons."— Presentation transcript:
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 25 Steel Companies bankrupt or out of business Cheap imports Losses in the billions Worldwide drop in steel prices
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
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
USTR Letter 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: 1.Give producers temporary relief. 2.Ultimately restore market forces and free trade 3.Evaluation would give U.S. ammo in negotiations w/ trading partners
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.
President Bushs Actions Proclamation on March 5, 2002 imposed tariffs Tariff rates from 13-30% Excludes NAFTA Countries
Reactions U.S. Steel Industry- CEOs, Unions, and Representatives of Steel States E.U.
Economic Impact 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
The Bush Steel Tariffs Case before the WTO Heres what happened... I.3 June 2002: EU submitted complaint II.14 June - 29 July 2002: other countries filed complaints III.11 July 2003: Panels ruling submitted
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
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
What does the future hold?
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.
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.
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?