Bush Nears Steel Repeal

President Bush likely will lift steep tariffs he imposed on foreign steel 20 months ago but soften the blow on the domestic steel industry by announcing new measures designed to protect against unfair foreign competition, congressional and steel industry officials say.

The White House asked key lawmakers on the steel issue to return to Washington on Thursday, and a formal White House announcement was expected to come after they had been briefed.

White House officials refused to discuss details of the president's decision, but congressional and steel industry officials, who spoke Wednesday on condition of anonymity, said they expected Mr. Bush to remove the tariffs in order to avoid the imposition of retaliatory tariffs on a wide range of American products.

The 15-nation European Union has vowed to retaliate against $2.2 billion of American products by mid-December unless the United States removes the steel tariffs, which were ruled illegal by the World Trade Organization.

Japan and China were weighing similar sanctions.

The EU carefully chose its target list to cover a range of products from oranges to pajamas that would inflict maximum political pain in key swing states that Mr. Bush is hoping to win in next year's presidential race. Florida, California and the Carolinas are among the states that might be hit.

That put Mr. Bush in the difficult position of being forced to choose between angering businesses in those states or steelmakers in West Virginia, Pennsylvania and Ohio, also considered crucial to Bush's re-election chances.

At the same time, Mr. Bush's original tariff decision in March 2002 had unleashed a barrage of criticism from steel consuming industries that claimed the higher prices they were forced to pay cost more jobs than were saved at U.S. steel plants. In states like Michigan where steel is used to produce other goods, the tariffs may have hurt the president.

Steel industry officials said the administration was reviewing a number of proposals to soften the blow of lifting the tariffs, which Mr. Bush had imposed at a time when the domestic industry was staggering from a string of bankruptcies and thousands of lost jobs that the industry blamed on a surge of foreign imports.

Among the proposals being considered by the administration was making permanent early reporting requirements to detect any big influx of steel into the United States.

The reporting program requires steel importers to apply for import licenses, giving the government a quicker way to detect possible import surges than waiting for Customs Service data when the steel arrives at U.S. ports.

The administration also was expected to pledge an aggressive use of U.S. antidumping laws to impose tariffs on specific steel products should imports surge once the tariffs are lifted.

"Dumping" occurs when a country exports steel at a lower price than it sells at home because of subsidies or as part of a strategy to kill off other competitors, and then raise prices. Under the rules of the WTO, countries can take measures to prevent dumping.

The administration package also was expected to include pledges to continue pursuing global negotiations aimed at getting other countries to limit government subsidies for their domestic steel producers and to curb overcapacity in the steel industry.

Those talks, under way since 2002, so far have yielded little, and many trade experts don't hold out much hope that other countries will agree to U.S. demands in this area, given the political power their own steel industries wield.

A key discussion on the steel issue occurred Tuesday night when Mr. Bush met in the Oval Office with Vice President Dick Cheney, Commerce Secretary Don Evans and U.S. Trade Representative Robert Zoellick after returning from a fund-raising trip to Pittsburgh where he encountered last-minute lobbying from the steel industry urging him not to lift the tariffs.

Mr. Bush raised $850,000 for his re-election campaign at the Pittsburgh fund-raiser where one of his hosts was Thomas J. Usher, chief executive of U.S. Steel Corp., the nation's largest steel producer. Usher met with Mr. Bush to urge him to retain the tariffs.

Brink Lindsey, a trade expert at the Cato Institute, a Washington think tank, said the package the administration was assembling to replace the tariffs amounted to little more than a fig leaf for the domestic industry.

"The existence or nonexistence of an import monitoring system is not going to make that much difference," he said. "And the pledge on more international talks is lip service as well. The talks haven't gone very far and they are not likely to go very far."

From the moment he announced the tariffs, the president said there were only a form of "temporary help" that was "expressly sanctioned by the rules of the World Trade Organization."

Even if he rolls back the measures, Mr. Bush was still able to provide 20 months of relief to the steel industry, says CBS foreign affairs analyst Pamela Falk, who points out that the steel dispute is only one of several trade disputes between the United States and Europe. Others concern hormones in beef and bananas.