Temperature on the rise in transatlantic tariffs row

The UK’s trade dispute with the US over its threat to restrict steel imports reached near meltdown this week.

The UK’s trade dispute with the US over its threat to restrict steel imports reached near meltdown this week, with the government and union leaders urging the Bush administration to drop the plans.

Industry leaders are angry at Bush’s recent threat to implement Section 201, a US trade law which allows import restrictions to be introduced to protect struggling domestic sectors.

Trade and industry secretary Patricia Hewitt this week flew to the US for talks ahead of a new World Trade Organisation round in Qatar in November. During the three-day visit, Hewitt and trade minister Baroness Symons held meetings with US trade representative Bob Zoellick.

US legal setback

Hewitt told officials she was concerned about the possibility of import restrictions being introduced, and that the UK steel industry had recently been through a painful process of restructuring. ‘The US needs to address the problems in its own industry and not seek to avoid those issues by taking unilateralist action,’ she said.

Earlier this month the US International Trade Commission launched a six-month investigation into the impact of imports on the country’s steel industry, at the end of which it may recommend that tariffs or quotas are introduced. Bush will then decide whether to go ahead with the import restrictions.

Ian Rodgers, policy director of UK Steel, said the US must recognise that, in a global economy, national borders are no longer sacrosanct. ‘President Bush specifically said he was aiming to tackle inefficient excess capacity, and the US clearly needs to close some of its own capacity. A lot of US companies are struggling because they are inefficient.’

Any restriction on imports would be likely to fall foul of WTO rules, he said, as these state that a rise in imports must cause serious injury to an industry for restrictions to be introduced. ‘Imports to the US have actually been falling, month on month, since October last year.’

The US efforts to protect its steel industry were this week dealt a blow when the WTO criticised aspects of its existing anti-dumping laws. The WTO upheld a ruling against anti-dumping duties on hot-rolled steel from Japan, and the US may now face sanctions if laws are not changed.

Meanwhile, despite Bush’s calls for what he sees as unfair subsidies to the world’s steel producers to be stamped out, the US has also faced criticism for a law, known as the Byrd amendment, which allows the proceeds of anti-dumping duties to be paid directly to the company affected.

But Andrew Sharkey, president of the American Iron and Steel Institute, said it would be unfair to accuse the Bush administration of ‘bullying’ the rest of the world’s steel producers into making all the sacrifices. The administration is simply trying to restore market forces to the steel trade, he said.

‘The US is the only steel producing country in the world that doesn’t have the capacity to meet its needs. Producers in the US have a hard time accepting they are the problem, because these aren’t industries built for export.’

Import restraints would offer ‘meaningful relief’ to US steel producers, he said. ‘The industry has been in an untenable position since 1998, where steel has been dumped in the US at any price.’

The AEEU has this week consulted officials at the US Embassy in London on the issue. Sir Ken Jackson, AEEU general secretary, said the union was hoping to gather more information on the proposals and how they would affect the UK steel industry. The union will also hold talks with unions in the US to garner their support. ‘There is a good deal of over-capacity in the US market. That’s not our fault – and it’s certainly not the fault of workers at Corus. Protectionism is not the way to solve the US industry’s problems,’ he said.

Multilateral talks

Corus has warned that jobs at its plants in northern England could be under threat if the US goes ahead with the import tariffs, although a spokesman for the company said recent reports that up to 18,000 jobs were under threat were ‘over the top’. ‘We would be affected, but it is difficult to say how much without knowing what level of quotas or tariffs were to be introduced, and their knock-on effects. We would then have to decide whether it was worth our while continuing to export to the US.’

The company, which cut its workforce by 6,000 earlier this year, is supporting a call from the International Iron and Steel Institute for multilateral talks, which it sees as the best hope of heading off possible US action.