The Telegraph
Since 1st March, 1999
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US on backfoot, to roll back steel tariffs

Washington, Dec. 1: The Bush administration has decided to repeal most of its 20-month-old tariffs on imported steel to head off a trade war that would have included foreign retaliation against products exported from politically crucial states, administration and industry sources said Sunday.

The officials would not say when President Bush will announce the decision but said it is likely to be this week. The officials said they had to allow for the possibility that he would make some change in the plan, but a source close to the White House said it was “all but set in stone”.

European countries had vowed to respond to the tariffs, which were ruled illegal by the World Trade Organization, by imposing sanctions on up to $2.2 billion in exports from the United States, beginning as soon as December 15. Japan issued a similar threat Wednesday. The sources said Bush’s aides concluded they could not run the risk that the European Union would carry out its threat to impose sanctions on orange juice and other citrus products from Florida, motorcycles, farm machinery, textiles, shoes, and other products.

Bush advisers said they were aware the reversal could produce a backlash against him in several steel-producing states of the Rust Belt — including Pennsylvania, West Virginia and Ohio. That arc of states has been hit severely by losses in manufacturing jobs and will be among the most closely contested in his re-election race.

The sources said Bush’s aides agonised over the options to present to the President and they considered it one of the diciest political calculations of this term. A source involved in the negotiations said White House aides looked for some step short of a full repeal that would satisfy the EU but concluded that it was “technically possible but practically impossible”.

Bush decided in March 2002 to impose tariffs of 8 per cent to 30 per cent on most steel imports from Europe, Asia and South America for three years. Officials acknowledged at the time that the decision was heavily influenced by the desire to help the Rust Belt states, but the departure from Bush’s free-trade principles drew fierce criticism from his conservative supporters. After a blast of international opposition, the administration began approving exemptions.

The WTO’s ruling against the tariffs was finalised three weeks ago.

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