Steel Tariffs and the FTAA

  
Unions and their allies are not satisfied with the 30% steel tariffs announced by President Bush in March. One of their underlying concerns is that this "solution" will provide cover for some of the decisive votes in the Senate and perhaps again in the House when fast-track legislation comes up for a vote after Easter. This analysis runs counter to many of the voices that say that the FTAA has been dealt a death blow by the approval of these "protectionist" tariffs. In fact, the FTAA may gain new momentum from the approval of fast track plus the fact that the tariffs are less than reported and will be phased out over time.

Specifically, the unions point out that the headlines announcing 30% tariffs leave out the fact that some of the remedies were as little as 8%, and that the 30% is reduced in each of the three years that the tariffs apply. Also, while quotas are placed on different types of steel products, the NAFTA trading partners (Canada and Mexico) are exempted from the restrictions. Argentina and Brazil are also unscathed, since Argentina doesn't send enough steel to the US for it to matter and Brazil's primary concern is steel slabs, exports of which will have to pass 2000 levels overall before the tariffs start to kick in.

The corporate lobbying against any remedies was led by General Electric. One of the major issues for it and other corporations is legacy costs. This involves benefits, especially for retirees of the steel industry who need money going into their retirement plans in order to receive continuing coverage. The issue affects the mergers of the remaining companies in the US steel industry, which will be responsible for future costs associated with these benefits.

Members of the US Senate will base their votes on fast track in part on the steel decision. The US Steelworkers' press release on the presidential decision is available at http://www.uswa.org/.