the appeal of steel

us steel duties may be overturned eventually, but the number of cases and the timeframe involved assure that results of an overall settlement will not be known for more than a year. the wto already has steel product safeguard dispute cases against the us filed by korea, japan, and the ec in march 2002. a us antidumping sunset review case was filed by japan in february 2002, and in january 2001 brazil filed on a us countervailing duty against carbon steel. october 2000 saw india file against us antidumping and countervailing duties on steel products. in november 2000, the ec filed in a us cvd case, and in december the ec filed a safeguard case. the most recently decided case is the appellate body decision of july 2001 in the hot-rolled steel case filed by japan against the us in november 1999.

last week, the european union drew up and sent to eu member states a list of us goods targeted for about us$2.0 billion of trade sanctions associated with the us setting tariffs of up to 30 percent on steel from europe, asia and latin america, to help struggling us steel producers. the eu has said it will retaliate against us goods if the united states fails to compensate it by reducing import duties on other items. the eu is also applying protection measures for eu steel makers.

on march 27, the european commission adopted safeguard measures on steel. following the us action to restrict steel imports on 20 march, the eu measures are designed to prevent floods of steel imports being diverted into the eu. canada and mexico were exempted from the us duties by virtue of their membership in nafta. the eu regulation applies provisional measures to 15 steel products subject to increased us tariffs, and for which eu imports have been increasing. the measures are expected to last for at least 6 months.

the european commission will investigate and very likely adopt safeguard measures including steel quotas and duties to protect europe from a surge of steel imports barred from the united states. canada has already done so by the announcement last week of its launch of a safeguard investigation on steel imports.

the european commission list will be submitted to the wto to seek approval to impose counter measures on the united states. eu member states will look at the list and decide whether to back it or drop items. the list will be submitted to the wto by may 20. the compensation demand and possible retaliation are part of eu tactics. the eu has said retaliatory sanctions would only be used if the united states refuses compensation.

what has not been widely appreciated is that the bush administration has little room to maneuver politically on steel, lumber, or textiles. all three sectors have been accorded significant trade concessions in the form of domestic protection from foreign competition in recent months. it appears that there is an element of domestic political calculation involved, as republican electoral fortunes in key steel states such as pennsylvania, west virginia and ohio are likely to be sustained.

it bears recalling as well that the president bush has still not received congressional approval for trade promotion authority. without congressional endorsement, the prospect of a successful doha round and conclusion of the ftaa negotiations is very slim indeed. although the house did pass a bill in november 2001, the us senate has not yet taken action on a trade promotion authority bill. in the senate, the lumber issue is important to max baucus, who chairs the finance committee with its jurisdiction over trade legislation, and senate minority leader trent lott.

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