Japan, EU drop tariff threats
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The U.S. says it will monitor the industry to ensure foreign steel is not dumped into the U.S. at below market rates.
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(CNN) -- Japan has joined the European Union in dropping the threat of retaliation after the United States scrapped its controversial tariffs on imported steel.
A spokesman for the Japanese Foreign Ministry, Hatsuhisa Takashima, told CNN on Friday Japan was very pleased the United States had finally upheld the rules of international free trade.
"Free and fair trade is the name of the game," he said.
South Korea's government Friday also welcomed the U.S. action, calling it "an appropriate measure" to promote international free trade.
U.S. President George W. Bush announced Thursday the widely expected decision to drop the tariffs, which had been ruled illegal by the World Trade Organization (WTO) last month.
Takashima said retaliation in trade disputes was a "very exceptional thing" and Japan preferred to see disagreements resolved within WTO rules.
Bush's decision earlier brought an immediate response from the EU, which dropped its threat to impose sanctions on up to $2.2 billion of exports from politically important parts of the United States, such as Florida and California.
Japan had also notified the WTO of its threatened intention to impose additional tariffs worth 10.7 billion yen (about $100 million) a year in retaliation for the U.S. curbs.
The Bush administration's decision averted the threat of a looming trade war with Europe and Asia, as the tariffs had targeted steelmakers from countries such as Japan, China, South Korea, Russia, Germany, France, the Netherlands and Brazil.
CLSA global chief economist Jim Walker told CNN the U.S. decision was a political one that was "easy to make" because of the 30 percent year-on-year drop in steel imports.
He said that decline was principally due to the massive increase in demand by China for imported steel, which meant steelmakers were clamoring to supply the fast-growing Chinese market in preference to the U.S. market.
On the share market Friday, Japanese makers Nippon Steel and JFE are both down about half a percent and Kobe Steel is 1.5 percent higher. South Korean maker POSCO is steady at 149,500 won. (Markets)
Safeguards
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| GLOBAL STEEL PRODUCTION |
First 10 months of 2003
1. China 179.6
2. Japan 91.95
3. United States 76.15
4. South Korea 38.25
5. Germany 37.34
6. Ukraine 30.45
7. India 26.25
8. Brazil 25.9
(Crude steel, millions of tonnes)
Source: International Iron & Steel Institute
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To cushion the blow to the U.S. steel industry, the administration said Thursday it will closely monitor the industry to ensure that foreign steel is not dumped into the United States at below market rates.
"These safeguard measures have now achieved their purpose," said White House spokesman Scott McClellan, reading a statement from Bush.
The European Union, which had vowed to respond with sanctions on up to $2.2 billion of exports from politically important states, including citrus fruit from Florida, where Bush's brother is governor, immediately lifted the threat.
"These sanctions as I've always said were there as a tool for compliance. They've complied, and the sanctions will disappear," European Union Trade Commissioner Pascal Lamy said.
The tariffs were imposed in March 2002 to protect the U.S. steel industry, which had been reeling from thousands of jobs losses and bankruptcies because of cheaper imports from abroad.
"I acted to give the steel industry time to adjust. I acted in time for us to say to the world that we will trade but we want to trade in a fair way,'' Bush said earlier Thursday before the announcement.
The decision is politically sensitive because of support for the tariffs in key presidential battleground states -- Pennsylvania, Ohio and West Virginia chief among them.
The United Steelworkers of America (USWA) condemned Bush's decision to lift steel tariffs as "clear evidence of capitulating to European blackmail and a sorry betrayal of American Steelworkers and steel communities."
"In his rush to appease the Europeans and Japanese, Mr. Bush willfully ignored the fact that damage to the American steel industry and American steel communities continues to this day, even with the tariffs in place," USWA President Leo W. Gerard said.
But presidential advisers concluded that the threat of sanctions from the European Union and other trading partners left Bush with little choice but to lift the steel tariffs 16 months ahead of their planned expiration.
A bruising trade war would do more harm to the economy than the potential good derived from protecting the steel industry, top administration officials concluded.
They also say many U.S. manufacturers stand to benefit from lifting the tariffs because they have complained about higher steel costs.
After the WTO ruling, the Bush economic team concluded that the tariffs should be scrapped.
-- CNN Senior White House Correspondent John King contributed to this report
Copyright 2003 CNN. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Associated Press contributed to this report.
