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Monday, November 10, 2003
Trade War is Hell
Posted by DavidNYCThe United States is facing up to $2.2 billion in European Union trade sanctions within weeks after a World Trade Organization appeals panel ruled Monday that U.S. tariffs on imported steel are illegal.In a 170-page report, a three-member WTO panel rejected the bulk of the U.S. appeal of an earlier ruling that said the duties of up to 30 percent introduced in March 2002 by President Bush's administration breached trade rules.
The appeals body is WTO's highest tribunal, and the decision is final.
In a joint statement, the countries that brought the case said the United States had "no other choice" but to remove the import duties without delay. The European Union said it will impose retaliatory sanctions of up to $2.2 billion by introducing 100 percent duties on some U.S. imports, effectively pricing those goods out of the EU market.
And the Europeans aren't backing off their plans to toss a political hand grenade into next year's elections:
The European Union plans to target its tariffs at goods that are produced in important swing states in the 2004 presidential election. (Emphasis added.)
And other countries are ready to get in on the act:
In addition to the European Union, complaints were filed by Japan, South Korea, Norway, Switzerland, China, New Zealand and Brazil. All of those countries also could now seek to impose sanctions on U.S. imports if the duties are not removed, and Tokyo already has warned it may retaliate.
At least in a trade war, no one gets killed. I can't wait to see how this one plays out.
(Thanks to Seamus.)
Posted at 03:21 PM in Economy | Technorati
Comments
That section you highlight DavidNYC really brings this issue to the forefront. Potential tarrifs on Citrus Fruit (Florida) combined with the obvious implications for Ohio, West Virginia, and Pennsylvania make this a larger issue than on first glance.
This whole thing for me should be a clarion call to folks about the potential dangers of the WTO. It might work to our political advtange this time, but it still hurts workers here in America.
Posted by: Seamus at November 10, 2003 10:49 PM | Permalink | Edit Comment | Delete Comment
This whole thing for me should be a clarion call to folks about the potential dangers of the WTO. It might work to our political advtange this time, but it still hurts workers here in America.
I'm not sure I understand your argument here. The only reason why we are subject to potential trade sanctions is because of the unfair and illegal tariffs Bush imposed on steel imports. (Which hurt more workers in steel-using industries than they help in steel-producing industries - and hurt steel-producing workers in other countries.) The WTO is simply providing a legal means for other nations to pressure the US to rescind its tariffs.
There may be plenty of problems with the WTO, but I'm not sure I agree that what's going on here is one of them.
Posted by: DavidNYC at November 10, 2003 11:04 PM | Permalink | Edit Comment | Delete Comment
David, I didn't follow this issue closely enough and probably should have bit my tongue there. What is the difference between what Bush adopted and what the steel industry asked for?
On the other hand, it does anger me that the WTO somehow has the authority to screw us over on these decisions. But something tells me that Bush may have chosen the tariff system based upon a presumption that the WTO would selectively knock down his particular approach. But I am totally reaching here because I know little.
One side note. I remember watching the evening news and seeing the steel industry celebrate Bush's original decision. Maybe it was the industry, and not the unions, I don't recall. But I think the future of the swing states here may depend primarily on how the steel unions interpret all of this. Any thoughts?
Posted by: Seamus at November 10, 2003 11:53 PM | Permalink | Edit Comment | Delete Comment
I know you weren't asking me, but I'll answer anyway.
"What is the difference between what Bush adopted and what the steel industry asked for?"
Not a whole hell of a lot, I suspect. That's rather the point of this administration, after all. Where you going with that line of questioning?
"I remember watching the evening news and seeing the steel industry celebrate Bush's original decision. Maybe it was the industry, and not the unions, I don't recall. But I think the future of the swing states here may depend primarily on how the steel unions interpret all of this. Any thoughts?"
That was certainly how Bush did the math. Steel tariffs will play well with everyone involved in steel production (steelworkers), and poorly with everyone involved in steel consumption (auto workers). Ultimately, because we all consume steel in one fashion or another, they're a huge net loss but most of the pain is borne by schmucks like you and me a nickel at a time and for the purposes of this calculation, we don't matter--steelworkers who see Bush saving their jobs will vote for him. Auto workers who see Bush costing them their jobs will vote against him. Me having to pay an extra $0.35 for the toaster I bought last week isn't going to change my vote.
So I expect that what happened was they decided they'd rather shore up Pennsylvania(21), Ohio(20) and West Virginia (5) at the cost of Michigan(17).
Who says domestic policy is hard?
Posted by: Laertes at November 11, 2003 04:14 PM | Permalink | Edit Comment | Delete Comment
ok, that is basically what I was getting at. Bush did do essentially what the steel workers asked and because of that the WTO decision probably won't hurt him via the steel workers.
Of course, the other indirect impacts on the auto industry and via the European Union could have tremendous effect.
Posted by: Seamus at November 11, 2003 10:43 PM | Permalink | Edit Comment | Delete Comment