US steel bill tests free
trade rhetoric
By Joanne Gray, Washington
The United States is on the verge of a new wave of trade
protection after the House of Representatives voted
overwhelmingly in favour of a bill that would slap import
quotas on foreign steel.
The White House warned that the quotas would violate
international trade rules, and aides said they would
recommend that President Clinton veto the bill if it passes
the Senate.
The steel quota bill was backed by the United Steel
Workers of America, which has run a vocal and high
profile campaign against cheap imports for six months.
The union movement expects a payback from the
President for its support during the impeachment scandal.
But Mr Clinton's response to the bill will test his
commitment to free trade as he prepares to host a fresh
round of trade liberalisation talks at the end of the year.
The steel vote comes just two weeks after the US
retaliated against the European Union's banana import
regime by threatening 100 per cent tariffs on a $500
million of EU luxury goods.
In a show of bipartisan support the House voted
289-141 in favour of the bill, just one vote short of
making it veto proof.
It reflects the growing protectionist mood in America. A
survey released this week showed that 60 per cent of the
American public believes tariffs are necessary to protect
manufacturing jobs.
Despite successes in trade agreements early in his first
term, Mr Clinton has been unable to secure authority
from Congress to negotiate free trade agreements for
several years - as the US trade deficit has soared, calls
for new trade barriers have grown louder.
Major importers of steel such as car manufacturers and
free traders said trading partners would retaliate if the bill
became law.
The US steel industry recently won several anti-dumping
suits with the Justice Department finding that Japan,
Russia and Brazil illegally dumped hot-rolled steel at
prices below the cost of production. Japan and Brazil will
be hit with tariffs if their steel imports are not curbed
while Russia has agreed to reduce its imports voluntarily.
The US is currently engaged in a host of trade disputes
with major trading partners in the name of fair trade.
Apart from the banana war, it is fighting with Canada
over magazines and cultural imports, on hormone-fed
beef with the European Union, and on genetically
modified foods. It will decide next month whether to hit
Australian and New Zealand lamb with tariffs to protect
its sheep meat industry.
The White House is worried that protectionist moves
would open the door for other countries to raise their
import barriers, shrinking markets for US exports. The
Administration expected that it would have to bear a
large burden as Asian countries tried to export their way
to recovery, but has attacked Japan and Europe for not
expanding their economies fast enough to share recovery
costs.
The steel bill would cut steel imports by 25 per cent, and
the quotas would expire in 3 years. US Trade
Representative Charlene Barshefsky said Mr Clinton's
advisers would recommend that he veto the bill if it
passes the Senate, where it will struggle to get support.
"The Administration does not support the bill that is
currently pending," she said, adding that the volume of
imported steel had fallen 34 per cent in the past two
months.
The industry claims that the quotas are justified by the
fact that three US steel producers have gone into
bankruptcy and 10,000 steelworkers jobs have been
lost.
"Bananas did not build America. Steel did," said Dennis
Kucinich, an Ohio Democrat during the debate. "The
Administration cares more about bananas than about
steel." The United Steelworkers president George
Becker said the campaign would shift to the Senate. "I do
not expect the president to veto this," he said.
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