Boomerang Bad Economics: Corp.Welfare Blowup

U.S. Tariffs on Steel Are Illegal, World Trade Organization Says

By ELIZABETH BECKER

Published: November 11, 2003


WASHINGTON, Nov. 10 � The World Trade Organization ruled on Monday that steel tariffs imposed by President Bush last year were illegal, clearing the way for the European Union to impose more than $2 billion of sanctions on imports from the United States unless Washington quickly drops the duties.

The final decision by a W.T.O. panel, which was widely anticipated and has been discussed for weeks at the White House, puts Mr. Bush in a difficult spot. As an election looms, he must choose between continuing to help the steel industry � which could bolster his electoral prospects in crucial industrial states � or respecting international trade laws and increasing his chances of winning new regional and global trade agreements.

www.nytimes.com...
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We had some pointed discussions in this forum a while back when the Special-interest-Vote-as-Economic-Policy-Driver was showing it's ugly head with Bush style politics.
That retort of "other presidents did it" was hollow then, and I hope not revisited now, but let's recap:

- During a cycle of recession, the Bush folks applied unsound tarriffs to bolster the steel industry, an industry that has not scaled itself to be competitive on a Global Market, but has relied on SOCIALIST style stipend by the central government.

- At the time, it was strictly for votes that this was done, despite all the loud warnings by every economist, hell, anybody whoever read "The Wealth of Nation" by Adam Smith, that it would start a punative trade war...one that our economy could ill afford.

- Now that the boomerang has come back, the votes gained there will likely be lost in the states thought to be held, since the WTO tarriffs will hit them where they live.

The net-net? Benefit the vote segment & benefactors tied to steel by keeping the tariffs or benefit the country by forging new trade & diverse trade segments by being a world partner.
We can't sustain by selling Yankee made to Yankee consumers; this world is our marketplace & we need to be a member.

Thoughts?

I wouldn't totally blame Bush here, BT. Let's be fair, eh?
(This was HUGE issue in my neck of the woods, btw)

For the record, I thought it was a bad move (the tariff). It's didn't do anything (I know several that lost their jobs [in the steel industry] anyway) - it also made steel more expensive (the cost of tariff was just put on the consumer)

Just let's not forget who was requesting these tariffs.
If Bush removes them, he's in bad shape here (Ohio, which narrowly supported Bush in '00) and if they remain in place it'll start a trade war and he'll be hurting all around. damned if you do, damned if you don't.

(one would think if he was able to sell a war he'd do the right thing and sell the tariff removal??)

Some members of Congress quickly urged Mr. Bush to ignore the W.T.O. ruling. Rep. Sherrod Brown, a Democrat of Ohio, referred to the W.T.O. as a "secret" court and said the president should let the tariffs run their three-year course, now only half complete.

Hell, you got the Alaska Congressmen doing the same thing, because if they drill, no matter thatit's a drop in the bucket & will effect squat, it'll still bring more jobs to Alaska.
Even if politicians had a concious, there is the national one and the constituent one. Sadly.

and it's the constituent that votes them in (these guys love bringin' home the pork!!!)

But - I really think any president would have probably done the same thing (tariffs would have been higher under a dem, I imagine)

And some of the guys I know who losts jobs aren't doing that badly, nice severance and all, schooling, etc.
(I'd be lucky to get my kids pics off my desk, lol)

[Edited on 11-11-2003 by Bob88]

The steel industry, though in america, does have to compete with countries that allow for very low wages to it's workers, much poorer working conditions, with few or no benefits.


And then they want to sell their product in america.