Asia Times: Cold, hard reaction to US steel tariff move


	March 7, 2002	atimes.com

Global Economy

Cold, hard reaction to US steel tariff move

SEOUL - South Korea, Japan and Australia have joined a global protest against a US decision to levy tariffs on steel imports, with some countries threatening to press the case before the World Trade Organization (WTO).

In Seoul on Wednesday, the Ministry of Foreign Affairs and Trade said that the tariffs of up to 30 percent are excessive import restriction measures, and the ministry will do all it can to keep the huge US market accessible, noting that it accounts for 15 percent of the nation's steel exports. Of its total 14.6 million tons of steel exports in 2001, South Korea shipped 2 million tons to the United States.

Shin Kook-hwan, the minister of commerce, industry and energy, said the US move runs against a free and fair steel trade spirit and voiced his regret over "the disappointing decision". He went on to say that South Korea, as a faithful long-term steel trade partner, had already agreed to cut excess facilities through the Organization for Economic Cooperation and Development (OECD). The US move is beyond our expectations for a sustainable partnership, he added.

Also adversely affected by the plan is Australia, which exports A$450 million (US$231.5 million) worth of steel to the US annually. The country had been lobbying the Bush administration to modify the proposed tariffs. Australia fears the tariffs may threaten BHP-Billiton, which controls most of the Australian steel exports to the US west coast. But Australian OneSteel Ltd said the direct impact of the plan would be negligible on its operations.

The Bush administration decided to impose the tariffs on most imported steel as a way of saving the beleaguered US steel industry. The move is meant to give the American steel industry time to get back on its feet at a time of an economic downturn. However, domestic opponents charge that the tariffs will end up having the opposite effect on the US economy, with companies that are big users of steel like automobile and appliance manufacturers essentially taxed for their raw materials, which will drive up costs, reported the New York Times.

The plan will be officially announced by US President George W Bush soon. Under the plan, steel imported from Canada and Mexico would be exempt from the duties under the North American Free Trade Agreement (NAFTA), as would imports from developing countries such as Argentina, Thailand, and Turkey whose portion in the US steel industry is meager.

But imports from South Korea, Japan, China, Russia, Ukraine, and Brazil will be subject to the US measure. A 30 percent tariff would be slapped on cold-rolled steel sheets, hot coils, and galvanized steel sheets, with an 8-15 percent tariff for steel pipes and stainless steel products. Import quotas would be set for steel slabs.

In response to the Bush plan, South Korea's ministries of Foreign Affairs and Trade, and Commerce, Industry and Energy will seek bilateral negotiations with the US as early as possible, pursuant to an act in the WTO safeguard agreement. They will also seek cooperation with other major steel exporters such as the European Union and Japan. An envisaged civilian-government task force will coordinate a joint response, and the government is also searching for ways to pressure the United States in the OECD high-ranking steel officials' meeting scheduled for April 18. Government officials said the European Union has already filed a petition against the US action.

Buttressing the possibility of South Korea following the European Union's lead, Minister for Trade Hwang Doo-yun noted that the government had won a legal battle with the United States in an earlier dispute argued before a WTO panel over US moves to slow the import of carbon steel pipes. "We won the case at that time when we took issue with procedural matters involving the issuance of the safeguards," the trade minister said. "WTO regulations call for prior consultations with relevant countries before issuing safeguards."

Hwang said that he will soon make an official announcement on his government's position, adding, "We will negotiate with the United States to protect the maximum interests of the domestic steel industry." The trade minister said foreign countries are likely to exert more pressure to further open the country's legal, education, visual entertainment, advertising, medical and energy service industries.

Hwang noted that the declaration issued by the Doha WTO ministerial meeting specifies that member states present by the end of March 2003 their schedules for the liberalization of their service sectors. The country's top trade negotiator said that his government will submit by the end of June a draft version of the schedule for wider opening of the country's services industry in close consultations with relevant industries.

The tariff plan also met with criticism from major steel exporter Japan, which said it may join the European Union in complaining to the WTO. Chief Cabinet Secretary Yasuo Fukuda said at a news conference on Wednesday, "We will consider appropriate countermeasures, including the referral to the WTO dispute-settlement process."

Earlier in the day, Takeo Hiranuma, Japan's trade and industry minister, said, "It's questionable whether the US steel industry has suffered sufficient damage from imports to justify the invocation of safeguard measures." In fact, US steel imports have been declining recently, with shipments from Japan sharply plunging to 2.2 million tons last year from 7 million tons in 1998, according to the Ministry of Economy, Trade and Industry.

Another major steel exporter, Russia, reportedly summoned US Ambassador Alexander Vershbow to communicate his concerns over the tariffs. Rounding out the chorus of protests were New Zealand, Britain, and Brazil.

Bush is proposing the tariff plan at a time when he also hopes to start negotiating a trade deal with South American countries much along the lines of NAFTA, reported the New York Times.

(Asia Pulse/Yonhap/Asia Times Online)