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Bush Rescinds 21-Month-Old Tariffs on All Steel Imports

By Richard W. Stevenson

and Elizabeth Becker

The New York Times -- WASHINGTON

Citing an improving economy and cost-cutting efforts by domestic steel makers, President Bush lifted tariffs on imported steel on Thursday, averting a trade war with Europe but risking a political backlash in some industrial states heading into the 2004 election.

Twenty-one months after imposing the tariffs and saying they would remain in place for as long as three years to help the struggling industry, Bush said he would rescind them as of midnight on Thursday.

The announcement of his decision immediately led the European Union to drop its plan to retaliate with tariffs on a variety of U.S. exports from states vital to Bush’s political fortunes, including Florida and Michigan.

Despite hopes within the industry that the tariffs would be lifted gradually or that steel companies would receive additional government help in offsetting the costs of union health and pension benefits, Bush announced no new steps to aid or protect steel makers and their workers.

The president said he would continue a program to monitor steel imports closely to detect any destabilizing surges of cheap foreign steel. The United States would also continue pressing other nations to stop subsidizing their own inefficient steel producers, he said.

In a written statement explaining the shift, Bush did not mention the threat from Europe or the ruling against the United States on the permissibility of the tariffs by the World Trade Organization, the international body that sets trade rules.

The president instead cast the decision as driven by improvements in the outlook for domestic steel producers since he imposed the tariffs in March 2002.

He said steel makers were benefiting from the economic recovery, new labor agreements, stable prices, increased efficiency and the assumption by the government of some of the industry’s pension obligations.

“I took action to give the industry a chance to adjust to the surge in foreign imports and to give relief to the workers and communities that depend on steel for their jobs and livelihoods,” Bush said in the statement. “The safeguard measures have now achieved their purpose, and as a result of changed economic circumstances, it is time to lift them.”

But Pascal Lamy, the top European trade official, immediately took credit for Bush’s decision, telling a news conference in Brussels, Belgium, “I am pleased to announce that all our efforts have worked.”

Lamy said Europe would drop its threat of $2.2 billion in sanctions in the form of additional tariffs on U.S. products and would also eliminate countertariffs it had already imposed on U.S. steel.

The president’s decision to abandon the tariffs was welcomed by advocates of unfettered trade and by representatives of states and industries that were paying the price for the trade protection in the form of higher steel prices.

“Too many Iowa manufacturers faced increased production costs because of these tariffs,” Sen. Charles E. Grassley, R-Iowa, said in a statement supporting Bush’s decision.