The WTO Rolls Bush On Steel Tariffs
In a decision with major electoral ramifications, President Bush reversed course yesterday and scrapped his program of steel tariffs after meeting a force that had outmaneuvered him: the World Trade Organization. After imposing the tariffs on imported steel last year ostensibly to allow the domestic industry to consolidate and become more competitive, Bush was accused by many including those in his own party of abandoning traditional free trade principles at Karl Roveís suggestion to buy the support of both the industry and steelworkers in the key steelmaking states.
After the tariffs were imposed, unions and industry began the process of consolidation and employee concessions to allegedly become more competitive. But after being only partway through this process, with of course the unions already making their concessions first (naturally), Bush encountered something he hadnít anticipated: a WTO led by European interests that timed their threatened retaliatory response to those tariffs to exert maximum political pressure on Bush to capitulate. And it worked perfectly.
In essence, after being humiliated by the US in the last year over Iraq, the European members of the WTO found a way to pay Bush and his minions back, by hitting Bush where it would hurt the most. Even though Bush tried to minimize the role of the WTO steamroller in his reversal, David Sanger of the New York Times and Warren Vieth of the Los Angeles Times both take an unvarnished look at how Rove's gambit here blew up and failed to make anyone happy, while getting rolled by the WTO. According to both, Bush got smoked by a WTO that designed and timed its retaliatory tariffs to focus on states and products from key electoral states that, if imposed, would have destroyed the Rovian political justification for the original tariffs in the first place. Yet the damage has been done anyway. Why?
Bush lifted the US tariffs yesterday to avert punitive measures from the WTO, but in doing so, left an industry and more importantly the unions and workers feeling abandoned and exposed to renewed competition from imported steel products while they were only part of the way through their competitiveness measures. More to the point, any benefit that Rove had wanted from buying the votes of workers in key swing states through the imposition of the original measures is now gone, as the unions feel cheated after they of course had agreed already to their labor concessions as their part of the deal. Let's see how that plays out next year in these key states.
Update: The DLC's New Dem Daily gives a good summary of how the steel tariff debacle is an example of a bigger problem - namely that the Bush Administration has made a hash of trade policies, broken commitments, and pissed off allies at the same time. Quite a feat from the world's best foreign policy team, huh? But remember, the Clinton guys didn't know what they were doing, right?