World welcomes Bush u-turn on steel tariffs
European and Asian nations today welcomed the US decision to scrap tariffs on steel imports, praising the move as staving off the danger of growing protectionism among key trading partners.
But global jitters are growing about Washington’s simmering trade tensions with China.
Within hours of the announcement from President George Bush to drop the import tariffs he had imposed last year, first Europe and then, early today, Japan, said they were dropping their threat to impose retaliatory tariffs on American goods, averting a possible trade war.
“President Bush supports the idea of free trade. I think it’s great that the United States has reached this decision,” chief Japanese government spokesman Yasuo Fukuda said, adding that Japan would forego its threat to slap retaliatory tariffs on more than 300 items, including plastics, fuel and clothing.
Japan’s sanctions, totalling €80m, would have been Tokyo’s first against its closest trading partner since the World Trade Organisation was formed in 1995.
In Beijing, a Chinese government official also welcomed the US decision.
“In my point of view, we welcome the US government’s decision to scrap steel tariffs,” an official at the Information Office of the Ministry of Commerce told Dow Jones Newswires.
The European Union ended its threat to impose sanctions on €1.9bn worth of American exports, calling Bush’s decision “good news for European steel makers”.
“These sanctions … were there as a tool for compliance,” EU Trade Commissioner Pascal Lamy said. ”They’ve complied and the sanctions will disappear.”
Bush’s decision to impose steel tariffs last year set off outrage in Japan as well as Europe and South Korea, and was ruled unfair by the WTO.
Washington had argued that the safeguards on steel imports were necessary to allow the reorganisation of an industry that has suffered more than 40 bankruptcies since 1997.
But yesterday, Bush said the tariffs were no longer needed because the 21 months they had been in place had given the US industry a chance to consolidate and modernise.
South Korea, which had been considering imposing tariffs and duties on US products, also welcomed Bush’s decision.
“We believe it is an appropriate measure to promote international free trade and minimise unjust damages to exporters from safeguard measures,” the foreign ministry said.
Analysts said the influx of foreign steel into the United States was not expected to grow significantly, even without the safeguards, because of unrelated factors such as the drop of the US dollar against foreign currencies. A weak dollar tends to make foreign products more expensive in the United States and hurts Asian and European exporters by eroding the value of their US earnings.
The bigger cause for worry was the brewing trade dispute between the United States and China, said JP Morgan chief economist Masaaki Kanno.
US-Chinese trade clashes have been growing over textiles, TVs, steel and soya beans as China’s trade surplus with the United States balloons to record levels. But any dips in Chinese trade are likely to hurt Asian economies at a time when many nations, especially Japan, are counting on Chinese growth to keep their own economies going.
“The United States, Europe and Japan have had their share of trade friction in the past so everyone could expect a relatively calm response,” Kanno said. “The world is more nervous about any trade disputes with China.”
