White House officials, speaking on condition of anonymity, said the tariff-and-quota plan is a three-year project that can be amended by Bush if the steel industry's financial crises worsens or improves.
The move, while short of the 40 percent tariffs sought by the industry, was generally applauded by industry and drew opposition from America's allies.
The long-awaited decision was to be announced in a White House later Tuesday. It was described by advisers and lawmakers who were briefed as a compromise approach, one designed to protect the U.S. industry while minimizing backlash from overseas and from U.S. manufacturers that rely on cheap steel.
The plan exempts several trading partners, including Canada and Mexico, and does not embrace an industry-sought $10 billion bailout of pension and health care costs of retired workers from bankrupt companies, sources said.
White House officials provided details of the plan, including:
--Tin mill steel, a 30 percent tariff.
--Flat steel products including cold-rolled, plate-rolled and coated sheet steel, 30 percent.
--Hot-rolled bar and cold-finished bar, 30 percent.
--Carbon and alloy fitting and flanges, used in car production, 13 percent.
--Circular welded tubular products, 15 percent.
--Stainless steel bar, 15 percent.
--Stainless rod, 15 percent.
--Stainless steel wire, 8 percent.
--Rebar, a product used largely in construction, 15 percent
--Slab steel would get a 30 percent tariff, but only after the first 5.4 million tons are imported.
The list reflects the political ramifications of Bush's decision.
Tin mill steel received one of the stiffest tariffs and is the type produced by Weirton Steel, one of the biggest employers in West Virginia. Bush won the state in an upset victory over Vice President Al Gore in 2000 largely on his promise to protect the steel industry.
The auto industry is one of many U.S. manufacturers depending on cheap steel and did not want high tariffs. The car industry uses lost of steel flanges.
Steel industry lobbyists pushed for the highest possible tariff on slab steel, produced largely overseas and used by smaller West Coast manufacturers. Those companies wanted to keep the steel cheep. Bush's split-the-difference approach calls for tariffs but only after a certain amount of the product is imported.
The industry had hoped that Bush would set a low quota, allowing for a quick kick-in of tariffs. It was not immediately clear how Bush's quota of 5.2 million short tons compares to current import levels.
In settling on a range of 8 percent to 30 percent, Bush split the difference while acting on a recommendation by the U.S. International Trade Commission that he impose tariffs between 20 percent and 40 percent.
Bush decided not to embrace the industry's request for a $10 billion bailout of pension and health care costs for retirees of bankrupt steel companies, according to those familiar with his decision. The president left the door open for Congress to look at finding ways of providing health care protection for retirees of bankrupt companies in general, not only those in the steel industry, the officials said.
However, the decision not to pick up these so-called "legacy costs" appeared to torpedo a proposed consolidation within the steel company. US Steel, the nation's largest steel maker, had said it would buy four companies that had filed for bankruptcy protection if the government picked up the costs.
Robert S. Miller, chairman of Bethlehem Steel Corp., one of the companies that would be part of such a merger, said the industry was "extremely grateful to the administration for standing up for steel."
At the same time, he said, "We have discontinued any discussions on the merger with (U.S. Steel) because they said they could not do it without comprehensive legacy relief."
He said Bethlehem would most likely "pursue a series of joint ventures" instead.
Meanwhile, the European Union cautioned that relations with the United States would suffer under such a tariff decision and hinted at possible trade retaliation against American products.
"Steps will have to be taken if the Americans impede our trade in steel," said European Commission President Romano Prodi in a letter to Bush.
In Moscow, Russia's foreign ministry summoned U.S. Ambassador Alexander Vershbow to express concern about steel tariffs. Russia is a major exporter of steel.
Any U.S. sanction "goes against the grain of procedures and conditions of bilateral agreements on trade," according to a Foreign Ministry statement released Tuesday.
More than 30 steel makers have declared bankruptcy in recent years and the price of basic steel has fallen dramatically. How to protect the industry without hurting the economy with steep price increases is a question that could sway congressional races in November, and even affect Bush's prospects for re-election in 2004.
Officials said Bush turned aside requests by the steel industry to impose 40 percent tariffs. Instead, he approved staff recommendations for tariffs, ranging from 20 percent to 30 percent, on about 16 steel products.
They said two of America's biggest trading partners, Canada and Mexico, would be exempt from the product-by-product tariff changes. Developing countries such as Argentina, Thailand and Turkey also would be exempt.
Nations hit hardest by the tariffs include China, Japan, South Korea, Ukraine and Russia, officials said.
While U.S. industries opposed higher tariffs, United Steelworkers of America President Leo Gerard made the opposite case. He said in a telephone interview that failing to impose punishing tariffs "would lead to the meltdown of the steel industry. We can't afford a Swiss cheese approach."
http://accesswdun.com/article/2002/3/197916