CITAC STF: PRESIDENT BUSH CAN TERMINATE STEEL TARIFFS;
DOMESTIC STEEL INDUSTRY PAPER ARGUING OTHERWISE USES
“STUNNINGLY ILLOGICAL INTERPRETATION” OF TRADE LAW

Washington, DC: In response to a domestic steel industry paper alleging that President George Bush does not have the authority to repeal the Section 201 steel tariffs that he imposed in 2002, Consuming Industries Trade Action Coalition Steel Task Force (CITAC STF) released a memorandum today authored by CITAC STF co-counsel Lewis Leibowitz and Lynn Kamarck detailing Presidential authority to terminate Section 201 tariffs and the authority of U.S. trading partners to retaliate against the U.S. under World Trade Organization (WTO) rules.

“The CITAC STF memorandum explains what is obvious to all those who live in the real world: President Bush has the authority to end the steel tariffs now and if he does not, our trading partners have authority under WTO rules to retaliate against U.S. exports,” stated Leibowitz.

CITAC STF Chairman William Gaskin added, “Recent statements by the domestic steel industry indicate that they are operating in a world where steel tariffs are not a policy, but a divine right, where not one steel consumer has been damaged by the steel tariffs, where every economic study not conducted by their own paid advisors is ‘flawed,’ where the President of the United States lacks the authority to conduct foreign policy, and where U.S. international obligations under WTO rules don’t exist.”

In their memorandum, Leibowitz and Kamarck write that the paper authored by two lawyers for the domestic steel industry, Alan Wolff and Robert Lighthizer “does not accurately state the law,” and uses “stunningly illogical interpretation,” regarding Presidential authority to terminate the steel tariffs and arguing that U.S. trading partners cannot retaliate. The CITAC STF memorandum outlines the legal authority of the President to terminate the steel tariffs based on “changed economic circumstances” and lists the legal measures under the WTO Safeguards Agreement (Article 8.2 and 8.3) in which the European Union is authorized to retaliate against the U.S.

“Contrary to the Wolff/Lighthizer argument, we conclude that the President has ample authority to terminate the tariffs under the statutory language in Section 204 of the Trade Act-- based on changes to the U.S. economy since March 2002. The deterioration of the steel industry’s customer base, leading to increasing imports of steel-containing products, and the flow of OEM [Original Equipment Manufacturer] orders off shore, impairs the effectiveness of the safeguard measures and the President is within his authority to terminate the measures …the President also possesses inherent power under the Constitution to conduct foreign affairs,” write Leibowitz and Kamarck.

Under the “changed economic circumstances” rationale for terminating the steel tariffs, Leibowitz and Kamarck stress the damage done by the steel tariffs to steel consuming industries. “Steel consumers have pointed out that they, the customers of domestic steel producers, have lost a significant portion of their business since the tariff decision was made in March 2002…with so much business lost, steel producers have a diminished market into which it can sell its products, which undermines their ability to be competitive once tariffs are removed. The sooner the tariffs are removed, therefore, the better for the health of steel consumers and steel producers.”

Regarding the WTO, Leibowitz and Kamarck write that Article 8.2 and 8.3 of the WTO Safeguards Agreement give the European Union the authority to retaliate on American exports should the U.S. lose its appeal by the World Trade Organization (WTO) (as expected) in the coming weeks. Europe has planned to hit U.S. exports with nearly $2.2 billion in duties. They also write that other countries may also follow with retaliation lists in the near future. Japan has already informed the U.S. that it is drawing up its retaliation list unless the tariffs are terminated.

Gaskin concluded, “I believe the Bush Administration can see past the increasingly hysterical tone of the domestic steel industry’s claims and look at the facts. The steel tariffs no longer make any sense. There has been too much damage to the steel consumers and to the economy, and there is too much at stake for the future. The steel tariffs must be terminated now.”

The Leibowitz/Kamarck memorandum is available here.

---

CITAC is a coalition of companies and organizations committed to promoting a trade arena where U.S. consuming industries have access to global markets for imports that enhance the international competitiveness of American firms. The CITAC Steel Task Force is comprised of steel consumers working to achieve the termination of the 201 steel tariffs by mid-point review and reform U.S. trade laws and policies to benefit U.S. steel consumers.