December 04,2003

Grassley Commends President’s Decision to Lift Steel Safeguard Tariffs

WASHINGTON – Today President Bush announced he will lift the steel safeguard tariffs that have been in place since March 2002. Sen. Chuck Grassley, chairman of the Committee on Finance, made the following comments on the President’s action:

“This is good news. The tariffs on imported steel may have helped some sectors of the economy, but they certainly hurt others. Too many Iowa manufacturers faced increased production costs because of these tariffs. The President’s decision to lift tariffs will bring welcome relief to struggling American factories. Today’s decision will help American manufacturers compete against their foreign counterparts.

“Just as important, the President’s bold decision means we can avoid retaliatory tariffs that were being proposed by some of our largest trading partners. Those tariffs would have hurt a lot of innocent companies and workers in the United States and contributed to slower economic recovery. Lifting the steel tariffs to avoid harm to many American workers and farmers across the United States was the right thing to do.

“But lifting the steel tariffs is just the first step to help jumpstart the economic recovery ofour manufacturing sector. Next year, I hope we can quickly consider the Jumpstart Our Business Strength Act, or JOBS Act for short. This bipartisan bill will help to revive American manufacturing by reducing our corporate income tax rate for all that manufacture here in the United States, regardless of their . I intend to work to get that legislation to the President’s desk as soon as possible.

“I also want to encourage the Administration to redouble its efforts to achieve successful conclusions to the ongoing negotiations in the Organization for Economic Cooperation and Development on global steel overcapacity and steel subsidies. We need a comprehensive and enforceable agreement that will lead to the elimination of inefficient and excess global steel capacity. We need a similar agreement that will discipline government subsidies to steel producers. Such agreements will go a long way toward enhancing the prosperity of our own steel producers here in the United States. I hope our trading partners will put as much effort into resolving both of these problems as they have in pushing for the United States to lift the steel tariffs. I stand ready to helpthe Administration any way I can to achieve this important goal.”

Grassley’s Nov. 14, 2003, letter to the President asking him to drop the steel safeguard tariffs follows.

November 14, 2003

The Honorable George W. Bush
President of the United States of America
The White House
Washington, DC 20500

Dear Mr. President:

I am writing to express my concerns, and the concerns of many Iowa businesses and workers,regarding the steel safeguard tariffs that have been in place since March 2002.

When you announced the decision to impose steel safeguard tariffs, you stated that thepurpose of the tariffs was to provide temporary help to our steel industry so that the industry could restructure, thus ensuring its long-term competitiveness. Recently, the U.S. International Trade Commission (ITC) completed its statutory midterm review of the steel safeguard tariffs. The ITC’s review makes clear that the steel industry in the United States has indeed experienced a significant restructuring. In addition, the United Steelworkers of America have negotiated ground breaking collective bargaining agreements with several U.S. producers. Those agreements are expected toserve as the basis for future labor agreements with other U.S. producers. Separately, the PensionBenefit Guaranty Corporation has assumed a substantial portion of the U.S. steel industry’s pensionobligations. Taken together, these actions help to ensure the long-term competitiveness of steelproducers in the United States.

The purpose of the steel safeguard tariffs has therefore been met, but this has come at a heavycost. The ITC estimates that the steel safeguard tariffs have already cost U.S. businesses andworkers over $680 million since their imposition. Critically, the brunt of that cost has fallen on theshoulders of the motor vehicle parts and steel fabrication industries. These businesses and theirworkers are already experiencing economic challenges, as reflected by the downturn in employmentwithin U.S. manufacturing in general. We shouldn’t add to those challenges needlessly. I haveheard personally from a number of Iowa manufacturers that have been hurt by the steel safeguardtariffs, and I attach letters they have written to me. These businesses employ thousands of Iowans.Their survival is key to maintaining the fabric of the communities in which they operate. Myconstituents inform me that they have incurred significantly increased raw materials costs by virtueof the steel safeguard tariffs, and yet have been unable to recoup these extra costs due to theincreasingly globalized nature of competition in their industries. The same is true for steelconsuming businesses across the United States. In short, continuation of the steel safeguard tariffsjeopardizes the future prosperity and survival of these vital members of our economy.

Mr. President, under your leadership we have taken important steps to ensure therevitalization, strength, and competitiveness of the U.S. steel industry. I call on that sense ofleadership now to ensure the revitalization, strength, and competitiveness of U.S. manufacturingfirms that consume steel. To continue the steel safeguard tariffs now will only serve to threaten theviability of the customer base that the revitalized U.S. steel industry seeks to service. The substantialdeclines in employment within U.S. manufacturing constitute changed economic circumstancesunder which the steel safeguard tariffs will no longer be effective in helping to ensure the long-termcompetitiveness of the U.S. steel industry. Rather, they will undermine that very goal, and the futureeconomic and social costs of the steel safeguard tariffs will far outweigh the benefits. On the otherhand, elimination of the steel safeguard tariffs will help to jumpstart the economic recovery of ourmanufacturing sector and revitalize the global competitiveness of our steel consuming businessesin Iowa and across the United States.

There does remain an important role for our government to assist the U.S. steel industry.That is, to redouble our efforts to achieve successful conclusions to the ongoing negotiations onglobal steel overcapacity and steel subsidies being conducted under the auspices of the Organizationfor Economic Cooperation and Development. The long-term competitiveness of our steel industrywill not be completely secured until inefficient and excess global capacity is eliminated anddisciplines are imposed on the provision of government subsidies to steel producers. We needcomprehensive and enforceable agreements that address these underlying problems facing aglobalized steel industry. Such agreements will go a long way toward enhancing the prosperity ofour own steel producers here in the United States.

Thank you for considering my concerns and those of my constituents as you determine theappropriate course of action to take with respect to the steel safeguard tariffs.


Charles E. Grassley