US President George W. Bush on Tuesday decided to begin a trade probe that could lead to sharp restrictions on steel imports to protect the beleaguered US steel industry from imports -- including those from Taiwan.
Bush announced he has asked the US International Trade Commission, an independent regulatory agency, to start an investigation into US steel imports to determine whether they are hurting US steel makers. The probe could end up with slimmer steel import quotas on Taiwan and other exporters in Europe and Asia for up to three years.
The action will be taken under Section 201 of the Trade Act of 1974, which provides for import curbs to allow domestic industries time to restructure in response to a crisis caused by surging imports.
The Bush administration acted in response to intense pressure from the US steel industry, which has experienced a string of problems stemming from rising imports, dropping world and US prices, and a series of bankruptcies from US steel firms.
The United Steelworkers Union and other labor groups have joined with the industry in pressing for the restrictions, adding political clout to the anti-import forces.
While the full impact of the action is far from clear from the initial statements released by the administration, import curbs are certain to be tightened, observers say.
"There will be fewer steel imports from Taiwan," says Martyn Chase, an editor with the Washington-based Kiplinger Forecasting Services, and one of the country's leading steel trade experts.
"Taiwan, as a supplier of steel will be affected," said a source at the Taipei Representative Office in Washington.
However, the Taiwan representative could not say to what extent Taiwan would be affected. That would depend, he said, on a letter that the US Trade Representative's office will send to the trade commission in the next two weeks, the first step in the process, giving details of the scope of the probe. US trade officials said Tuesday that the scope will be "as comprehensive as possible," stretching to virtually all steel products and all importers.
In any event, the impact will not be felt until early next year at the earliest. What Bush did was ask the trade commission to conduct an investigation, which will last four months, and then make a recommendation to the White House for action. After the investigation, the agency will have two months to make its recommendations to the president. After that, Bush will have up to two months to make his decision on the measures to be taken against foreign steel suppliers.
In the meantime, administration trade officials will hold negotiations with steel suppliers, including Taiwan, to try to work out ways to avoid or ease any restrictions the Bush administration eventually decides to impose on US steel importers.
On Tuesday, Bush asked US Trade Representative Robert Zoellick, Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans to begin negotiations on new rules for steel trading. The idea is to reduce excess global capacity. When O'Neill was chairman of Alcoa, the aluminum industry suffered from dropping prices because of rising global exports from Russia. O'Neill spearheaded negotiations that led to a reduction in worldwide aluminum production, and the goal is to repeat the same play for the steel industry.
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