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Robert Zoellick hints US may lift steel tariffs soon

In a possible sign the Bush administration may soon lift controversial US steel tariffs, US Trade Representative Robert Zoellick said on Wednesday that the duties had already fulfilled White House hopes by helping the domestic steel industry.

Zoellick told reporters a fall in the dollar since the duties were imposed in March last year was also making steelmakers more competitive. But it was up to President George W. Bush to decide whether to scrap the "safeguard" tariffs after the WTO this week declared them illegal.

"Frankly, the safeguards gave the industry an opportunity to do what we hoped it would do," Zoellick said after an event to tout a proposed free-trade pact with five Central American countries. "You've also had some change in exchange rates that's helped."

Meanwhile, Representative Joseph Knollenberg, a Republican, said he urged the White House to completely repeal the tariffs, rather than try to find a middle ground solution that would leave some duties in place.

Steelworkers have said removing the duties could hurt Bush's support in the pivotal steel-producing states of Michigan, Ohio, Pennsylvania and West Virginia as he seeks re-election next year.

However, Knollenberg said repealing duties would help Bush in Michigan by removing a source of frustration for many Midwestern manufacturers.

Zoellick also played down the impact the tariffs' removal would have on the Bush administration's trade agenda.

He acknowledged the duties persuaded some lawmakers to vote for a bill last year that enhanced the president's authority to negotiate trade deals, but noted that many lawmakers now favored lifting the duties.

Bush imposed duties of up to 30 percent on 10 categories of imported steel to give the domestic steel industry a three-year "breathing space" to restructure and become more competitive after a string of bankruptcies.

The EU and other trading partners immediately challenged the action, leading to the final WTO decision on Monday that the duties violated international trade rules.

Publicly, US officials have said they disagree with the ruling and have not ruled out the possibility of flouting the WTO by keeping the tariffs in place.

But sources and analysts said several factors -- not the least of which is an EU threat to retaliate on US$2.2 billion of US exports -- appeared to be leading the White House toward lifting the duties.
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