During the Vietnam War, a peculiar strand of U.S. logic was revealed when an official argued that a village had to be destroyed to save it from the North Vietnamese. A version of that tortured thinking has been resurrected recently as U.S. officials have struggled to justify President George W. Bush's decision to impose tariffs on steel imports. The move is indefensible except in the narrowest terms: Mr. Bush is protecting a powerful domestic political constituency. In so doing, he has undermined his credibility as an advocate of free trade and may well have torpedoed the next round of trade talks -- negotiations that he had championed only months ago.
Since taking office, Mr. Bush has been a tireless advocate of free trade. But the president abandoned that rhetoric recently when he decided to impose 30 percent tariffs on most steel imports. U.S. steel companies had been pushing for relief since 1998, but then President Bill Clinton refused to provide it, fearing that such a move would prompt retaliation by trading partners.
Mr. Bush was the beneficiary of his predecessor's commitment to free trade. Mr. Clinton's refusal to provide relief prompted steel industry states, most notably West Virginia, which has traditionally voted for the Democratic Party, to support Mr. Bush. Many observers credit his narrow win in 2000 to those election defections. Mr. Bush's decision is designed to solidify that support in steel-producing states.
The tariff has aroused a virtually unanimous chorus of dismay and complaint from other governments. Prime Minister Junichiro Koizumi called the move regrettable, and the government is assessing its options. Japan has filed a request to hold bilateral talks with the U.S. under Article 12 of the World Trade Organization Agreement on Safeguards; that obligates a WTO member that wants to use a safeguard measure to consult with "concerned parties." Tokyo could ask for countervailing steps such as reducing tariffs on other items or providing compensation. Other governments are likely to take similar steps. The process is long and time-consuming. The U.S. is counting on just that: Negotiations, decisions and final appeals could last until after the next presidential ballot, at which time the winner could make a decision unencumbered by crude political calculations.
While governments understood the domestic factors that influenced the decision, they were still dismayed at its impact on trade negotiations. Mr. Werner Muller, Germany's economy minister, spoke for many when he noted that "The decision not only puts considerable strain on U.S.-EU trade relations, but is also a negative signal, coming so soon after the opening of the new world trade round."
It is here that the tortured logic of the Vietnam era is resurrected. Putting the best possible face on the move, U.S. Trade Representative Robert Zoellick explained that "In order to promote free trade the U.S. has to manage the home front and the international front. And on the home front the only way that we can continue to get support from the American people for open markets and trade is to use our domestic and international laws to the fullest." That is well spun, but it makes no sense: The bottom line is that the U.S. is not supporting open markets. It is resorting to protectionism when powerful domestic interests are affected. Free trade accepts those losses in the name of a greater good. Mr. Bush's decision makes no such sacrifice.
This is the same logic that has alienated much of the developing world. The industrialized nations have pushed trade liberalization in the developing world, but they have been reluctant to open their own markets to the products those same countries desperately need to export. This hypocrisy has been the chief obstacle to the opening of a new trade round. Trust is in short supply, and Mr. Bush's steel decision only adds to the suspicion.
Of course, Mr. Bush is not the only hypocrite. It is hard to credit European outrage given the aid they afford their own steel makers -- $50 billion over the past 50 years, says Mr. Zoellick -- or the market distorting effects of the European Union's Common Agricultural Policy. Japan's own failure to open its markets to developing countries' exports, such as agricultural products and textiles, is equally "regrettable."
The chief danger, in addition to the loss of U.S. credibility in international trade negotiations, is the possibility of tit-for-tat retaliation and a real trade war. There are a number of disputes between the U.S. and the EU that could escalate. Fortunately, EU officials recognize the danger and have indicated their preference to resolve this dispute through WTO procedures. That logic is easier to understand.
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