Compared to the Middle East conflict and the war in Afghanistan, the World Trade Organization dispute over U.S. steel tariffs seems fairly trite'because it is trite. Unfortunately, some of the more petty arguments between nations can become matters of worldwide importance when international trade is involved.
The trade dispute is a result of the Bush administration deciding to raise tariff rates on foreign steel by 30 percent a few months ago. The decision has sparked allegations of protectionism from Japan, China and the European Union, which have vibrant or growing steel industries. What has been even more galling for other nations is that it appears as if Bush implemented the tariffs just so that steel industry states would vote for him in the next election.
In retaliation, the European Union is proposing more than $2 billion worth of tariffs on various U.S. goods that are manufactured in what were swing states in the last presidential election. This includes Wisconsin, which is being targeted through a proposed tariff increase on Harley-Davidson motorcycles.
Throughout most of the 1980s and 1990s, the United States was a leader in lowering tariff barriers and negotiating new trade regimes that enforce the ideals of free trade. The WTO was one of those creations. Europe was more often on the opposing end of free trade. It imposed tariffs on banana production from South America, banned hormone-injected beef and fiercely protected its agricultural industry.
The tables have turned under the new Bush administration. The steel tariffs, according to most economic analysts, clearly violate WTO rules. It is only a matter of time before the WTO rules that they violate international law. America seems to have switched its traditional role with Europe, becoming more interested in domestic political gain than maintaining international trade.
The EU Trade Commissioner Pascal Lamy said in a recent interview, \Jettisoning the rules is a big problem because the next time I say we have to abide by the rules, people in Europe will say others don't abide by the rules, so why should we make concessions."" His words contrast sharply with U.S. Trade Representative Robert Zoellick's claim that the steel dispute is the result of ""the running dogs of European imperialism.""
Implementing the steel tariffs was a mistake, but defending them using language that suggests Europe is at fault makes the decision a personal insult to European leaders who were hoping for a closer U.S.-Europe relationship.
The one saving grace for Bush's policy is that the EU's Trade Commission has not decided to preemptively impose tariffs against U.S. products. Instead, the Commission will wait until the WTO rules that the tariffs are violating international law. However, the ruling will be in favor of the European Union, which places Bush in the delicate position of deciding how to respond to the WTO.
If Bush rejects the WTO's decision and continues imposing steel tariffs, the European Union will retaliate and many industries throughout the United States will be hurt. Bush would also run the risk of undermining 50 years of free trade agreements that are an important reason for the economic success of the United States. It would be a step back to the protectionism of the 1920s and 1930s.
It is easy, during a time of national crisis, to lose sight of the supposedly trivial ideals that the United States has stood for throughout the 20th century. The Middle East conflict and Osama bin Laden certainly make the headlines more often than issues of free trade. However, the reason the United States is so capable of negotiating international conflicts and creating effective coalitions is because it has a long history of upholding its agreements and cooperating with its allies.
Bush needs to embrace the ideas of mutual cooperation and ""prosperity for all"" that are the founding principles of international trade. Slipping into protectionism and mutual distrust solely for domestic political gain will only lead to an ever-spiraling increase in retributive tariffs. A rise in steel tariffs may not be the sexiest of issues, but its implications for America's economic and political leadership in the world are immense.
