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Presented By: M. Sreedhar Roll No:A47 Q1107 M.B.

A{IB}

No Steel Industry
What would Suffer?

National Defense Economic Security

Homeland Security
Global Environment

Why Protect Steel


Jobs Security Related Industries

US Steel History & Context


The US is the largest steel importer in the world,

importing over 26% of global steel imports between 1997-2001, followed by the EU at 16%. Throughout the 20th century, 85% of non-US steel was tied to government ownership or control, cartels, or subsidies. WTO rules allow countries to impose temporary safeguards when increased imports have caused substantial serious injury to competing domestic industries.

Market CAP of an American Industries


Market Cap
30 27.4

25

20

19.5 17.9 17.2 16.1

15

MARKET CAP (US$ B)

11.9 10.1 10 8.8 7.4 7.2

0 Mittal Posco Nippon JFE Arcelor Thyssen Krupp Nucor Baosteel Companhia Siderurgica Nacional (CSN) US Steel

US Steel & Politics


When Bush began his first term campaign,

nearly 47,000 steel and iron jobs had vanished. President Bush and Vice President Cheney boxed themselves in politically during the 2000 campaign by pledging to come to the aid of steelworkers. Those promises helped Bush beat Al Gore in West Virginia.

The Steel Action Plan for America


In June 2001, the Bush Administration announced

its plan to correct distortions in the world steel market produced by government interventions.
On March 5, 2002, the US imposed "safeguard"

tariffs of up to 30% on about a third of the steel imported into the U.S. In exchange for three years of protection, the steel industry was required to commit to restructuring that would cut costs and shed excess capacity.

Market Problems:
Steel prices are still archaically determined by product

Pricing & Unions

weight; quality and value are not reflected in the price, merely tonnage" steel market analyst. Steel pricing is characterized by a lack of public transparency. The United Steel Workers of America mobilizes lobbying campaigns and blames each Administration for industryrelated problems. The Bush Administration, for example, has steadfastly refused to help provide relief for the more than 200,000 Steelworker retirees, surviving spouses and dependents whose health care benefits have been wiped out by unfair trade, bankruptcy and liquidation

EU perspective
The EU warned the US that it would start

imposing up to 2.2 Billions worth of counter tariffs on US imports. On March 25,2002, The EU imposed restrictive tariffs quotas based on the average of the annual level of steel imports in the years 1999 ,2000, 2001,plus 10% thereof. The EU s proposed sanctions targeted regions that the Bush Administration viewed as crucial to reelection campaign in 2004.

15 members of the European Union and seven

other nations complained to the WTO.

Japanese Government highlighted the legal flaws

of the US action under the dispute settlement mechanism. reserve the right to appeal the U.S steel safeguards to the WTO. were threatening to the integrity of the World Trade Organization

Chinas Ministry of Foreign trade said it would

South Korean government said that these actions

Panel Decision
The panel established on June 3,2002 had

to examine the consistency of the safeguards measures. Japan and Korea brought also their complaints to the panel based on Art.9.1. China, Norway, Switzerland on June 24, 2002. On July 8, New Zealand, then Brazil on July 29, 2002

They all claimed the inconsistency of the

measures applied on imports of certain steels based on Articles 2,3,4,5,7,8,9,&12 of the agreement on safeguards and Art.I,II,X,XIII,& XIX of the GATT 1994.
On July 11,2003 the Panel issued to the

members of the WTO eight Panel Reports in the form of one document.

The safeguards measures were inconsistent


The US failed to provide a reasoned and adequate explanation of how the facts supported its determination

with respect to increased imports.( Articles 2.1 & 3.1).

The US failed to show a causal link existing between any increased imports and serious damage to domestic producers. (Article 4.2(b). The US failed to comply with the requirement of

parallelism between the products for which the conditions for safeguards measures had been established and the products which were subjected to the safeguard measure.

The US failed to provide adequate explanation

demonstrating that unforeseen developments resulted in increased imports causing injury.

The Panel recommended that the DSB request the

United States to bring all the safeguards measures into conformity with its obligations under the Agreement on Safeguards and the GATT 1994

The Appellate Body


The appellate body upheld the Panels conclusions

concerning the complaints of China, the EU, New Zealand, Norway and Switzerland, that the application of all safeguard measures was inconsistent with the requirement of Article XIX:1(a) of the GATT 1994. It upheld the Panels conclusions that the application of the safeguards measures on imports on steels is inconsistent with the requirements of Articles 2.1,3.1,4.2(b) of the agreement on Safeguards. It found that the U.S. did not substantiate the claim raised under the Article 11 of the DSU. It recommended that the DSB requested the U.S. to bring its safeguard measures found inconsistent into conformity with its obligations under those Agreements.

Bush Ends Temporary Tariffs on Steel Imports


Safeguard measures result in Mission Accomplished.
o Industry consolidation and restructuring has

increased US productivity and lowered production costs, o PBGC is now in a position to pay 90% of the benefits of bankrupt companies US Steel industry now poised to benefit from a growing US and global economy. Continue to promote a level playing field for American steel producers and workers by closely monitoring import data

ITCs Analysis: The Safeguard Worked


Profitability has returned Prices have stabilized

Additional costs imposed on consumers was limited


Three largest steelmakers invested $3B to consoli- --date

flat-rolled sector