Baccalauréat Section Européenne, Juin 2002

Discipline Non linguistique: Sciences Economiques et Sociales

---

Preparation : 20 minutes

Oral exam : 20 minutes, 10 minutes to answer the question, and 10 minutes for discussion.

Using the document and your knowledge, make a structured answer of the following question.

Subject n°17 :

Steel tariffs Guardian Unlimited  Wednesday March 6, 2002

President George Bush has infuriated America's trading partners by imposing tariffs on steel imports. Mark Tran explains

What did the Bush administration do?
Mr Bush imposed tariffs ranging from 8%to 30% on various kinds of steel, claiming that US producers needed time to "compete on a level playing field" after 50 years of government subsidies to foreign competitors. The tariffs will be phased out in three years.

Are American steel producers hurting?
The US steel industry has been in decline for decades, but its plight has worsened in the last five years because of a rise in imports and a steep fall in prices. Around 30 steelmakers, mostly older companies such as Bethlehem Steel and LTV Corporation, have gone bust with loss of 20,000 jobs. But modern, so-called mini-mills have also run into difficulties.

Are foreign subsidies the problem?
To a very limited extent. More to the point, US steel producers have been hurt by the strong dollar, just as British companies have been squeezed by the strong pound. The older companies have also brought problems upon themselves. In better times management caved in to union demands for generous retirement and health benefits that have been increasingly unsustainable with a shrinking workforce.

So why did Mr Bush impose tariffs?
Mostly for political reasons. Steel producing states in the Midwest and West Virginia are swing states that could have a crucial bearing in the November midterm elections. (…)

Who will be affected by the US decision?
While short of the 40% tariff US steel companies sought, the move will prevent billions of dollars worth of steel from the EU, South Korea and China being sold in the world's largest market. European companies that will be hit include Thyssenkrupp, newly formed Arcelor and Britain's Corus. (…)

Will the EU retaliate?
The EU has threatened to impose tariffs of its own to keep out a surge of steel imports that will be diverted from the US. If the row over steel escalates, it could reverse the momentum for world trade liberalisation created by the launch of a new trade round at Doha in November.

Isn't Mr Bush supposed to be a free-trader?
During the presidential campaign, Mr Bush said: "Those who shut down trade aren't confident". But the US is pro-free trade in areas where it is strong (financial services, hi-tech and agriculture), but less so where its industries find it hard to compete such as textiles and steel.

Was the Bush decision a big change in trade policy?
The move to impose tariffs on steel imports marks a sharp of change of tack. In the past 15 years, the US has pushed for more open markets to help American companies, this time Washington is resorting to protectionist measures

.