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ECONOMICS REPORT - Steel Tariffs Dispute

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This is Bob Doughty with the VOA Special English Economics Report.

Last week, the World Trade Organization ruled that United States taxes on imports of steel violate international trade law and should be removed. President Bush ordered the new taxes, some as high as thirty percent, in March, two-thousand-two. He did so to protect the American steel industry from foreign competition.

The taxes were to last for three years and were designed to save American steel companies from failure. During that time, steel companies were to re-organize or join with other companies. Many struggling companies were bought by larger ones. And jobs were cut. But the steel industry says the reorganization is not complete. And steel industry leaders say it may never be complete if President Bush cancels the import taxes.

The European Union had protested to the W-T-O about the taxes on steel imports. The recent ruling permits the E-U to order taxes on imports from the United States as punishment. E-U countries say they plan to target more than two-thousand-million dollars worth of products. Several other nations, including Brazil, China, and Japan, also protested the steel import taxes and are threatening similar action.

The American steel industry offered a compromise plan this week. Three powerful steel companies proposed that the taxes on steel imports could end six months early. They also said the taxes could be sharply lowered during the next four months.But the European Commission, which negotiates E-U trade agreements, says the United States should honor the W-T-O ruling.

President Bush says he will decide on the issue in a reasonable period of time. The E-U has said it will begin taxing American imports December fifteenth if the steel import taxes are still in place. The E-U is expected to target products from American states that are very important to Mister Bush's re-election effort.

Some companies and individuals in the United States are also urging Mister Bush to end the import taxes. Industries that use steel say they have been hurt by the price increases that resulted.

And reports say some Bush administration officials are also calling for an end to steel import taxes. They reportedly think the taxes might be causing Mister Bush more political harm than good.

This VOA Special English Economics Report was written by Caty Weaver. This is Bob Doughty.

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