PRESIDENT BUSH REJECTS TARIFFS ON CHINESE WIRE
HANGER IMPORTS; CITAC STF URGES PRESIDENT TO USE
SAME LOGIC FOR STEEL IMPORTS

Washington, DC: The Consuming Industries Trade Action Coalition Steel Task Force (CITAC STF) today applauded President Bush's decision to reject tariffs on imported Chinese wire hangers in part because of the damage such tariffs would cause to consumers. CITAC STF called on the President to apply the same standard during the upcoming mid-point review on the steel tariffs that are devastating steel consumers.

In a statement released by the White House on April 25, the President rejected a recommendation by the International Trade Commission (ITC) to impose tariffs on the Chinese wire hangers. The tariffs were sought by domestic producers of wire hangers who claimed that the Chinese were flooding the market with less expensive imports.

In the statement, the President said, "providing import relief for the U.S. wire hanger industry is not in the national economic interest of the United States. In particular, I find that import relief would have an adverse impact on the United States economy clearly greater than the benefits of such action [a standard more stringent than in the global safeguard law under which the steel tariffs were imposed]. In addition, most domestic producers, including the petitioners, have begun to pursue adjustment strategies. While these strategies have included consolidation, modernization of production facilities, and expansion into complementary products and services, domestic producers are also expanding their use of imports. Indeed, a substantial part of the surge in imports during the most recent period measured was brought in by domestic producers themselves, including the petitioners."

The President's statement also expressed concern for wire hanger users: "Additional tariffs would also likely have a negative effect on the thousands of small, family-owned dry-cleaning businesses across the United States that would either have to absorb the resulting increased costs or pass them on to their customers."

William Gaskin, CITAC STF Chairman said, "The President's statement on wire hangers can be applied word-for-word to the current steel market in the U.S. Steel consumers - mostly small and medium-sized companies - are suffering from the imposition of the Section 201 steel tariffs imposed by the President in 2002 to help the domestic steel industry. They have been forced to absorb price increases resulting from the tariffs but are unable to pass them on to their customers, who can source the product overseas. The result: The tariffs have contributed to more than 200,000 job losses by steel consumers and are damaging the economy."

"Steel imports rose in 2002 almost directly as a result of imports of slabs by domestic steel companies," continued Gaskin. "The domestic steel industry is now even boasting of exporting steel for sale abroad. Like the wire hanger industry, there is simply no economic justification now for protecting domestic steel producers."

Gaskin also noted that the President cited the fact that even after 6 years of competing with Chinese imports, domestic producers still account for over 85 percent of the U.S. wire hanger market. With this dominant share of the market, the President offered that domestic producers could adjust to Chinese imports, without import relief.

"Again, the same logic should apply to domestic steel producers, who control about 75-80 percent of the U.S. steel market and have had more than 30 years to adjust to competition from global competitors," stated Gaskin.

"The CITAC Steel Task Force urges the President to apply the same logic to his mid-term review of steel tariffs due this autumn. If tariffs continue in effect, steel consumers across the country will lose more business to offshore competitors and the steel industry's customer base will be decimated," stated CITAC STF Counsel Lewis Leibowitz."

CITAC is a coalition of companies and organizations committed to promoting a trade arena where U.S. consuming industries have access to global markets for imports that enhance the international competitiveness of American firms. The CITAC Steel Task Force is comprised of steel consumers working to achieve the termination of the 201 steel tariffs by mid-point review and reform U.S. trade laws and policies to benefit U.S. steel consumers.