For Immediate Release
Office of the Press Secretary
December 4, 2003
Press Briefing by U.S. Trade Representative Robert Zoellick on Ending the Temporary Steel Safeguards
The James S. Brady Briefing Room
12:33 P.M. EST
MR. McCLELLAN: Good afternoon. I'm pleased to be joined today by
Ambassador Zoellick, our United States Trade Representative. I want to
begin with an opening statement by the President of the United States.
And then I will turn it over to Ambassador Zoellick, who will provide
some additional comments on the decision the President has reached
today. And he will be glad to take your questions on that issue. And
then at the end of the briefing, I'll come back for whatever other
questions you all may have on other topics.
This is a statement by the President: Today I signed a
proclamation ending the temporary steel safeguard measures I put in
place in March 2002. Prior to that time, steel prices were at 20-year
lows, and the U.S. International Trade Commission found that a surge
in imports to the U.S. market was causing serious injury to our
domestic steel industry. I took action to give the industry a chance
to adjust to the surge in foreign imports, and to give relief to the
workers and communities that depend on steel for their jobs and
These safeguard measures have now achieved their purpose. And as a
result of changed economic circumstances, it is time to lift them. The
U.S. steel industry wisely used the 21 months of breathing space we
provided to consolidate and restructure. The industry made progress,
increasing productivity, lowering production costs, and making America
more competitive with foreign steel producers.
Steel producers and workers have negotiated new ground-breaking
labor agreements that allow greater flexibility and increased job
stability. The Pension Benefit Guarantee Corporation has guaranteed
the pensions of eligible steel workers and retirees, and relieved the
high pension cost that burdened some companies. My jobs and growth
plan has also created more favorable economic conditions for the
industry, and the improving economy will help further stimulate
To keep the positive momentum going, we will continue our steel
import licensing and monitoring program so that my administration can
quickly respond to future import surges that could unfairly damage the
industry. We will continue negotiations with our trading partners
through the Organization of Economic Cooperation and Development to
establish new and strong disciplines on subsidies that governments
grant to their steel producers. We will continue to pursue economic
policies that create the conditions for steel producers, steel
consumers who rely on steel to produce goods ranging from refrigerators
to auto parts, and other U.S. manufacturers to succeed.
I strongly believe that America's workers can compete with anyone
in the world, as long as we have a fair and level playing field. Free
trade opens foreign markets to American products and creates jobs for
American works. And an integral part of our commitment to free trade
is our commitment to enforcing our trade laws.
I am pleased the steel industry seized the opportunity we provided
to regain its competitiveness and assist steel workers and their
communities. As a result, U.S. steel companies are now once again
well-positioned to compete both at home and globally.
And with that, I'm going to turn it over to Ambassador Zoellick for
some comments. Thank you.
AMBASSADOR ZOELLICK: Thank you. Good afternoon. One and one-half
years ago, the President acted to provide America's steel industry and
workers an opportunity to respond to increased competition from surging
imports due, in part, to global overproduction. And the industry has
used that breathing space well, to the benefit of many families and
communities around the country.
Trade is an important engine of economic growth and job creation.
To help very open economies like ours to adjust to rapid and sharp
changes, we sometimes provide temporary safeguards from imports. Such
relief is an accepted principle of global trade rules.
In March 2002, after a nine-month investigation, the independent
U.S. International Trade Commission found that 10 steel industry
products had been injured by a surge in imports that warranted relief.
Based on that finding, the President decided that America's steel
industry needed this breathing space. The industry was facing
tremendous pressures. Thousands of jobs were at stake, and many steel
firms were at or facing bankruptcies. The industry had been seeking
help following a rush of low-priced imports in the aftermath of the
Asian financial crisis. This President acted.
The President imposed temporary safeguards, "To help give America's
steel industry and its workers the chance to adapt to the large influx
of foreign steel." To do so, he exercised his authority under Section
203 of the 1974 Trade Act. Now, these safeguards consisted principally
of tariffs, ranging from 8 to 30 percent on the 10 categories of steel
products identified by the ITC. And in order to minimize the impact of
these tariffs on U.S. consumers, some steel products were excluded. In
addition, exports from our free trade partners and most exports from
developing countries were excluded, as well.
In September of this year, the ITC provided a follow-up report, a
midterm assessment of the impact of the safeguard. That assessment
provided an important basis for the President's deliberations of
whether to maintain, modify, or end the safeguard.
Now, there are three key elements that inform the President's
review. First, the ITC's analysis clearly demonstrated that the
safeguard worked. It provided the steel industry with a breathing
space they needed to regain its competitiveness. Jobs have been saved;
steel businesses have been given another chance to compete.
Since the safeguard has been in place, the industry has undergone
major restructuring and consolidation. More than half of the steel
production capacity is owned by firms that merged or restructured. And
they cut about 4 million tons of inefficient capacity. Overall
productivity has increased sharply. The ITC found that in the
safeguard's first year, productivity increased 12.5 percent for the
critical flat-rolled products, and by between 5.5 to 26 percent for the
range of products.
Prices have stabilized, and prices today are about 15 to 30 percent
higher than in February 2002, the month before the safeguard. Workers'
pensions have been saved and taken off steel industry books. The U.S.
Pension Benefit Guarantee Corporation has assumed guaranteed pension
underfunding of 14 steel producers, totaling $8.2 billion.
Profitability has been returned. After losing nearly $5 billion in
the 24 months before the safeguard was initiated, the flat-rolled
industry posted profits of $400 million during the first 12 months of
relief. And financial markets are reflecting the growing optimism for
the steel market. U.S. Steel Corporation stock is currently at a
52-week high. Through November 21, the S&P index of steel stocks rose
24.4 percent, as compared with a 13.9 percent increase for the S&P
500. And U.S. Steel exports are at historic levels, too. Through
August exports are 49 percent above the prior year, and that accounts
for about 8.4 percent of total U.S. shipments.
Now, this safeguard definitely provided the industry and workers
with needed breathing space. And to its credit, much of the industry
has used this time well. The bulk of the reconstructing that was
necessary to make the industry more competitive has now taken place.
Second, not only is the industry much stronger today than it was 21
months ago, but the economic circumstances that justified the safeguard
have changed. Imports are no longer depressing U.S. prices. On an
annualized basis, imports to date are at their lowest levels in a
decade, even including the exclusions from the safeguard. Demand in
Asia and Russia has rebounded. China's steel consumption has increased
22 percent a year since 2001, and it's forecast to increase even more
next year. Changes in relative prices have lowered import pressures
and increased export opportunities.
But last, but importantly, safeguards unavoidably impose some
additional costs on consumers. The aim, of course, is to make sure
that the benefits of the safeguard outweigh the costs. Fortunately, as
the ITC report demonstrated, the cost to the United States economy
imposed by the safeguards were limited.
Now, the purpose of the midterm review has been to determine
whether economic circumstances have changed, such that the cost of
maintaining the safeguard outweigh the benefits. In the first 21
months of the safeguard, the benefits to the industry outweighed the
marginal cost to consumers. Going forward, however, this is not the
case. For these reasons, the President has concluded that the
safeguard has done its job and can now be lifted.
We will continue to use our steel import licensing and monitoring
system so that we can identify potential import surges quickly in order
This President has worked hard with the Congress and with other
countries around the world to open markets for product and services for
American businesses, farmers, workers, and to help consumers stretch
their hard-earned dollar to go further. At the same time, he has
recognized that we need to help Americans adjust to change, through
safeguards like this one, worker retraining, better education. And
safeguards are not supposed to be permanent. They provide a helping
hand in extraordinary circumstances.
So we're pleased with the steps that the industry has taken to make
the most of this breathing space provided by the safeguard. And we
look forward to working with them and with other U.S. businesses to
continue to grow the economy, to create jobs, and to expand
Pleased to take your questions.
Q Ambassador Zoellick, the steel industry says, certainly they
have gone through a lot of the reconstructing and consolidation that
was needed, but that they still have more to do and now is not the time
to be lifting these tariffs. Furthermore, they say that while foreign
imports are not the same type of damaging competition that they were 20
months ago, a rise in the dollar could turn all of that around very
quickly. Are those concerns not founded?
AMBASSADOR ZOELLICK: At this point, no. The whole point of the
safeguard, as I mentioned, was not to be permanent, but was to take the
time necessary to get the industry back on its feet.
And from the very start of the safeguard, this midterm review was
built into the process, the ITC report was built into the process. And
as I've outlined, what have you seen -- you've seen profitability go
up; you've seen prices go up somewhat and stabilize. They went up and
came down, but have stabilized above earlier levels. The restructuring
that's taken place in these companies, as I mentioned, is enormous,
including labor contracts that have changed the overall picture, going
forward. And one of the best indicators is look at what financial
markets are telling you in terms of the future earning stream.
So the key about this safeguard, and it's an important part about
our overall trade policy, is sometimes industries really go through a
tough spot. And in this case, this industry really started to get hit
very hard after the '97 financial crisis. And if you look at their
overall statistics, they were really crying for help in the late '90s.
This President came in, asked the ITC to do the investigation, and he
acted. But he also believes that after that period is done, the
industry is stabilized, has an opportunity to move forward, that's what
we should do, because a safeguard is always a balance.
Q Ambassador, the retaliatory tariffs that the European crafted
were meant to inflict maximum political pain on the President's
reelection. How did that factor into your decision?
AMBASSADOR ZOELLICK: This decision was independent of that, in
that what we did and what we did from the start of this process was to
ask for this ITC review, and we were always going to measure the
benefits and costs, to try to get a sense of whether the industry was
coming back, what the circumstances were, in terms of it, and as I
said, profitability, the restructuring in terms of capacity, dealing
with some of their contractual arrangements -- removing $8.2 billion
from their pension guarantees and making sure that's protected through
the Pension Benefit Guarantee Corporation, another important thing. So
whether you look at any of the statistics, imports, imports -- all that
is on the positive side.
Now, of course, it's good that we now don't have retaliation. So
in my view, this has been a win-win proposition. You give an industry
a chance to get on its feet; the ITC showed it didn't have much effect
in terms of the past couple of years with some of the consumers -- some
effect, but not overwhelming effect; and there's also no retaliation.
Q If it was independent of the WTO decision or the EU
retaliation, why did it take you so long to make a decision after the
ITC report? It's been several months since the ITC report.
AMBASSADOR ZOELLICK: I've been in government for so many years, a
couple of months after an ITC doesn't strike me as too long. Look,
this is an important -- it was clearly an important issue. It is a
clearly important industry. And the President wanted to take the time,
do the analysis. We relied on the ITC report. A lot of different
offices looked at this. We also got imports -- or sort of inputs
looking at financial sectors. And so that was the basis of the
And so going forward, obviously, we think we've got a much stronger
industry. But obviously, we're pleased that we've avoided retaliation,
as well. But for us, the key from the start is to give breathing
space, but not give permanent protection.
Q The last few weeks you've talked about how this has been the
President's decision, and you've deflected a lot of your own comments
about that. Yet today, you come back to make the announcement, and the
President seems to be averse to going on camera to really talk about
this. Can you talk a little bit about the political implications of
his own owning up this decision, and secondly, the political
implications of getting TPA, versus some of the electoral states in the
AMBASSADOR ZOELLICK: Well, I've known this President very well
since 1988, and I haven't seen him shrink from difficult decisions,
whether policy or political. So I think the reason I'm presenting it
is, given the technical nature of this, they thought that it might be
useful to have me explain some of the basis that went in to the overall
decision as part of interagency process.
In terms of the politics of trade, what I've emphasized to you, and
what I would emphasize again today is that we have a very open
economy. Our average trade-weighted tariff is about 1.6 percent. We
have a large current account deficit, a lot more exports coming into
this country than exports that we send out. If you're going to run an
open economy, you have to have means to try to help people that come
under extraordinary stress.
And as I said, this is an industry that got hit very, very hard,
starting in '97, '98. And the purpose of safeguards -- and these are
not -- this is not something only the United States has done. There's
about 50 safeguards in place around the world today. There were
safeguards that we inherited during the course of the '90s. And in
terms of trying to deal with the politics of trade at home, you have to
give industries a chance to get back on their feet. But to go back to
your question, it doesn't mean that it's a permanent situation. And
industries may always want more, but if you look at the picture of this
industry, we think that they're not only stabilized, but heading
Q You mentioned that they were starting to get hard in the late
'90s -- '97, '98 I think you just said. Are you saying that there
should have been action earlier than there was, that the steel industry
could have received and should have received the same benefits, two,
three, four years earlier than it did?
AMBASSADOR ZOELLICK: I wasn't here, I wasn't in a position to make
that judgment. All I can say is, is that I knew a number of the steel
industry executives, including, at that time, the head of the United
Steel Workers, because we served on a commission together, and they
were pushing very much for this type of help. And all I can say is
that President Bush came in, looked at the situation, consulted his
advisors, and asked the ITC to do an analysis of whether the claims
were justified. The ITC came back with that analysis. That's a
bipartisan, independent commission. They didn't say for all products,
but they said for these 10 products. And the President devised this
And now, as part of that remedy, we always said we'd do this
midterm review. We have. The industry is much better off; we're not
facing retaliation. That strikes me as a good combination.
Q Certainly this is a very positive spin on a policy that you
believe worked. But what about the criticism out there that this
President simply caved, that the European Community was very shrewd in
targeting retaliatory tariffs that could have hurt him in a re-election
bid; that a policy that was, in part, designed to help the steel
industry in battleground states was doing more damage to consumers of
steel in other battleground states; and at a time that the economy was
improving, that you were at risk of a trade war? So, again, how is it
that the President didn't cave on this?
AMBASSADOR ZOELLICK: Well, look, the best thing that -- people are
always going to come up with their interpretations of a policy. The
best thing that I believed in many years of being in the government is
to set out what you're trying to do from the start, which we did when
we had the ITC investigation, the ITC results, the President setting up
the safeguard, the President setting up this review. And now, I guess
you and others have to judge the facts. Does the industry look like it
was much healthier in terms of profits and productivity and the import
situation, the export situation? The President looked at those numbers
and felt that it was much healthier.
Now, as you properly point out, people say, well, what was the
effect of this on other industries, when you raise tariffs? The ITC
looked at that, as part of the midterm review, and something called a
Section 332 review. They found the net dollar effects on the economy
were $30 million. Okay, now, whenever you use net, that means some
people paid more prices, there were some effects on some industries.
Part of that was an offsetting effect in terms of the tariffs that we
collected from the public side versus the private side. So it's
certainly our view that while these decisions are never easy, a key
part of free trade -- and part of the message has been from the start,
if we're going to go to Congress and get support for free trade, if
we're going to promote free trade around the world, you've got to help
people that are knocked off their feet. And it doesn't mean you give
them permanent protection, but it means you give them a breathing
space. And in that way, this thing worked.
Q Was it the President's determination that at this point in
time, a trade war was just not worth the risk at this juncture for the
AMBASSADOR ZOELLICK: Well, I don't think this President would ever
seek a trade war. But this determination was made on another basis.
This determination was made on the basis of the fact that in this
independent review, in this process, the decision of the benefits of
costs independently were the basis that we should lift the safeguards.
Now, look, obviously, if you can avoid tariff retaliation -- we
have other issues where we're retaliating against countries, countries
are retaliating against us. Wherever you can, you try to work out
those problems, because the goal is to try to open markets, not to
close them. But that's part of the WTO process, we accept that
So, again, to me, if we can begin a situation where we've helped
this industry get back on its feet -- a lot of people now have jobs
that wouldn't have had jobs if they were left with the policies that we
inherited. A lot of people have pensions, through the Pension Benefit
Guarantee Corporation. A lot of people were stockholders, and now are
better off. And it's part of a broader approach, in terms of the
strengthening economy. That obviously helps us, too.
So if you look at forecasts for steel prices, some of them are
actually to go up a little bit more. Why is that? Consumers are
buying more, auto companies are big steel purchases. So you -- look,
it's -- one can't forecast with precision the exact aspect of a market
economy. But, to me, this is a very important part of trying to keep
markets open. And probably all of you know, to varying degrees I spend
a lot of my time on the Hill, trying to work with people. You've got
to put together coalitions to support things. And I'm pretty much as
much a free trader as they come, but I know that being able to get
those coalitions together, you've got to be able to help people when
they're knocked down. And I think that's a good thing.
Q The World Trade Organization did find these tariffs to be
illegal. And there's a school of thought out there that with the
United States of America engaging in protectionism, as it was found to
be, it undermined efforts to liberalize trade. That's something else
you do around the world. But what do you say to the notion that when
the President of the United States slapped these protectionist tariffs
on, it hurt efforts at Doha and elsewhere to promote free trade?
AMBASSADOR ZOELLICK: Yes, I know that's a point that's often
raised. I haven't found it. And the best thing I can do, again, is
give you facts. You know, in this administration we've moved three
free trade agreements through the Congress. I'm in the processes of
negotiating free trade agreements with 12 more countries; a number I'm
trying to finish this month. The President has announced moving
forward with seven more. Obviously, a lot of countries are eager to
move ahead with trade with the United States.
During this time, we not only managed to regain the President's
trade negotiating authority from the Congress, as part of the Trade Act
of 2002, something that slipped for eight years, but we launched the
Doha Round, which had been failed in Seattle. So trade negotiations --
and I know this as well as anybody -- have their ups and downs. But I
find no shortage of countries willing to come forward and wanting to
negotiate free trade agreements, or in the other negotiations, try to
deal with the issues that we need to deal with -- whether they be
agricultural subsidies, where we put forward very aggressive proposals
to cut our subsidies and cut our tariffs if we can get other countries
to try to do it. We put forward a proposal to eliminate all tariffs in
So, again, the other key point is -- and many of you who cover this
sporadically may not be aware of this part -- but safeguards are part
of the international system. As I said, there's 50 in place now. I
double-counted, or I counted before I came over here, because I thought
someone might ask this; I think India has about eight in place now.
Philippines has five in place now. These sometimes get reviewed by the
WTO, as they do. One of our unhappinesses is I think the WTO panels
are a little tougher on safeguards than they should be. It is useful
to know that they did not challenge our underlying safeguard law,
what's called Section 201. They challenged its application in this
Q Just to be clear on this, are you saying that the WTO ruling
and the threat of retaliatory tariffs had no impact on this decision?
And if that's the case, what does that say about the effectiveness of
the WTO in these kinds of disputes?
AMBASSADOR ZOELLICK: What I'm saying is, this process was
independent. In other words, the decision that the President made was
on an independent analysis that we started from the beginning in terms
of this midterm review. And again, I suppose people could look at
these numbers and come to some different conclusion, but you see a much
stronger industry. And given the President's inclinations where he
wants to try to open markets and have fewer tariffs, he thought it was
time to lift the safeguards.
As for your other question about the WTO, look, this administration
has done a lot to promote the WTO. Frankly, Commissioner Lamy of the
EU and I were probably the moving forces to get the Doha negotiation
launched after its failure in Seattle in 1999. We put forward these
very aggressive proposals in agriculture and goods. We had a setback
in Cancun. But, as those of you that cover the trade agenda know, we
were the first country that suggested, well, as a way of coming back,
why don't we work off the Cancun draft text? And when the President
was at the APEC meeting, we got all the other countries of the APEC
economies to agree to that. In the past week or so, the European Union
has finished its review, and it hasn't said exactly that's what it
would do, but I think it's moving in that direction.
So we're very committed to the global trade round, the WTO
process. Look, again, in the past couple of weeks, we've won cases
with Canadian dairy. We've won cases with Mexican telecom. We've won
cases with Japanese apples. And these have important issues for our
agriculture -- the sanitary and phytosanitary standards. This telecom
case is the first one under these telecommunications rules that were
developed in 1997. So we have a big stake as a major trading economy.
But this decision was based on the benefits and costs independent of
Q Do you still dispute the WTO finding on steel? And I've also
got a question about health benefits. But if you could answer the
first one. Do you still dispute that finding, the WTO finding now?
AMBASSADOR ZOELLICK: Well, we certainly disagreed with it. Well,
we disagreed with it, and so we appealed it. The appeal changed some
of the findings. I don't want to get too technical with you on this,
but they changed some aspects of how the first-level ruling about ITC
decisions, whether concurring opinions, how they can count. And so we
have some continuing disagreements. But we accept those rules, as
other countries accept those rules, as we go forward. But again, this
decision was based independently on this assessment.
Q And the steel workers have cited as one of their major
concerns the fact that their -- the retiree health benefits could be
cut -- they're linked directly to industry health. And as the tariffs
are lifted, that reduces the funds available for health benefits. How
do you address that concern?
AMBASSADOR ZOELLICK: Well, the best way to have a health benefit
or anything else is to have a job. And the most --
Q These are retirees -- these are people dependent on --
AMBASSADOR ZOELLICK: And I was going to say, in addition, we've
also passed legislation that gave a 65 percent subsidy of steel
pensioners ability to pay for their health care if they lose their
health care through these changes -- through the changes of the
industry restructuring. So that's something that actually we helped
get through legislatively that makes a special benefit for health care
for steel workers.
But, in addition, I wouldn't underestimate the fact of the role
that the PBGC -- the Pension Benefit Guarantee Corporation -- has
played in this. When -- they pick up on average -- because it depends
on your age of retirement and other things -- about 90 percent of
somebody's retiree benefits. And $8.4 billion of retiree liabilities
means a lot of pensions for a lot of people.
And then the other thing is, these restructuring arrangements,
including the one that led to a lot of the labor contracts to be
adjusted is one -- a company called ISG -- it's International Steel
Group. It used to LTV. And as part of the new sort of labor rules,
they also changed how they will contribute not only to current workers,
but some of the retirees' benefits.
And the reason this contract is very, very important is because,
look, for an industry to compete in the global economy they had to do
some things that also reduced some of the costs. But, frankly, one of
the things that was impressive about this, they also cut supervisory
layers from about seven to three, and, frankly, built in incentives for
the steel workers to be able to get more benefits if the company does
well -- which is the direction you want to go. That contract was then
picked up in basic nature by U.S. Steel. And it was also applied to
the Bethlehem workers, including the ones out here at Sparrow Point.
And so that's exactly the sort of thing that we wanted to have happen,
and, frankly, wouldn't have happened if you didn't have the safeguard.
Q Are you taking any steps today, or planning to take any steps
to mitigate the effects of this action on the steel industry? Any
specific new steps?
AMBASSADOR ZOELLICK: Well, first off, the mitigation has been over
the course of the past 21 months, where you've had a much stronger
steel industry. Going forward, as I mentioned, the Department of
Commerce has put in a monitoring system that basically requires a
weekly adjustment in terms of any imports coming in, that is on the
Internet. And it will get close to real time, at least for economic
and trade statistics, in terms of learning about overall import
There are, as you know or may know, there's other ongoing trade
remedies that private parties or the government could use. But at this
point, with this safeguard, we feel this industry is much stronger.
And again, part of this is the overall economic climate. Growth in
China, as I mentioned, bringing in a lot, a lot of steel exports from
around the world. And it's a good sign that our steel exports are up.
Q When did the monitoring system go up, the Commerce monitoring
system? Has that just started, or is that --
AMBASSADOR ZOELLICK: No, we've had that in place before. And
we're going to be keeping it as a way to try to make sure that we keep
on top in a weekly fashion on data.
Q That was my question.
AMBASSADOR ZOELLICK: Okay.
Q Mr. Ambassador --
AMBASSADOR ZOELLICK: Let me make sure I get people who didn't ask
a question. You didn't.
Q When is the -- when is this all effective? And is this going
to be --
AMBASSADOR ZOELLICK: Tonight at midnight.
Q Okay. Is it going to be any type of a phasing-out? Or is it
going to be a complete lifting?
AMBASSADOR ZOELLICK: No, it lifts -- tonight at midnight. Just to
give you -- without getting to technical on this, the safeguard itself
had a phasing process. So the highest of the tariffs were 30 percent.
That was lowered to 24 percent at the end of a year. So there's
already been --
and the ones that were at lower levels were also reduced a similar
percentage during the time. So there has already been a phasing of
this, and that was built into the process along with the midterm
Q Does the White House have any estimate of how many American
jobs were lost as a result of the tariffs? The steel consuming
industries say that they've been hurt a great deal. Can you speak
AMBASSADOR ZOELLICK: I'd like -- if I had some better information
-- mainly because a lot of numbers are thrown out. You've obviously
got people on both sides of this issue that will come up with
economists studies as numerous as economists. But the best thing that
we can point to was that the ITC tried to do an analysis of the dollar
effects, as I mentioned. And as I said, they came up with a $30
million net dollar effect. That was based on about a $600-million-plus
loss to the private economy, but an increase in the tariff benefits.
Now, they also surveyed people in terms of jobs. And they really
did not get very large numbers in terms of the job loss. But it's hard
to tell with an overall survey of this. And the other thing is it's
hard to isolate out other conditions in terms of what affected the
economy. So my own sense is that the estimates of job losses have been
far expanded beyond what any reality would have been.
But here's another job number. You've got about 150,000 steel
workers in this country, and they can thank this President for having a
chance to compete in the future.
Q Many analysts of the industry say that it was poised for a
restructuring even before the tariffs were laid in place. I'm
interested in what your assessment is of the marginal impact of the
tariffs on that, beyond what would have happened without any action.
AMBASSADOR ZOELLICK: Well, look, the industry certainly needed a
restructuring. If you look at what I've talked about here in terms of
-- when you have about half of an industry merger in terms capacity
production, merge, restructure, change their labor contracts, get some
help on the pension side, get some help on the health care side in
terms of retirees, obviously, there were a lot of different aspects
going on here. It was always my belief, looking at this industry
before we came and when we came in, they needed something like this to
give them the breather. And that was certainly the message that they
were sending before we took office and now.
Now, how much of that are other forces here? Of course, as I said,
we are part of a world economy. Demand has picked up; relative prices
have changed. There's a lot of other variables in this process. And
so that is one reason why the President built in a midterm review. We
couldn't say for sure how this would work, whether the industry would
do what they needed to do, and what the external conditions are. I'm,
frankly, just very pleased that those have come together.
And, look, going back to your question early on, industries have to
compete. There's nothing that's secure for people forever. But the
purpose of a safeguard was to allow them to do that restructuring, and
taking, more specifically -- I mentioned ISG as a case. Well, ISG is a
executive that came from outside the industry. He bought into a
bankrupt company. He did a different labor agreement. That labor
agreement has spread. Sometimes industries that need change need to
get somebody from the outside. And, frankly, it starts a process.
Now, in addition to talking to the steel executives, I talked to
the union leaders along the way. They also knew they were going to be
under stress. But the management's willingness to change some of the
supervisory levels, give people a greater role, all those things have
to come together. And that's why -- look, the process is not finished,
but this industry has taken this time and used it pretty darn well to
give people a chance to move forward. And that's where I think the
safeguard acted as a catalyst to go forward.
Q If everything you've said is true, why isn't the industry
jumping up and down? And do you actually think that people are going
to think the WTO threat was not -- had no impact? Surely you must
understand that your whole momentum for reaching the decision was based
AMBASSADOR ZOELLICK: Well, on your first point, in terms of what
people are going to say or want, look, this is an industry that wanted
help for a number of years. It got help. You and I have both been
around long enough to know that industries often look for more help.
But this is where a balance -- this is where a balance comes in, in
terms of trying to say we gave them a special breathing space; you make
your own judgment of the statistics, whether they've started to use it,
and whether they've gathered some strength.
Q You painted it in such a rosy way, and they don't seem to be
reacting that way.
AMBASSADOR ZOELLICK: Well, you judge by the statistics.
Industries often look for more help. This President makes a balance, a
judgment about giving them enough help, but obviously weighing these
Now, your other question is -- be careful how I represent what I
said. I said it was an independent decision. It was based on the
benefits and costs. And so people are obviously aware of the fact that
you've got WTO actions, okay, but that was not the basis of this
Q Maybe not the basis, but it surely had an impact.
AMBASSADOR ZOELLICK: Well, we're very delighted that there's no
Q You have already free trade agreements with Mexico, with
Chile. You're almost finishing a free trade agreement with five
Central American countries. Others are on the way --
AMBASSADOR ZOELLICK: Trying to.
Q What is the outlook of the famous dateline 2005 for a free
trade agreement for a whole hemisphere? I know Brazil has some
questions, Venezuela has some questions, I think Ecuador has some
AMBASSADOR ZOELLICK: Well, we just had a ministerial meeting of
the 34 democracies of the Western Hemisphere in Miami a couple weeks
ago. And to answer that question, you really have to look at two
tracks, and it really goes to the way you asked it. The United States
has free trade agreements with NAFTA, with Mexico, with Canada, with
Chile, moving ahead with Central America. And we have now announced
free trade agreements, including one with the Dominican Republic, to
add to CAFT early next year. If you take all those sort of high
quality, NAFTA, Chile free trade agreements -- agriculture, goods,
services, intellectual property, environment and labor issues, that
covers, if you take out the United States, 68 percent of the Western
So we're well on our way to creating that hemispheric free trade.
But the Free Trade Area of the Americas, the venture launched in 1994
-- or the ALCA, for Spanish speakers -- is something that we also want
to try to move forward, and that would really need to add the four
countries of MERCOSUR -- Brazil, Paraguay, Argentina, Uruguay -- as
well as a number of the 14 Caribbean economies.
And what we did in Miami was to take that process and move it in a
much more practical step in terms of what we'll try to accomplish in
the negotiations over the course of the next year to try to keep that
on track. But our logic -- and this goes to some of the other
questions -- has always been to use what we call a competition
liberalization. The President wants to achieve free trade in the
Americas. It's something the United States has talked about since the
1820s and Henry Clay. We're well on our way doing it, in terms of
these individual agreements, but our goal would be to complete the Free
Trade Area of the Americas. And we made a good step in Miami, but
there's a lot of tough work to do still.
Q Can I ask one more question? This comes from people who I've
talked to who know this issue backwards and forwards, because they're
involved with it. They say that what happened was that for all of your
tough talk over the last couple of years, you allowed the Europeans to
put you in a box, and that because this was never a popular tariff at
the USTR office, and to preserve U.S.-EU relations, you just decided,
I'm not going to fight this, let's just walk away from it.
AMBASSADOR ZOELLICK: Look, I know there's lots of speculation on
this topic. I'll say, in total honesty, I've always supported this
safeguard, from the start. And I can remember talking with former
Secretary O'Neill, who had a good background in the aluminum industry,
on inauguration day about how we needed to try to help this industry.
This goes to some of the other questions. This industry was in such
bad shape, you had a reaction in Congress where you had over half the
members of the House of Representatives willing to sign a bill that
would impose total quotas.
Frankly, my judgment was, going back to my belief in safeguards,
what happened was people didn't listen to the need of an industry that
really was getting hammered. And so that's where you need to use a
safeguard -- not forever, but for a breathing space. We used it; it
built support; we got trade act authority; we've given the industry a
chance to recover, and its done pretty well, and there's been no
retaliation. So if that's the sort of box you end up being in, I could
take that a little bit more often.
Q Can I try and just pin you down on one other point? Each
time we've asked you about --
AMBASSADOR ZOELLICK: You can try.
Q I'm going to try. Each time we've asked you about the impact
of politics here, the role of the retaliatory tariffs, you've said it
was independent. Yes or no, did politics play a role here? Did the
threat of retaliatory tariffs factor into the President's decision?
AMBASSADOR ZOELLICK: Those are two different questions, in that --
that's why I try to answer about the politics of trade. The whole
belief in safeguards is one that you have to -- you can't have trade
policy in a vacuum. You've got to help people adjust. And that's why
part of the Trade Act of 2002 included $12.5 billion of worker
retraining funds. I believe this goes to the education system in our
country. If you're going to have a pretty open economy, and we've got
one of the most open economies in the world, you can't ignore people's
need to adjust and change. You've got to help them do it. And there
are tools that we have as a society to do that -- worker retraining,
safeguard, so on and so forth.
So if you're an ardent believer in opening markets -- and I am; our
tariffs are pretty low and I want to open other people's markets --
you've got to listen to people in terms of the need to give them a
chance to get back on their feet. And obviously that helps you with
congressional politics, in terms of trying to get support for trade.
Because, remember, under the Constitution, the authority for trade
negotiation belongs to the Congress. We get to borrow the authority.
I have to give it back regularly, and they get very concerned about the
condition it's in.
So, look, my job involves international politics, the domestic
politics, economics. That's the whole integration of the system. So,
sure, in that sense, the politics are part of trying to accomplish an
agenda. And, as I said, you make your own -- your own analysis. But
this one worked out pretty darn well. We avoided any retaliation. We
gave the industry a chance to be back on its feet. And in terms of
trade negotiations, I didn't find it any effect. People, of course,
use excuses for whatever their position. But it didn't stop us from
Q Did re-election come up in this meeting?
AMBASSADOR ZOELLICK: Pardon?
Q Did re-election come up in the meeting?
AMBASSADOR ZOELLICK: Not any meeting that I was in, no. And then
on your other point about independence, again, the key point I'm trying
to emphasize is, look, we needed to make the analysis in terms of the
benefits and cost of the safeguard. And we did that, and I think the
facts are pretty stark and striking. But, finally, in terms of the
bottom line, then, is that is it good to avoid retaliation, too?
Q Ambassador, based on all that you were just saying in terms
of the President's rationale that he was right, would you say that he
would be comfortable doing this again for the steel industry as long as
he was President and they made a case that they needed it?
AMBASSADOR ZOELLICK: I've worked for three or four presidents, and
one thing I've learned is never to preempt a president's decision. So
that's probably a good point to end. (Laughter.)
MR. McCLELLAN: Thank you, Ambassador.
END 1:15 P.M. EST