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Steel leaders confident tariffs will remain

| Thursday, Sept. 18, 2003

Top domestic steel industry officials said Wednesday they are confident that the Bush administration will keep a controversial tariff program in place until March 2005.

The U.S. International Trade Commission will deliver a report to President George W. Bush on Friday outlining the effects of the section 201 steel tariffs. Bush can choose to take no action and leave the tariffs in place, amend them or lift the program, which was enacted in March 2002.

"I'd say we remain confident," said U.S. Steel CEO Thomas J. Usher. "The ITC report will be a fact finding report, and I think it will be very clear that the industry has done a substantial amount of restructuring, which is exactly what the administration wants us to do."

Usher's comments in a conference call with reporters were echoed by International Steel Group Chairman Wilbur Ross, Ispat Inland Inc. President Peter Southwick and United Steelworkers of America President Leo W. Gerard.

Steel industry backers claim the tariffs have helped the industry consolidate, most notably with ISG's acquisition of bankrupt Bethlehem Steel Corp. and LTV Steel Corp. and U.S. Steel's purchase of National Steel Corp.'s assets. But steel consuming industries and foreign trade partners have been critical of the move.

Independent steel industry analyst Charles Bradford of Bradford Research in New York said the executives are probably correct in their prediction, but said politics will have a bigger hand than economics in making Bush's decision.

In addition to potentially losing key votes in crucial states -- including Pennsylvania, Ohio and Michigan -- in the 2004 election, West Virginia Senators Robert C. Byrd and Jay Rockefeller have threatened to cut the ITC's budget if the report is unfavorable, Bradford said.

A more likely scenario, Bradford said, would be for the Bush administration to keep the tariffs in place and wait for a November ruling by the World Trade Commission, which is hearing a United States appeal of its ruling that the tariffs violated international trade law.

"They have to show they used the time period so far to improve the situation, but in reality, the companies are doing worse. In the second quarter, all of the publicly traded companies lost money, where they made money in the first and second quarter last year," Bradford said. "They can further say consolidation hasn't worked because (domestic) capacity is up 10 million tons from where it was before the tariffs went into effect."

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