How Bush Can Get Right on Steel

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George W. Bush sold his soul for West Virginia. His decision Tuesday to impose tariffs on imported steel unquestionably did damage to the U.S. and global economic recovery at a precarious time, adding inflationary pressures to steel-based products and killing jobs in steel-consuming businesses (eight for every one saved by the tariffs, according to a study financed by those same steel consumers). It bruised America's relations with its allies — the EU, Russia, South Korea, Brazil, Japan, China, Taiwan and even Australia are all hopping mad and promising a fight — and left his Administration's pro-trade credibility in tatters. It also opened the door to countries like China throwing up pet barriers of their own. All in the name of about 800,000 voting steelworkers and retirees in West Virginia (and part of Pennsylvania), their unions, and their unions' congressmen.

Reports from the White House say it came down to Paul O'Neill the free-market economist against Karl Rove the GOP vote-counter. Pork politics — just those few rust-belt votes can lock down the House in 2002 and the White House in 2004 — won. And man-of-integrity Bush, who by keeping one campaign promise to West Virginia sold out not only his free-market principles but also most of his own party, is now sporting a sizeable black eye.

Bush might have saved all this trouble by simply writing U.S. Steel, Bethlehem Steel and the other ailing domestic producers the up-to-$12 billion bailout check they wanted, allowing them to pay off those crippling "legacy costs," consolidate at will, and get back in fighting trim without affecting U.S. prices or global relations. But unless Bush changes his mind in the 30 days before the tariffs kick in, it's over. The decision is made, and the damage is done.

Here's how Bush could make it all work out.

Remind the rest of the world it's a temporary plan. Send U.S. trade rep Robert Zoellick door-to-door to Europe, Russia, China and the Pacific Rim, pointing up the three-year term of the program, the review planned for the 18-month mark — and the fact that the tariffs decline each year over the life of the plan. Tell the EU to go ahead and take their beef to the WTO if they want — even the smallest cases take a year and enforcing them takes two — and to be patient.

Use the exemptions as an incentive to the victims. Have Zoellick remind complaining nations that he and Bush are still for free trade in the long term, despite the administration's pressing domestic political concerns. And tell them what they can do to soften Bush's heart.

Remind grousing Brazil that they've been allotted a generous 52 percent of the 5.4-million-ton slab-steel quota. And if they want to be treated like exempted NAFTA members Mexico and Canada, well, the Free Trade Association of the Americas (FTAA) negotiations — a Western Hemisphere version of NAFTA — kick off in 2005, which just happens to be three years away. Remind the Russians that they've been allotted 25 percent of that same slab-steel quota, and that if they want to be treated even better, like special-exemption Turkey, they could always be more helpful in the war on terror. Remind China — well, just remind China that they're a net importer of steel anyway, and consume most of what they produce at home.

Make sure he gets paid. Zoellick, embarrassed enough, didn't get specific Tuesday about how the decision helped Bush "manage the home front," but everybody knew what he was talking about. The White House can now go to the steel unions and rust-belt congressmen Bush just bailed out and present the bill: Passage of fast track.

Fast track is the "two steps forward" the Administration wants to pair with its big step back. The legislation, which allows Bush to submit trade deals to Congress on an up-or-down basis (no amendments), like campaign-finance reform tends to get bogged down in one Congressional body as soon as it passes the other. It can be rammed through, but it needs a push, and Bush now has to make sure his rust-belt charity cases remember who it was that pissed off the world to help them out, and to collect for it.

And after Bush reaps his political rewards in this year's midterm elections and wins election in 2004, he can rediscover his free market principles. In three years the FTAA negotiations — which hold far more promise of concrete results for the U.S. than the Africa-centric round currently underway in Doha, Qatar — will just be beginning, and the tariffs will just be ending. Maybe Bush will have his credibility back by then.

Or maybe he just should have written that check.