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Trade wars.

WE'RE NOT SURE WHAT President Bush has in mind when he talks about free trade. His idea is far different from ours.

Because he played politics to win the key electoral states of Pennsylvania, West Virginia and Ohio and imposed steep import tariffs on steel last year, the president now finds himself between a rock and a hard place.

Last week the World Trade Organization ruled that the president's tariffs on imported steel were illegal.

Now the White House must drop them and antagonize workers in those key states or keep them and risk retaliation from the European Union, Japan and other trading partners who are planning on placing tariffs on U.S. products.

The European Union is threatening to slap duties of as much as 30 percent within a month on $2.2 billion in U.S. exports from clothing and orange juice to motor boats and sunglasses. Japan, Norway, Switzerland, China and Brazil have their own lists of U.S. targets.

There's no doubt that even though Treasury Secretary John Snow and Commerce Secretary Donald Evans are said to favor scrapping the tariffs, politics will play an important role.

The president has, so far, bowed to powerful industry lobbying efforts to pressure a reneging on his once free-trade stance. And if he had a foreign economic policy anymore it's hard to see.

Steel isn't the only item that's causing problems. There's the ongoing dispute over softwood lumber with Canada and agricultural products with several nations, and most recently there have been calls from the furniture industry to put tariffs on Chinese furniture.

Making the decision doubly tough for Bush is what the European Union has targeted for retaliation. Those items include rice from Arkansas, citrus from Florida, apparel from North and South Carolina, and fruit from Washington and Oregon, all of which can be major battleground states in the next election. Bush would have a rough time without them. It almost looks as if the Europeans are playing hardball and targeting Bush where they know it would hurt him the most.

No one likes to be threatened, but the U.S. overstepped the boundaries with its steel decision. And some reports say the duties may have even back fired by causing the steel-using industry to cut more jobs than the tariffs saved.

Decisions, decisions, decisions. Will Bush knuckle under to the European Union or face an electorate in key states that think he's let them down?

Either choice could have an impact on next year's presidential election.

Our best guess is that Bush will eliminate the tariffs on steel. They were designed to give the industry some time to restructure, and much of that has taken place. It's becoming obvious that the duties are costing more votes than gained.

It will be interesting to see how he spins it without appearing as if he's giving in to the Europeans.
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Title Annotation:George W. Bush campaign trail
Publication:Arkansas Business
Article Type:Editorial
Geographic Code:1USA
Date:Nov 17, 2003
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