- Spitfire List - https://spitfirelist.com -

How Bush’s Berlin Ambassador Pick Profited from Protective Tariffs against German Companies

by Georg Mas­co­lo and Juer­gen Dahlkamp
Der Spiegel [1]

Wash­ing­ton’s choice for future US ambas­sador to Ger­many has all the mak­ings of a polit­i­cal bomb­shell. For years, a com­pa­ny owned by the mul­ti­mil­lion­aire and new­ly-appoint­ed diplo­mat William Timken, Jr. has been prof­it­ing from anti­com­pet­i­tive tar­iffs — at the direct expense of Ger­man com­pa­nies.

As Wash­ing­ton’s new ambas­sador to Ger­many, William Timken, Jr. will face, among oth­er things, the task of patch­ing up dam­aged rela­tions between the two coun­tries. But there’s one small prob­lem with this pic­ture. The mul­ti­mil­lion­aire who US Pres­i­dent George W. Bush nom­i­nat­ed to the posi­tion two weeks ago also hap­pens to be Chair­man of the Board of Direc­tors of The Timken Com­pa­ny, an Ohio-based firm that claims to be the biggest man­u­fac­tur­er of roller bear­ings in the world. And ever since the 66-year-old Timken, a major donor to the Repub­li­can Par­ty and dec­o­rat­ed with the hon­orary title of “Super Ranger,” (reserved for those who con­tribute more than $300,000) has been slat­ed to take over the posi­tion in Berlin, his com­pa­ny’s ques­tion­able busi­ness prac­tices have sud­den­ly become taboo among Ger­man politi­cians and indus­try lob­by­ists.

Here are some good exam­ples: Last Tues­day, the usu­al­ly out­spo­ken Bavar­i­an Min­is­ter of Eco­nom­ic Affairs Otto Wiesheu said he was not the right per­son to talk to about the Timken Com­pa­ny. On Wednes­day, Ran­dolf Roden­stock, the head of the Bavar­i­an Busi­ness Asso­ci­a­tion, also declined to com­ment on the mat­ter. Even Ger­many’s fed­er­al Min­is­ter of Eco­nom­ics and Labor, Social Demo­c­rat Wolf­gang Clement, has opt­ed to dis­creet­ly down­play the issue.

In oth­er words, no one wants to talk about the fact that the Bavar­i­an roller bear­ing indus­try is suf­fer­ing because it’s being forced to pay pro­tec­tive tar­iffs for prod­ucts it exports to the Unit­ed States as a result of charges of price dump­ing. To make mat­ters worse, the Bush admin­is­tra­tion is fun­nelling the pro­ceeds direct­ly to the Bavar­i­ans’ US com­peti­tors, pri­mar­i­ly Timken. In response to a com­plaint filed by the Euro­pean Union and oth­er states in Jan­u­ary 2003, the World Trade Orga­ni­za­tion, or WTO, ruled that this prac­tice is clear­ly ille­gal. Yet, no one dares speak out against it — or against Amer­i­ca’s newest ambas­sador.

Ignor­ing the WTO

Jür­gen Geissinger, CEO of the Scha­ef­fler Group in the north­ern Bavar­i­an town of Her­zo­ge­nau­rach and also pres­i­dent of the Fed­er­a­tion of Euro­pean Bear­ing Man­u­fac­tur­ers Asso­ci­a­tions, com­plains: “Timken, one of the biggest ben­e­fi­cia­ries of a trade pol­i­cy that vio­lates the WTO rul­ing, has been named ambas­sador to a coun­try whose busi­ness­es suf­fer as a result of this pol­i­cy.”

Scha­ef­fler’s hold­ings include roller bear­ing man­u­fac­tur­ers FAG Kugelfis­ch­er and INA which are respon­si­ble for about 26,000 Ger­man jobs. Accord­ing to Kugelfis­ch­er, the com­pa­ny has already paid more than $35 mil­lion in tar­iffs, with most of the mon­ey going into the cof­fers of Timken’s com­pa­ny. And, accord­ing to Geissinger, the pro­ceeds from the tar­iffs could even enable the Amer­i­cans to sell their prod­ucts at rock-bot­tom prices on the world mar­ket, “which would not only deprive us of rev­enues, but would also jeop­ar­dize Ger­man jobs on a mas­sive scale.”

To this day, hard­ly any oth­er US com­pa­ny has insist­ed so stead­fast­ly that the Unit­ed States should con­tin­ue to ignore the WTO’s 2003 deci­sion. More impor­tant­ly, no oth­er US com­pa­ny has prof­it­ed as much from Amer­i­ca’s anti­com­pet­i­tive pro­tec­tive tar­iffs since 2001 as Timken (includ­ing its sub­sidiary, the Tor­ring­ton Com­pa­ny, which Timken acquired in 2003). But the com­pa­nies that are pay­ing the lion’s share of these tar­iffs include Ger­man indus­tri­al bear­ing man­u­fac­tur­ers — and at $70 mil­lion in tar­iffs, the Ger­mans are only in sec­ond place behind the Japan­ese.

Mere­ly by fil­ing the appro­pri­ate forms, Timken man­aged to cash in on $52.7 mil­lion from the US cus­toms jack­pot in 2004, twice as much the sec­ond-largest ben­e­fi­cia­ry of the tar­iffs. Timken’s take was even big­ger in 2003 — $92.7 mil­lion, or five times as much as the num­ber two com­pa­ny on the receiv­ing end. Even Pres­i­dent Bush believes that there is some­thing wrong with this prac­tice of milk­ing the com­pe­ti­tion despite the WTO deci­sion. He attempt­ed — albeit unsuc­cess­ful­ly — to over­turn the 2000 legal basis for the tar­iffs, known as the “Byrd Amend­ment.”

Nev­er­the­less, there is no indi­ca­tion that Ger­man politi­cians will seize upon Timken’s appoint­ment as an oppor­tu­ni­ty to apply more pres­sure. Even Free Demo­c­rat (FDP) Rain­er Brüder­le, the head of the Com­mit­tee on Eco­nom­ic and Mon­e­tary Affairs in the Ger­man par­lia­ment (Bun­destag) and nor­mal­ly a staunch sup­port­er of con­cepts like “open mar­kets,” “free trade” and “fair com­pe­ti­tion,” has man­aged to come up with only luke­warm words of protest. “Fol­low­ing the Timken appoint­ment,” he said, the Unit­ed States ought to “dis­tance itself from the poli­cies of the Byrd Amend­ment.”

The offi­cial stance tak­en by the Social Demo­c­ra­t­ic Par­ty (SPD) has been just as tame. Klaus Brand­ner, eco­nom­ic and labor pol­i­cy spokesman of the SPD par­lia­men­tary group, said that he hopes Timken will become more sym­pa­thet­ic to the Euro­pean posi­tion once he arrives in Ger­many. But that might not hap­pen until ear­ly next year. And, already, the ambas­sador post has been vacant for five months. Still, per­haps there is some­thing to Brand­ner’s wish­ful think­ing. After all, it was Timken’s great­est wish to become US ambas­sador to the coun­try of his ances­tors. Although Timken speaks no Ger­man, his great-grand­fa­ther, Hen­ry Timken, was born here and was sev­en years old when he left Bre­men for Amer­i­ca in 1838.

But the EU has no inten­tion of rely­ing on such wishy-washy sen­ti­men­tal­ism. Instead, it decid­ed to fight back in May of this year, when it began impos­ing spe­cial tar­iffs on a wide range of US goods. The Wall Street Jour­nal prompt­ly point­ed out that as result of the EU tar­iffs, many US com­pa­nies will now suf­fer while a few oth­ers con­tin­ue to pad their wal­lets.

The Timken Com­pa­ny has refused to com­ment on its Byrd Amend­ment prof­its. Timken, for his part, once made it clear just how unim­pressed he is by attacks when he quot­ed a leg­endary US gen­er­al: “The ene­my is in front of us, behind us and next to us — this time he won’t get away.”