KEEP 'EM FOR SPITE

Don't buckle on steel safeguard (THE WASHINGTON TIMES, August 21, 2003)

The White House imposed steel tariffs, which are capped at 30 percent and exempt developing countries, in March 2002. On Sept. 18, the International Trade Commission will give its 18-month review of the three-year tariff safeguard. By law, President Bush can only revoke the safeguard under two criteria: The industry is not adjusting to global competition; the industry no longer needs the safeguard. Neither of these two criteria are applicable. The fact that the World Trade Organization (WTO) has ruled against the tariffs is not one of those criteria. (At any rate, the WTO usually allows countries about 15 months to become compliant with its rulings, which is roughly equivalent to the period left for the tariffs.) Therefore, the president should allow the industry to benefit from the full term of the safeguard.

Most major steel producers outside of the United States benefit from a range of measures to protect against free-market pressure, such as subsidies, "special access" to loans, special purchasing agreements, quotas, tariffs. Before the United States implemented the tariffs, it had one of the most open markets for steel imports, with foreign products claiming, according to 1999 data from the Organization for Economic Cooperation and Development, about 30 percent of the U.S. market, compared to 16 percent and 9 percent for the European Union and Japan, respectively.

These protections have caused a worldwide steel glut and made U.S. steel investments in labor and equipment redundant. Since steel production is so capital intensive, the cost has been considerable. About 45,000 steelworkers have lost their jobs since 1997. The administration has correctly stated that U.S. steel producers must face foreign competition -- fair or not -- but should be given a chance through the safeguard to consolidate. [...]

The steel industry has invested about $3.6 billion since March of last year to consolidate and restructure, demonstrating the industry is adjusting to global competition. But workers and steel companies need the next 18 months to further adjust. Mr. Bush should carefully consider the facts, and maintain the safeguard for its allotted time.

They should keep them just so the economic Right has something to whine about. Posted by Orrin Judd at August 21, 2003 7:22 PM