Akron Beacon Journal (Ohio) | September 23, 2003
In his weekly radio address, President Bush touted the benefits of lowering trade barriers and opening markets overseas. He also warned the country's trading partners against using unfair practices. He made plain the United States wouldn't tolerate such actions. Thus, the president walked a narrow and risky line, one he followed 18 months ago imposing tariffs on imported steel.
At the time, the International Trade Commission provided cover for the Bush tariffs. The federal agency ruled that foreign steelmakers were illegally ''dumping'' their products in the American market at prices below the cost of production. The president set the tariffs as high as 30 percent. He must decide soon whether to extend the tariffs for another 18 months.
On Friday, the trade commission issued a preliminary assessment of the impact. If nothing else, the tone favored the steel industry. The report acknowledged that prices have increased. It then added that prices have declined recently from their peak of last year. The commission applauded the industry's efforts to restructure its operations, a trend evident in Northeast Ohio with the emergence of the International Steel Group.
Steelmakers have clearly benefited, and the commission concluded the effect has not been as detrimental to the larger economy as many feared. President Bush made a political calculation, betting that a dose of trade protection would aid his fortunes in such large industrial states as Pennsylvania and Ohio. The free trader in word may see a continuing political benefit to protectionism in deed.
That would be unfortunate. Steel consumers, from the auto industry to toolmakers, argue that a less harmful impact than expected doesn't erase the overall negative effect. Prices are higher, and the costs ripple through companies, large and small, leading some to relocate operations overseas. Steel consumers far outnumber steelmakers. Their ranks include manufacturing jobs, if not precisely those the tariffs aim to save.
The commission analysis established a curious line. It estimated that the tariffs have reduced by $294 million the economy's overall return on capital investment and removed $386 million from the labor market. It places on the positive side of the ledger the $650 million in new revenue collected by the federal government via the tariffs.
The trouble is, that $650 million has likely added to the drag on a sluggish economy.
An argument can be made the tariffs amount to a tiny fraction of the total economy, suggesting, as the commission does, that a helping hand for the steel industry is worth the price. Still, steel consumers aren't alone in feeling the negative impact. In July, the World Trade Organization found the steel tariffs violated international trade rules. The United States has challenged the finding. If the appeal fails, the European Union will be permitted to impose retaliatory tariffs.
Why listen to the WTO? This country benefits more than any other nation from the trading rules set up and governed by the organization. When the United States bolts to serve narrow interests, other countries are invited to do the same, promising harm to an even wider array of American companies and jobs.Akron Beacon Journal (Ohio):
