Chicago Tribune
Free trade has its limits, President Bush has decreed, and they became visible when Democrats took over the U.S. Senate.
So, the Bush administration has announced it is saddling up the white horse to help protect America's ailing, old, full-service steel producers. These are the same steelmakers, incidentally, that have been seeking government help on and off at least since the 1980s.
Bush is asking the International Trade Commission, an independent U.S. agency, to investigate whether steel producers have been hurt by a surge in imports. If the ITC determines this is the case, higher tariffs or import restrictions are entirely possible. That would raise the cost to Americans of everything from cars and trucks to refrigerators and electronic equipment.
The implications would go well beyond steel. There are plenty of U.S. industries--lumber, textiles, sugar, to name just a few--that would like the government to raise the bar to foreign competitors. You did it for steel. What about us?
Wait a minute. What about the benefits of open trade in promoting political freedom and helping raise the world's multitudes from poverty? Bush talked a good game in Quebec at the Summit of the Americas. But that was then. This is now. This is politics, baby. Protectionist politics.
The Bush thinking apparently goes like this: The Democrats were going to do this anyway the moment they took over the gavel in the Senate. This way I can claim credit. And who knows? It might help me win over some Democratic support for the rest of my trade agenda.
The bottom line is this: A Republican president who purports to support free trade and trust in markets now will file a case that the Clinton administration refused to touch because of its protectionist ramifications.
Bush's action is aimed at foreign steel producers, but it is U.S. manufacturers and consumers who will pay the price. The Consuming Industries Trade Action Coalition estimates the cost of steel quotas could total $2.34 billion a year--$565,000 per steel job saved. The coalition also points out the U.S. steel industry itself imported 10 million tons of steel last year and that profitable U.S. steel producers are profoundly uneasy about an action that will serve only to subsidize their inefficient competitors.
It is true there is too much steel capacity worldwide and that has led to prices so low that 18 U.S. steel companies have filed bankruptcy in the last few years. Some have even closed up shop permanently. Ironically, that's good news because it means some of that excess capacity--though not nearly enough--has been eliminated. But the pain to U.S. steelmakers is as attributable to a strong dollar and more nimble domestic competitors as it is to foreign imports.
President Bush calls this action "part of our free-trade agenda." What parallel universe is he inhabiting? It must be the one where other countries scoff when the Bush administration urges them to resist resorting to protectionism because of domestic politics.:
