Nothing Surprising Here

President Bush’s extension of the “voluntary” restraints on steel imports is hardly surprising. He had made it a campaign promise as he nailed down support in the industrial states. He has served notice that this is transitional. All protections will be terminated in March of 1991. And, in proposing a 30-month continuation, he has wisely resisted industry pressure for a five-year extension.

For the moment the restraints will have no practical consequence because imports are substantially below the 18.4% of market share provided under the 1984 limits which, in turn, will be the base share under the Bush plan. The international economic slowdown that is being forecast may change that picture, with the prospect that American steelmakers could again confront a flood of lower-priced foreign products. A slowdown could compound the problem for major steel-consuming American enterprises, whose ability to compete in world markets would be hurt by limits on cheaper imports.

The most constructive element of Bush’s action is the incentive to encourage participation by other nations in a global consensus terminating steel subsidies. The market share for imports will be increased 1% a year, with the increased share going first to nations giving up subsidies. The continuation of government subsidies in a number of competing nations was cited as a major factor in the President’s decision. Admittedly, however, there is no definition as yet of what constitutes a subsidy. Some American steelmakers, like some of their foreign competitors, have benefited from indirect and direct subsidies, although not on the scale used by some nations.

Bush is not saying what he will do in 1991 if he has not been successful in winning international agreement to do away with subsidies. He could reaffirm his own commitment to free trade if he were to say, as he sends his proposal to Congress, that all restrictions would be lifted at that time on those nations that have dropped subsidies. That would certainly have been a better response at this time than continuing the universal import restrictions that punish equally those trading with subsidies and those without.