No to Steel Protectionism
The simplistic lure of protectionism is still a constant in national political life. Expose an industry to foreign competition that threatens its market share or profits and it is likely to demand legislative relief from a sympathetic Congress. Some complaints about unfair trade practices are of course warranted. Last month, Washington determined that Japan, Brazil and Russia were selling steel in the United States at less than fair value and causing injury to the domestic industry. The Clinton administration slapped prohibitive duties on Japanese and Brazilian steel and forced Russia to restrict its exports--a tough but fair response. But it was not enough for the steel industry or for the House of Representatives, which recklessly voted to limit all steel imports.
The industry cited last year’s one-third rise in imports and a loss of 10,000 jobs--though independent estimates put the number at closer to 3,000--as it mounted a vigorous campaign for protection from overseas producers. Are things as bad as the industry claims? For those who lose their jobs, things can be very bad. But as Times staff writer Donald W. Nauss reported this week, the industry overall is doing quite well in both sales and earnings. In common with other businesses, steel companies have steadily cut their labor forces while investing heavily in more efficient processes. The result has been a whopping increase in productivity. Meanwhile, thanks in part to government anti-dumping actions, imports have fallen for three straight months.
The protectionism sought by the House would put the United States in violation of world trade rules while inviting retaliation against U.S. products in overseas markets, jeopardizing jobs at home. Domestically, protectionism would add momentum to the steel price increases that are already underway, assuring that cars, household appliances and some other products would cost more.
The steel industry’s presence in most states gives it clout in Congress. The fact remains that its claims of having suffered major harm at the hands of unfair foreign competitors are excessive. The Wall Street Journal reported the other day that about 25% of the steel entering the United States last year was bought by American steelmakers, who otherwise could not have met the demands of their customers. That hardly suggests an industry in distress.
President Clinton says he will veto the steel import cap, should the Senate go along with the House. That would be the right response to a patently unwise action.
