Protecting Steel

July 03, 1992

What Bethlehem Steel has accomplished during the past decade in transforming its Sparrows Point plant into one of the most modern and efficient mills in the world is truly impressive and a huge boon to the Baltimore economy. Without Bethlehem's $1 billion-plus investment and its conversion to continuous casting, the Point might have been forced to close. The 6,000 jobs on its shrunken payroll would no longer exist.

How much Sparrows Point's survival is due to the steel industry's marked ability to secure government protection from foreign competition is a matter of conjecture, but we consider it an important factor. For a quarter of a century, since U.S. domination was first challenged by foreign mills, the industry has been able to secure an imposing array of defenses: So-called "voluntary" restraint agreements, trigger price mechanisms and tough anti-dumping and anti-subsidy laws.

Although presidents from Lyndon Johnson through George Bush have been eloquent in their obeisance to free trade, administration after administration has seen to it that the U.S. maintains a steel industry of sufficient size and competitiveness to protect national security. This is understandable, but it comes at a price. The more steel is protected, the higher the price of steel products to the consumer and of American-made steel products on the world market. U.S. exports suffer.

Thus, we have mixed feelings about a flood of anti-dumping and anti-subsidy complaints the steel industry filed this week against 21 nations which, though far from blameless, are also far from being the sole cause of the industry's financial losses. The recession, the fierce competition between the big steel companies and highly efficient, non-union "mini-mills" and chronic over-capacity are factors in the industry slump.

The new law suits, which will provide bountiful employment for Washington-based trade lawyers, were predictable after negotiations on a multinational steel agreement broke down March 31 and the Bush administration ended all bilateral "voluntary" restraints on the volume of foreign imports. But they come at an awkward time, what with the U.S. election giving extra clout to protectionists in Congress and the future of the entire international trading system very much in doubt. Foreign officials are complaining bitterly about U.S. "harassment" and Canada, for one, has lodged counter-suits. Other nations will follow.

The steel dispute offers a glimpse of what can happen to international trade generally if multilateral accommodation breaks down and it is every nation or every bloc for itself. If the industry's law suits bring negotiations back to the negotiating table in Geneva, that would be a help. But if the steel industry offensive encourages unilateralism and conflict, the United States as the world's greatest trading nation will have the most to lose.

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