Free-for-all in Steel

June 25, 1993

The Clinton administration's tendency to talk a good game on trade policy, proclaiming its support for a North American Trade Agreement and vast reforms in global commerce while catering to protectionist pressures, is once again on display. This time it is in the steel sector, as the Commerce Department moves to slap punitive tariffs on $3 billion in imports from 19 countries.

For the major U.S. steel producers, including the Bethlehem Steel Company's Sparrows Point plant here in Baltimore, the Commerce Department's tactic is a boon. Bethlehem chairman Curtis H. Barnette forecasts 400 more jobs at the Point if the U.S. International Trade Commission gives the go-ahead for the higher tariffs.

"These cases are about jobs," he proclaims, but gains for the big, highly unionized steel producers are only one facet of a complicated picture. Non-unionized mini-mills, the fastest growing and most efficient players, could lose some competitive edge and create fewer jobs. Even more at risk are manufacturers of steel products as they encounter raw steel prices that already have risen 5 percent this year. The American Institute for International Steel, surely as much a special pleader as the rival American Iron and Steel Institute, estimates the new tariffs will cost American consumers $1.5 billion a year and cost three jobs for every one saved.

All claims from all sides in this worldwide steel free-for-all should be considered skeptically. There are no angels and a host of sinners.

There seems to be a large grain of truth in U.S. allegations that European Community governments subsidize steel producers which, in turn, dump their products on the U.S. market below the cost of production. But there also is a lot of merit in the charge by Brian Moffat, chairman of British Steel, that the big integrated U.S. companies try to blame overseas producers for their troubles instead of making changes to meet the challenge from domestic mini-mills.

All this cacophony confirms the need, in our view, of vast improvements in the 111-nation General Agreement on Tariffs and Trade. Negotiations have lumbered along for six or seven years as global recession spreads far and wide. But so far, major powers have not mustered the will to come to closure as disputes hop-skip from agriculture to textiles to manufactured products to whatever.

At the Group of Seven summit in Tokyo next month, the big powers will make still another vow to push for trade reforms. But chaos in the over-capacity world steel industry cries out for prompt negotiation of a multilateral steel agreement. This might tamp down hostilities until GATT reforms restore growth and stability to world commerce.

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