Caught `steeling'

Big mills: The White House discovers protectionism in a bid that's all about politics.

March 07, 2002

A LITTLE MORE than a century ago, the big new plant at Sparrows Point went to work turning out the rails for a road of steel from Europe all the way to the Pacific Ocean, across 4,000 miles of Siberian taiga to the port of Vladivostok.

American steel was entering its heyday, and the Russian Empire was only too glad to bypass European producers and go shopping in Baltimore.

More than 100 years later, where are we? This country has the greatest and most potent economy in the world, but a steel industry so enfeebled and decrepit that it begs for protection -- from the Russians, among others.

Talk about returning the favor.

This week the White House slapped prohibitively high tariffs on a slew of imported steel products. President Bush said the tariffs will give American steel companies some breathing room so they can regroup.

More likely, the tariffs will give those companies an excuse to put off the inevitable day of reckoning. They'll also drive up prices for the rest of us, induce steel-consuming firms to move their production offshore, and set off a trade war with a large part of the rest of the world.

And the President will accomplish all this while violating his own principles.

Mr. Bush was not elected as a friend of organized labor, or as an enemy of free trade. How, then, can he explain the tariffs? The administration, according to various reports, wasn't shoulder-to-shoulder on this one.

Paul "Genius-of-Capitalism" O'Neill, the Treasury Secretary, was content to see the steel industry go the way of Enron. But opposing him was Karl Rove, the president's political adviser, who probably knows a lot about steel but who surely knows a good deal more about politics -- particularly, in this case, in West Virginia, Pennsylvania and Ohio, where Big Steel makes its home and where Republican votes are precious.

Mr. Rove (see the paragraph above about violating principles) won out.

Tariffs aren't the answer. But the question is: What to do about the sad state of the steel business in this country?

For starters, there needs to be a serious debate over whether it still makes sense to have one. We import, for instance, all our DVD players -- on foreign-flagged ships with Third World crews -- and no one objects. Should steel be any different? Probably, it should be.

But if we are to have a steel industry, it needs to reorganize soon, and not hide behind tariffs but compete with -- and learn from -- the best the world has to offer.

There are ways the government can help -- but a tariff is a blunt and inappropriate instrument. And it's also a tax. Isn't that what Republicans are against?

National Steel, a large Midwest producer, filed for Chapter 11 bankruptcy protection yesterday, tariffs notwithstanding. That hardly sets a trend; the whole industry has been in declining health for years.

Bethlehem Steel, which employs 3,500 people at Sparrows Point, went into bankruptcy last October. Far from being the emblems of American power that they were a century ago, Sparrows Point and plants like it are relics. Tariffs hurt all Americans and infuriate our trading partners. Big Steel -- as it exists today -- isn't worth it.

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