Bush's tariffs too weak to stabilize Big Steel

March 11, 2002|By Jason Shultz

CAN YOU hear that sound? It is the sound of the U.S. steel industry melting into obscurity.

In a largely political move, President Bush took the easy way out Wednesday by imposing limited tariffs ranging from 8 percent to 30 percent, but exempted America's two largest trading partners, Canada and Mexico.

He didn't go far enough.

What would you do if you lost your pension and health care in retirement? Would you go back into the work force? Do you have the skills to start a new career at 65?

This is what may happen to 600,000 retired steelworkers, their spouses and dependents since Mr. Bush chose not to impose a 40 percent across-the-board steel tariff or give the industry the $10 billion for which it asked for its retirement health care and pension funds.

Since 1998, 47,000 steelworkers and iron ore miners have lost their jobs, and 31 steel companies have either shut down or filed for bankruptcy, including Maryland's own Bethlehem Steel. This latest move is unlikely to help.

The situation may deteriorate because Mr. Bush did not properly respond to the warnings of the independent, bipartisan International Trade Commission's Section 201 investigation that found unanimously that the American steel industry is seriously hobbled and that increased imports were a significant cause of the problem.

This is not just simply a union or partisan political issue. These are people's lives we're talking about. The loss of one's job does more than just impact a worker's finances; it has repercussions for his or her quality of life and the community at large.

The seriousness of this issue is evident by the disparate groups it has brought together. Democrats and Republicans, union and management, united to implore Mr. Bush to take action. The presidents of both Bethlehem Steel and U.S. Steel stand side by side with the president of the United Steelworkers of America. Republican congressmen from Pennsylvania and Ohio stand with their Democratic counterparts to curb the practice of dumping in America.

Are steel prices in America higher than those of other countries? Absolutely. But the American steel industry stands for strong labor practices and environmental standards, and we should not compromise our ideals and partake in a race to the bottom with our foreign competitors.

American University economics professor Robert A. Blecker found that the impact of not taking severe action would be devastating to American steel and its employees. More than 325,000 Americans risk losing their jobs.

Moreover, the closing of steel plants will result in secondary job losses in the supplier industries that produce the raw materials and machinery used in the production of steel.

Bethlehem Steel alone risks the loss of more than 13,000 high-paying blue-collar jobs. Without these benefits, workers and their families would be devastated for years. Comparable jobs do not exist, and they would be forced to begin drawing unemployment checks or take minimum wages to support their families.

Many will argue that an increase in tariffs simply would be transferred to consumers in the form of higher prices. Foreign exporters pushed Mr. Bush hard not to impose these tariffs, threatening that such a move would lead to a trade war. Well, we're already in a trade war, and America clearly is losing.

With one-fifth of America's steel-making capacity already having been shut down, our reliance on foreign steel has resulted in a direct threat to our national security. Our domestic steel markets must not be at the mercy of other countries.

There is nothing fair or competitive about foreign companies dumping steel on the American market, undercutting our own companies. During the 2000 election campaign, Mr. Bush's running mate, Dick Cheney, pledged that Mr. Bush would protect the American steel industry and its workers. He has failed to do that. By exempting Mexico and Canada, and not setting across-the-board tariffs, the steel companies will not be able to raise prices enough to revitalize the industry.

While this compromise may have ensured Mr. Bush and his party some support in Rust Belt swing states in the 2002 House race and 2004 presidential contest, the cost just may be the pensions and health care of 600,000 steelworker retirees.

Jason Shultz is a public policy graduate student at the Institute for Policy Studies at the Johns Hopkins University.

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