Steel Trap: How Subsidies and Protectionism Weaken the U.S. Steel Industry

Overview: On March 6, President Bush is expected to announce specific Section 201 measures to further protect the domestic steel industry from import competition. By any relevant economic measure, the costs of protection will far exceed the benefits, and any benefits accruing to steel firms from that protection will be fleeting. Section 201 relief for steel producers could invite WTO-legal retaliation against other U.S. export sectors, undermine prospects for trade agreements and related job growth, and saddle downstream steel using industries with price hikes and supply shortages that will handicap them vis-à-vis their international competitors. Protection will only prolong crippling over capacity in the domestic steel market. The paper states that antidumping duties unfairly punish foreign producers for engaging in practices that are routine and legal for domestic producers. Under the current definition of dumping in U.S. law, every U.S. steel company that is losing money is guilty of dumping here in its home market. A Section 232 investigation by the Department of Commerce recently concluded that domestic steel capacity far exceeds any potential needs of the U.S. military. The U.S. steel industry, but more important, the country, will be best served if the president resists the temptation to impose new trade restrictions.

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Format: PDF | Size: 95KB | Date: Mar 2002 | Pages: 16