Description

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-a-vis their international competitors.
Protection will only prolong crippling overcapacity in the
domestic steel market. Over the past three decades, U.S. steel
producers have been shielded from foreign competition by quotas,
voluntary export restraints, minimum price undertakings, and
hundreds of antidumping, countervailing duty, and safeguard
measures. Federally subsidized loan guarantees, pension bailouts,
and "Buy American" preferences have likewise fostered uneconomic
excess capacity within the industry and discouraged unsuccessful
firms from the otherwise rational decision to exit the market.
The steel debate is not about "unfair trade." Antidumping duties
unfairly punish foreign producers for engaging in practices that
are routine and perfectly 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.
Claims that steel imports threaten national security are without
foundation. 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.