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Steel Ourselves Against Tariffs to Save Jobs

January 06, 2002|JIM KOLBE

American manufacturers in a number of industries are being forced to cut costs and staff. We may hate the word "recession," but the reality is that the economy and those who toil to make it work are hurting. Yet even as Congress and the Bush administration try to find ways to improve the economy, such as the economic stimulus package, others want to build trade walls that would be counterproductive to our goal of restarting the U.S. economy.

The case of steel imports provides a good example of the challenges facing those who advocate free trade in Washington. The International Trade Commission's recent investigation into steel imports already has determined that, in a number of product categories, imports have injured domestic steel producers. Last month, the trade panel decided on measures to remedy these injuries and forwarded these recommendations to President Bush, who is expected to decide on protective measures by mid-February.

The six-member U.S. panel was guided in its decisions by U.S. trade law, which says any final remedy imposed by the president must "provide greater economic and social benefit than costs."

During its deliberations, the panel was asked by domestic integrated steel producers to apply tariffs of up to 50% on steel imports.

But many of the steel producers asking for tariffs have failed to keep up with domestic and international competitors by not modernizing, cutting costs, consolidating plants or shutting down unprofitable operations. These companies seeking protection employ about 160,000 workers.

On the other hand, there are more than 100,000 U.S. businesses that consume steel imports. These businesses employ 12.8 million Americans and rely on getting raw material and other products at globally competitive prices to compete with foreign interests.

If the price of steel imports increases because of a tariff of 40% to 50%, 30,000 Americans who work for steel-using companies could lose their jobs. Many steel-consuming companies will go out of business or move offshore. Quotas and other measures could have even more damaging effects on steel-using industries.

These companies would not be the only downstream victims of any tariff. All Americans, as consumers of steel-containing products--cars, washing machines and other appliances, truck brakes, fire extinguishers, bridges and other new construction--will pay an invisible "tax" on these items. We in effect would be forced to protect companies that can't compete in the global economy.

It is clear that some domestic steel producers need help to get out from under the costs of the health care and retirement packages of steelworkers. Yet there are measures that would go far toward solving the problem without affecting the price of steel imports.

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Rep. Jim Kolbe, a Republican, represents Arizona.

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