- The Washington Times - Saturday, July 19, 2003

During major league baseball’s recent inter-league play, you would have known that something was fishy if National League umpires routinely made calls favoring NL teams and American League umpires called all the close ones for the AL teams.

That’s basically what’s been happening in the international trade arena, where the World Trade Organization routinely closes its eyes to violations of U.S. trade law by our “friends” around the globe, while threatening the United States with sanctions for upholding those laws. That’s why the Bush administration needs to fight the WTO’s July 11 edict that the United States must end its temporary steel relief program.

In fact, the program never would have been put in place if foreign steel producers played by the rules. But the WTO does not seem to care about that.

The U.S. trade sanctions were imposed in March 2002 on foreign steel producers who were unlawfully flooding the United States with cut-rate products subsidized by their governments. The so-called Section 201 sanctions followed a long International Trade Commission investigation of foreign steel “dumping.” Following that investigation, President Bush imposed tariffs on many steel imports.

The tariffs are intended to accomplish several goals:

1. Give the U.S. steel industry a chance to restructure. During the height of the dumping deluge some three dozen U.S. companies, including some of the biggest names in the business, such as LTV Corp., National Steel and Bethlehem Steel, were forced into bankruptcy. Severe human and economic devastation also gripped steel-related small businesses from one end of the country to another, many of which also went into bankruptcy.

My own company, which is both a steel-industry supplier and customer (employing 143 people in Illinois, northern Indiana and eastern Ohio) came close to bankruptcy, losing $2 million in 2001 and $300,000 in January and February 2002 alone. One more month with such losses, and we would have been out of business.

Thanks to the respite provided by the president’s actions, the industry is now picking up the pieces and putting them back together again. A U.S. bankruptcy court recently approved the purchase of National by U.S. Steel. Cleveland-based International Steel Group has purchased LTV, Bethlehem and Acme Steel. And Charlotte-based Nucor Steel has purchased Birmingham Steel and Trico. The restructuring will continue in the months ahead.

2. Provide surviving American steel companies with some breathing room.

The tariffs imposed by President Bush were not intended to punish anybody; they were intended to level the playing field. The United States neither owns nor subsidizes its steel industry. Unfortunately, that’s not the case in much of Asia, Europe and Latin America. That’s why foreign companies overproduce and could “afford” to dump the excess in the United States — frequently for less than it cost them to make it. That’s not competition, it’s exploitation.

3. Give the United States, working through the World Trade Organization and other organizations, an opportunity to “convince” the offending parties that it’s time to stop dumping and start obeying international trade rules.

This is a more difficult task.

There is currently a global glut of steel caused by the fact that most large steel-producing countries directly or indirectly subsidize their steel industries. Among the worst offenders are our “friends” in France, Germany, Russia, China, Japan and Brazil.

According to reliable estimates, 85 percent of all the steel now produced worldwide is, as one industry executive put it, “subsidized, cartelized, government-controlled or government-owned.”

The United States has encouraged its global trading partners to act more responsibly. Competition is one thing. Unfair competition is another.

Some users of steel products are clamoring to have the administration end the 201 sanctions early, claiming that they are being hurt because they have to pay higher prices for raw materials. But U.S. prices for domestic steel already are among the lowest in the world. Besides, the complainers did not lower the prices of their goods when steel prices hit rock bottom.

When Mr. Bush initiated his steel respite program, he did so recognizing that the U.S. steel industry — so necessary to our national security — was in crisis. His program was designed to address the underlying causes: global excess capacity, closed foreign markets, cartels and subsidies.

The WTO does not seem concerned about any of this. In fact, it has become a cheerleader for the violators. Cutting the U.S. steel program short would be a signal to the international community that it can thumb its nose at the United States with impunity.

Charles W. Connors is chief executive officer of Magneco/Metrel, Addison, Ill., a small manufacturer of refractories used in iron and steel making, and chairman of the newly formed American Steel Coalition.

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