Posted on 12/05/2003 11:52:25 AM PST by .cnI redruM
When you think to get mad at the World Trade Organization, bear in mind that the good old U.S.A. was foremost in recommending its creation in 1995. If the idea is free trade, then somebody has to have the authority to rule that you're cheating. There are many ways to cheat. You manufacture a mousetrap and persuade your congressman to introduce a bill that gives to mousetrap manufacturers tax endearments that result in making the mousetraps very cheap to manufacture. Or you can get your compliant bank to extend credits to the company which it could not have got from any bank at arm's length; and lo, USTRAP Inc. continues life and appeals to foreign buyers with its very low price. When President Bush decided to protect steel a year and a half ago, he did it very directly; he simply decreed tariffs on foreign steel.
The thunder we heard last week was the World Trade Organization court. It inspected the presidential move on steel and tested all the exclusions that provided for protection. If there was an acute national shortage or if a nation's defenses were imperiled — you name it. But it was very clear that we were moved to protect steel only for political purposes. Take just the steel that's manufactured in West Virginia. If West Virginia had voted Democratic in 2000 instead of GOP, Al Gore would have been president, not George Bush.
But the WTO's court can rise from judicial alabaster and spring to life like Machiavelli on a mission. The steel people in the countries afflicted by the U.S. tariff did a little economic/political sleuthing and came up with initiatives by which the World Trade Organization could talk back to the U.S.A. How about imposing tariffs on oranges from Florida? And maybe on cheese from Wisconsin. And maybe on computers from Texas. TEXAS!!! STOP!!!!
The World Trade Organization emerges as an outfit that can make shrewd decisions and ask pretty direct political questions. The motive to protect steel was exactly that, political. And a worldly institution like the WTO isn't going to use up its retaliatory resources by imposing countertariffs on, say, American petroleum products, all of which we hungrily use here at home. The idea was to use the same reasoning used by Mr. Bush when he extended a hand to U.S. steel: What states does the Republican party particularly wish not to offend? These would be targeted by the WTO salient. Mr. Bush capitulated.
It is a welcome byproduct of this most recent venture in protectionism that the steel industry has substantially benefited from it. In pleading to extend the tariff, a spokesman for the industry pointed out that there had already been a consolidation; that the steel being produced was better and cheaper than it had been; that the labor unions were cooperating in lowering costs. The steel companies just wanted more time. But the WTO was not chartered to weigh such matters. U.S. criminal courts are not chartered to give offenders time to conquer their felonious instincts at home: cool them off in the coop, if you've been caught stealing.
Unquestionably, the Democrats will do what they can to arouse fear & loathing against Mr. Bush. But they will need to train their megaphones carefully. Okay to blast that message in Virginia and Pennsylvania. Not okay to sound off in Florida and Wisconsin and Texas, where the counter-protectionist guns were trained. And the message would have to be spoken out delicately in Detroit, which has been paying more for steel, making the U.S. automobile more expensive because of protectionist steel prices.
In the long run — and the Democratic convention in August can be said to be in the long run — the case against protectionism speaks for itself. The U.S. is hardly blameless in the matter of free trade. Perhaps one day the WTO will take a look at sugar. We pay for it as much as five times more per pound than we would if we let it in from the Dominican Republic and elsewhere at a market price. These things take time, but WTO vs. U.S. Steel gives heart to the free-trade community.
When threatened a colossal trade war, Bush became smart enough to use his office to lead rather than shaemlessly politic. Being threatened with 100% tariffs on Florida citrus fruit, just in time for Decision 2004, helped remind him of why political tariffs were not good things.
There was not only a prediction, but a statement, by the President before the tarriffs were ever put in place that they would be temporary.
They were on track to end before they started. It was only a question of 'when'.
The motive for the repeal right now is something else.
You are making it sound as though tarriffs had NO technical merit to them. That it was done all for votes and NOTHING else.
I disagree with that sentiment.
Did you watch Mr. Zollick's press conference on the repeal of the tarriffs? He was the one announcing things.
He flat out said that repeal right now was the right thing to do because of the circumstances and that most of the goals have been met. He openly admitted that not having retaliation was a very good thing. He admitted that on several occassions.
If you haven't watched it, please do so.
Now, lets talk technicals. Why was US steel losing?
It was not because of sheer labor costs, nor any other silver bullet. It wasn't because of the unions either.
Technically, they lost because of structuring of their industry and technological deficiencies.
The difference between a European steel product (and its prices) and a US one are summed up with those two things.
Before the tarriffs were added, it was determined to bring in those two things back to the US industry. The tarriffs were to allow for that process to happen.
When that takes place, US steel then becomes as cheap in real terms as foreign competitors.
Rolling off the line in Europe will at the factory door be comparable in price to rolling off the floor in Michigan. Thats after we have implemented the reforms.
In reality, in the short term, tarriffs had nominal costs, but in the long term have saved us lots of money. Yes. Saved.
How? If we can now (or in the near future) produce steel in real terms at a comparable price, then we have saved ourselves lots of money. Shipping steel across the ocean isn't cheap.
Our industry was so ineffecient that even with those added costs of shipping we still lost. Now (supposedly) we can match the foreign makers in many aspects, but because of proximity, we can now supply US steel consumers at a cheaper price. It is caused by A) matching efficiency and B) proximity.
The steel producers were moaning and complaining that they were stopped in the middle of the plan which was slated for 3 years. According to those who do the research though, they didn't know how long the reforms would take. 20 months into it, they found out they were 80% to the goal.
Hence (supposedly) the steel tarriffs accomplished largely what they were designed for.
Just try looking at things from a technical standpoint, as to what has really changed in the steel industry in the last 20 months.
Oh I see. Now that the evil steel tariffs are over, Detroit can lower the price of their vehicles and all Americans will benefit from the blessings of "free trade".
buHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!
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