I was first alerted to the possibility that steel tariffs are not justifiable under national security grounds by an article at the following place:
Reason; Jun2006, Vol. 38 Issue 2, p48-55, 8p
“Many academic studies have concluded that steel industry protection has done nothing to improve its competitiveness. The higher prices simply raise industry profits or reduce its losses–and reduce incentives to innovate. Despite that, many analysts who usually support free trade have made an exception for steel on national security grounds, arguing that we need adequate domestic manufacturing capability to build ships and tanks in the event of war. But today’s weaponry depends much more on high-tech composite materials than on ordinary steel. According to an October 2001 Commerce Department study, no weapons system is dependent on imported steel; there will be more than sufficient domestic capacity for all Defense Department needs for the foreseeable future; and there are far cheaper ways of ensuring the Pentagon’s needs than through trade protection.”
That’s what it said. However, not satisfied with the word of an openly Libertarian-aligned magazine (I agree with them, but I’m not blind to motive doubts), I decided to look further. I almost immediately uncovered an article found here:
National Review; 6/25/2001, Vol. 53 Issue 12, p10-15, 4p
“President Bush asked the International Trade Commission, a federal agency, to investigate whether the steel industry deserves protection from imports. The steel industry could have asked the ITC to investigate; the purpose of an administration request is to lean on it to reach an affirmative conclusion. The legal case for that conclusion is weak. The ITC would have to show that the industry has both suffered “serious injury” and that this injury was “substantially caused” by foreign competition. Since only parts of the domestic steel industry are troubled, and imports have been falling, it seems unlikely that imports are what’s hurting the industry. The economics of steel protection is even more dubious, since there are only 160,000 workers in the industry-and 50 times as many people work for industries that use steel and would suffer from higher steel prices. The only argument for protection is political: The part of the industry that is not competitive is in West Virginia, which went narrowly for Bush, and in vote-rich Ohio and Pennsylvania. American presidents often, and rightly, try to persuade foreign leaders to bring down trade barriers, even though they may endure economic dislocation and political hardship. One may forgive these leaders if their attention sometimes wanders during these lectures. ”
Sadly, while this backs up the argument, it still does not represent an authoritative source. Again, there’s a motive issue. While ‘motive issue’ is an illogical thing to worry about in the case of say an academic journal, where one can scrutinize actual methodology as well as the findings, in a magazine it’s easier to distort things. So I kept searching. The next thing I discovered, after an hour’s search, was this:
Business Week Online; 12/5/2003, pN.PAG, 00p
“The tariffs pushed the world’s 20 major steelmaking nations to the negotiating table at the Organization for Economic Cooperation & Development in Paris. The idea was to reduce world overcapacity in the international steel industry. Not much has yet come of the steel talks other than an implicit admission by steelmaking nations: There’s no free market in steel because most nations — other than the U.S. — either massively subsidize or own outright their nation’s steel plants, totally distorting the market. Governments all over the world created the problem. Now, they’ll have to solve it.”
This one relates only weakly. The important thing in it to note is the way it mentions overproduction – even if our own steel couldn’t cut it, there’s so much steel floating around the world, we have easy access to alternative supplies. It’s a better source, but still less than ideal, and it’s not a perfect relationship. If only I could find that Commerce Department study! At least I did find another one, this time from Newsweek. While it doesn’t say nice things about the plight of steelworkers, it says great things about the viability of the steel industry in the United States:
Newsweek; 11/17/2003, Vol. 142 Issue 20, p53-53, 1p, 1bw
“First, the widespread impression that steel making in America is vanishing is both true and untrue. It’s true (as nightly news shows constantly remind us) that many Midwestern steel communities have suffered grievously from the shutdowns of vast mills that employed generations of workers from the same families. In 1974, industry employment exceeded 500,000; at the end of last year, it was 124,000. But it’s untrue that the United States is leaving the steel business. In 1970, American mills shipped 91 million tons of steel and imports supplied 14 percent of U.S. demand. Since 1996, U.S. mills have shipped an average of 103 million tons annually and imports have averaged 21 percent of demand. Bigger, more labor-intensive mills have gradually closed to be replaced by smaller, more efficient mini-mills.”
Unfortunately, at this point I’m going to stop. I still can’t find the report referenced. Yet I feel that I’ve made a case for some doubt to be injected on the “National Security” objection against free trade in steel. And of course, I’ve listed every source I’ve used in coming to this conclusion, so feel free to research it yourself.
And if you find that Department of Commerce research article, please, let me know.