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April
12, 2002 4:50 p.m.
Steel
Sophistry
Don
Evans defends Bush on trade.
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 ommerce
secretary Don Evans had some reporters and columnists over today to chat
about the administration's economic policy and, especially, its policy
on trade. An aide explained before he spoke that the administration's
decisions on lumber and steel had been distorted in the press. Unfortunately,
Secretary Evans did not clarify the issues involved.
Evans's main point
was that the administration had no choice but to impose trade barriers
on steel and lumber; it was a matter of enforcing the law. The administration,
he said, was enforcing American law while complying with its obligations
as a member of the World Trade Organization.
None of this is true.
The administration initiated the steel case at the request of the steel
industry; it didn't have to. Having asked the International Trade Commission
to look into the matter and then received its recommendation, the president
had — by law — complete, unchecked discretion over what to do.
He chose to impose tariffs.
Steel was investigated
under a section of American law, compliant with the WTO, that allows trade
relief for industries that have been seriously injured by increased imports.
During the period investigated, however, most categories of steel imports
fell. The ITC got around that by some fancy footwork that will not (and
should not) survive a WTO challenge.
When not making a
claim of legal obligation, Evans argued that steel tariffs were necessary
to overcome subsidies and market-distorting practices by other countries.
That was not the legal rationale for the investigation or the tariffs;
and the tariffs apply to countries whether or not they engage in any of
these (unspecified) practices.
The administration's
lumber protectionism is, by contrast, legally premised on Canadian subsidies.
Whether those subsidies exist was a matter that Evans's Commerce Department
had to decide. It found that they did exist because Canadian lumber is
cheaper than American lumber. That's an obvious non sequitur, and WTO
rules forbid that method of determining whether another country has subsidies
that justify countervailing tariffs.
On steel, Evans expressed
the hope for a "market-driven overcapacity reduction." How tariffs
that keep marginal American steel producers afloat will reduce global
overcapacity was not explained.
Nobody blames Secretary
Evans for the steel and lumber decisions. But if he wants to defend them,
he needs to find a stronger case.
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