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.