Exemptions undermining president's steel initiative

First the good news about the tariffs on certain kinds of imported steel imposed in March by the administration of President George W. Bush: Last month, imports of steel products were down 20 percent from May 2001. Indeed, the 1.6 million tons brought in by American companies this May were about 100,000 tons less than the amount imported in April.
This suggests to us that the president's decision to step in and protect American manufacturers from dumping is paying dividends. There is ample evidence that the domestic steel industry has been grievously harmed by the unrestricted flow of artificially priced -- below the cost of production -- steel products from Europe, Russia, Japan and South Korea. Indeed, former President Bill Clinton's refusal to deal aggressively with the steel-dumping issue resulted in thousands of American steelworkers losing their jobs.
But the good that is coming from Bush's three-year package of tariffs of 8 percent to 30 percent -- the steel industry and unions had pushed for 40 percent across-the-board penalties -- could be short-lived if the Commerce Department and the Office of United States Trade Representative don't put the brakes on the approval of tariff exemptions.
Exemptions mount up
As of Monday, 224 exemptions had been granted, and the Commerce Department has until July 3 to decide on the remaining 146 requests. If all are approved, a total of 470 exemptions would be granted. If that number seems excessive, consider this: more than 1,200 U.S. companies that use foreign steel products have asked the Bush administration for exemptions.
We urge the president to declare a moratorium so that the Department of Commerce and the U.S. trade representative can determine whether the overall goal of ending the dumping of steel is being undermined. Government-subsidized or government-owned foreign producers have benefited greatly from what has been an uneven trade playing field -- at the expense of American workers.
The tariffs are nothing more than an equalizer, but they will be ineffective if U.S. companies are able to secure exemptions without too much trouble.
Little alternative sometimes
While there are legitimate demands for foreign specialty products -- Thomas Steel of Warren has made a persuasive case -- not every request should be approved. Indeed, it behooves the Bush administration to determine whether U.S. steel producers can fulfill the needs of domestic users at prices that are competitive.
"Many of the products now being excluded from [tariff] relief are products that American steelworkers and American steel plants are ready and able to make," says Thomas Usher, chief executive officer of U.S. Steel Corp. "There is no legitimate reason to exempt these foreign imports from the president's remedy."
Bush and his trade team should use Usher's comments as the basis for an in-depth evaluation of all the exemption requests.