Steel industry executives and labor leaders are demanding increased trade protection against foreign steel imports. They say the world financial crisis has forced steel producers in Japan, Korea, Brazil, Russia and other depressed countries to "dump" steel here. Dumping occurs when a nation sells products abroad at lower prices than are charged in the domestic market.

If the administration grants protection for steel, it will be forced to give protection for textiles, machine tools, semiconductors and other industries also suffering from foreign economic woes. Restricting imports now risks a worldwide economic collapse.

• That is why U.S. Trade Representative Charlene Barshefsky was in Europe last week asking the European Union to ease its restrictions on Japanese cars and Russian steel.

• Numerous studies by the Congressional Budget Office, Federal Trade Commission and the U.S. International Trade Commission (ITC) have documented that past trade protection has failed to revive the steel industry.

• The steel industry is using the law to impede their competitors so that they can raise their profits, and this will occur whether or not the Commerce Department or the ITC ultimately grant relief.

That's because anti-dumping duties are assessed retroactively. Once a preliminary investigation begins, companies exporting steel to the U.S. will be required to post a bond equal to the estimated anti-dumping duty. If the case is ultimately thrown out they get their money back; if they lose the money is forfeit. Thus the mere threat of an anti-dumping complaint is enough to reduce exports.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 28, 1998.

For text go to http://www.ncpa.org/oped/bartlett.html