The US Steel Industry in 2004: Still in Need of Protection?
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Case Code: ECON006 Case Length: 20 Pages Period: 2001 - 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.600 Organization : - Industry : Steel Countries : USA Themes: Economics, Politics and Business Enviornment |
Abstract Case Intro 1 Case Intro 2 Excerpts
"That will give the US steel industry the opportunity to get back on its feet."
- Robert Zoellick, US Trade Representative, commenting on president Bush's tariff measures announced in March 2002.
Struggling US Steel Industry
Since the late 1960s, the US steel industry has been asking for protection from imports and subsidies to help alleviate its troubles. And the US government has, in response, enacted various protectionist measures from time to time. In 2001, President George W Bush announced the Steel Program. It consisted of three parts: negotiations with trading partners to eliminate inefficient excess capacity in the steel industry worldwide; negotiations with trading partners to eliminate the distorting practices including subsidies that resulted in excess capacity; and, investigation under Section 201 to determine whether the industry was harmed by low-priced steel imports.
After the investigation by the U.S. International Trade Commission (USITC) was completed in March 2002, the President imposed tariff measures under Section 201 to help domestic producers to compete with imported steel. Trade economists argued that these measures would hamper the competitiveness of the industry. The government's protectionist policies would adversely affect market efficiency and innovation in the industry. Imposition of Section 201 tariff measures would increase government intervention in an industry that was already protected, they felt. Statistics show that 80% of steel imports to the US were already subject to tariffs under the US antidumping laws. These laws allowed the government to impose tariffs on steel products that were subsidized by foreign governments and dumped in the US. But in spite of being protected, the industry was struggling. In December 2003, the US administration lifted Section 201 tariff measures, thus, avoiding a trade war with European Union and Asian countries for the time being.
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