We’re Raising Sword Against Our Allies

How does it happen that historically close and valued allies become involved in a vicious trade spat disproportionate to the issue at hand? It happens when other countries get under the skin of American labor unions backing Vice President Al Gore in the heat of a presidential election year.

This is one of the inescapable conclusions to be derived from the Clinton administration’s disheartening announcement last week that it would slap punitive tariffs on countries exporting large amounts of inexpensive steel products to American markets. In the United States, we call this trade practice, derogatorily, “dumping”--as in, foreign nation X has all this cheap stuff for export and “dumps” it in the U.S. market, at a price below the cost in the home nation. Unsurprisingly, eager customers snap up the lower-priced product and ignore U.S.-made alternatives.

In other words, one nation’s dumping is another’s nation’s price-slashing, which is all the more desirable in a truly efficient and competitive world economy that’s open to all parties. Think of all the mass-produced and marketed Hollywood films we “dump” (pardon the expression) on foreign markets. Indeed, this process is the very one anointed by economic globalization and its institutional archangel, the World Trade Organization, as the wave of the future.

What’s more, the targets of the U.S. tariff tantrum are not rogue exporting states or terrorist enemies but America’s two closest and most strategically vital allies in Asia: Japan and South Korea. The latter accounts for about half of all the imported carbon steel pipes bought in the United States. Washington’s move, said a Korean trade official, “is an extreme measure most countries are unwilling to take because it is highly likely to be accompanied by retaliatory measures . . . . But regrettably, South Korea has few, if any, specific means to cope with it.” The politically astute but sometimes hypocritical Clinton administration knew that Korea, dependent on the U.S. for military protection against North Korea and grateful for forthright Western aid during its recent economic plunge, would say little and do nothing.

Even if the U.S. dumping complaint has technical merit, is this how we should respond? The better way, in today’s more globalized, economically civilized world, is to allow the World Trade Organization to examine the facts and issue a ruling, something Washington has stiffly resisted. Vicious unilateral trade retaliations, whether by Washington or anyone else, contradict the whole point of the last dozen years’ highly motivated effort to help erect a civilized global economy.

The stated intent of last week’s deplorable announcement, taken under the anti-dumping provisions of U.S. law, is to protect U.S. businesses and their employees from the economic effects of cheaper commodities pouring in from other countries and outselling U.S. products. In the extreme, foreign dumping, to put the worst rhetorical face on it, can close down businesses and put people out of work. But look at the other side of the economic equation: Import sales in the U.S. provide jobs to workers in the country of manufacture and reduce the costs of the product to American consumers. This in turn improves the ability of foreign markets to buy our own goods and cools U.S. inflationary pressures by damping prices. So when Washington, acting mainly on behalf of special U.S. interests in an election year, moves to impose tariffs on steel imports, it is not serving the best interests of all the American people.

The Clinton administration’s action was less directed to the issue of Koreans dumping steel than to the possibility of U.S. labor unions dumping Al Gore. The vice president is well entrenched with them, and they with him; so look at this U.S. action more as a kind of election-year insurance policy than an example of the administration’s best world economic policy. Within the administration, which took months to decide the issue, dissenters argued against such protectionist pandering.

The steel tariff, which could endure as long as three years, will particularly set back South Korea, currently recovering from the Asian financial flu, by all but making its lines of carbon steel pipe unaffordable here. Either Seoul or Tokyo could appeal to the World Trade Organization, but its review process can take longer than even a U.S. presidential election.

Everyone else understands the game America is playing, because so many others play it. But by sometimes talking out of both sides of its mouth, and violating what it preaches, the United States weakens its claims for world leadership in the proper evolution of globalization. In this case, it is foolishly pandering to short-term domestic political concerns over the long-term interests of itself and the world. It’s a thoroughly depressing way for Clinton to stamp the last year of his presidency. And for Al Gore to show us what his would be like.