TRADE: A Little Hand For Big Steel

How much protection do U.S. steel mills need from foreign competition? In answering that question last week, President Bush added to his reputation as the Great Compromiser. Instead of extending the soon-to-expire voluntary trade quotas another five years, as Big Steel wanted, or abolishing the restraints altogether, as the industry’s customers desired, Bush split the difference. For the next 2 1/2 years, the U.S. will hold foreign imports to 18.4% of the domestic steel market. After 1992 the barrier will be dropped. In the meantime, Bush directed U.S. Trade Representative Carla Hills to try to negotiate an end to protective tariffs and subsidies around the world.

Big Steel argued for protection because it believed foreign plants were unfairly benefiting from subsidies. But the industry’s customers complained that the restraints produce shortages and higher prices.