Friday, October 13, 2006

Zero Sum Games?

No good Friday questions this week. Most of the searches were pretty basic ones like "customs law."

So, I'll just pass on this good article on steel dumping from the Chicago Tribune.

The gist of the article is that the U.S. steel industry and the U.S. auto industry (including foreign-owned producers in the U.S.) are at odds over whether a dumping order on corrosion-resistant flat-rolled steel. The U.S. steel companies, which are now relatively profitable, have been protected by antidumping duties on goods from six countries since 1993. This, of course, helped the U.S. companies compete with imports by offsetting the allegedly unfair low price of imported steel.

The thing to keep in mind is that for every producer of steel desiring protection from injury caused by low-priced imports, there are multiple consumers of that steel who feel they are paying unfairly high prices. And who are among the biggest steel consumers? Car companies. Not to mention appliance manufacturers and the folks who make basic steel products like auto parts, gears, etc.

So, trade relief (antidumping or countervailing duties) needs a delicate balance. The recipient needs protection. We know that because the International Trade Administration found that the goods were being sold in the U.S. at less than in the home market and the International Trade Administration found that the low price was causing injury to the domestic industry. But, there are consumers are who have built business plans around the low price. In many cases, the consumers are businesses that use the goods in the production of something and they likely employ lots of people doing that. Or, who want to use it.

And that, in part, is why there are "sunset reviews" conducted five years after the original antidumping duty order. At that point, the government gets to revisit the case. If it finds that dumping is not likely to continue in the absence of the order or that there is no continuing threat of injury, then the order is lifted.

For the steel case, that might happen next week. That is why there is a war of words going on between the auto industry and the steel industry. I'm not close enough to the issue to have a prediction. Either way, a big U.S. industry is going to be unhappy.

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