WSJ: IMF-forced exports poised to hurt US jobs

[Robert Weissman <rob@essential.org>]

>Wall Street Journal  Monday, October 19, 1998
>Administration Fears Other Industries
>May Join Steel's Cry for Protection
>By ROBERT S. GREENBERGER
>Staff Reporter of THE WALL STREET JOURNAL
>
>WASHINGTON -- After months of trying, steel-industry executives and union
>leaders finally got the Clinton administration's attention at a recent White
>House meeting. A flood of steel imports, they complained, already is causing
>layoffs and forcing production cuts. They demanded help, fast. "We hear you;
>you're on the radar screen," White House Chief of Staff Erskine Bowles
>responded.
>
>The question now confronting the Clinton administration is this: How long
>will it be before other industries join steel on that radar screen?
>
>Steel usually is the first big U.S. industry to sound the alarm over surging
>imports, and already has filed legal cases against Japan, Russia and Brazil,
>charging they are selling in the U.S. at unfairly low prices. The industry
>may bring as many as 30 more cases, including against South Korea, trade
>experts predict.
>
>But because steel's pain comes at a time of almost unprecedented domestic
>and global economic strains, administration officials fear that other U.S.
>industries soon may follow suit. For instance, Mark Levinson, chief
>economist for the Union of Needle Trade, Industrial and Textile Employees,
>or UNITE, sees the first signs of a flood of cheap textile imports,
>particularly from Indonesia. And apparel shipments from Mexico rose to $2.93
>billion in this year's first half from $2.23 billion last year, while
>apparel imports from Caribbean nations climbed to $3.86 billion from $3.41
>billion during the same period.
>
>Similarly, James Mack, vice president for government relations for AMT --
>the Association for Manufacturing Technology -- says many precision machine
>tools from Taiwan and South Korea that were shipped to the U.S. earlier this
>year and stored in warehouses are being taken out of inventory and sold.
>
>A senior Clinton administration official worries that the semiconductor
>industry could be another victim of a surge of imports if global instability
>worsens, though the industry's trade association says it hasn't yet seen
>clear signs of that problem.
>Facing such prospects, a politically wounded President Clinton confronts a
>difficult balancing act. As impeachment hearings approach, he must weigh his
>desire to hold onto his core support among such groups as steelworkers
>against the risk of unleashing a protectionist backlash. The pressure is
>intense. For instance, the United Steelworkers of America didn't openly
>oppose Mr. Clinton's push to win new funding for the International Monetary
>Fund despite their serious reservations about the institution's practices.
>Now they expect a favor in return.
>
>At the same time, politicians from steel-making states are demanding steps
>to slow the flood of steel imports. And governors from 13 steel-producing
>states, including Pennsylvania and New York, wrote Mr. Clinton last week
>warning that the industry "is facing a major crisis."
>
>The omnibus spending pact reached by Congress and the White House last week
>contains a nonbinding resolution calling on the president to press for and
>expedite investigations of steel cases and unfairly low steel imports.
>
>The administration has taken some steps to help, but remains divided. While
>the Commerce Department is sympathetic to steel's plight, Treasury Secretary
>Robert Rubin and some top White House advisers worry that the perception of
>mounting protectionism at home will exacerbate tensions with hard-pressed
>nations being urged by the U.S. to keep their markets open. "We have to be
>careful to think through the effects of extraordinary relief for particular
>industries on our trading partners," warns U.S. Trade Representative
>Charlene Barshefsky.
>
>Those concerns are well founded. Gregory Mastel, a vice president at the
>Washington-based Economic Strategic Institute, predicts that if steel wins
>its cases against imports, there will be a round of actions against
>Washington at the World Trade Organization, where new antidumping rules
>haven't yet been tested.
>
>As the world's economies weaken, retaliatory actions in other areas could
>exacerbate such global trade tensions. Mr. Clinton is under congressional
>pressure to penalize European nations, which haven't yet implemented WTO
>orders to end certain restraints on banana and beef imports. And Canada and
>Mexico are considering bringing their own cases against certain European and
>Asian steelmakers, alleging that they are selling steel at unfairly low
>prices.
>
>Indeed, the climate seems ripe for protectionism. With currencies of some
>Asian nations and Russia 30% to 50% below their levels of a year ago, ailing
>nations likely will increase the flood of shipments here as they try to sell
>their way out of financial difficulties. The forward momentum for new trade
>agreements, once pushed boldly by President Clinton, is stalled. And in the
>last few years, conservative governments in Britain, France and now Germany
>have been replaced by left or center-left ones that are more sensitive to
>the problems of high domestic unemployment.
>
>"It's potentially a very serious problem, because it's an article of faith
>to think you can have a prolonged financial crisis and not have some serious
>ramifications for trade," says Jeffrey Garten, dean of the Yale School of
>Management and former top Clinton administration trade official.
>
>The administration, trying to quell that concern, recently sped up the
>process under which duties would be imposed on foreign companies found to be
>selling here at unfairly low prices. The Commerce Department also is adding
>staff to process cases and will provide earlier availability of import data,
>which now takes about 90 days. In addition, Ms. Barshefsky, the U.S. trade
>representative, will use a trip to Europe later this month to press European
>nations to ease their restriction in order to take in more steel from Asian
>nations and Russia.
>
>In a speech Thursday to the National Association of Manufacturers, Ms.
>Barshefsky said, "We have to remember the lessons of the 1930s, and as we
>beseech other countries not to respond with protectionism, we also must not
>respond with protectionism."
>
>"This is meant to send a message to importers that they just can't flood the
>market," says Commerce Secretary William Daley.
>
>But the steel industry and its major union want more. Company executives
>want the administration to support legislation that would match U.S. trade
>law with European Union standards by lowering the criteria for temporarily
>restraining imports. The administration hasn't yet reached a consensus on
>this issue, a senior U.S. official said. The Steelworkers union is pressing
>for temporary quotas on steel imports.