Trade authority and tariffs

August 3, 2002

To date, President Bush's record on the trade front has been dismal, marred by one act of protectionism after another. But now he has in his grasp what he has sought since entering the White House--the authority to cut trade deals on the nation's behalf without fear that Congress will pick them apart.

The Senate passed trade promotion authority Thursday as one of its last acts before going on vacation, adding its approval to that of the House. When he signs this bill, Bush will regain a right every president since Gerald Ford had been accorded until Congress refused to extend it for Bill Clinton eight years ago. To be specific, the president can negotiate trade treaties with other countries. Congress can then vote them up or down--but can't amend them.

Still, Bush has paid dearly for authority. In the name of expanding trade, he moved to protect U.S. steel and lumber industries and boost farm subsidies. That has increased manufacturing costs and endangered jobs at a time when the economy is threatening to stall again. His actions have robbed the U.S. of the moral high ground on trade. If the richest country in the world can't stomach the domestic dislocations that go with expanding trade, how can other much poorer countries be expected to do so?

To gain trade authority, Bush also agreed to major increases in assistance for workers who lose their jobs because of foreign competition--including tax credits for health insurance and up to $10,000 per person, over two years, as partial reimbursement for lost wages.

But in all these efforts to protect the purported victims of trade, the Bush team completely ignores its stalwarts--those Americans who actually engage in commerce with the rest of the world, providing jobs and economic growth. They're left to fend for themselves.

Take Lester Trilla as an example. He traveled to Capitol Hill last month to explain what the president's 30 percent steel tariffs imposed in March have done to his third-generation Chicago company. The bottom line: The tariffs have cut off Trilla's supply of imported steel, raised his costs by 54 percent, and threatened future business and jobs at Trilla Steel Drum.

Those tariffs prompted a firestorm of retaliatory threats from U.S. trading partners. The only reason they haven't yet led to an all-out trade war with the European Union is that the administration has been forced to grant so many exemptions, the Europeans have so far been mollified. In mid-July, the administration added exemptions for another $60 million of European steel imports, bringing the total to $290 million.

At home, the economic ripple effects have been severe. The tariffs have caused spot shortages and price hikes for companies that need steel to make their products, as Trilla and others testified last month before the House Small Business Committee.

Trilla Steel Drum makes those 55-gallon drums used to ship everything from petroleum to food products. The South Side company's 60 employees make one million drums a year--or at least they did until steel tariffs "effectively cut off our supply of the major raw material we need," Trilla told the House committee.

"The steel tariffs were supposed to protect American businesses and American jobs," testified Robert Herrman, one of 400 workers at A.J. Rose Manufacturing, an Ohio maker of precision metal components. "So why do the steel mills deserve to stay in business more than A.J. Rose?"

Good question.

The Bush White House argued that tariffs would give the steel industry time to reorganize and become more competitive. That's absurd. The big integrated companies that make steel from iron ore, coal and limestone have been steadily losing business for years--not just to foreigners, but to more efficient domestic mini-mills that use scrap as their raw material.

That process will continue, with or without tariffs. Meanwhile companies like Trilla and A.J. Rose are bearing the cost--and it's being paid in lost jobs and business.

The administration argues all of that was a necessary price to advance the cause of free trade. It's now up to the president to prove the trade authority was worth it.

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