Trade Deal Opens Doors for Manufacturers the Impact of the Trade Agreement on the US Steel Industry Will Be Minimal, Industry Analysts Say

Article excerpt

OF all the basic industries in the United States, steelmakers may be the least affected by a North American Free Trade Agreement (NAFTA). The scales involved are too disproportionate to make much difference quickly.

For one thing, the US steel industry dwarfs its North American counterparts. Its production is seven times that of Canada, 10 times that of Mexico.

Thus, even if the doors were thrown open tomorrow, US steelmakers would not see an explosion of new business. The Mexican and Canadian markets are too small. Likewise, competition from Mexico and Canada in US markets would be minimal.

"When you open the borders and you eliminate tariffs, the effects will not be immediately huge," says one well-placed industry official who declined to be quoted by name.

In any case, the free-trade agreement would not eliminate all the barriers immediately. In many areas, it wouldn't reduce trade barriers at all.

"They should call it a free-investment agreement instead of a free-trade agreement," says Mark Anderson, director of the AFL-CIO Task Force on Trade. The union federation is particularly concerned that issues such as worker safety and environmental standards won't be addressed in the NAFTA.

The Bush administration claims that such concerns are addressed in the treaty. But Mr. Anderson says the provisions are not nearly enough.

Even the steelmakers are keeping an eye on those provisions. If Mexico has less stringent (and thus less costly) regulations on the environment and worker safety, its steel industry will have a leg up.

Though the treaty will give US companies more freedom to set up shop in low-wage Mexico - a boon to investors, perhaps - that will not offer much comfort to US workers left jobless, Anderson says.

Building new steel plants involves so much capital that analysts don't expect a rapid shift across the border. …