"Steeling" the World: Economic and Antitrust Implications of Steel Industry Cartels as Alternatives to Trade Protectionism

By Tisdell, Benjamin A. | Northwestern University Law Review, Fall 2002 | Go to article overview
Save to active project

"Steeling" the World: Economic and Antitrust Implications of Steel Industry Cartels as Alternatives to Trade Protectionism


Tisdell, Benjamin A., Northwestern University Law Review


I. INTRODUCTION

As recently as a year ago, the business conditions facing the American steel industry were, by any standard, extremely grim. Steel prices had reached their lowest point in almost twenty years and showed little sign of recovery.1 These depressed prices pushed many U.S. steel producers to the breaking point; between 1998 and 2001, thirty-two American steel companies filed for bankruptcy protection.2 Three of these bankrupted companies were among the five largest U.S. steel producers: Bethlehem Steel, LTV, and National Steel.3 The effect of low steel prices on steel workers was equally dramatic; between 1990 and 2001, job losses in the U.S. steel industry averaged nearly five thousand per year.4

In response to this domestic steel "crisis," on March 5, 2002, after months of lengthy internal debate and intensive lobbying by major American steel companies and steelworker unions, the Bush Administration announced a wide-ranging regime of protective tariffs and quotas for the U.S. steel industry.5 The decision included a three-year schedule of tariffs, rangIMAGE FORMULA5

ing from 8% to 30% on a wide range of imported steel products from a variety of countries.6 Another major element of the plan was a quota system designed to allocate shares of the U.S. import market among major foreign steel producers.7 While the plan technically was conditional on a competitive restructuring of the U.S. steel industry and subject to periodic official review, industry observers generally agreed that the plan represented the "most dramatically protectionist step of any president in decades."8

While American steel companies and their unions initially were guardedly enthusiastic about the tariff announcement, reaction outside the U.S. steel industry was swift and overwhelmingly negative.9 Media commentators criticized the decision as a political betrayal of sound economic and foreign policy.10 Overseas reaction was even stronger, as several foreign governments responded to the decision with retaliatory tariffs on both steel and non-steel products from the U.S.11 In addition to these classic "trade war" countermaneuvers, the governments of numerous nations initiated formal complaint procedures against the U.S. for the steel tariffs at the World Trade Organization (WTO) in Geneva.12

In the wake of the tariff announcement, the effects of the tariffs on the U.S. steel industry have been mixed, while the tariffs have remained a persistent sore point in diplomatic and trade relations between the U.S. and other nations. While market prices of some steel products have, by some IMAGE FORMULA7

measures, risen by as much as 60% and some U.S. steel operations have slowly begun to rehire laid off workers, most large steel manufacturers have remained unprofitable since the tariff announcement.13 Indeed, some evidence has indicated that the tariffs are actually making the long-term problems of the steel industry worse by giving the weakest and least efficient steel companies barely enough new revenue to resist market exit and by encouraging new inefficient production capacity to come online.14 Meanwhile, the tariffs have significantly increased diplomatic tensions with allies and trading partners of the U.S., who have made the tariffs an important issue in discussion of other international topics.15 In response to this criticism, the Bush Administration has quietly begun to scale back some of the tariffs, recently exempting about 25% of the thirteen million tons of steel imports originally hit by the duties.16 Unsurprisingly, these exemptions have fostered significant dissatisfaction among U.S. steel companies and their political allies.17

Because of the mixed economic and diplomatic success of the U.S. steel tariffs, a retrospective analysis of the decision to enact them seems both appropriate and timely. At first blush, an ex post analysis of the Bush Administration's steel policy decision seems constrained by the simple binary choice of whether protective steel tariffs should or should not have been implemented.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

"Steeling" the World: Economic and Antitrust Implications of Steel Industry Cartels as Alternatives to Trade Protectionism
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?