warrant presidential inaction. 44 The Trade Act's tendency to resolve
the contradictory demands of protectionists and free traders by increasing the president's discretionary powers led one steel industry official to observe that "the measure establishes some general principles
the industry has favored for a long time, even though it doesn't provide iron-clad guarantees of help." 45
The ambiguities and holes in the Trade Act did not immediately
appear. A temporary world boom in steel demand temporarily relieved
some of the pressures on the domestic industry. Over the long haul,
however, the increase in global steel demand only served to exacerbate further steel's plight. Foreign producers invested large sums in
modern new plants and equipment, and the prospects of future world
steel shortages were gradually replaced by the specter of overproduction. The domestic industry, in the meantime, continued its diversification efforts and slipped further behind many of its foreign competitors. These were crucial years for U.S. steel, and it was within this
context that the realities of the Trade Bill revealed itself. Protectionism meant foreign retaliation, but failure to protect the steel industry
was political suicide. More than ever before, policymakers now had
to find a solution for the deepening crisis in steel. 46
These data were extracted from Federal Trade Commission, Bureau of
Economics, Quarterly Financial Report, for various years; American Iron and
Steel Institute, Annual Statistical Report, 1971, 1973; Federal Trade Commission, The United States Steel Industry and Its International Rivals: Trends and
Factors Increasing International Competitiveness, p. 68 ( Washington, D.C.: U.S.
Government Printing Office, 1977).
Federal Trade Commission, The United States Steel Industry and Its International Rivals, p. 113.
For a discussion of these issues see Council on Wage and Price Stability, Report to the President on Prices and Costs in the United States Steel Industry,
pp. 76-84 ( Washington, D.C.: U.S. Government Printing Office, 1977).
Robert W. Crandall, The U.S. Steel Industry in Recurrent Crisis, p. 68
( Washington, D.C.: Brookings Institute, 1981); Federal Trade Commission, The
U.S. Steel Industry and Its International Rivals, p. 78.
See U.S. Congress, House, Committee on Ways and Means, The Trade
Reform Act of 1973, Hearings on HR 6767, 93rd Congress, Ist session, 1973,
pp. 3957-4031 (hereafter referred to as Trade Reform Act of 1973). Also, Report on the Committee on Finance, U.S. Senate, together with additional views
of H.R. 10710, To Promote the Development of an Open Nondiscriminatory
Economic State, To Stimulate the Economic Growth of the U.S. and for Other
Purposes, 93rd Congress, 2nd session, 1974.