October 14, 2005

By Lewis Leibowitz
Letter to the Editor
 

Anti-dumping laws create trade barriers

In his Oct. 4 Letter "Anti-Dumping Proposal Would Reward Lawbreakers1," Andrew Sharkey erroneously characterized companies that sell imported steel into U.S. markets as "lawbreakers." They are not. Steel producers for decades have spread the myth that U.S. antidumping law is "violated" when a company sells a product in the U.S. at a low price. Yet it is impossible to determine in advance whether a company is "dumping," because of the uncertainties in the Department of Commerce calculations. The antidumping law as it stands now is better designed to discourage importing altogether than to discipline pricing behavior. It plainly needs reforming.

Thousands of businesses use steel to make products from agricultural equipment to autos to highway overpasses. But U.S. steel mills do not make enough steel, requiring imports to fill the 25% gap between supply and demand in this country. And antidumping duties do not shield the steel industry's customers from global competition.

Steel producers certainly make money from these duties: a recent Government Accountability Office (GAO) study found that the steel industry is one of the top three industry recipients of more than $1 billion in taxpayer funds distributed through the Byrd Amendment. One steel conglomerate took in nearly 40% of the entire Byrd Amendment cash distribution.

The country is already short of steel, with imports down 37% from 2004. The U.S. would not benefit from a greater shortage created by trade barriers that would make America an island of uncompetitive prices in the global economy. The hurricane emergency and increased demand for steel threatens just such a situation.

Since companies that sell imported steel into the U.S. are not "lawbreakers," and since Hurricanes Katrina and Rita will create a surge in demand, it is essential to consider trade measures that will help bring supply and demand into line, including suspending the application of antidumping and countervailing duties on imported steel.

Reprinted with Permission from The Wall Street Journal.