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February 24, 2003

Dear Leader,

I must take strong exception to an article in the Observer Column on February 9 regarding a study recently released by the Consuming Industries Trade Action Coalition (CITAC). That study, of which I am a co-author, found that as many as 200,000 people in steel consuming sectors (broadly defined) were unemployed by higher steel costs during 2002.

The column incorrectly suggests that our estimate reflects job losses owed entirely to the effects of steel tariffs. We went to great lengths in the study to emphasize that steel tariffs are one significant cause of job losses, but by no means the only cause.

The column quotes Dr. Gary Hufbauer stating our findings are "way out of bounds." Dr. Hufbauer's comment was a reaction to an earlier FT story about the CITAC study, in which the FT reporter incorrectly stated that the job losses we calculated were due solely to steel tariffs. Dr. Hufbauer and his colleague Ben Goodrich have since carefully analyzed the CITAC study and the tariff-related job loss estimate Dr. Hufbauer was quoted making. Dr. Hufbauer's revised estimates of job losses in steel-consuming sectors (using a much narrower definition of steel consumers) are now posted on the CITAC web site. Objective readers of our estimates will see a rough consistency between them. Indeed, other economists have also called our study "very reasonable," and "completely defensible."

Finally, the column accepts as fact the steel industry's deliberate miscalculation that actual steel-consuming jobs increased from January 2002 to December 2002. As we note in the study, the employment data cited are not adjusted for seasonal variations. Thus, it is quite improper to compare January 2002 to December 2002 employment data. Instead, year on year data must be compared, such as December 2001 data to December 2002 data. According to newly released U.S. government-revised employment data, this comparison shows clearly that in fact employment in steel-consuming industries declined from December 2001 to December 2002 by 370,600 jobs.

The column suggests that there is something duplicitous about our correction of an inaccuracy that the column acknowledges has no impact on our central conclusion. We discovered that we had stated that over 900,000 steel consumers had lost their jobs over the one-year period ending December 2002, when in fact we should have stated the losses were over a two-year period ending December 2002. Again, this had no impact on the conclusions of the study.

Our findings remain that as many as 200,000 American steel consumers were added to the unemployment rolls last year as a result of higher steel costs. To date, no one has found fault with the economic modeling used in the study. The FT did a disservice to its readers by buying into the rhetoric of the domestic steel industry.

Sincerely,

Laura Baughman
President, Trade Partnership Worldwide, LLC