U.S. Steel and Cotton Industries

We live in a world where the mantra of free trade is recited as a panacea: lower tariffs and open markets are capable of creating economic efficiency, thereby raising profits, increasing employment, and generating higher economic growth. However, the reality is that all major industrialized powers protect their domestic industries. The United States, for all the brave talk by both political parties, is no exception, nor should it be. There are some industries that can legitimately be considered as vital for domestic security, and if protection is needed to ensure its domestic production, then so be it. Other industries may be vital for national interests in that replacing the jobs their failure would cost would be exceedingly difficult. This paper will analyze the steel and cotton industries in the United States and demonstrate why protectionist measures are not only needed but have been extensively utilized by both Republican and Democratic Presidents.

Since the mid 1990's, the United States steel industry has been confronted with rapidly escalating difficulties. In a ten-year period, more than 30 United States steel producers have gone into bankruptcy. While different companies and parts of the industry have been affected to different degrees, the two types of domestic producers of raw steel, integrated mills and minimills, have been impacted the most. The influx of cheap foreign steel has undermined the ability of the United State

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es could prevent the continuing decline of the domestic steel industry in late 2000 and 2001. Industry giants began to fail, with Geneva Steel closing its doors in November of 2001 and LTV following suit just a month later. These two companies alone had represented 10% of total domestic production (American Metal Market, 2002). Clinton also responded to the decline in the steel industry by approving the Byrd Amendment to a 2000 appropriations bill. This Amendment was also highly protectionist and called for the distribution of the proceeds from anti-dumping duties to the industries that petitioned for the duties. The Byrd amendment was challenged by eleven countries within months of its passage due to its highly protectionist stance and the allocation of the anti-dumping duties (Destler, 2004). President George W. Bush abandoned his own avowed free trade principles in 2001, undertaking a massive United States International Trade Commission investigation on the Steel Industry. This investigation led directly to the United States imposing three-year safeguard tariffs with top rates as high as 30% on imported steel. A whole slew of American trade partners, including some of closes allies such as England and Japan, chal

Category: Business - U