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On steel tariffs, trade panel must determine who will be hurt less

No one should be envious of the task facing the six-member U.S. International Trade Commission on the issue of whether or not to extend steel tariffs for another five years.

Regardless of the commission's decision, someone is going to be hurt, or at least be unhappy in terms of impact on profit.

Prior to issuing its ruling, the commission's task will be to thoroughly investigate and evaluate the arguments and claims being put forth on both sides of the issue — and determine whether either side is overstating a projected negative impact from the various decisions available to the commission.

Making at least some of the needed determinations is what a meeting Tuesday was all about. Auto and steel industry officials appeared before the commission in Washington to present their positions, as did 11 lawmakers who detoured from the campaign trail to support their respective sides.

In support of the auto industry, two Michigan congressmen asked the bipartisan trade panel to end the current tariffs, while the other nine urged that tariffs be extended for five more years against Canadian, Australian, Japanese and other steel imports.

Without any extraordinary powers to know the full range of fallout from any decision that it makes, the only right option for the trade group is to try to issue the ruling that will do the least overall harm.

The U.S. Department of Commerce said earlier this year that eliminating the tariffs would revive dumping of low-priced foreign steel in the American market, damaging the domestic steel industry.

The steel industry says tariffs are necessary for it to survive, despite what recovery the industry has experienced.

Major steel consumers such as the auto industry say they have been injured by artificially inflated steel costs brought about by the 13-year-old tariffs.

One point central to the dispute involves steelmakers' profits from high-end galvanized steel, 1,000 pounds of which goes into the average car. Steel companies say they are earning 5.2 percent, while auto companies say it's 12 percent.

The commission needs to find out who is telling the truth and who isn't.

The three U.S.-based automakers don't want giant, consolidated steel companies benefiting from protections put in place during a recession in the early 1990s. And, the domestic automakers have been joined for the first time on a trade issue by the Japanese competitors Nissan, Honda and Toyota.

Steel industry consumers contend that their jobs outnumber those in the steel industry 60-1 nationwide. Steel companies, who point to big job losses over the past decade, say they need to make enough profit to adequately invest in upgrading their plants so they can better compete.

But some of the problems that linger in that industry are linked to the decades of overly generous worker contracts that, over the long run, gutted the financial foundations of many steelmakers — and shortsightedness by steel executives and boards of directors in failing to pursue modernization and efficiencies that would have helped them compete with steel plant upgrades carried out overseas.

Mustafa Mohatarem, chief economist for General Motors Corp., said, "It (steel industry) is not just an industry that is ready to face competition, it is an industry that needs more competition," because of the higher costs emanating from the existing tariffs.

The commission will decide whether to remain with the protectionist mind-set or decree that domestic steelmakers must fend for themselves.

With someone destined to lose, most likely big time, commission members can't be looking forward to whatever decision lies ahead.

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