The Clinton administration agrees–up to a point. Since January it has acted to block some imports it says violate U.S. anti-dumping laws, and in a House Appropriations Committee hearing last Wednesday U.S. Trade Representative Charlene Barshefsky said the moves have produced a 34 percent decrease in steel imports in the last two months. No matter; the Visclosky bill (which still must clear the Senate, and which faces a Clinton veto) passed anyway. And the next day, the news that our trade deficit had soared to a record $17 billion in January made it look almost sensible–even though it clearly violates world trading laws. No wonder Treasury Secretary Robert Rubin called a Saturday White House meeting to plan how to fight the bill. “We’re concerned there has been some backtracking on the commitment to open markets,” says a senior administration official, “and the president is hoping to convince both sides we can find a new consensus.”
Or better yet, the old one. Barshefsky explained the virtues of free trade once again in her House testimony–this time, with regard to the politically charged question of China’s joining the World Trade Organization. Don’t think of WTO membership as a reward for China, she said. If China agrees to open its markets enough to strike a deal, perhaps in time for Prime Minister Zhu Rongji’s April visit to the United States, that’s good for everyone. Trouble is, the longer the U.S. remains the only major country that’s growing at a healthy pace–the reason for those record trade deficits, including a $4.8 billion gap with China in January–the harder it is to keep everyone focused on those mutual benefits.
Rubin has been jawboning the Europeans and the Japanese about growth for years. Now he has to work a little harder to keep the Americans on board. Luckily for him, the steel industry is pretty much alone in lobbying for protection these days: at a time of record prosperity and full employment, more folks enjoy cheap imports than fear them.
Other capitals, meanwhile, wonder why Washington is complaining; after all, it’s winning the globalization game. The European Union is miffed that the United States has forced a confrontation over opening the EU market to Central American bananas. Pure politics, say the Europeans, pointing to political contributions made by Big Fruit. Rules are rules, said Barshefsky in her House testimony. There may be a compromise before U.S. sanctions take effect in April.
As for getting the world growing again, there are a few hopeful signs out there. Some investors are betting Japan is finally getting serious about restructuring; the Nikkei is up 17 percent this year. In Germany, the departure this month of the left-leaning Finance minister, “Red Oskar” Lafontaine, could put the government on a more pro-business, pro-growth course. South Korea and Thailand appear to be on the mend. Even Brazil has stabilized. On Friday, both General Motors and Volkswagen said they’d step up their auto production there. With any luck, they’ll use lots of steel.
