EDITORIAL PAGE — Trade and trade wars

While we don’t pretend to understand all of the intricacies of the international trade and tariff game, it seems strange that in this era of “freer trade,” expressions such as “trade war” and “dumping” demand a lot of attention.

Of late, the Russians were reported to have moved some of their metal inventories, in particular gold and uranium, on to already bloated world markets. And now, the U.S. government may be about to pounce on foreign steel manufacturers for dumping certain forms of steel on the American market. In a preliminary ruling, the U.S. Commerce Department decided that 21 steel-producing countries, including Canada, have sinned. That is, the foreign producers have sold their goods at below market price. The ruling pertains to flat-rolled steel and it results from complaints launched by U.S. steel producers last year. (A couple of days later, Revenue Canada imposed provisional duties on certain types of steel imported from six countries, including the U.S.)

The chairman of Stelco, Canada’s largest steel producer, said the U.S. ruling is “absurd and destructive.” The Hamilton, Ont.-based company contends that Canada and the U.S. already form an integrated market for steel and that Canadian producers face the same economic forces and challenges as their U.S. counterparts.

Stelco says it has repeatedly called for talks to create a North American steel agreement to address the problems of offshore dumping of subsidized steel into the continental market. Support for such a bilateral steel accord has been voiced by the Canadian Steel Trade and Employment Congress, a co-venture between Canada’s steel companies and the United Steelworkers of America.

The Canadian Manufacturers’ Association (CMA) says the North American steel market has always been treated by both the Canadian and American industries as a single market in which companies from both sides of the border compete for business.

The president of the Canadian Labour Congress, Bob White, says the preliminary ruling is another indication that the Free Trade Agreement between Canada and the U.S. is not working. The CMS disagrees, and says that if the U.S. government does decide that dumping is occurring, then Canada may appeal the ruling to a dispute settlement panel which the CMA says has proved effective in reviewing trade decisions in the past.

The establishment of a North American steel agreement seems to make sense. A study undertaken by a Pennsylvania-based consulting firm and released by Stelco says the U.S. economy stands to lose jobs and investment if free trade in steel products is impeded by anti-dumping actions and tariff barriers. According to the report, Canadian steel companies contribute more to the U.S. economy in the form of purchases of raw materials used in steel production, direct investments, joint-operating ventures and jobs than the value of steel sold into the U.S. by Canadian steel manufacturers. An example of the size of the trade being discussed is the $418-million annual average expenditure by Canadian flat-rolled steel companies in eight states for coal, coke and iron ore.

It is possible that the dumping allegations will come to naught, but if they don’t, it has been suggested that any provisional duties applied by the U.S. would be minimal. The road to free trade (or, at least, freer trade) cannot be expected to be without a bump here or there. Protectionism, if it does work, is a short-term position. The global markets are beckoning and the operative word is trade.