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Trade Protection as an International Commodity: The Case of Steel

Published online by Cambridge University Press:  11 May 2010

Mary A. Yeager
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Abstract

Trade protection commonly is viewed as a support—external and perhaps occasional—granted to an industry by government policymakers. Focusing on the steel industry, this study argues that protection is better viewed as a commodity, an input into the production of steel. The development of the market for the protection commodity during the past century is related to the history of regional, national, and international markets for steel.

Type
Papers Presented at the Thirty-Ninth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 40 , Issue 1 , March 1980 , pp. 33 - 42
Copyright
Copyright © The Economic History Association 1980

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References

1 Wall Street Journal, 25 Sept. 1977Google Scholar.

2 Political scientists have used the “public goods” analogy to help explain the policy implications of the change from an open to a closed trading system. Economist Charles P. Kindleberger uses the public goods analogy in his historical account of the depression (The World in Depression, 1929–1939 [Berkeley, 1974])Google Scholar.

3 See especially, Krauss, Melvyn B., The New Protectionism: The Welfare State and International Trade, International Center for Economic Policy Studies (New York, 1978)Google Scholar.

4 The analogy forms the basis of my comparative study.

5 The best and most detailed histories of the early years are Berglund, Abraham and Wright, Philip G., The Tariff on Iron and Steel (Washington, D.C., 1929)Google Scholar, and Taussig, Frank W., Some Aspects of the Tariff Question (Cambridge, MA, 1929), pp. 117–213Google Scholar.

6 Votes, of course, are more elusive of exact measurement.

7 Taussig, Some Aspects of the Tariff, p. 139.

8 Taussig, Some Aspects of the Tariff, p. 203, and Hogan, William, The Economic History of the American Iron and Steel Industry, vol. 2 (Lexington, MA, 1970), p. 795Google Scholar.

9 See Taussig, Some Aspects of the Tariff, pp. 191–213, for details.

10 Berglund and Wright, The Tariff on Iron and Steel, pp. 110–11.

11 When USS was formed, it controlled 75 percent of the country's output of raw steel. Thereafter its share declined steadily, dropping to 45.8 percent in 1920 and to 33.1 percent in 1938. Taussig, Some Aspects of the Tariff, p. 181, and Federal Trade Commission, Report on the United States Steel Industry and Its International Rivals: Trends and Factors Determining International Competitiveness (Washington, D.C., 1977), p. 157Google Scholar.

12 Schattschneider, E. E., Politics, Pressures, and the Tariff (New York, 1935)Google Scholar.

13 See U. S. Congress, Senate, Temporary National Economic Committee, 76th Cong., 3rd Sess., “Export Prices and Export Cartels,” in Investigation of Concentration of Economic Power, Monograph No. 6 (Washington, D.C., 1940)Google Scholar.

14 Hexner, Ervin, The International Steel Cartel (Chapel Hill, NC, 1943), p. 22Google Scholar.

15 I am especially indebted to Richard A. Lauderbaugh, Washington University, St. Louis, for this information, detailed in “Business, Labor, and Foreign Policy: United States Steel, the International Steel Cartel, and The Recognition of the Steel Workers Organizing Committee,” mimeo.

16 Lauderbaugh, “Business, Labor, and Foreign Policy,” p. 8.

17 Hexner, The International Steel Cartel, p. 176.

18 The ENA committed the industry to voluntary binding and final arbitration in contract negotiations in return for a no-strike pledge by the union. It also established a Supplemental Unemployment Benefit Fund to assist workers laid off by plant closings or cutbacks.

19 The trigger price mechanism was created in part to curb steel dumping. Violations of “reference” prices are supposed to spark investigations by the Treasury Department to determine whether dumping has in fact occurred. With the TPM, the Treasury Department established a reference price list to monitor basic steel mill products, which make up nearly 90 percent of basic steel imports. The price was based on the estimated costs of production of the world's most efficient producer, Japan, plus 10 percent overhead, 8 percent profit, and “extras” covering freight, insurance, and handling costs to the United States. Imports entering the United States below their reference price would immediately trigger a “fast track” (2- to 3-month versus the normal 7- to 9-month) anti-dumping investigation. See Solomon, Anthony M., “Report to the President: A Comprehensive Program for the Steel Industry,” mimeo (Washington, D.C., 1977), pp. 9–10Google Scholar, and Federal Trade Commission, The United States Steel Industry and Its International Rivals, pp. 559–63.