Steel quotas: jobs vs. trade

The Reagan administration, to its credit, has been generally supportive of free-trade measures that help hold down consumer prices and promote global commerce.

Now the White House is facing perhaps its biggest test on the protectionism front: The issue of restricting foreign steel imports. This was called for by the US International Trade Commission to aid a troubled domestic steel industry that has lost over 200,000 jobs since the late 1970s. For President Reagan, the issue is complicated by the fact that many American steel-producing facilities are located in states with substantial electoral votes.

The trade commission ruled last July that domestic steel producers have been injured by imports. It urged Mr. Reagan to impose quotas and tariffs on a broad range of steel imports that, taken together, represented 70 percent of all US steel imports last year. Mr. Reagan has until Sept. 24 to act on the package.

The decision is clearly a tough one. Still there are some guiding principles:

* The issue should be as divorced from domestic political considerations as possible. Many other industries also seeking trade protection, such as the auto industry, will be watching the steel decision.

* Free trade works in favor of lower consumer prices.

* At the same time, free-trade considerations must be carefully balanced in the mix along with national security needs. A strong steel industry is important for the nation's defense requirements. Still, the US is a global trading power. If the US were to go the protectionist route - thus undercutting efforts by US Trade Representative William Brock to open up global commerce - other nations could be expected to follow suit.

* The best course would thus seem to be a balanced package: modest relief for domestic manufacturers - worked out if at all possible through voluntary import agreements with such low-cost producers as Korea, Brazil, and Spain. This would be far preferable to across-the-board quotas. The quid pro quo for such a modest package of industry assistance should be (a) federal job assistance and possible tax or other federal financial help for workers and US steel producers injured by such a voluntary arrangement; (b) a requirement that domestic US producers take firmer steps through mergers and better management practices to modernize and upgrade the industry.

By ruling out any form of protectionism to the copper mining industry last week - thus reaffirming his commitment to free trade - Mr. Reagan opened the way to reach a compromise on steel.