Steel must compete

Now that the world economy is finally growing - after going through a difficult recession - it is vital that nations avoid protectionist measures that work against global trade. For that reason, the United States should not impose broad new restrictions on steel imports - as sought by the domestic steel industry and its trade union allies.

The push for new restrictions on steel imports was given a boost this week by the 3-to-2 vote of the International Trade Commission. The ITC held that imports are a major cause of harm to segments of the American steel industry. Some 70 percent of all imports are covered by the ITC's ruling. The commission must now decide what form of relief should be granted the domestic steel industry, and pass its recommendation along to President Reagan. He, in turn, must either act on or deny the ITC proposal by late September, just before the presidential election.

That timing - looked at in political terms - is awkward for the administration. The old-line steel producers are found in electorally important states, such as Pennsylvania. And the administration in the past had opposed global quotas to aid domestic steel - instead preferring nation-by-nation (or regional) agreements. The US has a quota agreement with Europe. Japan, meanwhile , has agreed to limit its exports voluntarily.

The nation-by-nation approach remains preferable to moving to across-the-board restrictions on imports, as sought by the domestic steel industry. An across-the-board limit on imports could add millions of dollars to the prices that consumers pay for durable goods. It would raise the price of many US goods sold abroad. And some newly emerging nations in Asia that are major steel exporters could well have difficulty meeting their large debt obligations if steel exports to the US were suddenly reduced.

One possible upshot: retaliation by those nations in the form of restricting purchases from the US.

The next step in all this is up to the ITC. It could propose quotas or tariffs, or a combination of both, over a defined period of time. Whatever course of action it recommends, the long-run principle seems most crucial: namely, that the world economy is best served by expanding, not restricting, global trade.

The domestic steel industry is already taking many steps toward the modernization that will be needed to make the industry truly competitive: such steps as mergers, closing of outdated facilities, and joint ventures with overseas producers.

Protectionist measures, by contrast, will only work against genuine job creation.