Balance on steel
The office of the American presidency has always served as that of a balancer - an adjuster - of competing interests in a democratic society. At times, presidents have had to serve as representatives of entire groupings of peoples or interests left outside the economic or political mainstream, as happened in the 1930s when Franklin Roosevelt initiated his New Deal. At times, presidents have rallied to the side of specific minorities or causes. Occasionally, the adjusting process has been seen in terms of public drama. But as often as not - particularly in the 1970s and '80s as international financial and debt concerns have moved to the political forefront - the adjusting process has involved more complicated day-to-day economic trade-offs.
We mention all this in light of President Reagan's decision to seek voluntary country-by-country accords on steel imports, rather than impose stiff, across-the-board quotas or tariffs as a way of reducing imports. The same day the White House announced the decision on steel it also announced a new program to provide debt relief to financially strapped farmers.
The two issues - steel and farms - are directly interlinked. US farmers export a significant percentage of their crops - for some commodities, up to one-half their entire output. Imposing rigid import restrictions on steel - a course of action recommended to Mr. Reagan by the US International Trade Commission, which ruled that domestic producers have been injured by imports - could very well lead to retaliation against US exports in general, including farm exports. On the other hand, doing nothing to aid the American steel industry - which has lost over 200,000 jobs since the late 1970s - could accelerate the flight of companies out of steel, thus leading to more job losses as well as a considerably reduced industry. A smaller industry, in turn, would have national-security implications, since the United States would find itself more dependent on overseas producers.
Thus, President Reagan, for economic and political reasons, sought to balance the competing interests. In calling for voluntary agreements with such low-cost producers as Spain, Brazil, South Korea, and Japan, Mr. Reagan has straddled the fence on the protectionism issue. His decision will not please all sides. Steel unions want all-out protection. Walter Mondale, who favors protection, can be expected to use the decision to press his case against Mr. Reagan in such states as Ohio and Pennsylvania. Meantime, free-trade enthusiasts within Reagan's own Cabinet argue, correctly, that the voluntary agreements would boost steel prices and, ultimately, consumer prices for a broad range of products.
Still, the decision on steel (and farm credit aid), imperfect as it is, is sound. The administration has already negotiated selective import agreements regarding a number of industries, including autos (to expire next year), motorcycles, textiles, and specialty steel products.
The White House argues that voluntary agreements will hold imports to around 20 percent of the market, down from the current 25 percent. (Imports surged to 33 percent in July.) Perhaps. But reducing imports will not by itself ensure a healthier American steel industry. The industry must prove itself far more innovative than it has been. That means it may have to consider more mergers and better management practices. Steelworkers need to reconsider high wage scales. And the White House and Congress must level with the American people about steel: namely, that the downsizing now taking place in the US industry is part of a larger pattern of adjustment going on worldwide, as low-wage third-world nations build modern steelmaking facilities. Washington needs to put together a comprehensive program of job retraining and relocation assistance to help steelworkers who have lost their jobs and who, in many unfortunate cases, will not be going back to their former trades as some factory gates slam shut.