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Steel protection hurts consumers.

The U.S. lost another round at the World Trade Organization (WTO) against its policy to protect the U.S. steel industry from competition. In an appellate body decision, the WTO agreed again with the complaint by seven countries and the European Union that U.S restrictions on steel imports, including high tariffs, violate international trade agreements. This ruling could have led to $2.2 billion in retaliatory tariffs on U.S. products going to the EU alone.

Fortunately for consumers President Bush in December reversed his earlier policy of steel protection.

Whether on steel or in other areas, the real losers from U.S. protectionist policies are consumers. U.S. consumers end up paying to protect politically influential industries. More open markets could lower prices and free consumers from undeclared "taxes" on products, such as steel.

The protectionist steel policy cost U.S. consumers millions of dollars each year through higher prices. In addition, it costs steel users, such as the auto industry, millions of extra dollars annually for their production inputs. More broadly, the U.S. policies, has seriously undermined the country's leadership position as a promoter of free trade and has provided other countries with a good excuse to hold onto their own protectionist policies. For example, the EU sees no reason to liberalize its heavily supported agricultural markets when it can point to the U.S. steel policy. U.S. consumers, workers in steel consuming industries and other sectors, such as agricultural producers, are the losers.

Protecting politically influential special interest is not good economic policy for U.S. consumers and producers.
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Publication:Consumer Comments
Date:Dec 22, 2003
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