[Congressional Record Volume 148, Number 28 (Wednesday, March 13, 2002)]
[House]
[Pages H887-H888]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          STEEL PROTECTIONISM

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. Mr. Speaker, I am disheartened by the administration's 
recent decision to impose a 30 percent tariff on steel imports. This 
measure will hurt far more Americans than it will help, and it takes a 
step backward toward the protectionist thinking that dominated 
Washington in decades past. Make no mistake about it, these tariffs 
represent naked protectionism at its worst, a blatant disregard of any 
remaining free market principles to gain the short-term favor of 
certain special interests.

                              {time}  1815

  These steel tariffs also make it quite clear that the rhetoric about 
free trade in Washington is abandoned and replaced with talk of ``fair 
trade'' when special interests make demands. What most Washington 
politicians really believe in is government-managed trade, not free 
trade. True free trade, by definition, takes place only in the absence 
of government interference of any kind, including tariffs. Government-
managed trade means government, rather than competence in the 
marketplace, determines what industries and companies succeed or fail.
  We have all heard about how these tariffs are needed to protect the 
jobs of American steelworkers, but we never hear about the jobs that 
will be lost or never created when the cost of steel rises 30 percent. 
We forget that tariffs are taxes and that imposing tariffs means 
raising taxes. Why is the administration raising taxes on American 
steel consumers? Apparently no one in the administration has read Henry 
Hazlitt's classic book ``Economics in One Lesson.'' Professor Hazlitt's 
fundamental lesson was simple: we must examine economic policy by 
considering the long-term effects of any proposal on all groups.
  The administration, instead, chose to focus on the immediate effects 
of steel tariffs on one group, the domestic steel industry. In doing 
so, it chose to ignore basic economics for the sake of political 
expediency. Now, I grant you that this is hardly anything new in this 
town, but it is important that we see these tariffs as the political 
favors that they are. This has nothing to do with fairness. The free 
market is fair. It alone justly rewards the worthiest competitors. 
Tariffs reward the strongest Washington lobbies.
  We should recognize that the cost of these tariffs will not only be 
borne by American companies that import steel, such as those in the 
auto industry and building trades. The cost of these import taxes will 
be borne by nearly all Americans, because steel is widely used in the 
cars we drive and in the buildings in which we live and work. We will 
all pay, but the cost will be spread out and hidden, so no one 
complains. The domestic steel industry, however, has complained; and it 
has the corporate and union power that scares politicians in 
Washington. So the administration moved to protect domestic steel 
interests, with an eye towards upcoming elections. It moved to help 
members who represent steel-producing States.
  We hear a great deal of criticism of special interests and their 
stranglehold on Washington, but somehow when we prop up an entire 
industry that has failed to stay competitive, ``we are protecting 
American workers.'' What we are really doing is taxing all Americans to 
keep some politically favored corporations afloat. Some rank-and-file 
jobs may also be saved, but at what cost? Do steelworkers really have a 
right to demand Americans pay higher taxes to save an industry that 
should be required to compete on its own?
  If we are going to protect the steel industry with tariffs, why not 
other industries? Does every industry that competes with imported goods 
have the same claim for protection? We have propped up the auto 
industry in the

[[Page H888]]

past; now we are doing it for steel. So who should be next in line? 
Virtually every American industry competes with at least some imports.
  What happened to the wonderful harmony that the WTO was supposed to 
bring to the global market? The administration has been roundly 
criticized since the steel decision was announced last week, especially 
by our WTO ``partners.'' The European Union is preparing to impose 
retaliatory sanctions to protect its own steel industry. EU Trade 
Commissioner Pascal Lamy has accused the U.S. of setting the stage for 
a global trade war; and several other steel producing nations, such as 
Japan and Russia, also have vowed to fight the tariffs. Even British 
Prime Minister Tony Blair, who has been a tremendous supporter of the 
President since September 11, recently stated that the new American 
steel tariffs were totally unjustified.
  The WTO was supposed to prevent all this squabbling, was it not? 
Those of us who opposed U.S. membership in the WTO were scolded as 
being out of touch, unwilling to see the promise of a new global 
prosperity. What we are getting instead is increased hostility from our 
trading partners and threats of economic sanctions from our WTO 
masters. This is what happens when we let government-managed trade 
schemes pick winners and losers in the global trading game. The truly 
deplorable thing about all this is that the WTO is touted as promoting 
free trade.
  Mr. Speaker, it is always amazing to me that Washington gives so much 
lip service to free trade while never adhering to true free trade 
principles. Free trade really means freedom, the freedom to buy and 
sell goods and services free from government interference. Time and 
time again, history proves that tariffs do not work. Even some modern 
Keynesian economists have grudgingly begun to admit that free markets 
allocate resources better than centralized planning. Yet we cling to 
the idea that government needs to manage trade when it really needs to 
get out of the way and let the marketplace determine the cost of goods.
  I sincerely hope that the administration's position on steel does not 
signal a willingness to resort to protectionism whenever special 
interests make demands in the future.

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