Study Reveals That Proposals for Protecting U.S. Steel Industry Will Cost Consumers More Than $2.89 Billion Annually

Cost to Consumers Per Job Saved Could Be as Much as $732,000



Apr 30, 2001, 01:00 ET from Consuming Industries Trade Action Coalition

    WASHINGTON, April 30 /PRNewswire/ -- A study released today by the
 Consuming Industries Trade Action Coalition (CITAC) Foundation reveals that
 restrictions on steel imports proposed in the Steel Revitalization Act
 (HR 808), could cost U.S. consumers billions of dollars a year, and result in
 as many as nine times more job losses in the steel-consuming sector as jobs
 "saved" in steelmaking.
     The study, Costs to American Consuming Industries of Steel Quotas and
 Taxes, commissioned by the CITAC Foundation and conducted by the Trade
 Partnership, quantifies the negative consequences for steel-users, taxpayers
 and the economy as a whole of HR 808, a steel quota bill introduced on March
 1.  The bill imposes quotas on imports of steel raw materials and finished
 steel products, and a 1.5 percent steel sales tax.  The study also examines
 the economic impact of quotas on finished steel imports -- the likely result
 of an investigation under Section 201 of the Trade Act of 1974.
     The study shows that HR 808 would "protect" no more than 3,700 steel jobs,
 but cause the loss of up to 32,000 jobs in the steel consuming sector while
 costing taxpayers a whopping $2.89 billion a year.  This amounts to as much as
 $732,000 per steel job protected.  Over the five-year term of the legislation,
 consumers would effectively face a tax bill totaling $14.5 billion.
     "The results clearly show that special protection for the steel industry
 will cause significant damage to the economy as a whole, consumers and
 globally competitive steel-users," said Laura M. Baughman, President of the
 Trade Partnership and co-author of the study.  "If indeed restrictions provide
 any real relief to the domestic steel industry and its workers -- and we think
 that's questionable -- it would be very limited in scope and have no lasting
 impact on their ability to compete globally, which they must do to survive."
     The study found that quotas resulting from a Section 201 investigation
 could cost consumers as much as $2.34 billion a year, or as high as $565,000
 per steel job protected.  Under a 201 quota scenario, roughly two to three
 times as many workers in steel-consuming industries would lose their jobs as
 would be protected in steel producing companies.
     "There are 50 workers in steel-consuming companies for every one
 steelworker.  CITAC undertook this study to make policymakers and opinion
 leaders aware that special protection for the steel industry could have
 serious consequences for broad sectors of the economy.  The U.S. government
 measures how trade restraints on steel protect the domestic steel industry but
 not what consequences it has on steel users.  Now that the costs to the
 consumers and their employees have been quantified, policymakers can make more
 informed decisions about the wisdom of steel trade restrictions," said Jon
 Jenson, CITAC Chairman and President Emeritus of the Precision Metalforming
 Association.
     American steel-consuming industries include major producers of
 automobiles, housing and commercial buildings, wire and wire products,
 electronic equipment, heavy machinery, tires, food processing equipment, oil
 and gas drilling equipment, and others who rely on imports as components and
 raw materials.  CITAC members frequently describe situations where steel
 import restrictions (duties and quotas) cause damage to their businesses in
 terms of contracts and jobs lost or relocated offshore.  The CITAC Foundation
 study quantifies those damages to steel users in the U.S. economy.
     "Policymakers need to take into consideration the potential negative
 impact of trade restraints on other sectors of the economy and consumers when
 attempting to protect a narrow sector of the economy.  Unfortunately, current
 U.S. trade law does not give consumers a voice.  At the very least, consuming
 industries need to be full participants in trade remedy cases and in any
 consideration of new quotas or taxes, because it is American businesses and
 American jobs that are jeopardized by these measures," concluded Jenson.
     The CITAC Foundation study, authored by Ms. Baughman and Trade Partnership
 Research Fellow Dr. Joseph F. Francois, employed a state-of-the-art computable
 general equilibrium model to estimate the potential impacts of the quota and
 tax features of HR 808.  The model reflects the interactions of the entire
 U.S. economy, rather than of just the protected industry.  The model includes
 15 specific sectors.  The Trade Partnership benchmarked the model's data for
 national income, trade flows and related data to the year 2000.  The study
 examines two plausible economic scenarios, HR 808 provisions and quotas
 emanating from a Section 201 investigation.  Both restraints are considered 1)
 under an assumption that the economy was at full employment, and 2) Under an
 assumption of less-than-full employment.
     CITAC is a coalition of companies and organizations who are committed to
 promoting a trade arena where U.S. consuming industries and their workers have
 access to global markets for raw materials and other imports that enhance the
 international competitiveness of U.S. firms.  The CITAC Foundation is an
 affiliate of the Consuming Industries Trade Action Coalition.
     The Executive Summary of Costs to American Consuming Industries of Steel
 Quotas and Taxes is attached.  The full study can be downloaded from the CITAC
 website at http://www.citac-trade.org or may be obtained by e-mail by
 contacting Mihaela Cebotari at The PBN Company at 202-466-6210 (e-mail:
 mihaela.cebotari@pbnco.com).
 
                   Costs to American Consuming Industries of
                             Steel Quotas and Taxes
 
                               Executive Summary
 
     Once again, policy makers are debating the wisdom of imposing quotas to
 protect the U.S. steel industry from imports and to help it maintain
 production capacity and employment domestically.  A related initiative targets
 financial support for steelworkers through new taxes on steel-consuming
 industries.  Legislation -- the "Steel Revitalization Act of 2001" (SRA) --
 has been introduced in the Congress.  In addition the Bush Administration is
 considering whether to self-initiate an investigation under Section 201 of the
 Trade Act of 1974, which likely would result in the imposition of quotas on
 steel imports.
     While much attention is being paid to the need for assistance to protect
 employment in the steel industry, only passing attention is being paid to the
 broader effects such protection would have on the rest of the American
 economy.  In part this is because hard estimates of these impacts are not
 readily available.  At the request of the Consuming Industries Trade Action
 Coalition Foundation, The Trade Partnership has estimated the impacts on the
 economy generally, and on steel-consuming industries specifically, of pending
 proposals to protect the steel industry:  (1) the SRA (quotas on imports of
 steel raw materials and finished steel products, and a 1.5 percent steel sales
 tax), and (2) quotas on finished steel imports.  The findings are as follows:
 
     *     The SRA would cost more jobs than it would preserve.  The SRA would
           protect no more than 3,700 steel jobs, compared to losses in steel-
           consuming sectors of the American economy ranging from 19,000 to
           32,000 jobs.  The job losses in steel-consuming industries would be
           five to almost nine times as great as the job gains in the steel
           industry.
 
     *     The SRA comes with a heavy price tag for consumers and the economy
           generally.  The SRA's quotas would essentially tax consumers $1.35
           billion to $2.89 billion a year, and cost as much as $732,000 per
           job protected in the steel industry.  This amounts to roughly 10
           times the average employment cost (wages and benefits) of a
           steelworker in 2000.  Over the five-year term of the SRA, consumers
           generally would be socked with an effective tax bill totaling $6.75
           billion to $14.5 billion.
 
     *     The impact of quotas on finished steel products alone remains
           significantly negative for steel-consuming industries.  Roughly two
           to three times as many workers in steel-consuming industries would
           lose their jobs as would be protected upstream in the steel
           industry.
 
     *     The costs to consumers generally of quotas on imports of finished
           steel products are significant.  Total consumer costs would range
           from $1.33 billion to $2.34 billion a year, or as high as $565,000
           per steel job protected, for the cutbacks suggested by the SRA.
 
     *     More severe import reductions (say, of 50 percent) would preserve
           almost 13,000 steel jobs, but at an annual cost to consumers of $5.8
           billion.  In just five years, the cost of such a jobs program would
           amount to $22 billion.  Put another way, this type of jobs program
           would require steel-using industries (and ultimately consumers as a
           whole) to pay $2.2 million per job over a five-year period.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X11345542
 
 

SOURCE Consuming Industries Trade Action Coalition
    WASHINGTON, April 30 /PRNewswire/ -- A study released today by the
 Consuming Industries Trade Action Coalition (CITAC) Foundation reveals that
 restrictions on steel imports proposed in the Steel Revitalization Act
 (HR 808), could cost U.S. consumers billions of dollars a year, and result in
 as many as nine times more job losses in the steel-consuming sector as jobs
 "saved" in steelmaking.
     The study, Costs to American Consuming Industries of Steel Quotas and
 Taxes, commissioned by the CITAC Foundation and conducted by the Trade
 Partnership, quantifies the negative consequences for steel-users, taxpayers
 and the economy as a whole of HR 808, a steel quota bill introduced on March
 1.  The bill imposes quotas on imports of steel raw materials and finished
 steel products, and a 1.5 percent steel sales tax.  The study also examines
 the economic impact of quotas on finished steel imports -- the likely result
 of an investigation under Section 201 of the Trade Act of 1974.
     The study shows that HR 808 would "protect" no more than 3,700 steel jobs,
 but cause the loss of up to 32,000 jobs in the steel consuming sector while
 costing taxpayers a whopping $2.89 billion a year.  This amounts to as much as
 $732,000 per steel job protected.  Over the five-year term of the legislation,
 consumers would effectively face a tax bill totaling $14.5 billion.
     "The results clearly show that special protection for the steel industry
 will cause significant damage to the economy as a whole, consumers and
 globally competitive steel-users," said Laura M. Baughman, President of the
 Trade Partnership and co-author of the study.  "If indeed restrictions provide
 any real relief to the domestic steel industry and its workers -- and we think
 that's questionable -- it would be very limited in scope and have no lasting
 impact on their ability to compete globally, which they must do to survive."
     The study found that quotas resulting from a Section 201 investigation
 could cost consumers as much as $2.34 billion a year, or as high as $565,000
 per steel job protected.  Under a 201 quota scenario, roughly two to three
 times as many workers in steel-consuming industries would lose their jobs as
 would be protected in steel producing companies.
     "There are 50 workers in steel-consuming companies for every one
 steelworker.  CITAC undertook this study to make policymakers and opinion
 leaders aware that special protection for the steel industry could have
 serious consequences for broad sectors of the economy.  The U.S. government
 measures how trade restraints on steel protect the domestic steel industry but
 not what consequences it has on steel users.  Now that the costs to the
 consumers and their employees have been quantified, policymakers can make more
 informed decisions about the wisdom of steel trade restrictions," said Jon
 Jenson, CITAC Chairman and President Emeritus of the Precision Metalforming
 Association.
     American steel-consuming industries include major producers of
 automobiles, housing and commercial buildings, wire and wire products,
 electronic equipment, heavy machinery, tires, food processing equipment, oil
 and gas drilling equipment, and others who rely on imports as components and
 raw materials.  CITAC members frequently describe situations where steel
 import restrictions (duties and quotas) cause damage to their businesses in
 terms of contracts and jobs lost or relocated offshore.  The CITAC Foundation
 study quantifies those damages to steel users in the U.S. economy.
     "Policymakers need to take into consideration the potential negative
 impact of trade restraints on other sectors of the economy and consumers when
 attempting to protect a narrow sector of the economy.  Unfortunately, current
 U.S. trade law does not give consumers a voice.  At the very least, consuming
 industries need to be full participants in trade remedy cases and in any
 consideration of new quotas or taxes, because it is American businesses and
 American jobs that are jeopardized by these measures," concluded Jenson.
     The CITAC Foundation study, authored by Ms. Baughman and Trade Partnership
 Research Fellow Dr. Joseph F. Francois, employed a state-of-the-art computable
 general equilibrium model to estimate the potential impacts of the quota and
 tax features of HR 808.  The model reflects the interactions of the entire
 U.S. economy, rather than of just the protected industry.  The model includes
 15 specific sectors.  The Trade Partnership benchmarked the model's data for
 national income, trade flows and related data to the year 2000.  The study
 examines two plausible economic scenarios, HR 808 provisions and quotas
 emanating from a Section 201 investigation.  Both restraints are considered 1)
 under an assumption that the economy was at full employment, and 2) Under an
 assumption of less-than-full employment.
     CITAC is a coalition of companies and organizations who are committed to
 promoting a trade arena where U.S. consuming industries and their workers have
 access to global markets for raw materials and other imports that enhance the
 international competitiveness of U.S. firms.  The CITAC Foundation is an
 affiliate of the Consuming Industries Trade Action Coalition.
     The Executive Summary of Costs to American Consuming Industries of Steel
 Quotas and Taxes is attached.  The full study can be downloaded from the CITAC
 website at http://www.citac-trade.org or may be obtained by e-mail by
 contacting Mihaela Cebotari at The PBN Company at 202-466-6210 (e-mail:
 mihaela.cebotari@pbnco.com).
 
                   Costs to American Consuming Industries of
                             Steel Quotas and Taxes
 
                               Executive Summary
 
     Once again, policy makers are debating the wisdom of imposing quotas to
 protect the U.S. steel industry from imports and to help it maintain
 production capacity and employment domestically.  A related initiative targets
 financial support for steelworkers through new taxes on steel-consuming
 industries.  Legislation -- the "Steel Revitalization Act of 2001" (SRA) --
 has been introduced in the Congress.  In addition the Bush Administration is
 considering whether to self-initiate an investigation under Section 201 of the
 Trade Act of 1974, which likely would result in the imposition of quotas on
 steel imports.
     While much attention is being paid to the need for assistance to protect
 employment in the steel industry, only passing attention is being paid to the
 broader effects such protection would have on the rest of the American
 economy.  In part this is because hard estimates of these impacts are not
 readily available.  At the request of the Consuming Industries Trade Action
 Coalition Foundation, The Trade Partnership has estimated the impacts on the
 economy generally, and on steel-consuming industries specifically, of pending
 proposals to protect the steel industry:  (1) the SRA (quotas on imports of
 steel raw materials and finished steel products, and a 1.5 percent steel sales
 tax), and (2) quotas on finished steel imports.  The findings are as follows:
 
     *     The SRA would cost more jobs than it would preserve.  The SRA would
           protect no more than 3,700 steel jobs, compared to losses in steel-
           consuming sectors of the American economy ranging from 19,000 to
           32,000 jobs.  The job losses in steel-consuming industries would be
           five to almost nine times as great as the job gains in the steel
           industry.
 
     *     The SRA comes with a heavy price tag for consumers and the economy
           generally.  The SRA's quotas would essentially tax consumers $1.35
           billion to $2.89 billion a year, and cost as much as $732,000 per
           job protected in the steel industry.  This amounts to roughly 10
           times the average employment cost (wages and benefits) of a
           steelworker in 2000.  Over the five-year term of the SRA, consumers
           generally would be socked with an effective tax bill totaling $6.75
           billion to $14.5 billion.
 
     *     The impact of quotas on finished steel products alone remains
           significantly negative for steel-consuming industries.  Roughly two
           to three times as many workers in steel-consuming industries would
           lose their jobs as would be protected upstream in the steel
           industry.
 
     *     The costs to consumers generally of quotas on imports of finished
           steel products are significant.  Total consumer costs would range
           from $1.33 billion to $2.34 billion a year, or as high as $565,000
           per steel job protected, for the cutbacks suggested by the SRA.
 
     *     More severe import reductions (say, of 50 percent) would preserve
           almost 13,000 steel jobs, but at an annual cost to consumers of $5.8
           billion.  In just five years, the cost of such a jobs program would
           amount to $22 billion.  Put another way, this type of jobs program
           would require steel-using industries (and ultimately consumers as a
           whole) to pay $2.2 million per job over a five-year period.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X11345542
 
 SOURCE  Consuming Industries Trade Action Coalition