“The market gives individuals the opportunity to demand and decide, and entrepreneurs the opportunity to provide,” said then GOP presidential candidate George W. Bush after returning from China on Dec 9, 1999.

And government’s role? It needs to step aside so that the free market can naturally balance supply and demand.

Announcing his presidential candidacy in Cedar Rapids, Iowa, Bush said, “I’ll work to end tariffs and break down barriers everywhere, entirely, so the whole world trades in freedom. The fearful build walls. The confident demolish them. I am confident in American workers and farmers and producers. And I am confident that America’s best is the best in the world.”

Now that Bush is in the White House, does his talk about freedom, market and trade match its walk? We turn our eyes to what the president is doing for the steel market.

On June 5, President Bush moved to restrict steel imports from South Korea. As a result, the U.S. Trade Representative has launched a Section 201 investigation to determine if Korean steel producers are unfairly competing with the U.S. steel industry.

Companies and workers in the U.S. steel industry want the Bush administration to give them government protection from South Korean steel. The U.S. buys a bit of Korean steel.

“Korea, ranking No. 6 in terms of global steel output, was the world's fourth largest steel exporter to the U.S. market last year, with shipments totaling 2.35 million tons, taking a market share of 7.1 percent,” according to a recent report in the Korea Herald.

Presumably, the Koreans are producing steel at a lower cost than the U.S. Which means in part that the wages of Korean steelworkers are lower than their U.S. counterparts.

Economist Dean Baker has a different view of what ails the U.S. steel industry.

“The Clinton and Bush administrations have both pursued a high dollar policy, under which the dollar has risen 20-30 percent above a sustainable level,” Baker noted. “In the short-run this policy has the effect of reducing the price of imports by approximately 20-30 percent. When the dollar falls back to a sustainable level, it is not clear that South Korean steel will still be cheaper than steel made in the United States.”

Export-led economic growth defines the global steel market. South Korea, an East Asian “tiger economy” that crashed four years ago, is no exception.

What is exceptional is the role of the U.S. economy. It has been compared to that of a sponge, soaking up the rest of the world’s exports.

The rub is that the U.S. has been able to be the buyer of last resort because it can borrow big from abroad. Thus keeping the dollar high lets foreign creditors earn a tidy sum lending to the U.S. so that it can continue buying other nations’ exports.

In fact, the U.S. is currently borrowing $450 billion a year from foreign lenders. That’s about $1.23 billion each day. “This level of borrowing clearly cannot be maintained for more than a few years,” Baker warned.

If the Bush administration erects trade barriers to slow the imports of Korean steel, such protectionism would surely distort the global steel market. There’s more, and the effects would fall hardest on foreign shores.

Such a violation of free-trade principles in our economically interdependent world would make the South Korean economy contract. But in this way, Bush would for a short time be able to partly displace the effects of the global economic slowdown onto South Korea and away from domestic producers.

Why? Part of the story is that the president needs the support of domestic steel firms and their workers in his campaign to convince Congress to approve the Free Trade Area of the Americas. It’s a proposed expansion of the North American Free Trade Agreement, which in the past seven years has sunk farm incomes and increased bankruptcies throughout the U.S., Canada and Mexico, as U.S. food prices climbed 20 percent, a recent study by Public Citizen’s Global Trade Watch found.

President Bush praises market competition but seems to be pursuing an anti-competitive trade policy for U.S. steel makers. It appears that when it comes to the steel market, free trade is to freedom and trade what Apple Jacks are to apples and jacks.

Seth Sandronsky is an editor with Because People Matter, Sacramento’s progressive newspaper <ssandron@hotmail.com>.

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