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Cato Daily Dispatch for October 23, 2001

Bush Gets Green Light For Steel Protectionism

A United States trade panel decided today that American steel makers had suffered serious injury from foreign competition, a ruling that will allow President Bush to impose the broadest restrictions in a decade on steel imports, according to The New York Times.

The Bush administration sought the decision from the panel, the International Trade Commission, last summer and now is widely expected to impose hefty duties or quotas on foreign-made steel early next year. The final shape of the penalties awaits further hearings and a decision from the White House.

In "Antidumping Laws Hurt American Consumers," Trade Analyst Daniel Ikenson writes that such a measure is "costly to import-using industries and consumers, and is agitating U.S. trade partners whose markets are sought by U.S. business."

Brink Lindsey, Daniel T. Griswold and Aaron Lukas write in "The Steel 'Crisis' and the Costs of Protectionism" that consumers and steel-using producers will be the ones who pay a heavy price for steel protection.

U.S. May Tighten Iraq Sanctions

The United States is unlikely to take military action soon to topple Iraqi President Saddam Hussein but it could be ready to tighten the noose around him by reinvigorating 11-year-old U.N. sanctions, a senior Arab official and regional analysts said, according to Reuters.

The sources said Washington, armed with a blanket of international support for its "war against terrorism," would reintroduce a proposal to refocus sanctions against Iraq when the current six-month phase of an oil-for-food deal with the United Nations comes up for renewal in early December.

In "Two Cheers for Sanctions," and "A Chance to Rethink Sanctions," Trade Policy Analyst Aaron Lukas examines the failures of trade sanctions. He writes that "it's time for Congress to realize that disrupting private business transactions is not an effective foreign policy tool. Sanctions damage domestic interests at least as much as the target country and have little chance of inducing policy changes."

Earlier this year the Cato Institute hosted the policy forum "Ten Years after the Gulf War: The Lessons and Future of Washington's Iraq Policy," featuring former U.S. ambassador to Iraq Edward Peck and Middle East expert Laurie Mylroie. The future of sanctions and U.S. policy toward Iraq were debated.

Postal Service To Ask For Bailout

The Philadelphia Inquirer reports today that to cope with terrorism and offset declining income, the U.S. Postal Service plans to ask Congress for a bailout, possibly as early as today.

Postmaster General John Potter gave no figures, but the Postal Service had projected a $1.65 billion deficit before the Sept. 11 attacks and acknowledges that its business is off slightly since then. Potter likened his agency's problems to those of the airline and insurance industries, both of which turned to Washington for help after being knocked hard by terrorism.

The Cato Handbook for Congress calls for the privatization of the U.S. Postal Service and the repeal of the Private Express Statutes that preserve the postal monopoly. Director of Regulatory Studies Edward L. Hudgins, editor of the book "Mail @ the Millennium: Will the Postal Service Go Private?" has testified before congress on privatizing the Postal Service.