Introduction

Neglecting the WTO safeguard law has hurt us in the past and will hurt us in the future. To be successful, policymakers must align trade policy and politics. If we don't face this domestic policy imperative, we will not have the necessary domestic and political constituency to underpin trade policy. This sounds obvious but failure to heed this domestic political imperative imperils US trade policy -- or any policy for that matter.

Congressional and public criticism of the operation of the old post-World War II Bretton Woods institutions, including the WTO and the IMF, is a refrain we ignore at our peril. The collapse of the US- hosted and chaired WTO ministerial in Seattle is an undeniable reality. Repeated failure to achieve Congressional fast-track authority that the White House feels is needed to initiate new multilateral or regional trade pacts portended that collapse. The G-8 protest in Genoa is this week's reminder of the problems facing trade negotiations.

Section 201 as escape valve from pressure of politics

The political reality is that 201 is the escape clause of GATT, and it is critical that we use it and not abuse it. Section 201 serves as a safety valve for free trade. At its introduction in 1974, it was aimed at temporary relief to freer international competition.

The ITC and Section 201 act as the shield of Congress

The International Trade Commission is an independent, fact-finding agency that provides objective analysis of the laws. While the law is not perfect, it should be administered based on merit. The six appointed ITC chairs hear cases brought before them and determine whether relief is justified. During my nine-year tenure, I analyzed 23 Section 201 cases. This was during the "bad old days", the deep recessionary period between 1980 and 1983 when the ITC was busy with cases regarding automobiles, motorcycles, steel, semiconductors, televisions, etc. The three conditions necessary to prove Section 201 are 1) increased imports, 2) domestic industry must be severely injured or threatened, and 3) imports must be a substantial cause of the injury. If the ITC rules in favor of 201, a relief period ensues that is accompanied by a period of adjustment.

Adjustment, the Purpose of 201

Reviewing the proposed import relief of a section 201 investigation can be used as an analytic check on the ITC's causation analysis. If imports are the most important cause of injury, then import protection should help heal the injury caused most importantly by imports. If protection only hurts the consumer without helping the injured domestic industry, that is a good indication that imports are not the most important cause of serious injury. Imports in some cases can be a sign of adjustment, not a sign of relief. For example, in my discussion of semifinished steel in my 1984 Carbon and Certain Alloy Steel Products case, I said "imports of semifinished products by producers within the industry generally are part of the adjustment process. Therefore, it is difficult indeed to find increased imports as a cause of injury, much less an important cause for semifinished products".

Section 201 contemplates that the petitioning industry provide the ITC adjustment plans for the period of import relief. The domestic producers are expected to file an adjustment plan and are encouraged to commit to take specific adjustment actions. To be consistent with the purpose of the law, import relief should not be imposed unless domestic producers have demonstrated that their proposed adjustment efforts will make them better able to compete with imports at the end of the temporary relief period.

Conclusion

A progressive trade policy requires support from all commercial interests- business, workers and consumers. To build the necessary domestic political support for future trade initiatives, Congress and the White House must strike a balance to advance worker and producer interests as well as consumer and macroeconomic goals.