Just last spring, the steel import crisis was the talk of Washington. The House of Representatives had voted overwhelmingly to impose quotas on steel imports and the Senate was preparing to vote on the same legislation. For its part, the Clinton administration announced a "Steel Action Plan," which promised a variety of measures to stem the crisis as an alternative to legislation. An agency with responsibility for implementing U.S. trade laws, the U.S. International Trade Commission was moving toward a unanimous decision to impose duties on imported steel. There was a definite atmosphere of urgency throughout Washington in responding to the crisis.

Now, steel imports are down and U.S. steel companies are showing some signs of recovery. The atmosphere of urgency seems to have passed. Unfortunately, the underlying economic problems that sparked the steel crisis are still very much in evidence.

Perhaps the most dramatic evidence that the steel crisis has passed in the minds of Washington policy-makers is found in the recent actions of the Clinton administration and the International Trade Commission. After urging steel wire rod producers to seek relief under a U.S. trade statute known as Section 201, the Clinton administration took five months longer than allowed under the law to reach a decision on the case and then granted only limited relief.

For its part, the ITC also seems to have had a rather dramatic change of heart.

After voting unanimously to support antidumping cases on hot rolled steel in 1999, the commission this year turned down a similar set of cases that were being considered on cold-rolled steel by a 5-1 vote. In making their decision, the ITC gave surprising weight to issues such as the 1998 General Motors strike as a cause for the steel industry's problems; the same issue was largely dismissed in their decisions on earlier cases. The ITC also seemed to largely ignore a law passed by Congress to change the way it accounted for intra-company steel transfers -- this seemingly small difference in practice appears to have had a critical impact upon the decision.

Congress was first to raise alarm cries about the steel crisis, but it also has accomplished little. The quota bill was probably intended more to prod the administration than as serious legislation. Unfortunately, even sound proposals to revise U.S. trade laws in ways that are fully consistent with the World Trade Organization and would address a future import crisis seem to have been forgotten.

It is difficult to avoid the distinct impression that official Washington has forgotten about the steel crisis. In particular, the recent ITC and administration decisions appear to be attempts to balance earlier support for the U.S. steel industry in 1998 and much of 1999.

In fact, although steel imports have trended down, the underlying problems that sparked the steel crisis are still very much in evidence. In 1998, imports controlled 30 percent of the U.S. steel market, up from an average of less than 20 percent in the early and mid-1990s. In 1999, imports controlled about 26.5 percent of the U.S. market. The 1999 import levels are down, but they are still well above levels in any year other than 1998. For comparison, total steel imports in 1999 were up about 50 percent from 1993. The dollar figures also understate the actual impact of imports on the domestic industry since distressed producers in Asia, Russia and elsewhere sold many of these imports at fire sale prices.

The sharp rise is all the more surprising since there is almost universal agreement that the U.S. steel industry is quite competitive and efficient by global standards; U.S. steel is as efficient as any in the world in production per man-hour.

The real cause of the steel crisis was not lagging U.S. competitiveness, but economic crises in Asia and Russia and gross government interventions in the market in many other countries. The collapse of markets in Asia and Russia displaced much of the steel production in those countries into the United States. Asia is showing signs of bouncing back, but the recovery is likely to continue for some time and during that period Asian countries will be looking to exports, including steel exports, to finance their economic recovery. For its part, Japan is still showings signs of slipping back into recession and the prospects for Russian recovery are mixed.

The long-term distortions in the industry are at least as serious as the short-term economic prospects. Collusion among Japanese steel companies still supports dumping in foreign markets. Steel industries in countries from Europe to Latin America were built with heavy government subsidies that threaten to depress world prices for many years to come. Two of the new steel powers -- Russia and China -- sport large and increasingly export oriented steel industries that were built and remain largely controlled by the governments of those countries.

In short, there simply is no global free market in steel. Even if the symptoms of the steel crisis have abated somewhat, the underlying problems remain and will continue to impact the U.S. steel industry for years to come.

The steel crisis is a dramatic demonstration of globalization's downside. With the U.S. market largely open and most manufactured goods easily tradable, disruptions in the world economy can easily result in large job losses in the United States. This time it was a steel crisis, but next time it could just as easily be an automobile import crisis, a computer import crisis, or even another steel crisis, depending upon the nature of the next global economic shock.

There are steps that could be taken to prevent a future crisis with new legislation and administrative action, but memories are short in Washington. Unfortunately, those that wish to forget the steel crisis too quickly are sowing the seeds of still worse problems in the future.