The list of trade cases in steel has been increasing on predictable lines. Among the important ones are the anti-dumping and countervailing petition by the US steel industry and the American Independent Steelworkers' Union against imports of HR coils from eleven countries including India and the petition of Mexican steel makers against cut to length plates from a few countries again including India.

The US Department of Commerce as well as the Mexican government are to decide now whether to admit these cases for investigation or throw those out into the dust bin. The point here is not to discuss the merits of these petitions. After all, the objectives of such filings are well known and in many cases their end results too. The course of events in between, needless to mention, can be forecast with equal ease.

The point is, should the steel industry rise above this morbid protectionism, well institutionalised now under the aegis of the World Trade Organisation (WTO), and work for a common survival of the industry worldwide with more meaningful practical dialogues and without having to depend on external systems involving cumbersome rules to trade. Any such dialogue can only reveal the weakness of the present system and open doors for corrective measures. Otherwise, the process of self destruction will continue and one may be sure that none will be spared from the wrath of the market forces.

For the steel industry, it is not merely a problem of the day related to prices or entry barriers. If trade suffers, the industry will lose money and if that happens will find itself pushed to the wall when investment will be required not for building empires with capacity additions but for modernisation and routine revamps to avoid obsolescence. If not death for some in the ensuing competition, there will be an overall drop in efficiency in operation leading to loss of value to the users.

In many areas, steel itself may lose out to competition if the steel capacities are not maintained at high quality to deliver at low costs.Therefore, the trade cases should not be construed as matters of immediate importance to contemporary business. The problem is, so long the WTO dictates the global trading rules, there will be trade cases slapped by one on another. What is important is how to reduce this if not eliminate it. The objective of creating the WTO that whims and fancies of the individual countries should give way to a rule based system and that the world should move towards free trade seems defeated today with rising trade conflicts based on these rules themselves.

There has to be a global discourse on the system of anti-dumping worldwide. Have trade disputes reduced over the years after the WTO has come into being? Or has that increased? Has the WTO facilitated global trade? If global trade has increased manifold over the decades, it is common knowledge that the same is due to increased information flow, liberal attitude towards technology and cross border investments. There is no definite ground to believe that it is due to the WTO, since its birth in 1994. If every country puts its national agenda on top, globalisation will lose its substance. These are, however, issues addressing the generality of the problem. But, these are of more dirct relevance to steel. If the US market gets blocked for most steel products from the most competitive sources, there will be no benefit of globalisation to grab for the steel consumers in the US. There will be no gains also for the producers elsewhere who are being drawn into the process of globalisation because they are being toldthat there are larger opportunities in the world market tap. Once there, they will take no time to discover the myth in it.

Assuming that the US continues to take trade actions in the most expected lines, the US steel market will turn a monopoly of the US mills. The country may be able to solve a problem for its own industry but only at the cost of serious distortion in the global market aggravating the problem in turn. With the increasing number of trade cases elsewhere in the world, the steel producing nations will soon turn to their own home markets. This will provide enough ground for them to cry, quite justifiably too, for larger protection. Under pressure from the domestic industries, there are already instances of violation of the WTO rules. Today, such a number may be small.

But, if globalisation is a one way traffic, such violations may become the order of the day. What will be the credentials of the WTO then ? Trade at the end of the day is a matter between a buyer and a seller, connecting a producer and a consumer. The globalisation means bringing a consumer from one part of the world close to a producer in another. Some third interested party, whether a producer or a consumer, should not matter much. If protecting the national industry is the priority, one cannot bring globalisation up to its full potential. The harsh reality is that with over capacity in most industries, the question of globalisation and protection got entangled in a rather complex notch with conflicts ruling over mutual benefits.

The future of steel as a global commodity will perhaps have a basket full of uncertainties and worries for the planners and the investors. This is one industry that has lost the most in its fight for capital in the recent few years. Although it is again a problem that the steel industry has created for itself, adding capacity mindlessly, a restricted and inefficient trade flow will distort resource allocation with then possibility that more capacities will be added rather inefficiently.

A protected US market will certainly encourage some adventurous entrepreneur to invest in new capacity only to come a headache for the rest at some point of time or other in the future.

If protectionism grows, it makes more sense to accept it in a transparent manner rather than to talk dumping.

(The author is associated with Steel Exporters' Forum. The views expressed here are his own and not that of the organisation)