Don't Look For Steel Quotas, Tariffs Just Yet

By John S. McClenahen Don't expect to see the U.S. slap quotas or tariffs on foreign-made steel anytime soon. For one thing, a series of mandated administrative steps make such actions unlikely before next year. What's more, the imposition of quotas or tariffs would first require that the U.S. International Trade Commission (USITC) recommend the actions -- and that President Bush accept them. In fact, under the Section 201 1974 Trade Act, the White House can accept, reject, or modify the USITC's recommendations. On June 5 President Bush said he was asking U.S. Trade Representative Robert Zoellick to "request the initiation of an investigation of injury" to the domestic steel industry. "The U.S. steel industry has been affected by a 50-year legacy of foreign government intervention in the market and direct financial support of their steel industries," Bush said. "The result has been significant excess capacity, inefficient production, and a glut of steel on world markets." Since 1998 some 18 steelmakers have filed for protection under U.S. bankruptcy laws, and, the industry claims, 20,000 steelworker jobs have been lost. "Initiating a [Section] 201 investigation into the crisis in steel trade is a bold and responsive move by the [Bush] Administration," says Thomas J. Usher, chairman of USX Corp. and acting president of U.S. Steel. "It sends a message to our trading partners that the United States will no longer be a dumping ground for the world's excess steel -- that it's time for them to solve their overcapacity problems and end their market-distorting practices." Not surprisingly, many steel consumers have a different take on the White House initiative. If the Section 201 investigation results in restricting steel imports, "it could severely impact U.S. consumers and steel-consuming industries, but won't solve the U.S. industry's basic problems," says Janet Kopenhaver, executive director of the Washington-based Consuming Industries Trade Action Coalition. The group estimates that quotas in steel imports could cost U.S. consumers as much as $2.34 billion annually. In addition to the prospective Section 201 filing, President Bush has asked Zoellick, Commerce Secretary Donald Evans, and Treasury Secretary Paul H. O'Neill to begin negotiations aimed at eliminating inefficient excess global steel capacity in the short-term and at coming up with rules to govern steel trade over the longer-term.

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