U.S. Automakers Rev Up Campaign Against Steel Duties

Automakers argue that the steel industry is now prospering so restrictions should be lifted.

Six of the world's biggest carmakers on Oct 16 backed a cross-party drive by U.S senators to scrap controversial duties on a type of steel used extensively in the auto industry. Accusing U.S. steelmakers of distorting the threat from foreign competition, the auto companies said the government's International Trade Commission (ITC) should agree at hearings Oct. 17 to allow the duties to expire.

The duties were imposed in 1993 to protect U.S. steelmakers from cheaper imports of corrosion-resistant steel from six countries -- Australia, Canada, France, Germany, Japan and South Korea. The duties were renewed in 2000 and the ITC is due to review them again under a "sunset" clause that could allow them to expire if the government panel says they are no longer useful. A final decision is expected in December.

DaimlerChrysler, Ford, General Motors, Honda, Nissan and Toyota all endorsed a letter sent to the ITC from 10 U.S. Republican and Democratic senators, who argued the steel industry had changed dramatically since 1993. "In fact, the assets of the 14 U.S. companies that produced corrosion-resistant steel in 2000 are now owned by only six companies, and the market is dominated by just three," the senators' letter said.

"Since the steel industry is now prospering, restrictions should be lifted to restore the competition to the marketplace. Failure to do so would threaten the sector of the U.S. economy that uses this same product as a raw material, namely the automotive industry," the statement said.

In a joint statement, the automakers said they bought the "overwhelming amount" of the steel used in their U.S. operations from American mills.

But noting that the U.S. car industry employs 2.4 million people, the companies said they "must maintain the ability to obtain key materials for their vehicle assembly plants dependably and at globally competitive prices."

U.S. steelmakers and unions have banded together to take out full-page newspaper advertisements demanding that the ITC renew the duties. "Don't let America's steelworkers get run over by the auto companies," the ad says. The ad quotes a Commerce Department report that said if the duties were lifted, foreign corrosion-resistant steel would flood the U.S. market at up to 36% below the fair market price. But critics including the automakers accuse the steel industry of using wildly distorted figures that are based on the import pattern of the early 1990s. And since then, the massive growth of countries like China means that global demand for steel has rocketed to ensure double-digit earnings growth for U.S. steelmakers, the critics note.

Copyright Agence France-Presse, 2006

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