April 2004

Steel Shortage Causing Havoc for U.S. Manufacturers
Consuming Industries Trade Action Coalition Urges Lifting Trade Barriers

Washington — Consuming Industries Trade Action Coalition (CITAC) Board Member William Gaskin indicated that despite the termination of the Section 201 tariffs on steel imports in December 2003, U.S. manufacturers are facing major steel supply disruptions and shortages that could contribute to plant closures and job losses in a matter of weeks or months. He called on the Bush Administration to examine trade barriers that are preventing manufacturers from obtaining the steel needed to survive.

“U.S. steel users have experienced massive price increases in the past two months, as well as major supply disruptions,” said William Gaskin, who chaired the CITAC Steel Task Force, which successfully advocated for the elimination of the Section 201 steel tariffs last year. “Steel imports have been depressed for years due to government intervention and steel users cannot obtain enough steel from domestic sources. Under these conditions, the Bush Administration should be removing impediments to steel imports, because they are so badly needed by American manufacturers.”

“While steel imports rose in January 2004 from the depressed levels of December 2003, most of the increase was due to an increase in semi-finished steel imports, used by the steel industry,” continued Gaskin. “Steel imports were still far below the needed levels to assure adequate supplies for American steel users to remain globally competitive.”

Gaskin, who is also President of the Precision Metalforming Association (PMA), noted that PMA’s monthly survey of members showed that 42% of respondents had experienced cancelled orders for steel in January and 90% had late deliveries of steel.

“While the steel safeguard tariffs are gone, there are still U.S.-imposed restrictions on steel imports that hurt steel users,” said CITAC Chairman Michael Fanning. “Chiefly, these are antidumping and countervailing duties on steel products that make steel less available and more expensive for thousands of U.S. manufacturers. Some of these duties were imposed years ago. Under the current crisis market conditions, we believe that these restrictions should be suspended. The Administration should take changed circumstances into account in deciding whether to maintain these duties, which currently protect no one and harm steel using manufacturers.”

The Congressional Budget Office recently reported that the largest user of the anti-dumping or countervailing duty (AD/CVD) laws is the steel industry with 131 active antidumping orders relating to iron and steel mill products, 30 related to iron and steel pipe products and 30 relating to other iron and steel products.

Under U.S. trade laws, the Department of Commerce and the International Trade Commission may initiate reviews of orders to find if “changed circumstances” exist. “We think that the current market situation clearly constitutes changed circumstances,” said CITAC Counsel Lewis Leibowitz. “Under the law, the Department of Commerce may remove the duties in response to changed circumstances. We believe that such removal is necessary and appropriate to alleviate the incredible shortages and price increases that currently afflict American manufacturers.”

“U.S. steel users need access to steel at competitive prices,” concluded Gaskin. “We are asking the Bush Administration to take immediate action to remove unnecessary and burdensome U.S. trade barriers, such as antidumping duties for products in short supply or that are not even made in the United States. These barriers are preventing U.S. manufacturers from obtaining the steel they need.”