President Requests Investigation into Steel Imports

Washington, DC - President George W. Bush and his administration has requested an investigation on steel imports. The administration has launched a three-pronged steel policy. The first step directs the Office of the United States Trade Representative (USTR) to request as soon as possible that the International Trade Commission (ITC) initiate an investigation on steel imports under Section 201 of the U.S. trade law. It also urges multilateral negotiation to reduce global excess steel capacity and calls for multilateral negotiations to address market distorting facts in world steel trade.

Congressman Bob Ney, chairman of the House of Representatives and the Ways and Means Committee and representing Ohio's 18th district, along with 13 other House members asked the committee to petition the ITC under Section 201 of the Trade Act of 1974.

Congressman Ney said, "A surge of foreign steel, much of it illegally traded, is causing America's steel industry extreme financial hardship. Since the end of 1997, 18 steel producers from across the country have filed for bankruptcy protection. The closure of additional firms would deal a crippling blow to tens of thousands of workers and retirees in steel dependant communities nationwide."

Duane R. Dunham, American Iron and Steel chairman, president and CEO of Bethleham Steel Corporation said, "Today's decision by the President to initiate prompt action under Section 201 is an essential first step toward addressing our immediate steel crisis, because it begins the process of moving us toward a sustained period of steel import stability in the United States. We applaud the President for recognizing that American's steel industry is in crisis, offer our support and thank him for his leadership in deciding to take action to address the key causes of the crisis- foreign excess steel capacity and market-distorting practices."

Thomas J. Usher, USX chairman and acting president of U.S. Steel said, "Initiating a 201 investigation into the crisis in steel trade is a bold and responsive move by the Administration. 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.

United Steelworkers of America President Leo Gerard added, "When we met with the Bush cabinet members recently, local leaders of our union made it powerfully clear that failure to act to stop the flood of illegal trade in steel would result in devastation to hundreds of thousands of steelworkers, steel worker retirees and steel communities. Today's progress is the result of unprecedented activism by steel workers throughout this country who have written more than half a million letters to Washington urging action to cope with the steel crisis."

John Walker, president of Weirton Steel urged the administration to stand firm against expected backlash. "While this is the best news the steel industry received since the import fight began three years ago, the President and pro-steel members of Congress soon will be facing added pressure. Foreign governments, foreign steel companies and even some domestic steel consumers will be mounting an anti-201 campaign. The President has taken the proper stand on this issue and we're calling on him to hold his ground."

Congressman Peter Visclosky (D-IN), vice chairman of the Congressional Steel, "The livelihood of hundreds of thousands of good paying American steelworker jobs are at risk due to illegal foreign steel imports. The President has taken an important first step, but Congress still has a role to play to strengthen our trade laws and allow American steel to compete on fair and equal footing."

According to Americans For Steel, American steel is produced in world-class plants, using innovative production techniques. Today it takes 3.6 hours of labor to produce one ton of steel, down from 10 hours in 1980. Since that time, steel products have increased at an annual rate of 5.4 percent, higher than almost any other sector of the economy. However, the flood of imports has severely depressed the price of steel. Hot-rolled steel prices are at their lowest levels in 20 years, down 32 percent in the last year alone.

"American steelworkers are as productive as any in the world, and our steel industry has invested $60 billion over the past two decades in modernizing our plants, said Mr. Gerard. "Yet the surplus of foreign steel being dumped in the U.S. market is rendering these competitive achievements meaningless. It's the farthest thing from how fair trade is supposed to work."

Congressman Phil English (R-PA) said, "The crisis in the American steel industry is the same crisis that all American manufacturing is facing. The predatory trade policies by our international competitors are killing good paying jobs and challenging the living standards of the American working families. Strengthening our trade laws to police our markets against unfair trade practices is critical if we are going to maintain a strong and vibrant manufacturing economy in the United States."

Congressman Ney added, "A successful Section 201 action is critical to our domestic steel industry. A strong competitive and vibrant steel industry is vital to the U.S. economy and to national security. We owe it to the American people to maintain a level playing field for this industry and to avoid future dependence on foreign steel."

What is section 201?

Sections 201-204 of the Trade Act of 1974 authorizes the President of the United States to take action when a particular product is being imported into the country in such large quantities as to cause injury or threaten serious injury to a domestic industry. This authority can be used even if the import is not priced unfairly. Under these sections, the United States International Trade Commission (ITC) assesses whether U.S. industries are being seriously injured by imports and can recommend to the President that relief be provided to those industries to facilitate positive adjustment to import competition. Relief could take the form of increased tariffs or quotas on imports and/or adjustment assistance for the domestic industry.

Investigation Process

The ITC conducts investigations in response to petitions filed by representatives of affected industries, upon request by the President of the United States or the United States Trade Representative, upon receiving a resolution from the House of Representatives Ways and Means Committee or the Senate Finance Committee, or by its own decision.

The ITC has 180 days from the day on which the petition, request, or resolution was received to conduct the investigation and report its findings and any recommendations to the President. The investigation is a two-phased process: 1. determine if harm has been sustained by the domestic industry, 2. a remedy phase if harm has been determined. If harm has been determined by the ITC, it then recommends to the president the course of action that will facilitate the industry's adjustment to import competition. Steps that can then be taken are: increased duties, imposition of tariff rate quotas, quantitative restrictions, adjustment measures, or combinations of these measures. Among NAFTA partners, the ITC must also determine whether the imports from Mexico or Canada make up a substantial share of total imports and if they are seriously affecting the U.S. industry.

Public hearings must be held by the ITC in conjunction with the injury and remedy phases of its investigation.

Concluding Actions

The President has 60 days to decide what to do after receiving the ITC report that determines that the domestic industry has been found to be harmed and a recommended course of action has been outlined by the ITC. The President does not have to follow the ITC's recommendations. He has the choice of implementing the ITC's recommendations, implementing a form of relief that is within his authority, or taking no action at all. The President must report to Congress the course of action he is taking. If his actions are different from that which was recommended by the ITC, he must explain this to the Congress. Congress can, through a joint resolution within 90 days, direct the President to follow the course of action recommended by the ITC.

There are special provisions that allow for "provisional" relief to be provided on an expedited basis pending the completion of the investigation.

Domestic industries can expect assistance in alleviating injury for an initial period of up to four years. This period can be extended, but the total time cannot exceed eight years. When relief is granted, the ITC monitors industry developments. When the measure exceeds three years, the ITC must submit a report to the President and Congress on the situation of the industry no later than the midpoint of the relief period. An industry receiving assistance can request an extension of assistance by submitting a petition six to nine months before the end of the relief period if it plans to seek an extension.

Editor's Note: This information is from the International Trade Data System webpage. The International Trade Data System (ITDS) is a federal government information technology initiative of the National Performance Review

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