U.S. raises duties on foreign steel Move likely to help domestic producers

December 01, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Bethlehem Steel Corp. and other American steel companies received an early Christmas present yesterday as the U.S. Commerce Department slapped higher duties, ranging from 0.71 percent to 90.09 percent, on steel imports from 12 countries

The ruling is expected to depress steel imports and to boost the prices of steel plate and sheet products, which are made at Bethlehem's Sparrows Point mill in Baltimore County.

The amount of the conditional duties on various steel plate and sheet products varied depending on the company, country and the type of steel produced.

Steel affected by the decision accounted for $1.2 billion worth of imports in 1991, or about 14.6 percent of the total $8.2 billion worth of steel imported that year, according to the Commerce Department.

The preliminary determination must still be confirmed by a final review by the Commerce Department, which is scheduled to be completed April 12. The ruling is also conditioned on a finding on whether foreign steel subsidies injure American companies, which is to be made by the International Trade Commission in June.

In the meantime, importers of the affected steel must pay a cash deposit to cover the duties or post a bond. The duties could be refunded if the subsequent decisions are in the importers' favor.

The countries affected are Mexico, Brazil, Sweden, the United Kingdom, Belgium, France, Germany, Spain, Italy, South Korea, Austria and New Zealand.

The Commerce Department must still rule on a companion case involving dumping charges against 19 countries. That decision is expected to have a greater effect because it includes Japan and Canada, two of the largest steel importers to the United States.

"Imports are coming down, no question about it," said Charles Bradford, vice president of UBS Securities Inc., an institutional investment brokerage with offices in New York. He expects steel imports to be cut by 2 to 3 million tons from the 16 million tons that were imported in 1991.

Mr. Bradford also expects that price increases of 3 percent and 4 percent for steel plate and sheet -- already announced by U.S. steel companies -- will take hold when they go into effect Jan. 3.

Previous attempts at price increases were beaten back by intense competition.

But the effects of the action could be offset by increasing imports from foreign companies that received smaller duties, replacing shipments from countries with higher duties.

"There could be a lot of swapping around," he said. "It's like a bowl of jelly. You push down on one side and it comes up somewhere else."

As expected, the preliminary determination was praised by American steel companies and denounced by importers of foreign steel.

Six of the 12 companies that brought the trade case, including Bethlehem, issued a joint statement saying the determination confirms that foreign subsidies "are adversely affecting the fair trade of steel in the U.S. market."

"Foreign producers will no doubt cry 'harassment,' but no one who believes in the established rules of free trade can possibly defend the market distortions which are documented in this ruling," the statement said.

The decision was also praised by Sen. Barbara A. Mikulski. "Thousands of Maryland jobs depend on giving our steel workers a chance to compete fairly in the international steel market," the Maryland Democrat said in a statement. "It's good that we are finally hearing the truth about foreign subsidies in the steel industry so that we can continue to fight for fair trade."

But the American Institute for Imported Steel Inc., which represents primarily steel importers, said the trade charges have little to do with unfair practices and more to do with the fluctuation of currency exchange rates and depressed prices caused by the recession.

The changes in currency rate have made it appear that producers are selling below their costs because deals are negotiated months in advance, when a different exchange rate existed, the group said.

Likewise, the institute said a drop in demand caused by the recession has forced companies to sell below costs because of market competition.

"Once the genie of trade harassment and conflict is on the loose, it will be difficult to put it back into the bottle," said Erwin L. Klein, president of the Institute at the group's annual meeting in New York yesterday.

But he said there was still time to resume negotiations on a multilateral steel agreement, which could eliminate such trade disputes by eliminating all tariff and other barriers to steel trade.

International talks about such an agreement collapsed in March at the same time that voluntary steel import quotas expired. Those had protected American steel companies for eight years.

With President Bush's refusal to extend the quotas, however, Bethlehem and 11 other steel companies filed their trade cases in June.

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