Steel industry trade-law lobbying labeled 'catch-up' protectionism

July 31, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Having achieved mixed results in its efforts to restrict steel imports through the regulatory process, the steel industry is now trying to change the trade laws themselves -- an action that is raising the hackles of steel importers.

The object of the steel industry's attention is the legislation implementing the General Agreement on Tariffs and Trade (GATT) -- the multinational agreement aimed at lowering trade barriers. Steel importers and users charge that the steel industry is trying to include provisions in the bill that are contrary to its purpose.

The legislation will be put on a "fast track" through Congress, with legislators voting only for or against the final proposal.

"This is catch-up football . . . and they are getting a lot more," said Jon E. Jenson, president of Precision Metalforming Association, a trade group that represents 1,200 companies. That group is working with Pro Trade Group, a coalition of businesses that includes such steel-using companies as Apple Computer Co., Compaq Computer Corp. and Whirlpool Corp.

"This is some of the most protective trade legislation since Sen. Smoot's albatross was put in place," he said, referring to the 1930 legislation that raised tariffs on imports and was blamed for deepening the Depression.

But the steel industry claims its proposals are merely fine-tuning to ensure that American companies are still protected.

All of the proposals are "GATT consistent" and will "cause our trade laws to be as strong and effective as they are today and in some cases, strengthen them," said Curtis H. "Hank" Barnett, the chairman and chief executive officer of Bethlehem Steel Corp. "We're going to press for strong and effective trade laws."

Bethlehem Steel, which owns the Sparrows Point steel mill in Baltimore County, is one of the leaders of a group supporting the changes, called the Committee To Support U.S. Trade Laws. This coalition includes more than a hundred companies and unions such as Chrysler Corp., Zenith Electronics Corp. and the United Steelworkers of America.

The fight over the GATT legislation comes about a year after Bethlehem and other steelmakers suffered a regulatory setback. federal trade board struck down half of the cases brought by the companies in a massive "dumping" case involving $3.2 billion worth of steel imports from 20 countries.

The cases were the last of a string of efforts to stem the tide of foreign imports, which the steel industry blames for much of its woes in the 1980s and early 1990s. The steel industry charged that foreign competitors received government subsidies and then sold the steel below the cost of production in the American market.

In their new effort, the U.S. steel companies and their allies want these key provisions to be included in the enabling legislation:

* Diversion of the payment of duties assessed in trade cases from the U.S. Treasury to a fund that would reimburse the companies that bring the trade cases.

* Revise the trade "sunset" laws so that it is harder to drop them after five years.

* Double punitive duties on a product if the manufacturer absorbs the first penalty and keeps the price at its previous level.

Mr. Jenson of the Metalforming Association said the proposal to reimburse companies is an invitation to file more trade cases. "That's a heck of an incentive," he said, noting that the foreign companies will not be reimbursed if they win the cases.

The other proposed provisions will increase the cost of proposed penalties and leave them in effect indefinitely.

But Mr. Barnett believes the proposed changes are entirely reasonable and just bring trade regulations into line with other accepted legal practices.

For instance, he said the proposal to have the punitive duties go to reimburse the companies that bring the action is akin to plaintiffs receiving damages in a civil suit.

The imposing of additional duties -- only if companies absorb the cost of punitive duties -- is meant to ensure that the trade laws have their intended effect of raising the product's cost to the price in its home country, according to David A. Hartquist, an international trade attorney working for the group supporting provisions.

Drafts of the GATT legislation went to the House Ways and Means Committee last week for input and will go to the Senate Finance Committee next week. The final draft of the legislation is scheduled to be sent to Congress before Aug. 12.

Ironically, the efforts by the steel industry come as U.S. mills are working at capacity and turning profits even as foreign imports are surging.

Steel shipments for the first five months of the year are up 5.6 percent to 38.6 million tons, according to the American Iron and Steel Institute.

But steel imports were also up 79.7 percent for the first five months. Part of this increase was due to the removal of preliminary punitive duties imposed early last year. But the imports also increased dramatically because American companies cannot fill burgeoning demand. In fact, the U.S. steelmakers themselves have been importing raw steel to keep up with customer orders.

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