Steel-quota `showdown vote' today

`It's the issue of the hour as far as free trade goes'

Veto already promised

Administration hopes 16 anti-dumping probes will head off bill

June 22, 1999|By William Patalon III | William Patalon III,SUN STAFF

Hoping to head off a U.S. Senate bill that would set strict quotas for steel imports, the Clinton administration initiated 16 new anti-dumping investigations yesterday involving cold-rolled steel from a dozen countries, White House officials said.

The administration has said President Clinton will veto the bill, which the Senate is scheduled to consider today.

The Senate bill is the "showdown vote and nobody is sure which way it will go," said Daniel T. Griswold, associate director for trade policy studies at the Cato Institute, a Washington-based free-trade think tank. "It's the issue of the hour as far as trade goes."

Commerce Secretary William M. Daley said the investigations will focus on Argentina, Brazil, China, Indonesia, Japan, Russia, Slovakia, South Africa, Taiwan, Thailand, Turkey and Venezuela.

Steelmakers and unions have accused the administration of allowing foreign firms to "dump" steel here, flooding the market and driving down prices -- and causing U.S. steel-company profits to plummet and layoffs to spike. U.S. steel producers have joined in filing dumping cases against these importers, causing import levels to plunge.

U.S. companies recently filed dumping charges against foreign makers of cold-rolled steel, a steel with a polished finish that is used in home appliances. Ten days ago, members of a U.S. trade panel unanimously concluded that U.S. steel firms had been injured by unfairly traded imports of hot-rolled steel.

That ruling by the U.S. International Trade Commission paves the way for the Commerce Department to impose punitive tariffs of up to 67 percent on hot-rolled steel from Japan -- which would effectively keep Japan out of that sector of the market because it would drive its prices sky high. Dumping is technically defined as selling a product abroad for less than it sells for at home. U.S. companies have also alleged that foreign companies -- such as those from Russia -- were selling steel here for less than it cost to make back home.

The dumping cases that have been filed have had a chilling effect on imports, which have fallen to levels not seen since before the alleged dumping began. But that is not enough, steelmakers have said, contending that imports were at historical highs even before cheap foreign steel flooded the market starting in the summer of 1997.

For months, the administration has been trying to fend off criticism that it has been too lax in its response to entreaties from steelmakers to take a hard stand against the countries whose companies allegedly were dumping steel. But some of President Clinton's economic advisers feared that a hard stand could short-circuit the delicate economic rebound taking place in Southeast Asia -- a rebound that caused the inflation-fighting Federal Reserve to do an about-face last year and ratchet down interest rates to feed the recovery.

The Senate bill to be considered today owes its impetus to the belief among steel companies that anti-dumping petitions take too long to have any effect because of the many steps involved in proving a case. The main thrust of the bill would be to limit imports to levels established before the alleged dumping began.

No matter which side triumphs, free trade loses, Cato's Griswold says. And, with the Fed ready to increase interest rates here to head off any possibility of inflation, quotas or any other artificial import barriers could cause recoveries abroad to stall -- hurting the U.S. economy because those countries would not be able to buy U.S. exports, Griswold said.

Wire services contributed to this article

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