Steel tariffs get a plea for 2 more years

They've helped prices, U.S. lawmakers are told

WTO ruling is a problem

Executives, union leader appeal to joint caucus

April 09, 2003|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

WASHINGTON - The nation's top steel executives and the leader of the steelworkers' union urged members of a joint congressional caucus yesterday to support steel tariffs for two more years, despite the World Trade Organization's ruling last month that the U.S. tariffs are illegal.

The top executives from International Steel Group Inc., U.S. Steel Corp., Nucor Corp. and Weirton Steel Corp. said President Bush's tariff program, which began in March last year, helped boost steel prices and gave the troubled domestic steel industry time to consolidate after enduring years of illegal dumping of cheaper steel from foreign countries.

"The tragic flaw in free trade is we're the only ones who practice the theory," Wilbur L. Ross Jr., chairman of ISG, told a group of congressional leaders yesterday that included Sen. Barbara A. Mikulski of Maryland, Sen. Arlen Specter of Pennsylvania and Sen. John D. Rockefeller of West Virginia.

ISG's intended $1.5 billion purchase of Bethlehem Steel Corp. this month is a leading sign of forthcoming consolidation in an industry that many experts say has been fragmented for too many years.

Some European and Asian countries have fewer, but larger, steel companies that dwarf many U.S. steelmakers in annual production capacity.

ISG intends to buy Bethlehem Steel Corp., including the Sparrows Point mill in Baltimore County, in a move that would create this country's largest integrated steelmaker. U.S. Steel and AK Steel Corp. are vying for National Steel Corp., another steelmaker in bankruptcy.

The tariffs have forced other nations to look more seriously at the problem of worldwide overcapacity in steel manufacturing, the executives said. Several executives blamed the government for not doing enough over the years to enforce its own trade laws.

"Our trade laws are constantly under attack, and unless we take a stand, we're not going to have any manufacturing in this country, let alone steel," said Thomas J. Usher, chairman and chief executive officer of U.S. Steel.

The United States plans to appeal the WTO ruling.

Rockefeller called the tariffs "a failure" because a raft of exemptions and a declining tariff rate over three years won't provide enough protection to domestic steelmakers from foreign competition as they attempt to restructure and consolidate.

"I don't think the past two administrations give one hoot about the steel industry ... ," Rockefeller said. "I'll do anything to try to help the steelworker. ... My job, professionally, is to stay optimistic and to fight. I continue what's called `sustained outrage.'"

Steel consumers, however, claim that the tariffs have hurt their businesses, and they are fighting to end them. The tariffs are up for a midpoint review in September.

The senators also questioned the executives and the head of the United Steelworkers of America about the problem of lost health care benefits for steel retirees resulting from a spate of steel company bankruptcies since 1997.

Bethlehem, which has been in bankruptcy since October 2001, terminated health care coverage for roughly 95,000 retirees and dependents on March 31. About 20,000 people in the Baltimore area are affected.

"What more can we do?" Mikulski asked the steel executives. "This is a crisis in my community. My office is flooded with calls."

Leo W. Gerard, the Steelworkers president, said that national health care insurance is the ultimate answer that could help American manufacturers compete with foreign rivals.

"I believe in the long run, the country must find a way to fund a national health insurance program," Gerard said. He said that 200,000 steel retirees, widows and their dependents have lost health care benefits as a result of collapsed steel companies in recent years.

After bargaining with ISG, the union and the company formed a "VEBA," or voluntary employee benefit association, to help retirees of the companies ISG acquired.

The fund will be administered by the union, financed by a proportion of company profits, and available for retirees "with the most serious problems," Ross said.

ISG already has contributed $50 million in start-up money to the fund, he said.

Ross said that forming the VEBA was a moral - not a legal - obligation.

Covering retiree health care costs is "ultimately a societal issue and should be dealt with on societal terms," Ross said.

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