Automakers seek end of steel import tariff

October 06, 2006|By Bloomberg News

WASHINGTON -- General Motors Corp., Toyota Motor Corp. and the four other largest automakers said yesterday that they will petition an independent government agency to lift tariffs on corrosion-resistant steel from six countries.

With steel prices near 18-month highs, the 13-year-old duties on the steel used to make parts are no longer necessary, the auto companies say.

"The steel industry now is completely different than it was 13 years ago," Mustafa Mohatarem, GM's chief economist, said in an interview. This is the first time Detroit-based GM, the world's largest automaker, has asked for steel duties to be dropped. "When we were persuaded that the steel industry had a legitimate case, we didn't object," Mohatarem said.

More than a third of the $2 billion of corrosion-resistant steel imported each year is used by automakers and their parts suppliers.

The automakers say they will petition the U.S. International Trade Commission to revoke the so-called dumping and countervailing duties on steel from Australia, Canada, France, Germany, Japan and South Korea. Every five years the agency must decide if revoking the dumping duties would result in injury to U.S. producers such as U.S. Steel, Nucor Corp. and AK Steel Corp.

The automakers' petition marks the first time these companies - including Ford Motor Co., Nissan Motor Co. Ltd., DaimlerChrysler AG, and Honda Motor Co. Ltd. - have united to contest a trade case.

Lawyers for the steel producers argue that this type of steel hasn't been profitable for the companies and lifting the duties would result in a flood of cheap imports.

"This industry has not been able to recover its cost of capital," said Alan Price, a lawyer at Wiley Rein & Fielding LLP who represents Charlotte, N.C.-based Nucor in this case. "The industry's profitability is not what the domestic auto industry has tried to argue."

The fight between automakers and steel producers has prompted intense lobbying from Congress, with lawmakers on both sides of the issue trying to sway the ITC. More than 50 lawmakers signed a letter to the independent panel yesterday, asking that the duties be dropped. Steel supporters acknowledged the problems of U.S. automakers, but said the duties need to stay.

"While we should all be looking for ways to help troubled industries, forcing another American manufacturing sector to face documented unfair trade is not the right approach," Rep. John P. Murtha, a Pennsylvania Democrat, wrote in a letter to colleagues Sept. 28. Murtha and other lawmakers have signed up to testify at an ITC hearing on the issue on Oct. 17.

U.S. factory owners, the consumers of steel, are contesting duties on a variety of fronts, seeking to have the duties dropped so steel prices would decline.

"The automakers are really feeling the effects of consolidation of the domestic steel industry," said Michelle Applebaum, a Highland Park, Ill., steel analyst.

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