U.S. Industry Views on Safeguard Measures for the Steel Industry
 
February 20, 2002
 

The Bush Administration faces opposing views with respect to its decision on how far to go in protecting the beleaguered U.S. steel industry. With just three weeks to go before his decision, Senator John (Jay) Rockefeller, (D-WV)., and the leaders of the nation's top steel producers and unions have bluntly stated that half-measures would lead to the industry's dissolution in America. The industry wants to see tariffs of 40 percent for four years, to give domestic producers a chance to recover from devastating levels of cheap imports. The industry also argues for multilateral efforts to address the global overcapacity, which it believes has resulted largely from government subsidies to the industry in other countries. On the other hand, a coalition of companies that use steel in making autos, tools and other goods, such as Caterpillar, Emerson and Illinois Tool Works are stepping up their efforts to convince Bush to forgo imposing such high tariffs on imported steel. The coalition argues that such action could prompt another round of damaging trade disputes and drive up prices on a range of goods, and contends that protective tariffs would mean higher and less competitive prices for the products they make. The companies also argue that steel imports are dropping, and that the European Union is working on ideas to reduce their output over the next four years in an effort to stabilize supply. Meanwhile, the third high-level meeting on steel at the OECD, attended by 39 countries representing virtually all of the world’s steelmaking capacity, has decided to form a new Capacity Working Group to identify the best means to regularly update and review countries’ information on production capacity and developments for their steel industries; and to form a second group to look at disciplining market-distorting practices. The issues discussed at the OECD meeting and the conclusions reached by the participating countries are summarized in a communiqué that was accepted by all of the countries, which was published on the OECD Web site: http://www.oecd.org/oecd/pages/documentation/displayxml/0,3375,EN-document-0-nodirectorate-25899-0,00.html.