Washington — The wedge of steel has moved a bit closer toward denting trade relations between the United States and the European Community.
On Jan. 11, seven major US steel companies dropped 3 million pieces of paper in the federal government's lap. The documents charged producers in 11 foreign nations with either ''dumping'' steel - selling it below cost - or selling steel at unfair subsidized prices. Seven of the accused are members of the European Community (EC).
Early this week, the US government agreed to investigate the charges. Preliminary hearings begin Feb. 3 at the International Trade Commission (ITC).
An EC spokesman calls most of the charges ''ludicrous.'' US producers are keeping a tight-lipped silence, pending the outcome of the case. Tempers seem to be getting short, and many observers warn that conflict over such a bellwether industry risks an all-out inter-continental trade battle.
''A lot of heated demands may begin flying around,'' says Joseph C. Wyman, an analyst with Shearson/American Express. ''Steel is an easy sort of thing to grab onto - it speaks to people's minds, or whatever.''
Last year marked a modest increase in domestic steel production, according to the American Iron and Steel Institute, with US mills pouring out 119.9 million tons - a 7 percent rise over 1980. For the year, the industry ran its plants at about 73 percent of capacity.
But in recent weeks, the institute estimates, mills have been under 60 percent capacity. At least 77,000 steelworkers have been laid off. US steel companies are placing much of the blame on what they say are unfair EC imports.
Europeans counter that America's own obsolete plants, low productivity, and high wages are the real villains.
''The problems the US industry is facing right now have nothing to do with us ,'' says an EC spokesman.
Imports penetrated the US market at record levels last year, accounting for 19.1 percent of steel sold in America, up from 16.3 percent in 1980.
The seven complainants - US Steel, Bethlehem, Republic, Jones & Laughlin, National, Inland, and Cyclops - claim foreign competitors bought their increase through dumping or subsidies, or both.
Britain, France, Belgium, West Germany, Luxembourg, the Netherlands, Italy, Brazil, Spain, South Africa, and Romania are the countries charged. The Commerce Department and the independent ITC have agreed to begin a joint series of 109 specific investigations, covering products from structural steel through cold-rolled sheet.
The domestic producers' petitions fill 424 file boxes. But who is being hurt by what and how much is far from clear.
''No one party is to blame,'' says a market analyst who requested that his name not be used. ''If we had a good steel demand, this would all recede into the background.''
Much of the increased market penetration of imports can be attributed to a rise in shipments of pipe and tube used in oil production - an area in which domestic capacity doesn't match demand. Total imports from the EC went up 66.7 percent last year, with pipe, tube, and semifinished slabs accounting for over one-third of the rise.
There is ''no question,'' however, that European producers are being bailed out by their governments, the analyst says.
''Look at their losses,'' he says. ''It's not thousands a day, but millions.''
Spokesmen for both US Steel and Bethlehem declined comment, saying the case is now in the hands of the government. But Republic's petition, for instance, claims European mills have received more than $30 million over the past six years through government grants, loans, loan guarantees, and aid to workers.
Marcel Loeb, president of the American Institute for Imported Steel, counters that the domestic industry has been subsidized through accelerated depreciation write-offs, softening of EPA regulations, and the now-scrapped Trigger Price Mechanism (TPM), a trade barrier designed in part to keep the price of imports high.
''American steelmakers got at least $10 billion a year from the public as a consequence of government assistance,'' says Loeb.
As for dumping, the real problem is that European producers have begun to offer lower prices on flat-rolled products, says Mr. Wyman of Shearson/American Express.
''When the auto market softened, domestic producers started to offer'' their flat-roll steel at sub-TPM prices, says Wyman, referring to the discarded import barrier.
Rather than be priced out of the market, the Europeans said, ''The heck with that,'' and dived below the TPM themselves, Wyman says.
If the US government finds for the plaintiffs, countervailing duties could be slapped on imports to make them more expensive. That sort of action risks retaliation from a Europe already mired in its own recession.
''It is clear European governments have made their steel producers into employment agencies,'' Wyman says. Duties would ''mean that many more layoffs in Europe - and that would be picked up by the European press.''
Ministerial-level talks between US Special Trade Representative Bill Brock and EC officials will begin in Washington Feb. 8, with steel high on the agenda. If an informal, negotiated settlement can't be reached, the Commerce Department and the ITC will forge ahead, so to speak.
The ITC must issue a preliminary ruling on injury by the end of February. But a final determination may be a long time coming. ''The odds are this thing should go all the way into the fall,'' says an ITC source. ''Who knows what's going to happen?''