Steel Trade Complaints Advance

AFTER more than a decade of struggle, the United States steel industry is starting to roar again.

Its first bellow came six weeks ago. A dozen domestic producers filed a host of unfair-trade complaints against steelmakers in 21 foreign countries. On August 10, the US International Trade Commission found a "reasonable indication" of injury in 72 of the 84 cases the industry filed.

Of course, when one lion roars, others answer.

A spokesman for Canadian steel producers said he was "deeply disappointed." Canada intends to look into dumping charges against US steel producers. Mexico threatens to do the same. Expect more howls from the world's two largest steel producers - the European Community (EC) and Japan.

The rising chorus of protest in steel illustrates the jittery state of world trade. But it also disguises some of the positive developments in steel.

"Something has to be arranged," says Rev. William Hogan, an economics professor at Fordham University in New York and author of 10 books on the steel industry. He is hopeful that steel-exporting nations will come to terms. "I think they will still try to negotiate."

The last time the US industry bellowed so much, it was teetering on the edge of a deep abyss. It was the early '80s. Domestic steelmakers were woefully outdated and uncompetitive with the rest of the world. In 1984, the US negotiated voluntary restraint agreements. The VRAs limited steel imports so the industry could get back on its feet. In March, the VRAs expired.

By all accounts, the industry is in far better shape than it was a decade ago. Leaner, meaner producers

"The state of the industry is much, much stronger than at any point since these trade cases have been heard," says John Jacobson, head of a steel consulting firm in Philadelphia. "The industry has taken upon itself to reinvest and to work very hard to lower its costs and become competitive."

US mills are modernized. The percentage of continuous casters (an advanced production method) has soared from 20 percent in 1980 to 75 percent last year. It used to take 10 man hours to make a ton of steel; the industry average is now down to five hours. The industry has halved its trade deficit - the difference between exports and imports.

Now, with renewed economic clout, the industry is arguing that other nations should stop subsidizing their steel industries. Of the 21 countries accused of unfair trade practices, the International Trade Commission exonerated only Taiwan. The decision is preliminary. The Commerce Department will have to investigate the alleged subsidies and dumping. If it finds any such cases valid, the trade commission would then judge the extent of the injury to US industry. The whole process will take at least a year,

a commission spokesman says.

Europe and South America are the biggest culprits, analysts say.

EC officials claim the US trade cases are a lever for US producers to get continued trade protection.

But the picture is confused enough that no one really knows how, or even if, the situation will resolve itself. The US industry, for example, is pursuing at least three distinct strategies on trade.

Earlier this spring, the US tried to negotiate a multicountry agreement. When those talks collapsed, US industry prepared its unfair-trade complaints - the largest such collection of cases in about a decade. Meanwhile, US steelmakers were also sitting down with their Canadian and Mexican counterparts to iron out differences in the North American Free Trade Agreement (NAFTA).

It may seem difficult to call Mexico and Canada unfair traders one minute and try to be partners the next. A USX Corporation spokesman said the two issues were entirely separate.

The industry is also trying to safeguard its interests in the Uruguay Round of world trade negotiations. If both sets of trade talks fail to satisfy US steelmakers, the industry has a third option - more partnerships with Japanese steelmakers, currently charged with unfair competition. US-Japan partnerships

US steel companies have so many joint deals with the Japanese that only two of the 12 domestic producers cited that country for unfair trade practices. Of the $23 billion invested in modernizing US plants over the last decade, an estimated $3 billion came from the Japanese.

The result, according to Mr. Jacobson, is that the US steel industry is taking a more balanced view of trade protection as a strategic option.

"The trade cases are not generally the major emphasis of the steel industry," he says. US companies realize that for a real bounce in their fortunes, "it will take a much improved economy and increasing efforts on the marketing and production side of the business. Anything on the trade side is going to be more temporary and short-lived."

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK