Chairman of one top US steel firm speaks out on imports and trade imbalance

The record United States trade deficit has concerned a lot of people -- including Frank Luerssen. As chairman of Inland Steel Company, the fourth-largest US steelmaker, Mr. Luerssen has seen the US industry's position steadily eroded by steel imports. Imports grabbed 26.2 percent of the US market during the first half of 1985. In a recent Monitor interview, he detailed his ideas on ``managed'' trade. Imagine that tomorrow, the people of a small, underdeveloped country elected you their leader. Would you model your economy after the United States?

Oh, no. I think I would take Japan. . . . I'd pick up whatever I could by way of the organizational features of the Japanese program, the investment features of the Japanese program. I'd go around and get the best technology that I could anywhere in the world.

Developed as they are, the Japanese continue to impose substantial import barriers. At some point, would your fictitious country remove those trade barriers?

There's no doubt about it. . . . When the success of the program has endangered the future viability of [continued economic growth], then you really have to make some substantial changes. . . . It seems to me the sentiment to do those sorts of things already exists in Japan. And they need a good heavy push.

How would you give that push to Japan and other US trading partners?

My own feeling is that we do it somehow through a system of taxation -- and . . . shorten the time frame to act against unfair trade and dumping.

How would this tax program work?

We're saying that business has a social responsibility in the United States, part of which is [paid] through the social security system. . . . Foreign goods also have a social responsibility in the United States. . . . We're suggesting that there be an offset of those social security taxes against [a new] value-added tax or [a] business-transfer tax. [This] would, in effect, nullify that tax for domestically produced goods while that tax would be charged against imported goods.

Is that fair to importers?

It's my impression that the Europeans, and the less-developed countries, and the Japanese, and you name it, believe that this economy, the US economy, is the most important economy in the world. They don't want to do anything to destroy it or to weaken it substantially, because this is where they trade their goods.

What's the outlook for the US steel industry if nothing is done?

It will be substantially smaller.

Are our trade laws working?

The whole process is slow and so fraught with political problems that it's difficult to make any progress. . . . It even looks like the people who designed it felt that they didn't want to design anything that was really useful.

What about President Reagan's program -- getting steel-exporting nations to limit imports to the US?

The negotiations started in October of last year and they're still dragging on and dragging on. And they won't be done be-STEELSTEEL fore October of this year, even with the major exporting countries. . . . That kind of program is very, very unsatisfactory.

Is your proposal for managing trade gaining acceptance?

Sen. [William V.] Roth [Jr. (R) of Delaware] has introduced legislation in the Senate to accomplish exactly this. It hasn't gotten a lot of publicity. But you know, it's in the system and it's stewing.

Is Congress ready to act?

There's going to be something happen down there. . . . I think what we need is something we can live with over the long haul.

Your company has reinvested a fair amount of money into upgrading steel plants. Can new technology save the US steel industry?

I have great difficulty with people who say to me -- and there have been some relatively knowledgeable people say [it]? -- that technology is not going to be a substantial boost to the US steel industry in its current struggle to return to its former vitality. That's probably true for some companies. But I'm not willing to give up that race, because I see opportunities out there that clearly are open to us.

What opportunities?

We're working on a continuous cold-mill program that Nippon Steel has helped us with. And I point out to people that we see substantial merits in this thing. The labor productivity in the unit will be three times what we have in a conventional facility doing the same sorts of things. The yield is substantially higher. . . . And the energy consumption is reduced by about a third.

I'm not discouraged from that [technological] standpoint. What I am discouraged with is . . . if the US government allows all of industry in the United States to be decimated. . . . We can do everything that's [technologically] possible. But if foreign governments want to maintain their industry, if they want to give export incentives to their industries to ship materials into the United States, there's nothing we can do to stop it.

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