Canton Repository

June 6, 2001

Bush seeks probe over steel imports; Ney: ‘This is huge’ 

By PAUL M. KRAWZAK Copley Washington correspondent 

WASHINGTON — President Bush is launching what is billed as a comprehensive investigation into steel imports, which could lead to curbs on foreign steel and give domestic steel makers “breathing room,” administration officials said Tuesday. 

The announcement ended months of speculation about what action, if any, the pro-free trade administration would take in response to complaints that the domestic steel industry is in a crisis caused at least in part by cheap foreign steel.

In a statement, Bush said the investigation is part of an initiative “designed to restore market forces to world steel markets and eliminate the practices that harm our steel industry and its workers.” The initiative also calls for negotiations with steel-producing nations aimed at reducing global overproduction of steel and ending government subsidization of the industry, he said.

Since 1998, more than a dozen U.S. steel companies have sought Chapter 11 bankruptcy protection as the price of steel plunged. Many of those companies have blamed cheap foreign imports, which push down prices, for their financial problems.

Among the largest exporters of steel to the United States are Japan, China, South Korea, Brazil and Russia.

The announcement drew an overwhelmingly positive response from lawmakers in steel-producing states such as Ohio, Pennsylvania and Illinois, and from steel companies. Both have pushed for an investigation for awhile.

“This is huge,” said Rep. Bob Ney, R-St. Clairsville, who represents a steel-producing region in eastern Ohio. “This is going to have a tremendous effect.” 

Ney said the investigation alone “will send a signal out to those foreign companies that are illegally dumping that if they continue they will have to pay a great amount of money.”

Sen. George Voinovich, R-Cleveland, who also has been pressing for a probe, said the action “hopefully will lead to a more level playing field for Ohio’s steel industry.”

Sen. Dick Durbin, D-Ill., added that the probe could revive the faltering steel industry in his state. 

Others who praised the move included Sen. Mike DeWine, R-Cedarville, and Rep. Ralph Regula, R-Bethlehem Township.

Bush said the investigation, called a Section 201 after its location within a 1974 trade law, is part of a strategy to reduce worldwide overcapacity in the steel industry and end government intervention in the industry, which he blamed for oversupply. The probe could take four months or longer, but lawmakers said they hoped it would move faster.

The U.S. steel industry “has been affected by a 50-year legacy of foreign government intervention in the market and direct financial support of their steel industries,” Bush said. “The result has been significant excess capacity, inefficient production and a glut of steel on world markets.”

Bush said he is directing Commerce Secretary Donald Evans, Treasury Secretary Paul O’Neill and U.S. Trade Representative Robert Zoellick to negotiate with U.S. trade partners to eliminate overcapacity in the steel industry and end government subsidies that have led to overcapacity.

Within two weeks, the administration will submit a petition to the U.S. International Trade Commission, directing that agency to conduct the probe, officials said. Rep. Phil English, R-Pa., and chairman of the Congressional Steel Caucus, said he expected to see a draft of the petition as early as today.

The commission will determine whether steel imports have caused, or threaten to cause, substantial damage to U.S. steel makers. If the agency finds evidence of damage, it must recommend remedial actions to the president. These could include raising duties or tariffs paid by importers, which would have the effect of increasing prices, and reducing the level, of imports.

The law allows Bush to order these remedies for a period up to four years.

Regula, a former chairman of the Congressional Steel Caucus, praised Bush for “acting on this problem in less than five months after taking office.” During the two years following the previous steel crisis in 1998, he said, the Clinton administration “resisted a Section 201 investigation and did not provide the necessary relief to the U.S. steel industry.”

While both Democrats and Republicans commended Bush for the action, they expressed concern that the investigation be as comprehensive as possible. The probe should assess the impact of every type of steel product imported into the United States, they said. That way, they explained, if import curbs are ordered, foreign steel companies would not be able to circumvent the limits by
shifting to production not covered by the curbs.