Canton Repository

September 26, 2002

Repeal of steel tariff denied 

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — Opponents of President Bush’s steel tariffs called for their repeal Wednesday, but the administration is not
contemplating any changes in the duties, a top United States trade official said.

Grant D. Aldonas, undersecretary of commerce for international trade, answered no when asked if there was any thought of ending
the tariffs before they expire in 2005.

He said struggling American steel makers need more time to adjust and restructure in the face of foreign competition. More than a
dozen domestic steel producers have gone bankrupt since the late 1990s.

Another reason to maintain the tariffs, he said, is to keep pressure on U.S. trading partners to eliminate subsidies to their steel
industries and reduce excess steel-making capacity.

During a congressional hearing, a handful of steel-using manufacturers asked for the repeal of the tariffs, which they said have caused their steel costs to rise as much as 60 percent.

As a result of the tariffs, one of the companies, Dowding Industries in Eaton Rapids, Mich., warned that it may move some of its
production to Mexico, its president Chris Dowding said.

“Due to the steel tariff, we have begun conversations with a Mexico-based company,” Dowding said. She added that her company’s steel costs have risen 16 to 20 percent. The company makes parts for the auto industry.

The amount of time it takes to receive steel orders has grown from two to four weeks to up to six months as a result of shortages,
which also hurts the business, she said.

President Bush imposed the tariffs in March to give domestic steel makers a break from foreign competition.

Rep. Donald Manzullo, an Illinois Republican who is chairman of the House Small Business Committee, convened the hearing to
provide a forum for small companies hurt by the tariffs.

Although big steel companies have had access to federal policy makers, he said small businesses have not.

Turning to a steel company executive, he said: “Your industry has been welcome at the White House. They have not. They’re little
people.”

Defenders of the tariffs pointed out that some small companies, such as those selling their products to steel companies, have
benefited from the tariffs.

Doug Ruggles, vice president of Martin Supply Co. in Sheffield, Ala., told a pro-steel gathering earlier in the day that increased
activity in the steel industry helped his business.

Along with defending the tariffs, the steel industry has lobbied the federal government to take over the responsibility for health
insurance costs of steelworkers who lose their jobs when their companies go belly up or are acquired.

This “legacy cost relief” would make it easier for steel companies to consolidate, which many analysts believe would strengthen the
industry.

Rep. Ralph Regula, R-Ohio, a pro-steel lawmaker who helped found the Congressional Steel Caucus, favors legacy cost relief but
said the idea faces daunting obstacles.

“I don’t like to create false expectations on anything,” said Regula, sponsor of a legacy cost relief proposal. Of 435 members of the
House, only about 100 represent steel-producing areas that would benefit from legacy relief, he said. “The vast majority of members
are not interested.”

Aldonas said domestic steel makers can consolidate without the federal government assuming responsibility for health plans.

“It’s a question of price,” he said, suggesting that if the price is right, one company will buy another. “Do you need congressional
action? No,” he said.

During the hearing, Manzullo declared that about half of the exclusions to the steel tariffs approved by the administration benefit steel companies that pressed for the tariffs rather than steel-users.

In the program’s first year, the administration exempted 727 types of steel imports from the tariff because equivalent types of steel
were not available from domestic steel makers.

Those exceptions, which keep the prices of those imports down, were designed to benefit steel-using companies that otherwise
would not have access to the kind of steel they need.

But almost half of the exclusions, as measured by tons of steel imported, applied to steel slabs imported by steel companies.

The American steel makers roll the slabs into finished steel or use it to line steel-making furnaces.

Aldonas said the administration excluded slabs from the tariffs because they are unavailable from U.S. steel makers.