Steel Imports Still Too High, Panel Asserts : New Measures Sought to Fight Effect of Subsidies

A Reagan Administration program has reduced the flow of foreign steel into the United States, but new measures are needed because subsidized imports continue to plague the American industry, a congressional panel reported Friday.

The domestic steel industry is in a “crisis for survival,” precipitated in part by imports from foreign competitors, said a study by the House Government Operations Committee.

“The growth of foreign steelmaking capacity is based on conscious decisions by these countries to compete in the world steel market once dominated by the United States,” it said. “In order to do so, these governments engaged in direct subsidies and other financial incentives to their national steel industries.”

In October, 1984, the Administration embarked on a program designed to reduce the foreign share of the U.S. steel market to 18.5% from about 25%, except for an additional 1.7 million tons of semi-finished steel. The five-year program relies on a series of 18 pacts in which leading steel-exporting nations such as Japan and South Korea agreed to keep imports down.

Problem Continues

But imports, which held 26.4% of the American market in 1984, continued to account for 22.7% as recently as last June, the committee said.

“The targets of the steel programs have not been met,” it said. “Only about half the desired reduction in the steel import market share is likely to be realized under the program as it is presently operating.”

The missed opportunity “translates into thousands of jobs and the well-being of hundreds of localities throughout the United States,” the report said.

The committee said the import program was not comprehensive enough. It covers 17 nations, plus the 12-nation European Community. But the report said non-covered countries such as Canada had been increasing their steel shipments into the United States.

Canada was not asked to participate in the program, in part because its industrial economy is so closely linked with that of the United States.

But U.S. Trade Representative Clayton Yeutter said last month that he was concerned about surging Canadian imports, and that negotiations will be held to try to solve the problem.

Further Reductions

Commerce Secretary Malcolm Baldrige, while acknowledging that the program has not met initial targets, said recently that imports were down considerably since 1984, and that further reductions were expected.

Imports, Baldrige said, “are no longer the major source of the steel companies’ problems.” He said that many American steel firms had not invested enough in keeping their plants modern during the 1960s and 1970s, “and we’re paying for that right now.”

Steel industry employment is down about 56% since 1977.