U.S. Steelmakers Blast Unfair Trading : Import Restraints Must Be Extended, Companies Argue

Import restraints have slowed the influx of foreign steel, but the illegal trading practices that made trade protection necessary 4 1/2 years ago are as prevalent as ever, American steelmakers said Wednesday.

“We have the documentation to prove it,” Bethlehem Steel Corp. Chairman Walter F. Williams told reporters at the annual meeting of the American Iron and Steel Institute.

“We are prepared to file cases against virtually all our trading partners” unless steel import limits are extended under the five-year Voluntary Restraint Agreements, he said.

President Bush is expected to fulfill a campaign promise to extend quotas past their Sept. 30 expiration. But steel executives are concerned that he may impose the second round of VRAs for less than five years or otherwise weaken the restraints.

Canadian Quota Unlikely

After a slow start in October, 1984, the VRAs are now limiting imports to around 20% of the U.S. market

No nation should be allowed to ship steel to the United States without restriction, as Australia, Mexico and Korea have requested, the U.S. producers said.

Even Canada should be included, they said, although most steel producers seem to be trying to abide by an understanding that Canada will claim no more than 2.5% of the U.S. market.

Political realities make it unlikely that Bush will demand a quota agreement from Canada, the United States’ largest trading partner, said Thomas C. Graham, outgoing AISI chairman and president of USX Corp.’s steel division, the largest U.S. steelmaker.

Williams cited examples of illegal trade practices:

- “Italy is bailing out (its) state-owned steel company for the third or fourth time, frankly I’ve lost track, to the tune of about another $4 billion,” he said.

- Indonesia plans to give $425 million to save a steel rolling mill that is partially government owned. Imports of Indonesian steel are not restricted, and shipments have risen from virtually nothing several years ago to 265,000 tons in 1988. “They’re planning to triple their steel exports over the next decade,” he said.

- Acesita, a government-owned specialty steel producer in Brazil, is negotiating for a 70% expansion in its production capacity primarily for export, Williams said. Brazilian steel capacity already far exceeds domestic needs.

- U.S. producers suspect that the Australian government cut a deal with its steelmakers. In exchange for private investment in steel plants the government would shield the domestic market from imports and, he said: “Hold on to your hats, pay bounties to Australian steel consumers for the spread between the higher domestic and lower foreign price.”

U.S. Said to Subsidize

“Our information is that the Australian government, starting in 1984, has paid out up to $64 million a year in these bounties,” he said.

“And British steel has been privatized as of last fall and now declares itself debt free and ready to take on all comers . . . after (its) government converted $12 billion of debt into $4 billion of equity for an estimated $8-billion loss,” he said.

Last year, Canada shipped 3.2 million tons of steel to the United States; Brazil, 1.37 million tons; Korea, 1.3 million tons; France, 1.24 million tons; Mexico, 471,200 tons; Italy, 326,200 tons, and Australia, 282,000 tons.

Steel importers say the U.S. government also subsidized steel production through unemployment compensation to laid off workers and in defaulted loans. But U.S. companies say such financial support pales by comparison to foreign government ownership and investment in steel production.

“There is no fair trade in steel, especially among the 29 countries currently operating under the VRAs,” Williams said. “Each and every one of them is currently trading unfairly in the U.S.”