U.S. Says It Has Struck Deals on Steel Subsidies : Trade: Accords with the European Community, Japan and others may lead to the end of steel import curbs imposed in 1984.

The Bush Administration said Tuesday that it has completed negotiations with most of the world’s major steel-producing countries on accords to limit--or in some cases eliminate-- government subsidies to their domestic steel producers.

The agreements, involving the European Community, Japan and five other countries, are part of a two-pronged Bush Administration strategy designed to pave the way for the eventual end of the across-the-board steel import restrictions imposed by Washington in 1984.

At the same time, the Administration disclosed more details about its reallocation of individual quotas for 17 countries to allow increased sales of steel products to the U.S. market by Mexico, South Korea, Brazil and Poland, primarily at the expense of Japan.

President Bush decided on the two-part strategy as a compromise between extending the 1984 quotas for another four years, as domestic steel producers had sought, and scrapping them immediately, as some free-trade advocates had been urging.

The Administration has said that if the latest accords prove effective, it plans to phase out the U.S. steel import-restraint program by March 31, 1992, about 7 1/2 years after the quotas took effect.

U.S. officials also announced plans to press for incorporation of the new agreements to pare subsidies into global trade-liberalization talks now under way in Geneva. Authorities said the governments that signed the accords had promised to support the United States in that effort.

Along with the EC and Japan, countries that signed accords agreeing to limit or end their steel subsidies include South Korea, Brazil, Mexico, Australia and Trinidad and Tobago. Negotiations are continuing with several others, including Austria, Finland and Yugoslavia.

U.S. negotiators said the five have agreed to pare back a broad range of government protections for their steel industries, including subsidies, quotas, tariffs and non-tariff barriers.

Linn Williams, the deputy U.S. trade representative who headed the negotiations, called the measures “historic.” Williams told reporters that the accords marked the first time that the United States has persuaded other governments to limit general production subsidies.

The accords also establish specific procedures for settling disputes that could arise during the 2 1/2 year life of the agreements by referring them to a seven-member international arbitration board that includes members chosen by each country involved in a disagreement.

At the same time, however, officials conceded that the agreements affecting government steel subsidies contained some gaps that, depending on the country, could nullify much of the benefit the United States otherwise would derive.

For example, although government payments designed to subsidize steel exports will be eliminated in all cases, some subsidies intended to support domestic production in other countries will be allowed to remain on the books, while others will be phased out.

In addition, governments participating in the agreements will be able to continue current payments subsidizing environment-related changes, research and development, plant-closings and worker retraining.

U.S. steelmakers have been divided over the new approach. Many doubt that the accords can be enforced effectively, but they have said they are reluctant to criticize the package openly for fear of reversing the President’s decision to extend the current quotas.

The reallocation of the 1984 quotas is designed to allow imports a 19.1% share of the total U.S. steel market in 1990, a 20.1% share in 1991 and a 20.3% share in 1992. By contrast, before the 1984 program was begun, imports had captured 27% of the U.S. market.

STEEL IMPORT QUOTAS Table shows new allocation levels negotiated so far for the next 30-month period

Present Share of total U.S. market, in percent Country Program First 15 months Next 15 months Australia 0.26 0.39 0.49 Austria 0.24 0.25 0.25 Brazil 1.35 1.80 2.10 Czechoslovakia 0.04 0.04 0.04 European Community 6.94 7.00 7.00 Finland 0.24 0.25 0.25 East Germany 0.11 0.10 0.10 Hungary 0.03 0.05 0.05 Japan 6.19 5.00 5.30 South Korea 1.92 2.45 2.62 Mexico 0.49 0.95 1.10 China 0.08 0.08 0.09 Poland 0.09 0.13 0.13 Romania 0.11 0.11 0.11 Trinidad and Tobago 0.04 0.12 0.13 Venezuela 0.21 0.33 0.33 Yugoslavia 0.02 0.05 0.05 TOTAL 18.36 19.10 20.14

Source: Office of the U.S. Trade Representative