U.S. Sanctions Expected Over Steel Dumping

The Clinton Administration, in a decision that appears to signal a tough new stance on trade, is expected to announce today that it will impose sanctions against major steel exporting nations for dumping cut-rate steel in the United States.

The preliminary ruling opens the way for the imposition of stiff import duties on foreign-made steel, and could spark price increases on a number of U.S. products, including automobiles and appliances made with imported steel.

Although the steel-dumping case was filed before President Clinton’s election, foreign officials expressed concern Tuesday that the decision denotes a new, hard-line approach to trade matters and an increased resolve to adhere to the letter of domestic and international trade law.

The two previous Administrations had talked tough on trade but seldom followed through with aggressive enforcement of existing laws against unfair trading practices.

The George Bush Administration determined Nov. 30 that a dozen nations were heavily subsidizing steel exports to the United States, but findings on other questions in the case and a final decision on sanctions were not completed before Bush left office last week.

The Clinton Administration’s ruling, which is subject to further review before it becomes final, marks a significant step toward erection of steep barriers to the importation of several widely used types of steel that form the backbone of the domestic industry.

The decision is all but certain to add to world trade tensions and complicate talks among more than 100 nations intended to reform and expand the world trading system. Canadian, Japanese and European officials already have scheduled news conferences or prepared press releases to criticize the Administration decision.

The Commerce Department action may also embolden other domestic industries to try to seek relief from alleged unfair trading practices. The major U.S. auto makers are weighing a multibillion-dollar anti-dumping case against foreign car manufacturers--particularly the Japanese--on grounds that they are selling millions of underpriced cars here.

The Big Three domestic auto firms have been investigating Japanese auto pricing tactics for years and are considering filing a dumping case with the Commerce Department in the next few months, industry officials said Tuesday. But no decision has been made on whether to press the case, they stressed.

Today’s ruling is a preliminary determination that more than a dozen steel exporting nations dumped rolled, plate and coated steel in the United States at less than the cost of production or at prices lower than in their home markets.

The complaints involve a total of 6.5 million tons of imported steel worth $2.5 billion. Total U.S. consumption of these types of steel is 45.5 million tons. Among the offending nations expected to be identified by the Commerce Department are Belgium, Brazil, Canada, Germany, Korea, Japan, Mexico and the Netherlands.

Before the decision becomes final, exporters will have an opportunity to argue that their pricing is fair or that the sanctions are unfair. But during that time, shippers of imported steel must post bonds equal to the duties to be decreed today by the Commerce Department, ranging from less than 5% of the value of the steel from some producers to more than 25%.

Many exporters will simply halt shipments rather than pay the duties, which effectively would price their products out of the U.S. market, trade specialists noted.

An official of the 12-nation European Community complained Tuesday that, while the case technically is a judicial-style proceeding free of political influence, the Clinton Administration could ease the sanctions by signaling to exporters and the domestic industry that it prefers a negotiated settlement of the dispute.

No such signal has been forthcoming, the official said. “It looks to us like another stratagem to extend the protection of the (American) steel market,” he said.

He added that Leon Brittan, chief trade negotiator for the EC, plans to come to Washington within the next few weeks to try to head off the duties, which will take effect this spring unless the Commerce Department or the International Trade Commission--an independent federal panel that reviews department decisions on trade complaints--reverses course.

American officials and spokesmen for the steel industry said that such a turnaround is unlikely because the dumping and subsidy determinations were made on narrow technical and legal grounds. They said that additional information is unlikely to result in the lifting of the tariffs.

But the exporters remain hopeful that a diplomatic compromise can be struck to head off the duties.

It is possible for Commerce Secretary Ronald H. Brown or U.S. Trade Representative Mickey Kantor “to say they feel there’s a possibility to do a deal on this,” the European official said. “They don’t have to follow this thing slavishly.”

U.S. steelmakers filed the anti-dumping and subsidy cases against 84 producers in 21 countries last June, just three months after voluntary restraints on the volume of steel exports expired. Those restraints were approved by the Ronald Reagan Administration in 1984 and subsequently renewed under Bush.

A spokesman for the industry, who asked not to be identified in advance of the Commerce Department ruling, said that U.S. steel companies do not want an extension of the voluntary restraints or a negotiated deal with the exporters. They want current law enforced, he said, not protection.

“The thing that’s really different about now than before is that the domestic industry has gotten its act together and is by any objective measure very, very competitive today,” he said. “They spent $23 billion on modernization since 1980. They’ve restructured and streamlined. A lot of pain came with that and 60% of work force laid off.

“A lot of what the free traders lectured us about in the early 1980s has been done. Now we’ve done our part and government should enforce the trade laws,” he said.

Another industry official said that, while foreign producers are certain to vehemently protest the Commerce Department ruling, “it’s all a lot of rhetoric.”

“They’ll say it shows the Clinton Administration is protectionist,” he said. “But the only groups who say that are the ill-informed and the malicious.”