Japan to Cut Steel Exports to U.S.; American Firms May Get Tax Aid

The Clinton administration said Thursday it secured an agreement from the Japanese to cut back steel shipments to the U.S. and promised American steelmakers a $300-million tax break, as part of an effort to rescue a domestic industry besieged by imports.

Still, the administration didn’t take the broader step the U.S. steelmakers wanted--slapping quotas on imports. That drew criticism from legislators who have pushed the administration for decisive action.

Japan’s government pledged that steelmakers from Asia’s largest economy would cut exports to the U.S. this year to “close to 1997 levels,” according to a report the administration is submitting to Congress. The administration is also seeking an agreement to cap exports from Russia and taking steps to insure the South Korean government doesn’t unfairly subsidize exports.

The industry has eliminated 10,000 jobs since November 1997, idled plants and seen earnings plunge in the face of a 30% rise in steel imports. On Thursday, Bethlehem Steel Corp., the third-largest U.S. steel producer, said it will close two stainless-steel and strip-metal plants, with 540 workers, to end “significant cash losses,” after failing to sell the facilities.

Some steel-state senators dismissed the package as inadequate, saying President Clinton was more concerned with propping up the economies of Japan, South Korea and Russia, which have tumbled into recession in the last year and have cranked up exports to the U.S.

“Unfortunately, the president seems more concerned about the global economic effect of taking action on steel than protecting American steel workers,” said Sen. Jay Rockefeller (D-W.Va.).

Rockefeller said he may introduce legislation to curb steel imports.

Foreign steel soared to about 35% of all sales in the U.S. in the third quarter of last year, up from about a quarter of the market before. The imports contributed to a more than 30% drop in hot-rolled-steel prices since July 1997.