Firms fear bid to limit US steel imports

Date: 06/05/1999

By Peter Chapman

EU STEEL firms are bracing themselves for a key vote in the US Senate later this month on a 'protectionist' bill which would shelter American producers from overseas imports.

Union industry fears the Senate could plunge EU-US trade relations further into the mire by supporting the controversial proposal to freeze the amount of steel coming into the US from abroad at or below July 1997 levels.

The legislation would leave no scope for the EU to add to its average 7-9 million tonne share of the 25-30 million tonne US market for imports.

President Bill Clinton opposes the bill, which is sponsored by Indiana Democrat Pete Visclosky and has already won the support of the House of Representatives, fearing it would worsen relations with trade partners and fall foul of World Trade Organisation rules.

But Christian Mari, a director of European steel lobby Eurofer, said the bill could still go through if the president felt the result of the Senate's vote was too strong to use his veto.

" There is a risk. At the moment it is difficult to make a prognosis, but there is a chance that it could be adopted. We hope that Clinton will veto it, but we are concerned that there was already a large majority in favour of it in the House of Representatives," he said, adding: "It will be a great blow to our trading system and our industry if it is adopted."

Mari said that if approved, the quotas would remain in place for three years and would cover all types of long and flat rolled steel. He added that even if the ceilings were deemed illegal by a WTO panel, it would still take three years to overturn them, by which time foreign steel firms would have been hit hard by the measure.

Steel trade policy aides to Acting Trade Commissioner Sir Leon Brittan warn that the Visclosky bill may be only the beginning of a long-running legislative attack on steel and other imports, which would all be bitterly opposed by the Union.

A senior official in the Commission's Directorate-General for external trade (DGI) said Congress was about to debate two other bills which could make it easier for the US government to launch 'safeguard' measures designed to help industries hit by 'unfair' imports.

The Levin and English bills both aim to amend the US' 'Section 201' law which sets the levels of injury which American industry must face before it can call for anti-dumping duties or quotas. These criteria are currently in line with WTO rules.

The Commission expert warned that lowering the injury levels required to trigger duties could breach WTO rules. "Even if they do not ask for a ban, they could lead to some surprise interpretations of WTO rules," he said.

Eurofer's Mari said he feared these could pose even more of a threat to the steel sector than the Visclosky bill because they had more chance of success on Capitol Hill. "Reform of Section 201 might be a way to achieve the same things as the Visclosky bill is trying to do but in an apparently cleaner way," he said.

The US' demands for steel trade action have been prompted by the Asian economic crisis. Falling domestic demand in the region and other areas hit hard by the downturn such as eastern Europe and South America have led to large increases in exports to the economically buoyant US. At the same time, Europe has been accused of not taking its share of responsibility for mopping up this extra supply.

Mari insisted, however, that European industry was facing the same problems as US firms although it had not called for wholesale trade barriers. "It is much less talked about in the EU because we are not looking for a solution through stopping imports," he added.

Others, including the US Trade Representative Charlene Barshefsky, claim the situation has stabilised since the measures were drafted.