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Renew Steel Import Quotas, Study Says

October 7, 1988

WASHINGTON (AP) _ The United States cannot afford to discontinue soon-to-expire steel import quota agreements with Japan, the European Community and other nations, said a study released Thursday.

The conditions that led to the import barriers being erected in 1984 - namely, pervasive intervention by foreign governments to help their steelmakers compete in world markets - have not changed, said the study by three Washington-based attorneys and an economist.

Attorneys Thomas Howell, Jesse Krier and Alan W. Wolff and economist William Noellert all work for the Washington law firm of Dewey, Ballantine, Bushby, Palmer and Wood. But their research was financed partly by six American steel companies who are on record as favoring continuation of the five-year quotas, which expire in the fall of 1989.

In conjunction with the release of the study, those six firms released their own statement on the import ceilings during a news conference Thursday.

″The United States should not dismantle this system until the international distortions which give rise to the policy in the first place have been eliminated,″ said the statement by Armco Inc., Bethlehem Steel Corp., Inland Steel Industries Inc., LTV Steel Co., National Steel Corp., and USX Corp.

Congressional pressure and a finding by the U.S. International Trade Commission that the steel industry was being harmed by imports led the Reagan administration to negotiate five-year import agreements with Japan, South Korea, the EC and other leading steel-exporting nations in 1984. The agreements placed product-by-product caps on the amount of steel that can be imported into the United States each year.

Since the quotas took effect, the foreign share of the American steel market has dropped from 26.4 percent in 1984 to 21.3 percent in 1987, according to Thursday’s study, called ″Steel and the State.″

The steel industry, which saw its work force drop from 500,000 in 1973 to 163,000 in 1987, was profitable last year for the first time since 1981.

Given continuing government subsidies of foreign steel operations, the study said it would be ″imprudent, if not foolhardy, to permit completely open access to the U.S. market ... ″

The study said that even with the quotas, the United States has permitted a much higher level of steel imports than Japan or Europe would consider acceptable.

The study provided ammunition for steel-state lawmakers hoping for commitments from the two presidential contenders to renew the quotas.

″Clearly, the American steel industry continues to face a hostile environment,″ Sen. John Heinz, R-Pa., said in a prepared statement about the study.

″What’s really at issue is our government’s willingness to face up to the reality of the world marketplace and take meaningful action,″ he said.

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