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US Rules Brazil, Japan Dump Steel

February 12, 1999

WASHINGTON (AP) _ The Commerce Department announced today it has found evidence that Brazil and Japan have illegally dumped steel in the United States at up to 70 percent below normal prices.

In a step that could lead to tariffs on imported steel, the government made a preliminary finding that producers from those countries sold steel in U.S. markets at prices dramatically below production costs or home-market prices.

A ruling in an investigation into possible steel dumping by Russia was delayed however, as negotiations seeking settlement of trade issues with that country continue.

The Clinton administration still faces difficult choices about how exactly to respond to complaints from U.S. steel companies and workers’ unions.

While concerned about American industry, ``we do not want to take steps ... that would send the wrong message to the rest of the world,″ said Commerce Secretary William Daley.

Calling the dumping charges ``unjustified, ill-considered and counterproductive,″ Fujio Ono, chairman of the Japan Steel Information Center said, ``market forces are working to lower imports without government intervention.″

Steel imports surged to record highs last year as the Asian economic crisis reduced demand abroad and forced foreign producers to seek U.S. outlets, often by selling goods at prices below the prevailing U.S. levels.

Formal complaints made to the Commerce Department by the American steel industry specifically deal with hot-rolled carbon steel, a common product that can be used as is or turned into more specialized products such as auto parts.

Imports of hot-rolled carbon steel from Japan, Brazil and Russia jumped more than 60 percent during the first six months of 1998, compared to the same period in 1997.

The U.S. producers blame at least 10,000 layoffs and three company bankruptcies on the import surge.

But, while U.S. steel producers accuse them of dumping, the foreign producers blame normal market factors, including devalued currencies abroad and a General Motors strike that temporarily lowered demand in the United States.

The administration said today it is continuing its investigation into whether Russia dumped steel at unfair prices, and plans to release findings next week.

But a written statement also noted: ``Commerce is discussing with Russia a possible agreement to suspend the hot-rolled steel dumping investigation.″

Such an agreement, which the U.S. industry opposes because it would mean a certain amount of cheap imports could continue, could come within weeks and would not require industry consent.

Restrictions under World Trade Organization agreements, which Russia does not participate in, rule out such negotiations with Japan and Brazil.

Commerce found that goods from Japan may have been sold at up to 67.59 percent below the fair value and from Brazil at up to 71.02 percent. The government also found that Brazil may have illegally subsidized its producers, driving down the price of steel by up to 9.45 percent.

Before tariffs could be imposed, Commerce would have to make a final dumping determination by late April and the U.S. International Trade Commission would have to find, by mid-June, that the imports injure or threaten to hurt domestic industry.

Any tariffs would be retroactive to today at least. For Japan and Russia, the effective date could go back to mid-November if Commerce affirms an earlier ruling that the import surge was unusually high.

There are already signs that imports dropped in December because of fears of retroactive tariffs from Japan and Russia, and today’s ruling could begin to lower imports from Brazil.

The U.S. industry has urged President Clinton to go beyond the dumping cases, which target one country and one product at a time, and consider broader reviews that could lead to quotas or across-the-board steel tariffs.

Clinton administration officials, however, have been reluctant to take steps that could start a trade war and cut off foreign markets to U.S. exports of other goods.

Although labor unions are traditional allies of Democrats, Clinton has also been a strong supporter of free trade, pushing other countries to open up their markets.

In addition, the administration has been trying to help countries suffering through economic hard times, and new steel tariffs could set an uncomfortable precedent.

Analysts say that as the global economic troubles hit U.S. companies harder, more industries _ including computer chip-makers, machine tool companies, textile manufacturers and automakers _ could also file dumping complaints seeking protective tariffs.

Meanwhile, manufacturing and steel-consuming industries, such as automakers, complain they would face higher prices for steel if tariffs are added. Tariffs also could translate into higher prices for American consumers: the average family sedan contains $700 worth of steel.

U.S. steelmakers and steelworkers also have pressed their case on Capitol Hill, but the legislation they seek will likely have a tough time in a Republican-controlled Congress that favors free-trade policies.

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