The Administration is seriously considering a range of trade
ac-tions, including a Section 201 case, that would impose various barriers
to protect the domestic steel industry, according to USTR Bob Zoellick
who recently testified on Capitol Hill. Section 201 of the 1974 Fair Trade
Act gives the president the authority to impose quotas, increase tariffs
or make trade adjustments.
Under Section 201, remedies would only be in effect for a limited time
and, in return, the industry would have to agree to restructure or take
other actions to become more competitive. For instance, President Bush
could restrict steel imports for an initial period of up to three years
if the US International Trade Commission (ITC) determines imports pose
a serious threat to the health of the US industry. Officials are working
with the steel industry to set the ground rules, and are already asking
the industry to take steps to restructure on its own. The possibility of
201 relief is meeting resistance on the part of smaller steel companies.
Zoellick gave no indication of the time frame during which the Administration
would make its final decision. However, if Bush invokes a Section 201 action,
the ITC would have six months to conduct an investigation, report its findings
and make recommendations. The president would then have some time to accept,
modify or reject the Commission's recommended relief plan.
In an effort to learn more about what the Administration is considering
in the way of a possible remedy, AWPA's Government Relations Advisory Council
Chairman H Woltz (President, Insteel Industries) and staff met with Andrew
Stephens, the Director of Steel Trade Policy in the USTR Office of Industry
& Telecommunications. Andrew advised that some type of decision could
be expected within one to two months. He concurred that the Administration
is seriously considering some type of Section 201 case, but that all the
details were far from being ironed out.
He advised AWPA to contact Ambassador Zoellick with our views and concerns
with any remedy agreed upon. He added that we had three choices, in his
view: speak out against any 201 trade case; try to get our products included
in the case; or seek congressional pressure to limit a Section 201 initiative
to only certain steel products instead of comprehensive coverage.
On the Congressional front, a far-reaching bill has been introduced
to aid the steel industry. Reps. Peter Visclosky (D-IN) and Jack Quinn
(R-NY) - the two Chairmen of the Congressional Steel Caucus - introduced
HR 808, the Steel Revitalization bill. It now has over 150 co-sponsors.
Among the provisions are the following:
· Limits on steel imports for the next five years. Imports would
be returned to mid-1990's levels. (This provision would in fact be contrary
to the United States' obligations as a member of the World Trade Organization
(WTO).
· A $500 million grant program to help struggling companies handle
merger costs.
· A 1.5% surcharge on steel that would pay for the health insurance
of retired steel workers.
· More generous terms for loan guarantees, including allowing
the government to back 95% of the borrowed amount, rather than the current
85%, and letting the companies repay over 15 years instead of five.
· Expanding the loan guarantee program by allowing it to back
$10 billion worth of loans to struggling companies instead of the current
$1 billion. (President Bush is proposing to eliminate this program from
his budget.)
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Alexandria, VA 22314-1757
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