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A RECOMMENDED PROGRAM TO ADDRESS THE STEEL CRISIS
March 2001
INTRODUCTION
The specialty steel industry is in the midst of its worst crisis in decades. This stems from record levels of imports, mostly unfairly traded in violation of U.S. trade laws and WTO rules, and unprecedented increases in global stainless steel production capacity. The domestic industry is modern, efficient and competitive. It is essential to the national defense and the industrial base. But its future requires a coordinated series of government actions to allow the industry to compete on a fair trade basis in order to retain the jobs of its workers and to generate the level of profitability and access to capital required to stay competitive.
The industry faces plans by foreign stainless steel producers to add about 7.4 million tons of new production capacity in the next five years. This represents about three times the total U.S. annual consumption of stainless steel. SSINA is concerned that much of this production capacity cannot be absorbed in foreign markets and the output will be headed toward the United States.
SSINA respectfully proposes the following multifaceted program to deal with the crisis:
Import Relief
Temporary import restraints are needed to halt the devastating surge of imports. Such import restraints should limit imports on all major specialty steel product lines to pre-crisis levels (prior to 1997), for a period of four years. Such restraints can be based upon the following mechanisms, each of which can be implemented consistent with WTO rules:
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Presidentially-initiated section
201 cases. |
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Negotiated voluntary restraint
agreements with non-WTO countries and with WTO
member companies pursuant to appropriate waivers.
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Action under section 232 of the
Trade Expansion Act of 1962 with respect to the
impact of imports on the national security. |
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Implementation of a "surge mechanism"
to deal with the current surge of imports and
to prevent an even greater surge in the future.
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Import Monitoring
The Department of Commerce should monitor imports under section 732 of the Tariff Act of 1930, as amended, in cases involving "persistent dumping," i.e., where more than one antidumping order is in effect on a particular product line and additional countries appear to be dumping. The Department of Commerce would initiate discussions with countries that are dumping and self-initiate new antidumping cases if warranted.
Automatic Import Licensing
The Customs Service should implement an import licensing program designed to provide advance warning of import levels.
Multilateral Negotiations
Negotiations should be initiated promptly with the governments of significant foreign producers leading toward the establishment of a "Multilateral Specialty Steel Agreement," which would include a prohibition of all government subsidies and provisions relating to global excess capacity issues.
Trade Legislation
The Administration and Congress should work together to enact legislation to ensure the effectiveness of U.S. trade laws and to make the section 201 injury standard compatible with the WTO injury standard.
Financing of Capacity Expansions
The U.S. government should oppose the provision of funding from any U.S. government agency or international financial institution for the development of foreign steel making capacity.
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