- The Washington Times - Friday, June 16, 2000

The Department of Commerce will release a plan this month to aid the U.S. steel industry, which was hammered by rising imports after the world economic crisis that began in 1997 and only recently began to ease, a senior administration official said Thursday.

But foreign companies, consumer groups and ardent free traders are mounting a pre-emptive strike against the plan and other federal assistance to U.S. steel producers that they claim hurt American consumers.

The American Institute for International Steel Thursday released a study detailing what it claims are up to $151 billion in costs to U.S. consumers over the past 40 years from aid to the steel industry. The study, written by two lawyers who represent Japanese steel producers, describes what AIIS calls protectionist and corporate welfare-style policies.

"American consumers and taxpayers have paid a high price to protect an antiquated industry that refuses to modernize and compete fairly in the open global marketplace," said AIIS President Horst Buelte, whose group represents steel importers and foreign producers.

The study drew derisive responses from the U.S. steel industry, which has vigorously pushed for tough laws to stop dumping in the U.S. market, principally by Japanese firms.

"At a minimum, this study is a polemic by the Japanese," said Robert Lighthizer, a lawyer for U.S. steel firms at Skadden, Arps, Slate, Meagher & Flom. "It's also wrong."

Keenly aware their credibility would be challenged, the authors of the study got a boost from two elder statesmen of U.S. trade policy, former Reps. Sam Gibbons, Florida Democrat, and Bill Frenzel, Minnesota Republican.

Mr. Frenzel, active on trade issues for decades, told of how the U.S. steel industry, in his view, had failed to modernize in the 1950s and turned to the government.

And the U.S. government, Mr. Frenzel said, responded with trade protection and subsidies that penalized consumers, a much larger group, in the form of higher prices and taxes.

"[Steel firms] represent a tiny slice of America, a declining slice of America," Mr. Frenzel said.

The study locates the steel industry's woes over the past 40 years not in devious foreign producers, but in decisions by U.S. companies in the 1950s not to invest in new technologies that would have made them more efficient. Instead, when they began losing market share to imports in the 1960s, U.S. producers sought government assistance.

Unsuccessful in the marketplace, steel industry lobbyists proved effective in Washington and most state capitals, the study concludes. They won help that restricted imports, subsidies that eased their decline, measures that cost consumers and taxpayers billions.

"The domestic steel industry's genius is that of the con artist whose victims pay him for taking their money," the study concludes.

The coming report by the Department of Commerce on steel imports will focus on ways the United States can counter unfair trading practices by other countries, according to Robert LaRussa, the acting undersecretary of commerce for international trade. Mr. LaRussa refused to reveal what the administration will do, but said the plan would focus on Japan.

Organized labor said it is counting on the administration to draft a plan that will combat rising steel imports, which it blames, in part, for the loss of 25,000 jobs in the last five years. Gary Hubbard, a spokesman for the United Steelworkers of America, said the union is worried about higher imports over the past few months, and may push for passage of a bill to limit steel imports that is currently stalled in the Senate.

"If the numbers keep going up, we might take another run at it," Mr. Hubbard said.

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