- The Washington Times - Wednesday, June 6, 2001

President Bush said yesterday he would order a wide-ranging investigation to determine whether a recent burst of imports is damaging the American steel industry, a move that likely will lead to drastic restrictions on steel imports from around the world by early next year.
The action, which the Clinton administration steadfastly refused to take, would lend protection to an embattled U.S. steel industry that has seen 19 companies slide into bankruptcy during the past six months and 20,000 layoffs.
The decision responds to months of urgent pleas from steel companies, unions and a bipartisan group of lawmakers. It is also an abrupt switch from the administrations free-trade rhetoric and is sure to prompt condemnation from key trading partners around the world.
But Mr. Bush, who begins a major trip to Europe next week that includes a trade summit with its leaders, vowed to push ahead.
"I am deeply concerned … about the situation in the U.S. steel industry," he said during a White House meeting with senators on education legislation. "Ive told the world that were going to have an active internationalist foreign policy with U.S. interests at heart."
Western European countries, Russia, Ukraine, Japan and Korea are likely to be hit by the restrictions, which are certain to boost the cost of steel and goods made of steel for U.S. consumers.
Pascal Lamy, the 15-nation European Unions top trade official, called the decision "bad news."
"The cost of restructuring in the U.S. steel sector should not be shifted onto the rest of the world," he said.
The Bush administration also announced that it will seek negotiations with steel-producing countries to reduce capacity in the global industry, a step that also would raise prices.
The U.S. steel industry has been reeling since the 1997-98 Asian economic crisis reduced demand worldwide while falling currencies gave its foreign competitors the edge. Just as the sector was recovering from that episode, weakening demand in the United States dealt it another blow.
The companies and their unions have blamed virtually all their woes on imports. Echoing an accusation they have made for 20 years, they say foreign governments have unfairly subsidized their own companies, which dumped steel onto the U.S. market at prices below the cost of production.
But the administrations move does not deal with dumping and subsidies. Instead, it would restrict imports of goods that the industry says are killing its business.
The decision pre-empted a similar move by Senate Democrats, who were preparing to use their new majority status to take the same step through a rarely used provision of U.S. trade law. Sen. Max Baucus, the Montana Democrat who now heads the Finance Committee, said he would refrain from acting.
The Bush administration also concluded that the action was necessary to shore up support for its top trade-policy priority: passage later this year of legislation that would give the president fast-track authority to negotiate new trade agreements, a senior administration official said.
Fast-track authority, which the Bush administration is calling "trade promotion authority," allows the president to cut trade deals and submit them to Congress for an up-or-down vote without amendments. Mr. Bush has said he wants to win fast-track authority by the end of the year, and yesterdays announcement appears to have won him some good will in Congress.
"It definitely makes me more willing to discuss future trade endeavors with the White House," said Rep. Bob Ney, Ohio Republican, who had pleaded for action.
The presidents decision won rare praise from labor unions, which have staged rallies around the country and pressured members of Congress for action.
"Todays progress is the result of unprecedented activism by steelworkers throughout this country," said Leo Gerard, president of the United Steelworkers of America.
Duane Dunham, chairman of the American Iron and Steel Institute and chief executive officer of Bethlehem Steel, called the administrations action "an essential first step towards addressing our immediate steel crisis."
Large steel producers that cast steel from raw materials have posted record losses over the past year and have mostly blamed imports for their woes, though they have been hit by high energy prices as well. Smaller steel companies that use newer technologies have seen record profits, but they also have clamored for protection from imports, which they say have driven down prices.
Companies in the automotive, machinery and construction sector railed at Mr. Bushs move, saying it will hurt the 8.5 million workers who rely on reasonably priced steel.
"Their jobs are threatened by import curbs, and they contribute much more to the economy than the steel industry," said Lewis Liebowitz, a lawyer for the Consuming Industries Trade Action Coalition, a group of steel users.
After intensive work that included several Cabinet meetings, the Bush administration announced yesterday that it would consult with steel companies, unions and companies that buy steel about precisely which products would be covered by the restrictions. Within two weeks, the president will ask the International Trade Commission, an independent body, to determine whether imports of these products have harmed the U.S. industry.
The list of products will be "as comprehensive as possible," an administration official said.
Mr. Bush could sign off on three-year import curbs in about eight months if the commission concludes that imports have harmed the industry.
The timing of the case creates some leverage for Mr. Bush over steel-state members of Congress, many of whom have opposed fast-track in the past, observers pointed out.


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