[PEN-L:30137] remember steel?

["Ian Murray" <seamus2001@xxxxxxxxx>]

Administration putting forward new proposals to reduce global steel capacity
By Martin Crutsinger, Associated Press, 9/9/2002 16:58

WASHINGTON (AP) The Bush administration called Monday for the elimination
worldwide of most government subsidies to steelmakers as part of a comprehensive
effort to cut global overcapacity that has plagued the industry for decades.

The administration said it would announce its proposals at a meeting in Paris
this week of 39 steel-producing countries being held under the auspices of the
Organization for Economic Cooperation and Development.

The U.S. proposal would seek the elimination of substantially all government
subsidies to the steel industry with the possible exception of government
support to close outdated steel plants and to help retrain laid off steel
workers.

The U.S. plan would also address such issues as eliminating various trade
barriers countries use to keep steel out of their markets and curbing other
practices that governments use to support domestic industries that are not now
subject to World Trade Organization rules.

''We will put forward a very ambitious agenda. This is essentially a call to
action to countries to take the necessary steps to eliminate distortions
worldwide,'' said a senior Commerce Department official who briefed reporters on
condition that his name not be used.

The administration has pledged to pursue a number of avenues to deal with the
problems facing the U.S. steel industry, which has seen 30 U.S. steelmakers file
for bankruptcy over the past five years.

The administration contends that government subsidies, especially in many
developing countries, are a major reason for a glut of steel worldwide, and it
petitioned last year to begin the OECD talks to search for ways to trim this
excess production.

In March, the administration announced hefty tariffs of up to 30 percent on a
variety of foreign steel products in an effort to give the U.S. industry three
years to reorganize and modernize.

However, after the European Union, Japan and other trading partners threatened
immediate retaliation, claiming that these higher tariffs violated WTO rules,
the administration began issuing a series of exemptions.

With the last batch of exemptions announced on Aug. 22, the administration has
now excluded about a quarter of the 13.1 million metric tons of imported steel
covered by the president's original order. The administration also pledged to
review new requests for exemptions next year.

In an effort to keep pressure on American steelmakers to use the three-year
period to modernize, the administration is requiring companies to file at
six-month intervals updates on efforts to become more competitive.

The Commerce official said some companies were given an extension until this
Thursday for filing the first set of proposals. But he called the information
submitted so far ''very, very good.''

While the company reports are confidential because they contain proprietary
business information, U.S. Steel Corp., the nation's largest steelmaker, issued
a statement last week saying it had set a goal of cutting $300 million in costs
during the next three years.

U.S. Steel Corp. President Thomas Usher said part of the cost savings would come
from establishing a new labor agreement with the United Steelworkers of America.

The U.S. delegation for this week's talks, which are scheduled for Wednesday
through Friday, will be led by Commerce Assistant Secretary Faryar Shirzad.

U.S. officials said they did not expect final decisions to be made on the U.S.
proposal this week but hope to get the action plan launched at a follow-up
meeting in Paris in April. They said some of the negotiations might be conducted
as part of new global trade talks being held by the WTO.

On the Net:

Department of Commerce: http://www.doc.gov