CITAC Reacts to Adminstration's Steel Trade Policy

Washington, D.C., July 26, 2000

The Consuming Industries Trade Action Coalition ("CITAC"), a group of companies and trade associations advocating consumer-friendly trade policy by the United States, reacted today to the release of the Administration's steel trade policy study, Global Steel Trade: Structural Problems and Future Solutions.

Jon Jenson, Chairman of CITAC and President of the 1600-member Precision Metalforming Association, said, "The Commerce Department study of the steel industry unfortunately fails to address the critical issue of the effect of trade restraints on U.S. companies that purchase and use steel in manufacturing. Consuming industries and their need to be competitive were not addressed and their views were not sought during the preparation of the study."

Accordingly, the study's recommendations give woefully inadequate consideration to the impact of restricting steel imports on the more than eight million workers who earn their livelihood in steel consuming industries in the United States. CITAC speaks for these workers and their employers-unfortunately, the Department of Commerce did not factor their concerns into its recommendations to the President.

The study attaches far too little importance to the fundamental fact that America needs steel imports. Steel demand in this country is over 140 million tons and growing, while U.S. mills can only ship 105 million tons running at full capacity. Steel demand is growing so fast that the gap between what U.S. steel users need and what U.S. steel mills can supply is growing every day. Indeed, the integrated steel producers import millions of tons of semifinished steel because of their competitive needs. The study contains a few lines acknowledging these facts, but makes no further mention of them.

Mr. Jenson noted: "Steel is not a single product, but many highly specialized products that are not interchangeable. These specialized products are often available only from foreign sources. Import restraints must not cut off supply of needed production inputs."

As consumers of much of the steel produced and sold in the United States, CITAC members are intimately familiar with the problems and challenges of the steel market in the United States and around the world. The Commerce study focuses on the very real dislocations among workers and communities but does not address the global changes that affect steel producers all over the world. For example, the study fails to analyze the comparison of U.S. price levels for steel with those of other major world markets. The plain fact is that the U.S. industry is unfortunately less prepared for the challenge of global change that it would be if it were forced to compete.

We are encouraged that the Commerce study did not urge destructive and anti-competitive changes to U.S. trade laws, which ignore the needs of America's consuming industries. We are concerned, however, that the recommendations in the study for increased "monitoring" of imports and an "early warning system" could discourage needed imports from entering the U.S. market. We have already seen the destructive effects that trade cases can have on the market, whether or not the U.S. petitioners prevail in the end.

Jenson added: "We are anxious to work with the Administration and other interested parties to address steel import issues constructively and with attention to maintaining and improving steel markets."

Contacts: Chris Howell, Precision Metalforming Association

Lewis E. Leibowitz, Counsel for CITAC,